Chesapeake Energy 1996 Annual Report Download - page 13

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Chesapeake's fifth competitive
advantage is management and
directors' ownership of ap-
proximately 42% of Chesapeake's
equity, among the highest in the in-
dustry and of all NYSE-listed com-
panies. ihis large ownership stake has
fostered a culture ofentrepreneurship
in our company that we believe re-
stilts in more creative and productive
employees. Furthermore, it more
closely aligns the interests of manage-
ment and shareholders.
The daily decisions involved in
managing Chesapeake's active and
technically sophisticated drilling pro-
gram are made decisively and are
implemented by employees who have
direct lines of communication to
management and a significant stake
in the outcome of those decisions.
This flat organizational structure
combined with our motivated work
teams enables Chesapeake to seize
competitive opportunities more
quickly and to establish leasehold
dominance in its areas of operations.
CHESAPEAKE ENERGY CORPORATION
COMPETITIVE ADVANTAGE N°.
Management's large equity stake
Looking Forward
Chesapeake's growth
strategy has always been
based on three fundamen-
tal beliefs:
Greater financial
returns and more
shareholder value can
be created by drilling
new wells;
Large amounts of oil and
natural gas reserves remain in
fractured carbonate reservoirs;
and
Continuing advances in
technology will enable
Chesapeake to more profitably
extract its existing reserves
and to more easily develop
significant new reserves.
During the past seven years, we
have grown from five employees and
$50,000 in assets to an industry
leader with 275 employees and an en-
terprise value of almost $2 billion. 'Ve
believe Chesapeake is evolving into
one of the premier large capitaliza-
tion independent energy producers.
LETTER TO SHAREHOLDERS
Management and directors' 42% equity
stake in Chesapeake, one of the highest of
NYSE companies, creates an alignment of
management and shareholder interests.
To accelerate this evolution, we are
committed to increasing the finan-
cial strength of our company so that
we can more reliably replicate our
results over the long term. Our suc-
cess in fiscal 1996 provides the foun-
dation for our optimism that Chesa-
peake will continue to remain an in-
dustry leader in creating shareholder
value. /
Aubrey K. McClendon
Chairman and CEO
Tom L. Ward
President and COo
October 1, 1996