This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cramer: McClendon's Departure May Mark Bottom in Natural Gas

NEW YORK ( TheStreet) -- Lindsey Bell: Chesapeake Energy (CHK - Get Report) on Tuesday said founder and CEO Aubrey McClendon will leave the company on April 1st due to philosophical differences.

Jim, a lot of analysts had predicted that this might happen, given the board shakeup. Were you surprised?

Jim Cramer:

Well, Aubrey had been talking to a lot of people about a lot of different things. Now he's saying to me he retired. Obviously if he were speaking to a lot of different shareholders and this suddenly happens, it feels more like Vikram Pandit (former CEO) at Citigroup (C) than it does feel like a gradual stepping away. That said, obviously there is a transition, so it wasn't like they told him to get the heck out. There were no ethics violations.

But I think this is important -- let's overlap this on Kinder Morgan (KMP) CEO Rich Kinder's decision to buy Copano (CPNO). Aubrey had bet the company that natural gas and natural gas liquids would rise in price. It didn't happen. He borrowed a huge amount of money, made these giant bets ... Chesapeake is now the second-largest producer in the country. Just at the time when he leaves, Rich Kinder makes a gigantic bet on natural gas liquids and natural gas by buying his JV partner, Copano.

I think that Aubrey's departure will mark a bottom in natural gas liquids in this country. Natural gas liquids are used to make plastic. I think we're going to see a renaissance of building in the Louisiana area, taking advantage of all that's in the Eagle Ford and the Woodford (where Copano is) shale, and taking advantage of everything that Aubrey always believed would happen.

Lindsey Bell:

So what does this do for the strategy at Chesapeake? Do they stop acquiring and begin developing, given the coming increase in the price of natural gas?

Jim Cramer:

They've been selling off assets. Now, one of the things Aubrey's prided himself on is that production hasn't dropped during the time they've been selling off properties. They have to continue to sell off properties to meet the cash flow. Now Carl Icahn's in there, maybe he can make something happen, but, look, if you want to take over a name, don't own Chesapeake. We own Southwestern Energy (SWN - Get Report) for Action Alerts Plus. It's a clean company. If someone wanted to be big in natural gas, that's a great play. EOG Resources (EOG - Get Report) is a giant in natural gas but mostly is an oil producer -- that's another one because Mark Papa, the CEO, is retiring. Don't buy Chesapeake on the takeover. Buy Chesapeake on a break-up, which will probably accelerate now that Aubrey is gone. Now Aubrey's going to be back.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CHK $6.59 -4.08%
EOG $82.78 0.19%
KMP $102.03 1.98%
SWN $12.80 -4.69%
AAPL $93.64 -0.11%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs