Photo: LeBow College
Carl Icahn told CNBC that embattled natural gas giant Chesapeake Energy remains a “very undervalued company” and that he is in no way ready to sell his recently purchased 7.5 per cent stake in the firm.Icahn’s interview came as Reuters reported the Justice Department had opened an inquiry into possible bid-rigging Chesapeake engaged in with Canadian company Encana over land deals in Michigan.
Meanwhile, a Bloomberg investigative team led by Zach Mider reported Chesapeake has paid a total of just $53 million in taxes on its billions in pretax profits over its 23-year history.
CNBC did not bring either issue up in their interview with Icahn Monday evening.
Icahn called Chesapeake CEO Aubrey McClendon “a very bright guy” and said he was not concerned by what some analysts see as a major cash shortfall and expenses problem.
“I think they’ll definitely meet [their cash gap] if they’re able to cut costs and sell their assets,” Icahn said.
Icahn offered an interesting analogy to Chesapeake’s current, stating it reminded him of ImClone Systems in having experienced a corporate governance failure but whose assets were still prized. Icahn took over ImClone in 2006 and sold it to Eli Lilly two years later.
“If you clean this company up and … natural gas prices go higher, which I think they will,” the company will remain valuable, he said.