Shareholders Should Win at Chesapeake Chess

It's hard to keep close tabs on the complex stunts that continue to be the stock in trade of Oklahoma City-basedChesapeake Energy (NYS: CHK) .

As last week came to a close, Chesapeake, the nation's numero uno company in locating unconventional oil and gas action, announced its quarterly results and unveiled a rather complex Utica Shale joint venture worthy of magician David Copperfield ... or Chesapeake CEO Aubrey McClendon. As a warm-up for talking about the deal, let's take a quick look at the company's third-quarter results.

For the quarter, the company earned an adjusted $0.72 per share, well above the consensus expectation of $0.65. The big driver was a whopping 91% jump in liquid volumes. Total production increased by more than 9% on a cubic feet equivalent basis. The company is still weighted heavily toward natural gas, which accounted for 83% of total production.

So we can chalk up a solid quarter for the company. But looking at its somewhat opaque deals, the company has entered into a letter of intent to sell 25% of 570,000 acres of its 1.5 million acres in the Utica Shale to an "undisclosed international major energy company" for $2.14 billion. The math involved indicates that, with the interest that Chesapeake is retaining, the 570,000 acres are worth slightly more than $8.5 billion. Chesapeake has stated previously that its total holdings in the Utica Shale "could be worth $15-20 billion in increased value to the company."

But that's not all. McClendon has also announced that Chesapeake will sell up to $1.25 billion of a callable preferred stock in a brand new entity named CHK Utica, LLC. I obviously don't know your feelings, but the 7% dividend attached to the issue appears more than a tad expensive. Beyond that, one of the more interesting -- and confusing -- aspects of McClendon's latest chess game involves the lack of disclosure about the name of Chesapeake's new partner.

After all, there have been prior deals consummated with the likes of Norway's Statoil (NYS: STO) , China's CNOOC (NYS: CEO) , BP (NYS: BP) , and France's Total (NYS: TOT) . None of those companies was made to stand unidentified behind a curtain. ExxonMobil (NYS: XOM) has been mentioned as a possible mystery guest, and that could be. So isChevron (NYS: CVX) , which lags behind its bigger rival in domestic gas assets.

The Wall Street Journal's Liam Denning, my spouse's second-favorite financial writer, believes that Friday's nearly 7% slide in Chesapeake's share price indicates resistance to McClendon's progressively more complex deals. He may be right, but the company is also a thrill a minute sitting on a bed of solid assets.

As such, I for one, intend to continue watching its goings-on -- in part through the Fool's My Watchlist feature -- until I hear someone intone a "checkmate."

At the time thisarticle was published Motley Fool newsletter serviceshave recommended buying shares of Chesapeake, Chevron, Statoil, and Total. Try any of our Foolish newsletter servicesfree for 30 days.We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Fool contributorDavid Lee Smithisn't Chesapeake's mystery mate and doesn't own shares in any of the companies mentioned here. The Motley Fool has adisclosure policy.

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