Chesapeake Energy 2000 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2000 Chesapeake Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 122

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
The following table sets forth certain information regarding the production volumes, oil arid gas sales,
average sales prices received and expenses for the periods indicated:
Results of Operations
Years Ended December 31, 1998, 1999 and 2000.
General. For the year ended December 31, 2000, Chesapeake had net income of $456 million, or $3.01
per diluted common share, on total revenues of $628 million. This compares to net income of $33 million, or
$0.16 per diluted common share, on total revenues of $355 million during the year ended December 31, 1999,
and a net loss of $934 million, or a loss of $9.97 per diluted common share, on total revenues of $378 million
during the year ended December 31, 1998. Net income in 2000 was significantly enhanced by the reversal of a
deferred tax valuation allowance in the amount of $265 million during the fourth quarter. The reversal related
to Chesapeake's ability to generate sufficient future taxable income to utilize net operating losses prior to their
expiration. The loss in 1998 was caused primarily by an $826 million oil and gas property writedown recorded
under the full-cost method of accounting and a $55 million writedown of other assets. See "Impairment of Oil
and Gas Properties" and "Impairment of Other Assets."
Oil and Gas Sales. During 2000, oil and gas sales increased to $470.2 million versus $280.4 million in
1999 and $256.9 million in 1998. In 2000, Chesapeake produced 134.2 bcfe at a weighted average price of
$3.50 per mcfe, compared to 133.5 bcfe produced in 1999 at a weighted average price of $2.10 per mcfe, and
130.3 bcfe produced in 1998 at a weighted average price of $1.97 per mcfe.
-27-
Years Ended December 31,
1998 1999 2000
Net Production:
Oil (mbbl) 5,976 4,147 3,068
Gas (mmcf) 94,421 108,610 115,771
Gas equivalent (mmcfe) 130,277 133,492 134,179
Oil and Gas Sales ($ in thousands):
Oil $ 75,877 $ 66,413 $ 80,953
Gas 181,010 214,032 389,217
Total oil and gas sales $256,887 $280,445 $470,170
Average Sales Price:
Oil ($ per bbl) $12.70 $16.01 $26.39
Gas ($ per mcf) $1.92 $1.97 $3.36
Gas equivalent ($ per mcfe) $1.97 $2.10 $3.50
Expenses (S per mcfe):
Production expenses and taxes $.45 $45 $.56
General and administrative $.15 $.10 $.10
Depreciation, depletion and amortization $1.13 $.71 $.75
Net Wells Drilled:
Horizontal wells 20 11 10
Vertical wells 116 109 167
Net Wells at End of Period 2,405 2,242 2,697