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Should Investors Worry About Owning Chesapeake Energy's Spin Off?

By Taylor Muckerman and Joel South - Mar 19, 2014 at 10:30AM

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Chesapeake Energy is spinning off its oilfield services business, but investors might not want the shares they'll likely receive.

In its younger days, Aubrey McClendon had visions of grandeur to build Chesapeake Energy ( CHKA.Q ) into an integrated natural gas producer. Since his ouster, the pieces have slowly been crumbling away in the form of asset sales. The latest deal, however, will be the spin off of its oilfield services unit into publicly traded, Seventy Seven Energy.

Current investors will likely receive shares of each, but should they want to hang on to them? While their ownership of Chesapeake Energy has exposed them to this segment, our analysts wonder if they would be wise to dispose of those newly granted shares once the company goes public. For more on this news, check out the short clip below.

What companies are better bets on the U.S. commodity boom than Chesapeake Energy?

This segment is from Tuesday's edition of "Digging for Value," in which sector analysts Joel South and Taylor Muckerman discuss energy and materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays and Thursdays. It can also be found on Twitter, along with our extended coverage of the energy & materials sectors @TMFEnergy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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