(Chesapeake Energy, SandRidge Energy story updated for M&A commentary, market closing data)NEW YORK ( TheStreet) -- Chesapeake Energy ( CHK - Get Report) and SandRidge Energy ( SD - Get Report) shares are moving in opposite directions on Monday, as the market rewards Chesapeake for a $2 billion sale to the Chinese, and SandRidge shares get dumped by investors after its CEO sells a major portion of his holdings in the speculative drilling play. The Chesapeake Energy sale of a 33.3% interest in its 600,000-acre Eagle Ford oil and gas holdings to the Chinese state-owned energy conglomerate CNOOC ( CEO) for $2 billion -- half of which is to fund Chesapeake drilling costs until the end of 2012 -- led to a spike as high as 6% in the premarket trading of Chesapeake shares. After the market open, the Chesapeake rally was cut in half, with shares up 3%. By the close of the market, the gain in Chesapeake Energy shares was 1%. It's not surprising that the Chesapeake Energy rally would moderate even with the announcement of a major sale to the Chinese, energy's most active asset purchaser, and even though Chesapeake shares are down 19% over the past year, too. Chesapeake more or less promised the market this deal, and in fact, promised it would have been completed on an even earlier schedule. Market chatter about a deal that had fallen through with India's Reliance Industries had added to investor questions about Chesapeake Energy's ability to finance its future. While it was never clear if Chesapeake had a deal in place with Reliance that fell through, the fact remained that Chesapeake needed to get a deal done given its balance sheet issues that include a huge debt plate it needs to pay down. The company had promised to pay down $3.5 billion in debt in the next two years. Analysts' reaction to the deal was positive, but was tempered given the company's balance sheet and its history of aggressively financing its operations. Analysts described the deal valuation as being commensurate with recent strong pricing for similar acreage in the Bakken and Marcellus share plays. Even given the Chesapeake Energy financial strain, the deal was not priced as if Chesapeake Energy needed to liquidate to meet its financial needs -- far from it. Yet there was some skepticism about the deal. Chesapeake Energy is hosting its annual analyst day this week and analysts knew that the company would want to have good news ahead of that meet and greet. "It's a pretty good valuation, it brings their debt down to a manageable level, and I knew they would want to do something splashy around the analyst day," said Phil Weiss, analyst at Argus Research. "The timing is very much what we've come to expect from Chesapeake. As far Chesapeake shares, I still have some questions," the Argus Research analyst said.
Eric Rosenbaum. >To follow the writer on Twitter, go to http://twitter.com/erprose. >To submit a news tip, send an email to: firstname.lastname@example.org.