5 Catalysts for Chesapeake Energy in 2012

5. Mississippian shale joint venture

SandRidge Energy (SD) announced last week a $1 billion joint venture with Repsol in the Mississippian shale. Chesapeake Energy plans to complete a JV in the same shale play in the first half of 2012. It also has acreage considered to be in a better location within the Mississippian.

SandRidge didn't break out in its Repsol announcement the value it received for acreage in the better parts of the shale play, versus acreage in what is considered the second tier Mississippian "extension." For this reason, the value Chesapeake can get for its Mississippian acreage could be a catalyst.

SandRidge received a price per acre of $2,400. In its first Mississippian JV, SandRidge had received a price of $4,400 per acre.

McClendon said on the last earnings conference call of places where JVs might be coming, "I guess significant-enough leasehold positions in areas where we haven't already accelerated our drilling and would like to have a partner. And I believe I identified those as the -- potentially the Mississippi Lime, the Williston Basin, and then also we have a third play where we're accumulating acreage. It's on the oil side."

Sterne Agee's Rezvan, even given the risks to assumptions and the "best laid plans" of Chesapeake CEO Aubrey McClendon in 2012, there is a baseline case for the stock being undervalued relative to assets that sends it back to its $35 52-week high by the end of 2012.

For other analysts, as the company transitions from the land grab to the asset development phase -- CEO McClendon has said 2012 will mark the end of the land grab phase -- the issue could be how long it takes before the transition is proved successful and rewarded by the market.

For analyst Phil Weiss of Argus Research -- a bear on the stock who is notably the only analyst covering Chesapeake that's not listed on the company's investor relations' page -- the story hasn't changed.

Weiss wrote in a damning note at the end of November, "We believe that CHK's near-term cash needs are growing and that its spending levels are unsustainable and ill-advisably elevated ... We have long maintained that CHK holds one of the industry's best collections of acreage, with significant positions in most of the premier unconventional shale plays in the U.S. Despite this view, we think it best to avoid the shares."

-- Written by Eric Rosenbaum in New York.

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