Chesapeake Energy 2000 Annual Report Download - page 23

and other environmental hazards and risks. Our drilling operations involve risks from high pressures and from
mechanical difficulties such as stuck pipes, collapsed casings and separated cables. If any of these risks occurs,
we could sustain substantial losses as a result of:
injury or loss of life,
severe damage to or destruction of property, natural resources and equipment,
pollution or other environmental damage,
clean-up responsibilities,
regulatory investigations and penalties, and
suspension of operations.
Our liability for environmental hazards includes those created either by the previous owners of properties
that we purchase or lease or by acquired companies prior to the date we acquire them. In accordance with
industry practice, we maintain insurance against some, but not all, of the risks described above. We cannot
assure you that our insurance will be adequate to cover casualty losses or liabilities. Also, we cannot predict
the continued availability of insurance at premium levels that justify its purchase.
Exploration and development drilling may not result in commercially productive reserves.
We do not always encounter commercially productive reservoirs through our drilling operations. We
cannot assure you that the new wells we drill or participate in will be productive or that we will recover all or
any portion of our investment in wells drilled. The seismic data and other technologies we use do not allow us
to know conclusively prior to drilling a well that oil or gas is present or may be produced economically. The
cost of drilling, completing and operating a well is often uncertain, and cost factors can adversely affect the
economics of a project. Our efforts will be unprofitable if we drill dry wells or wells that are productive but do
not produce enough reserves to return a profit after drilling, operating and other costs. Further, our drilling
operations may be curtailed, delayed or canceled as a result of a variety of factors, including:
unexpected drilling conditions,
title problems,
pressure or irregularities in formations,
equipment failures or accidents,
adverse weather conditions,
compliance with environmental and other governmental requirements, and
cost of, or shortages or delays in the availability of, drilling rigs and equipment.
Canadian operations present the risks associated with conducting business outside the United States.
Our operations in Canada are subject to the risks associated with operating outside of the U.S. These
risks include the following:
adverse local political or economic developments,
exchange controls,
currency fluctuations,
royalty and tax increases,
retroactive tax claims,
negotiations of contracts with governmental entities, and
import and export regulations.
In addition, in the event of a dispute, we may be required to litigate the dispute in Canadian courts since
we may not be able to sue foreign persons in a U.S. court.
The loss of key personnel could adversely affect our ability to operate.
We depend, and will continue to depend in the foreseeable future, on the services of our officers and key
employees with extensive experience and expertise in evaluating and analyzing producing oil and gas
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