Chesapeake Energy 1996 Annual Report Download - page 63

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(b) The imputed income tax provision is hypotheti-
cal and determined without regard to the company's de-
duction for general and administrative expenses, interest
costs and other income tax credits and deductions.
Oil and Gas Reserve Quantities
(unaudited)
The reserve information presented below is based upon
reports prepared by the independent petroleum engineer-
ing firm of Williamson Petroleum Consultants, Inc.
("Williamson") as of June 30, 1996, 1995 and 1994 and
the company's petroleum engineers as of June 30, 1996
and 1995. The reserves evaluated internally by the com-
pany constituted approximately 0.6% and 0.5% of total
proved reserves as of June 30, 1996 and 1995, respec-
tively. The information is presented in accordance with
regulations prescribed by the Securities and Exchange
Commission. The company emphasizes that reserve esti-
mates are inherently imprecise. The company's reserve
CHESAPEAKE ENOICORPORATION
estimates were generally based upon extrapolation of his-
torical production trends, analogy to similar properties
and volumetric calculations. Accordingly, these estimates
are expected to change, and such changes could be mate-
rial, as future information becomes available.
Proved oil and gas reserves represent the estimated
quantities of crude oil, natural gas, and natural gas liq-
uids which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and op-
erating conditions. Proved developed oil and gas reserves
are those expected to be recovered through existing wells
with existing equipment and operating methods.
Presented below is a summary of changes in estimated
reserves of the company based upon the reports prepared
by Williamson for 1996, 1995 and 1994, along with those
prepared by the company's petroleum engineers for 1996
and 1995:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996 1995 1994
Oil
(MBbI)
Gas
(MMCI)
Oil
(MBbI)
Gas
(MMCI)
Oil
(MBbI)
Gas
(MMCI)
Proved reserves, beginning of year 5,116 211,808 4,154 117,066 9,622 79,763
Extensions, discoveries and other additions 8,924 173,577 2,345 129,444 2,335 82,965
Revisions of previous estimate (812) (2,538) (244) (9,588) (868) (5,523)
Production (1,413) (51,710) (1,139) (25,114) (537) (6,927)
Sale of reserves-in-place ---(6,398) (33,212)
Purchase of reserves-in-place 443 20,087 ---
Proved reserves, end of year 12,258 351,224 5,116 211,808 4,154 117,066
Proved developed reserves, end of year 3,648 144,721 1,973 77,764 1,313 30,445