Chesapeake Energy 1996 Annual Report Download - page 6

Download and view the complete annual report

Please find page 6 of the 1996 Chesapeake Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 69

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69

Qutcompany has led the sec-
tor in totil shareholder return
for the past two years 544%
n fiscal 995 and 431% in fiscal
1996. We believe this success is at-
tributable to our focused and clearly
articulated strategy and to our expe-
rienced and highly motivated iiian-
agement team, supported by techni-
cal teams second to none.
Since Chesapeake's inception in
1989, our business strategy has been
"growth through the drill hit." Using
this strategy, the company has rap-
idly expanded its reserves and produc-
tion through the acquisition and de-
velopment of large blocks of unde-
veloped acreage overlying deep, tin-
derdeveloped geological reservoirs
such as fractured carbonates. We are
attracted to these reservoirs because
they offer low geological risk, large
reserve potential, and the opportu-
nity to earn attractive economic re-
CHESAPEAKE ENERGY CORPORATION
CHESAPEAKE CONTINUES to
lead the independent oil and
CHESAPEAKE'S CONTINUED PROGRESS
natural gas industry in creating
shareholder value.
turns through the application ofad-
vanced drilling and completion tech-
niques.
Our successful implementation of
this strategy has enabled Chesapeake
to become one of the premier inde-
pendent energy producers. As the
corn panv has matured, we have de-
veloped the following five competi-
tive advantages that we believe are the
keys to continued growth:
Growth through the drillbir
business strategy;
Five-year inventory offuture
drilling opportunities created
by establishing dominant
leasehold positions;
Technological leadership result-
ing in new oil and gas discover-
ies and a lower cost structure;
Superior profit margins that
generate high levels of cash
flow per unit of production to
reinvest in growing our
LETTER TO SHAREHOLDERS
company; and
Close alignment of shareholder
and management interests
resulting from management's
40% ownership stake.
Before explaining why we believe
these competitive advantages can
continue to generate attractive re-
turns to our shareholders, we will
highlight our results for fiscal 1996.
During the year, Chesapeake:
Increased oil and natural gas
production 88% to 60 Bcfe;
Increased total revenues 122%
to $149.4 million;
Increased earnings 100% to
$23.4 million and earnings per
share 91% to $0.80;
Increased operating cash flow
100% to $90.3 million;
Increased proved reserves 76%
to 425 Bcfe and increased
SEC-PV1O value 193% to
$547 million.