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Chesapeake Energy Corporation (NYSE:CHK) recently took a shock when shareholders rejected two directors from joining the board and demanded to have more influence over company decisions.  Shareholders have lost confidence in the natural gas producer’s management.  Scandals and reports of “mismanagement” have pushed shareholders to the edge and now they are fighting back.

V. Burns Hargis and Richard K. Davidson were the two directors that shareholders gave less than 30% of the votes to during yesterday’s annual shareholder meeting in Oklahoma City.  The two directors have offered to resign, however nothing is official yet.

Chesapeake has lost over $2.6 billion in market cap this year.  Weak energy prices combined with management scandals has pushed the stock down greatly, making shareholders angry and looking to change things.  In addition, the company has announced that they are going through a bit of a cash flow problem.  While the company did sell some of its assets to cover some of their costs, Chesapeake says they will run out of money next year.  The company also reported a $71 million loss during the first quarter.

Obviously, things are not going so well over at Chesapeake.  Shareholders no longer have confidence in management but is it too late to save Chesapeake?  According to some analysts, Chesapeake can not be saved.  Even though legendary investor, Carl Icahn, has come aboard some analysts believe the debt load alone for Chesapeake is just too much to handle.  The company is currently sitting on $12.6 billion in debt obligations as of March 31st.  These analysts believe that Chesapeake should just sell itself to a larger company such as Exxon Mobil Corporation (NYSE:XOM).

While Chesapeake’s situation does look dire, I want to give Icahn a chance to work his magic.  Icahn is extremely experienced at turning struggling companies into top performers again.  He clearly has the backing of the rest of the Chesapeake shareholder which makes things a lot easier but there is a lot that needs to be done there before we see a major turnaround.  Not to mention, part of the company’s slump is the low energy prices.  Chesapeake needs to be able to operate successfully during low energy priced environments.

The bottom line is that Chesapeake could very well sell itself to a giant in the oil and gas industry.  However, I am willing to give Carl Icahn and the rest of the shareholders a chance to see if things can turn around before committing to a sale.