Chesapeake's largest shareholder pleased with its position

Southeastern Asset Management, a Tennessee-based money manager, detailed its view of Chesapeake in a letter to shareholders in its Longleaf Partners Funds. The letter was posted on its website Wednesday.

“Although Chesapeake Energy is only in the Partners Fund, its recent visibility has generated discussions with shareholders across the three funds,” CEO O. Mason Hawkins and President G. Staley Cates wrote.

Chesapeake's stock dipped 20 percent in the second quarter, despite its position as a leading acreage holder in seven of the top resource plays in the United States, according to the letter.

Amid declining natural gas prices in April, “the media raised questions about CEO Aubrey McClendon's potential conflicts, board oversight and CHK's ability to meet its 2012 cash flow needs,” the letter notes.

“Almost all of what was reported was previously known, but the rapid onslaught of stories blurred the lines between perception and reality,” Hawkins and Cates wrote. “To best represent our clients' interests, we became more active to push the board and McClendon to focus on what mattered — de-risking the balance sheet, managing costs and reducing discretionary spending while gas prices stayed at uneconomic levels, and focusing on operating the company rather than convincing the world of the long-term case for natural gas.”

Southeastern Asset Management, a longtime Chesapeake shareholder, indicated its intent to take a more active role in the company's governance in early May.