Quicksilver Resources Inc (KWK), Chesapeake Energy Corporation (CHK): Why Do Investors Hate This Top-Traded Natural Gas Stock?

One way the company will accomplish this is by concluding its advanced negotiations to monetize its Barnett Shale assets with a deal. The company is considering either an asset sale or an MLP for the assets and is hoping to unlock the value of those assets. Quicksilver is also looking for a joint venture partner of its Horn River Basin assets.

Outside of unlocking some value by shedding assets, Quicksilver Resources Inc (NYSE:KWK) is looking to grow its oil and liquids production. The most promising of its developing oil plays is its Niobrara acreage. The company just closed an acquisition and exploration agreement with Royal Dutch Shell plc (ADR) (NYSE:RDS.A) that covered 320,000 acres. The company got a small cash infusion and a world-class partner in the deal. It’s also looking for another third-party joint venture partner to help further fund its development. If Quicksilver Resources Inc (NYSE:KWK) can strike oil in the Niobrara it’ll really boost its liquids production and set investor’s minds at ease.

My Foolish take
Given that the debt to capital ratio is four-to-one, I’d be leery of going long as the company doesn’t have a lot of financial flexibility. However, there are enough potential positives to quickly burn any short position. Long-term investors are better just staying away from this one and watching from the sidelines. If it can execute on its leveraging strategy, there will be plenty of upside later with much less risk.

The article Why Do Investors Hate This Top-Traded Natural Gas Stock? originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy.

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