Chesapeake Energy 1995 Annual Report Download - page 29

million secured by oil and gas properties owned by
Chesapeake's wholly-owned subsidiary CGDC. This
facility provides for interest at the Union Bank reference
rate. The facility is not guaranteed by Chesapeake or any of
its other subsidiaries and is recourse only to the assets of
CGDC. CGDC used proceeds borrowed under this facility
to acquire producing oil and gas properties from
Chesapeake Exploration Limited Partnership.
CASH FLOW ANALYSIS Cash provided by operating activities
was $54.7 million in fiscal 1995, compared to cash
provided by operating activities of $19.4 million in fiscal
1994, and cash used in operating activities of $1.5 million
in 1993. The $35.3 million difference from fiscal 1995 to
1994 was primarily attributable to a $7.8 million increase in
net income and $22.6 million increase in non-cash charges
and to changes in current assets and liabilities from fiscal
1995 to 1994.
UTILIZATION OF CASH Significantly higher cash was used in
fiscal 1995 for development, exploration, and acquisition of
oil and gas properties compared to fiscal 1994 and 1993.
Chesapeake expended $106 million in fiscal 1995 (net of
proceeds from sale of leasehold, equipment and other
services), compared to $28 million in fiscal 1994, and $13
million in fiscal 1993. Net cash proceeds received by
Chesapeake for sales of leasehold, oil and gas equipment,
and other services increased to $15 million in fiscal 1995,
compared to $7.6 million in fiscal 1994, and $3.9 million
in fiscal 1993.
PROCEEDS FROM FINANCING Cash flows from financing
activities in fiscal 1995 reached $97 million, largely as the
result of the May 1995 $90 million issuance of 10.5%
Senior Notes, compared to $21.2 million in fiscal 1994 and
$20.8 million in fiscal 1993.
CAPITAL EXPENDITURES Chesapeake has established a capital
expenditure budget of $119 million to fund leasehold
acquisition and drilling and completion activities during
fiscal 1996. Of this total, the company expects to spend
$51 million to develop a portion of its proved undeveloped
reserves, $55 million for developing non-proved reserves,
and $13 million for acreage acquisition and other corporate
purposes.
Absent a significant increase in Chesapeake's drilling
schedule, the company's internally generated cash flow,
existing cash resources and bank credit facilities should be
sufficient to fund its operating activities, budgeted capital
expenditures, and debt service obligations in fiscal 1996.
The discretionary nature of nearly all of Chesapeake's
capital spending permits the company to make adjustments
to its budget based upon factors such as oil and gas pricing,
exploration and development drilling results, and the
continued availability of internally generated or external
capital resources.
PROVED RESERVES The following table sets forth
Chesapeake's proved reserves in its primary operating areas
(net of the interests of other working and royalty interest
owners and others entitled to share in production), estimated
capital expenditures and the number of potential drilling
locations required to develop the company's proved
undeveloped reserves at June 30, 1995:
OIL (MBBL) GAS (MMCF) GAS EQUIVALENT
(MMCFE) PERCENT OF
PROVED RESERVES
ESTIMATED CAPITAL
EXPENDITURES REQUIRED
TO DEVELOP )$ IN 000'S)
NUMBER OF PROVED
UNDEVELOPED
LOCATIONS
Navasota River 1,192 78,720 85,870 35.4% $16,026 34
Independence 61 24,537 24,901 10.3 6,115 8
Fayette 1,085 22,705 29,217 12.0 10,448 35
Other Giddings 1,244 7,743 15,209 6.3 7,050 9
Subtotal Giddings 3,582 133,705 155,197 64.0 39,639 86
Knox 315 40,699 42,590 17.6 21,877 32
Golden Trend 318 13,428 15,339 6.3 3,861 21
Arkoma jackfork 15,600 15,600 6.5 7,038 11
Other 901 8,377 13,779 5.6 4,128 10
Subtotal Non-Giddings 1,534 78,104 87,308 36.0 36,904 74
Total 5,116 211,809 242,505 100. 0% $76,543 160
CHESAPEAKE ENERGY CORPORATION 27