Chesapeake Energy 2000 Annual Report Download - page 111

Costs Incurred
Costs incurred in natural gas and oil property acquisition, exploration and development activities for the years
ended December 31, 1998, 1999 and 2000 were as follows:
Results of Operations From Oil and Gas Producing Activities (Unaudited)
Gothic's results of operations from natural gas and oil producing activities are presented below for 1998, 1999
and 2000. The following table includes revenues and expenses associated directly with Gothic's natural gas and oil
producing activities.
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Natural Gas and Oil Reserves Data (Unaudited)
Estimated Quantities
Natural gas and oil reserves cannot be measured exactly. Estimates of natural gas and oil reserves require
extensive judgments of reservoir engineering data and are generally less precise than other estimates made in
connection with financial disclosures.
Proved reserves are those quantities which, upon analysis of geological and engineering data, appear with
reasonable certainty to be recoverable in the future from known natural gas and oil reservoirs under existing
economic and operating conditions. Proved developed reserves are those reserves which can be expected to be
recovered through existing wells with existing equipment and operating methods. Proved undeveloped reserves are
those reserves which are expected to be recovered from new wells on undrilled acreage or from existing wells where
a relatively major expenditure is required.
Estimates of natural gas and oil reserves require extensive judgments of reservoir engineering data as explained
above. Assigning monetary values to such estimates does not reduce the subjectivity and changing nature of such
reserve estimates. Indeed, the uncertainties inherent in the disclosure are compounded by applying additional
estimates of the rates and timing of production and the costs that will be incurred in developing and producing the
reserves. The information set forth herein is therefore subjective and, since judgments are involved, may not be
comparable to estimates submitted by other natural gas and oil producers. In addition, since prices and costs do not
remain static and no price or cost escalations or de-escalations have been considered, the results are not necessarily
indicative of the estimated fair market value of estimated proved reserves nor of estimated future cash flows and
significant revisions could occur in the near term. Accordingly, these estimates are expected to change as future
information becomes available. All of Gothic's reserves are located onshore in the states of Oklahoma, Texas, New
Mexico, Arkansas and Kansas.
1998 1999 2000
($ in thousands)
Oil and gas sales $ 50,714 $ 52,967 $ 83,065
Production expenses (8,608) (5,725) (5,234)
Production taxes (3,521) (3,880) (6,566)
Impairment of oil and gas properties (76,000) -
Depletion and depreciation (24,001) (20,969) (22,621)
Results of operations from oil and gas producing activities $(61,416) $ 22,393 $ 48,644
1998 1999 2000
($ in thousands)
Proved property acquisition $225,103 $ 1,499 $655
Unproved property acquisition 2,109 2,611 718
Development costs 16,270 18,445 18,535
Total costs incurred $243,482 $22,555 $19,908