UPDATE 1-Southeastern's Hawkins says Chesapeake undervalued

Thu Jun 21, 2012 12:20pm EDT

CHICAGO, June 21 (Reuters) - Depressed shares of Chesapeake Energy Corp are worth more than $50 a piece, and will eventually top $100, the head of Southeastern Asset Management, its top shareholder, said on Thursday.

Chesapeake is off 35 percent over the past year amid a collapse in natural gas prices and a firestorm over Chief Executive Aubrey McClendon's personal investments.

Chesapeake traded Thursday at $18.42, down 3.3 percent, but Hawkins disagrees with that valuation.

He said he believes the stock is currently worth at least $50 share. And eventually, he forecast it could top $100 a share, if natural gas growth prospects materialize.

Hawkins made his remarks during a rare public appearance at Morningstar Inc's annual investment conference in Chicago.

Chesapeake, the nation's No. 2 natural gas producer, has been under fire from investors since Reuters reported that McClendon had arranged for more than $1 billion in personal financing from a lender who is also a big source of funding for the company. The arrangement could put his interests at odds with those of shareholders.

Earlier this month, Chesapeake shareholders rebuked McClendon and the board, rejecting two directors running for re-election in a reaction to a governance crisis that has engulfed the company.

The shareholders' vote came just hours after Chesapeake said it planned to sell pipeline and related assets to Global Infrastructure Partners for more than $4 billion as part of efforts to close a colossal $10 billion cash shortfall this year.

Chesapeake is replacing four current board members with directors chosen by its top shareholders -- activist Carl Icahn and Southeastern Asset Management. This would give shareholder-backed directors a majority on the board.

At the Morningstar conference, Hawkins told reporters during an intermission that Chesapeake is on track to sell assets and create what he called a pristine balance sheet.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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