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How Chesapeake Energy Can Be Saved (From Itself): Opinion

Stocks in this article: XOM CHK

NEW YORK ( TheStreet) -- Poor, misunderstood Chesapeake Energy (CHK) CEO Aubrey McClendon. He's really the victim, isn't he, in the current controversy over his fiefdom otherwise known as a publicly traded company owned by shareholders.

One thing is likely: No matter what anyone else thinks -- including some of the biggest pension funds in the world that would like to see the Chesapeake CEO put on a leash -- McClendon probably thinks he is the one being unfairly targeted.

Last November, when I had the chance to interview McClendon on the sidelines of a conference in New York, it wasn't too long after the first in what's now been worked into a Moby Dick-sized volume from the collected financial press attacking the embattled CEO of the second-largest oil and gas driller in the U.S. after Exxon Mobil (XOM). Chesapeake is actually No. 1 in terms of the number of rigs actively drilling on U.S. land right now.

I asked McClendon about the New York Times piece in which Times writer Ian Urbina referred to Chesapeake as more or less being a Ponzi scheme - the print "shot across the bow" so to speak -- and McClendon answered in a way I found curious. He didn't respond to the accusations directly, but with somewhat of an exasperated look of a naif who has lost his innocence. He riffed on what a long-time reader of the Times he has been. The Chesapeake CEO seemed to feel personally wounded by the piece, stabbed in the back by a publication with which he has long began his mornings:

"I read the New York Times every day for 30 years, and now I say gosh -- I never read the editorial page because I understood the bias there - I didn't understand just straight stories could be so biased."

The "bias" as McClendon likes to view it, has now hit a crescendo in the aftermath of the Reuters investigation into the CEO's controversial well ownership. Controversy is nothing new for Chesapeake or McClendon, but with natural gas prices at a decade low and shareholders at a boiling point, it's a perfect storm for "death spiral" talk about Chesapeake.

I even received a comment on Thursday from a city council member in a Texas town where Chesapeake dominates the drilling who asked, "We wonder how vulnerable our town is to a Chesapeake bankruptcy. "

Yes, Aubrey, it's come to this. Short interest in Chesapeake shares has been on a steady rise, reaching close to 9% of the company's float as of mid-April, and increasing by roughly 62% since a year-ago. It could simply be a trade on the descent in natural gas prices -- Exco Resources (XCO), another proxy on natural gas prices has a similar short interest chart over recent months -- or it could be the beginning of the "death spiral" that some, including Real Money columnist Dan Dicker, see coming for Chesapeake as the David Einhorns of the hedge fund world see a fresh, and valuable carcass, to carve up.

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