A new report from Barclays PLC (NYSE:BCS) (LON:BARC) concerning Chesapeake Energy Corporation (NYSE:CHK) upgrades the firm’s shares and reinstated an equal weight rating on the company with a price target of $24. The reason behind the positive report is, as always, asset sales. The real question is, however, when the firm’s asset drain will end, if ever.

Chesapeake Energy Logo

Chesapeake was in such a poor position last year that it needed to shed $20 billion in assets in 2012 and 2013 in order to restore investors’ confidence. By the fourth quarter the company had divested itself of $11.4 billion in assets, below management’s 2012 target of $13-$14 billion.

Despite the annual miss, the company managed to shift $5 billion in assets in the last three months of last year. That was enough to restore confidence in the firm, and, coupled with the resignation of Aubrey McClendon, the firm’s CEO, precipitated a rise in the firm’s shares of more than 20% so far in 2013.

Chesapeake is not exactly a vibrant company, though it still excites many investors because of its potential in the natural gas sector. Any firm that needs to rely on asset sales and debt reduction in order to stabilize its shares could not really be considered a safe bet. And one that needs to fire a CEO in order to increase value needs to take a long hard look at itself.

According to the Barclays report, Chesapeake Energy Corporation (NYSE:CHK) will need to rely on  asset sales in order to fund its capital expenditure going forward. The firm’s capex is set to fall this year to around $7.5 billion. That number is down from the 2012 total of $13 billion. The firm will take in enough cash to cover the outlay, and Barclays analysts expect a deficit of $4.2 billion.

That short fall will have to be covered by asset sales, and the company is readying itself for another push in sales in the first quarter of 2013, and throughout the year. The company will be able to stop relying on asset sales for future expenditure as soon as the natural gas market recovers.

That market is unlikely to return to favor this year, and the boom in production, as well as the technical obstacles in widening the market for the energy source, means that prices may not recover for the decade ahead. Chesapeake Energy Corporation (NYSE:CHK) will propagate its suspect business model for some time to come. Whether investors continue to go along with it remains to be seen.