Chesapeake Energy 2000 Annual Report Download - page 32

No estimates of proved reserves comparable to those included herein have been included in reports to any
federal agency other than the Securities and Exchange Commission.
Chesapeake's ownership interest used in calculating proved reserves and the associated estimated future
net revenue was determined after giving effect to the assumed maximum participation by other parties to our
farmout and participation agreements. The prices used in calculating the estimated future net revenue
attributable to proved reserves do not reflect market prices for oil and gas production sold subsequent to
December 31, 2000. There can be no assurance that all of the estimated proved reserves will be produced and
sold at the assumed prices or that existing contracts will be honored or judicially enforced.
There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting
future rates of production and timing of development expenditures, including many factors beyond Chesa-
peake's control. The reserve data represents only estimates. Reserve engineering is a subjective process of
estimating underground accumulations of oil and gas that cannot be measured in an exact way, and the
accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological
interpretation and judgment. As a result, estimates made by different engineers often vary. In addition, results
of drilling, testing and production subsequent to the date of an estimate may justify revision of such estimates,
and such revisions may be material. Accordingly, reserve estimates are often different from the actual
quantities of oil and gas that are ultimately recovered. Furthermore, the estimated future net revenue from
proved reserves and the associated present value are based upon certain assumptions, including prices, future
production levels and cost, that may not prove correct. Predictions about prices and future production levels
are subject to great uncertainty, and the foregoing uncertainties are particularly true as to proved undeveloped
reserves, which are inherently less certain than proved developed reserves and which comprise a signfficant
portion of our proved reserves.
See Item 1 and note 11 of notes to consolidated financial statements included in Item 8 for a description
of drilling, production and other information regarding our oil and gas properties.
As a result of the January 2001 Gothic acquisition, Chesapeake acquired total proved reserves of
302 bcfe, comprised of 255 bcfe of proved developed reserves and 47 bcfe of proved undeveloped reserves. The
associated present value of future net revenues is $1.3 billion based on weighted average prices at
December 31, 2000 of $26.54 per barrel of oil and $10.19 per mcf of gas. The tables below set forth estimated
proved reserves, the associated estimated future net revenue and the present value as of December 31, 2000
for Chesapeake and Gothic combined.
Estimated Future
Net Revenue Proved Proved Total
as of December 31, 2000(a) Developed Undeveloped Proved
in thousands)
Estimated future net revenue $9,842,538 $3,473,241 $13,315,779
Present value of future net revenue $5,228,249 $2,084,282 $ 7,312,531
(a) Estimated future net revenue represents estimated future gross revenue to be generated from the production of proved reserves, net of
estimated production and future development costs, using prices and costs in effect at December 31, 2000. The amounts shown do
not give effect to non-property related expenses, such as general and administrative expenses, debt service and future income tax
expense or to depreciation, depletion and amortization. The prices used in the external and internal reports yield weighted average
prices of $26.42 per barrel of oil and $10.13 per mcf of gas.
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Proved developed 17,012 1,103,935 1,206,007
Proved undeveloped 8,553 399,005 450,321
Total proved 25,565 1,502,940 1,656,328
Estimated Proved Reserves Oil Gas Total
as of December 31, 2000 (mbbl) (mmcf) (mmcfe)