Chesapeake Energy 1998 Annual Report Download - page 24

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Acreage
The following table sets forth as of December 31, 1998 the gross and net acres of both developed and
undeveloped oil and gas leases which the Company holds. "Gross" acres are the total number of acres in which the
Company owns a working interest. "Net" acres refer to gross acres multiplied by the Company's fractional working
interest. Acreage numbers are stated in thousands and do not include options for additional leasehold held by the
Company, but not yet exercised.
Marketing
The Company's oil production is sold under market sensitive or spot price contracts. The Company's natural gas
production is sold to purchasers under varying percentage-of-proceeds and percentage-of-index contracts. By the
terms of these contracts, the Company receives a percentage of the resale price received by the purchaser for sales
of residue gas and natural gas liquids recovered after gathering and processing the Company's gas. The residue gas
and natural gas liquids sold by these purchasers are sold primarily based on spot market prices. The revenue
received by the Company from the sale of natural gas liquids is included in natural gas salçs. During 1998, the
following two customers individually accounted for 10% or more of the Company's total oil and gas sales:
Percent of Oil
Amount and Gas
($ in thousands) Sales
Koch Oil Company $ 30,564 l2%
Aquila Southwest Pipeline Corporation $ 28,946 11%
Management believes that the loss of either of the above customers would not have a material adverse effçct on
the Company's results of operations or its financial position.
4
Year Ended
December 31,
1998
Six Months
Ended
December 31,
1997 Year Ended June 30,
1997 1996
(S in thousands)
Development costs $ 150,537 $120,628 -$ 187,736 $ 138,188
Exploration costs 68,672 40,534 136,473 39,410
Acquisition costs:
Unproved properties 26,369 25,516 140,348 138,188
Proved properties 740,280 39,245 24,560
Sales of oil and gas properties (15,712)
Capitalized internal costs 5,262 2,435 3,905 1,699
Proceeds from sale of leasehold, equipment and
other (296) (1,861) (3,095) (6,167)
Total $ 975.112 $ 226,497 $ 465,367 $ 335,878
Developed Undeveloped Total Developed
and Undeveloped
Gross Net Gross Net Gross Net
Mid-Continent 1,576 621 835 304 2,411 925
Gulf Coast 451 280 1,333 1,084 1,784 1,364
Canada 82 32 569 233 651 265
Other areas 60 30 683 JLL24 713
Total 963 -3,267
Development, Exploration and Acquisition Expenditures
The following table sets forth certain information regarding the costs incurred by the Company in its
development, exploration and acquisition activities during the periods indicated: