Chesapeake Energy 2000 Annual Report Download - page 77

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As of December 31, 2000, we had the following open natural gas swap arrangements designed to hedge a
portion of our domestic gas production for periods after December 2000:
NYMEX-Index
Volume Strike Price
Months (mmbtu) (per mmbtu)
January 2001 4,960,000 $6.03
February 2001 5,320,000 6.12
March 2001 4,650,000 5.11
April 2001 5,100,000 4.79
May 2001 5,270,000 4.63
June 2001 3,900,000 4.61
July 2001 4,030,000 4.59
August 2001 4,030,000 4.58
September 2001 3,900,000 4.57
October 2001 620,000 4.80
If the swap arrangements listed above had been settled on December 31, 2000, we would have incurre.d a loss of
$80.1 million. Subsequent to December 31, 2000, we settled the natural gas swaps for January, February and March
2001. A loss of $18.6 million and $4.4 million and a gain of $0.1 million will be recognized as price adjustments in
January, February and March, respectively. If we had settled the remaining swaps (April through October) using
March 21, 2001 prices, we would have incurred a loss of $13.5 million.
On June 2, 2000, we entered into a natural gas basis protection swap transaction for 13,500,000 mmbtu for the
period of January 2001 through March 2001. This transaction requires that the counterparty pay us if the NYMEX
price exceeds the Houston Ship Channel Beaumont/Texas Index by more than $0.0675 for each of the related
months of production. If the NYMEX price less $00675 does not exceed the Houston Ship Channel Beaumont!
Texas Index for each month, we will pay the counterparty. Gains or losses on basis swap transactions are recognized
as price adjustments in the month of related production. Subsequent to December 31, 2000, we settled the natural
gas basis protection swaps for January, February and March 2001. A gain of $0.3 million, a loss of $0.1 million and a
loss of $0.5 million will be recognized as price adjustments in January, February and March, respectively.
As of December 31, 2000, we had open natural gas collar transactions designed to hedge 60,000 mmbtu per day
throughout 2001 at an average NYMEX-defined high strike price (cap) of $6.08 per mmbtu and an average
NYMEX-defined low strike price (floor) of $4.00 per mmbtu. If the collar transactions had been settled on
December 31, 2000, we would have incurred a loss of $18.5 million. Subsequent to December 31, 2000, we settled
the natural gas collar transactions for January, February and March 2001. A loss of $6.9 million and $1.4 million
will be recognized as price adjustments in January and February, respectively. The March 2001 contract was settled
for no gain or loss.
As of December 31, 2000, we had the following open crude oil swap arrangements designed to hedge a portion
of our domestic crude oil production for periods after December 2000:
NYMEX-Index
Volume Strike Price
Months (bbls) (per bbl)
January 2001 165,000 $29.97
February 2001 150,000 29.92
March 2001 165,000 29.84
April 2001 160,000 29.80
May 2001 165,000 29.75
June 2001 160,000 29.71
July 2001 165,000 29.68
August 2001 165,000 29.65
September 2001 160,000 29.62
October 2001 165,000 29.59
November 2001 160,000 29.56
December 2001 165,000 29.54
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