Sathya Ganesan on Chesapeake Energy Corporation (CHK) until May 29, 2013

Investment Thesis

• The average forward price ratio of oil to natural gas for equivalent btu energy
  is 7:1. Historically this number has been < 1.5:1
• Natural gas prices at historic lows, any rebound of natural gas prices will

  provide significant upside to CHK ( currently unhedged for 2012 & 2013)

Supply and Demand

• Increased natural gas demand going forward
  • Industrials, Electric Power, Transportation (CNG & LNG vehicles)
• Natural gas supply glut expected to taper off

Negative investor sentiment

• Several downgrades of CHK by sell side analysts in April.
• Credit rating was also downgraded by S&P to BB in April.
• These downgrades have resulted in CHK being oversold to extreme levels. From a contrarian view, this is a great opportunity to build long positions in
  CHK.

Insider buying

• Company insiders have been steady buyers from March 2011 – March 2012