Chesapeake ( CHK) keeps drilling for profits in the same familiar way.

The independent gas producer announced yet another big acquisition -- its fourth so far this year -- when reporting strong second-quarter results late Monday. Chesapeake plans to buy three private companies in a $590 million transaction financed with an equal mixture of equity and debt. The transaction furthers Chesapeake's strategy of relying on acquisitions for much of its profit growth.

Fredric E. Russell, a money manager in Chesapeake's home base of Oklahoma, expressed some alarm on Tuesday.

"When the universal thesis declares that energy prices have nowhere to go but up, and that we will face an energy crisis forever, I get concerned that companies may be buying at the top," said Russell, who has no position in Chesapeake's stock. "If you look back at every boom and bust since 1973, you'll see that acquisitions during periods of optimism have seemed to be a dangerous, risky strategy."

Chesapeake itself has a history of placing huge bets during good times that have come back to haunt it later. The company's stock -- once a $30 highflier -- collapsed below $1 in the winter of 1998 as gas prices and its own drilling success faltered. But the company was quick to point out on Monday that its stock has rocketed some 1,525% since that difficult time.

Still, investors were cautious on Tuesday. They pushed shares of Chesapeake down 3.4% to $14.65 during the morning session.

Bob Rader, senior vice president of Capital West Securities in Oklahoma City, blamed the slide on the dilutive nature of the current transaction. Still, he described the deal as a good one. He pointed out that Chesapeake is acquiring the new reserves at about one-fourth of current gas prices. Thus, he says the company is now strongly positioned to profit from the transaction.

Rader's firm has been tapped to help sell the new stock that will finance the deal. Rader also owns stock in the company himself.

News of the latest acquisition came along with a quarterly earnings report that, once again, surpassed expectations. Chesapeake handily beat revenue estimates of $523 million by reporting sales of $574 million. Excluding special items, the company also posted second-quarter earnings of 33 cents per share -- up from 26 cents a year ago -- that topped the consensus estimate by 4 cents.

For its second quarter ended June 30, Chesapeake posted a profit of $85.8 million, or 31 cents a share. That's up from the year-ago $76.3 million, or 31 cents a share. Sales surged to $574 million from $430 million a year earlier.

Chesapeake attributed its success, in part, to one of the "very best organic growth performances reported by public mid- and large-cap exploration and production companies in the past several years." But it nevertheless relied on acquisitions for most of its production growth in the latest quarter and will continue to do so when aiming for higher production targets going forward.

CEO Aubrey McClendon praised the company's strategy on Tuesday.

"Today's announcements of very strong operational and financial results for the 2004 second quarter and of three new value-creating acquisitions provide ongoing confirmation that Chesapeake continues to execute with precision on its business strategy," McClendon stated. "We believe Chesapeake's management team can continue the successful execution of the company's 'distinctive' business strategy and continue to deliver significant shareholder value in the years ahead."

Russell, for one, prefers firms -- like Warren Buffett's MidAmerican Energy Holdings -- that profit by "opening up their pocketbooks during periods of depression and anxiety" instead. He points out that MidAmerican snatched up the valuable Kern River pipeline from Williams ( WMB), another Oklahoma company, when Williams' "back was against the wall."

"That seems like a shrewder strategy" than Chesapeake's, Russell said. "But who can argue with success?"

Still, investors were looking for better news from Chesapeake and others across the sector. Marathon Oil ( MRO) slid 1.7% to $35.89 after missing Wall Street estimates. The company posted second-quarter earnings of $1.02 a share instead of the $1.07 analysts were expecting. The miss came despite what Marathon described as the "second-best quarterly earnings" ever for the company's refinery division.

Canadian producer EnCana ( ECA) also disappointed. The company's stock fell 1.3% to $43.41 after special charges slashed its second-quarter profits. Excluding the noncash items, however, profits actually surged 38% to 81 cents a share.

Looking ahead, EnCana pledged on Tuesday to grow production by 15% this year. Unlike Chesapeake, the company is relying primarily on organic growth to hit its full-year target.

The company touted its own business strategy on Tuesday.

"North American conventional reservoirs are generally experiencing increasing decline rates and decreasing reserve life -- the combination of which creates a treadmill effect that makes profitable production growth difficult," CEO Gwyn Morgan stated. "EnCana's strategy of investing in unconventional North American resource plays, while divesting of conventional assets, is expected to continually slow our treadmill and enable us to focus on strong return investments in long-life, low-decline assets."

But the market remained cautious, knocking down an energy services company as well.

Transocean ( RIG) slipped 1% to $27.38 after the company missed the consensus estimate by 2 cents with second-quarter operating income of 8 cents a share. Although the company did manage to reverse a year-ago loss, it reported a number of challenges. Drilling revenue declined due to lower utilization of some assets caused, in part, by "planned shipyard programs and idle time between contracts." But the company expects continued pressure going forward due to a strike in Norway and fire damage on one of its rigs. Even so, the company pointed to recent contract signings as "encouraging indications of growing customer interest and an improving offshore drilling environment."

Meanwhile, fellow oil services company Nabors Industries ( NBR) actually managed to please investors on Tuesday. The company's stock climbed 1.4% to $44.31 following a report that second-quarter earnings had jumped nearly 50% to 30 cents a share. The company also offered an upbeat outlook for the future.

"With each quarter, we continue to see constructive trends in place that support our belief that the North American gas markets will require higher levels of drilling for an extended period to meet the supply challenges," CEO Gene Isenberg stated. "While there is some degree of uncertainty as to the precise magnitude and timing of incremental rig pricing and utilization, we are very confident of our strategy over the long term in both our North American and international markets."