Billionaire investor Carl Icahn has cut his stake in shale driller Chesapeake Energy Corp. by more than half to 4.6% citing “tax-planning reasons”. After the cut, Icahn is no longer the Oklahoma City-based explorer’s biggest holder though he has publicly stated he still has confidence in the company’s management team.
Icahn began amassing significant amounts of Chesapeake stock during the second quarter of 2012, when the shares traded between about $12.60 and $22.40. Chesapeake shares traded at roughly $6.96 Tuesday as a heavy debt load, weak energy prices, and controversy weighed on the second-largest U.S. natural gas producer.
Chesapeake has taken $16 billion in impairments on its gas and oil fields since the beginning of 2015, according to data compiled by Bloomberg. As the data from the EIA shows, the price of natural gas has fallen substantially since 2014 which has meant significant losses for the company on investments paid for with debt during the shale boom. Chesapeake has lost money for six consecutive quarters since the natural gas glut began to weigh on the industry.
Chesapeake Energy Corp. is also currently facing U.S. Justice Department scrutiny. Chesapeake has been at the center of antitrust probes of gas-lease auctions and government investigations into how it pays royalties to landowners and accounts for its assets.
A recently received subpoena from the Justice Department sought “information on our accounting methodology for the acquisition and classification of oil and gas properties and related matters,” according to a regulatory filing by the company on Thursday.
Icahn Enterprises LP, the billionaire’s publicly traded holding company, has declined almost 30% in the past 12 months, hurt in part by energy investments including Chesapeake and natural gas exporter Cheniere Energy Inc.