Chesapeake Energy 2000 Annual Report Download - page 89

CHESAPEAKE ENERGY CORPORATION
PRO FORMA COMBINED FINANCIAL STATEMENTS
Summary
Chesapeake Energy Corporation completed the acquisition of Gothic Energy Corporation on January 16, 2001,
by merging a wholly-owned subsidiary of Chesapeake into Gothic. We issued a total of 4.0 million shares of our
common stock in the merger. Gothic shareholders (other than Chesapeake) received 0.1908 of a share of
Chesapeake common stock for each share of Gothic common stock. In addition, outstanding warrants and options to
purchase Gothic common stock were converted to the right to purchase Chesapeake common stock (1.1 million
shares as of March 15, 2001 at an average price of $12.28 per share) based on the merger exchange ratio. Prior to
the merger, Chesapeake purchased substantially all of Gothic's 14.125% senior secured discount notes for total
consideration valued at $80.8 million in cash and Chesapeake common stock. We also purchased prior to the merger
$31.6 million principal amount of 11.125% senior secured notes due 2005 issued by Gothic's operating subsidiary
and guaranteed by Gothic. The consideration for these purchases consisted of cash and Chesapeake common stock
valued at a total of $34.8 million. In February 2001, we purchased an additional $1.0 million principal amount of
Gothic Production senior secured notes tendered pursuant to a change-of-control offer to purchase for 10 1%. There
remain outstanding $202.3 million principal amount of the Gothic Production 11.125% senior secured notes. The
notes are collateralized by Gothic's oil and gas properties. Chesapeake has not assumed any payment obligations
with respect to the notes. Gothic's preferred stock, all of which was owned by Chesapeake prior to the merger,
remains outstanding. As part of the merger, the terms of the Gothic preferred stock were amended to eliminate
cumulative dividends and conversion rights. The parties executed a definitive merger agreement on September 8,
2000, as amended on October 1, 2000, and Gothic's shareholders approved the merger at a special meeting on
December 12, 2000.
The following unaudited pro forma combined financial statements are derived from the historical financial
statements of Chesapeake Energy Corporation and Gothic Energy Corporation. The pro forma combined
statements of operations for the year ended December 31, 2000 reflect the Gothic acquisition, accounted for as a
purchase, as if the acquisition occurred on January 1, 2000. The pro forma combined balance sheet at December 31,
2000 reflects the consummation of the Gothic acquisition as if it occurred on December 31, 2000. The unauditedpro
forma combined financial data should be read in conjunction with the notes thereto and the historical financial
statements of Chesapeake and Gothic, including the notes thereto.
The unaudited pro forma combined financial statements do not purport to be indicative of the results of
operations that would actually have occurred if the transaction described had occurred as presented in such
statements or that may occur in the future. In addition, future results may vary significantly from the results
reflected in such statements due to general economic conditions, oil and gas commodity prices, Chesapeake's ability
to successfully integrate the operations of Gothic with its current business and several other factors, many of which
are beyond Chesapeake's control.
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