Chesapeake Energy 2000 Annual Report Download - page 47

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Subsequent to December 31, 2000, we entered into the following natural gas cap-swaps designed to hedge
a portion of our domestic gas production for periods after December 2000. This transaction requires that we
pay the counterparty if the NYMEX price exceeds an average NYMEX-defined strike price. If the NYMEX
price is less than the strike price, the counterparty pays us. However, the counterparty's payment is capped.
In addition to commodity hedging transactions related to our oil and gas production, our marketing
subsidiary, CEMI, periodically enters into various hedging transactions designed to hedge against physical
purchase and sale commitments it makes. Gains or losses on these transactions are recorded as adjustments to
oil and gas marketing sales in the consolidated statements of operations and are not considered material by
management.
Interest Rate Risk
Chesapeake also utilizes hedging strategies to manage fixed-interest rate exposure. Through the use of a
swap arrangement, we reduced our interest expense by $2.6 million from May 1998 through December 2000.
-36-
Volume
NYMEX
Index
Strike Price
Capped
Low
Strike Price
Months (mmbtu) (per mmbtu) (per mmbtu)
May 2001 1,860,000 5.77 4.60
June 2001 1,800,000 5.81 4.64
July 2001 1,860,000 5.85 4.68
August 2001 1,860,000 5.87 4.70
September 2001 1,800,000 5.83 4.66
October 2001 1,860,000 5.83 4.66
November 2001 2,400,000 6.00 4.78
December 2001 2,480,000 6.10 4.88
January 2002 2,790,000 6.03 4.83
February 2002 2,520,000 5.82 4.62
March 2002 2,790,000 5.48 4.28
April 2002 5,700,000 4.85 3.85
May 2002 5,890,000 4.81 3.81
June 2002 5,700,000 4.80 3.80
July 2002 5,890,000 4.81 3.81
August 2002 5,890,000 4.81 3.81
September 2002 5,700,000 4.81 3.81
October 2002 5,890,000 4.80 3.80
November 2002 2,100,000 4.97 3.97
December 2002 2,170,000 5.06 4.06
Volume
NYMEX
Defined
High
Strike Price
NYMEX
Defined
Low
Strike Price
Months (mmbtu) (per mmbtu) (per mmbtu)
June 2001 600,000 $6.80 $5.00
July 2001 620,000 6.80 5.00
August 2001 620,000 6.80 5.00
September 2001 600,000 6.80 5.00
Januaiy 2002 620,000 5.75 4.00
February 2002 560,000 5.75 4.00
March 2002 620,000 5.75 4.00
April 2002 1,200,000 5.38 4.00
May 2002 1,240,000 5.38 4.00
June 2002 1,200,000 5.38 4.00
July 2002 1,240,000 5.38 4.00
August 2002 1,240,000 5.38 4.00
September 2002 1,200,000 5.38 4.00
October 2002 1,240,000 5.38 4.00
November 2002 600,000 5.75 4.00
December 2002 620,000 5.75 4.00