Chesapeake Energy 1997 Annual Report Download

Download and view the complete annual report

Please find the complete 1997 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 91

  • 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
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91

CHESAPEAKE ENERGY CORPORATION
ANNUAL REPORT FISCAL 1997
JULY 996 JUNE 30, 1997
DRILLING AHEAD

Table of contents

  • Page 1
    CHESAPEAKE ENERGY CORPORATION ANNUAL REPORT FISCAL 1997 JULY 996 JUNE 30, 1997 DRILLING AHEAD

  • Page 2
    ... oil and gas exploration company headquartered in Oklahoma City. The company utilizes advanced drilling and completion techniques to develop significant new oil and natural gas dis- coveries in major onshore producing areas of the United States. Chesapeake is traded on the New York Stock Exchange...

  • Page 3
    CHESAPEAKE ENERGY CORPORATION ANNUAL REPORT FISCAL 1997 S.. .5lb I 5S CHESAPEAKE ENEF CORP t S '**' .%* . 4S

  • Page 4
    Masters Creek will be the centerpiece of Chesapeake's refocused Louisiana Trend drilling program in fiscal 1998. LT P P0 R AT ON I-

  • Page 5
    ... of the fourth quarter of fiscal 1997, we determined that a significant portion of the company's Louisiana Trend lease- hold had become evaluated under the full cost accounting method, which in combination with significant related drilling costs, caused us to Oil and Gas Production Growth scores...

  • Page 6
    ... a large multi-state exploration company As many of you know, we made that transition and increased shareholder value significantly While our drilling activities outside of Masters Creek and letting our the oil and gas industry remains a high-risk business with many CHESAPEAKE ENERGY CORPORATION

  • Page 7
    .... We are determined to effectively execute our fiscal 1998 strategy and look forward to sharing better results with you as we drill ahead. // Aubrey K McClendon Chairman ofthe Board and ChiefExecutive Officer Tom L. Ward Presidt and Chief Operating Officer October 15, 1997 CH ESAPEAKE EN ER

  • Page 8
    ...Director Tom L. Ward has served as President and Chief Operating Officer and has been a director of the company since its inception. From 1982 to 1989, Mr. Ward was an independent producer of oil and gas in affiliation with Mr. Aubrey K. McClendon. Mr. Ward Aubrey K. McClendon Chairman of the Board...

  • Page 9
    ..., Inc., Attorneys at the Board of Trustees of Springfield College, Sprinfield, Massachusetts, and is a director of Earth Satellite Corporation, Rockville, Maryland, and Amerac Energy Corporation, Houston, Texas. Mr. Wilson graduated from Dartmouth College in 1958. CHESAPEAKE ENERGY CORPORATION

  • Page 10
    ... is a Certified Public Accountant and graduated from Wichita State University in 1975. Ronald A. Lefaive Controller and Chief Accounting Officer Steven C. Dixon Sr. Vice President - Operations Ron Lefaive has served as Controller and Chief Accounting Officer since CHESAPEAKE ENERGY CORPORATION

  • Page 11
    ... Graduate School of International Management: in 1992. Resources Manager since 1996. From 1994 to 1995, she served in various accounting positions with the Company including Assistant Controller Operations. From 1989 to 1993, Ms. Burger was employed by Hadson Corporation as Assistant Treasurer and...

  • Page 12
    ... dedicated¼o our traditional strategy of growth through the drillbit, in fiscal 1998 we will also increase our reserves and production through selected acquisitions of under- developed properties and undercapitalized companies, principally in the Mid-Continent. CHESAPEAKE ENERGY CORPORATION

  • Page 13
    ... Tax Accountant Supervisor George Denny Landman Tim Denny Administrative Services Linda Gardner Executive Assistant Eduardo A]varez-Salazar Roustabout Steve Cody Geology Technician Steve Gaskins Land Technician Pumper Heather Anderson Lease Analyst Janice Brown Lease Technician Kimberly...

  • Page 14
    ... Order Supervisor Mike Johnston Pumper David Jones Aubrey McClendon Chairman of the Board and Chief Executive Officer Ron Lefaive Larry Holladay Drilling Superintendent Controller and Chief Accounting Officer Gerda Oliver Cashier Auditor Analyst Scotty LePretre Production Facility Operator...

  • Page 15
    ... Drilling Engineer Durell Willoughby IT System Tom Price, Jr. Vice President- Davina Spillers Accounting Assistant Sr. Division Order Analyst Danny Rutledge Production Foreman Bryan Sagebiel IT Supervisor Administrator Corporate Krysta Starkey Treasury Analyst Charles Waldroup Pumper...

  • Page 16

  • Page 17
    ... incorporation or organization) 6100 North Western Avenue Oklahoma City, Oklahoma (Address of principal executive offices) 73-1395733 (I.R.S. Employer Identification No.) 73118 (Zip Code) (405) 848-8000 Registrant's telephone number, including area code Securities registered pursuant to Section...

  • Page 18
    ... Field in southern Oklahoma, the Louisiana Trend, the Arkoma Basin in southeastern Oklahoma, the Lovington area in eastern New Mexico, and the Williston Basin in eastern Montana and western North Dakota. In fiscal 1997, the Company also added a large exploration project in Wharton County, Texas...

  • Page 19
    ...'s proved undeveloped reserves at June 30, 1997: Estimated Capital Expenditures Required to Percent of Areas (MBbI) Oil Gas (MMcf) Gas Equivalent Proved Reserves PUD's ($ in 000's) Develop Number of Net Proved Undeveloped Locations 16 Louisiana Trend Oklahoma Giddings Williston Basin Other...

  • Page 20
    ...1998. Other Operating Areas Williston Basin. During fiscal 1996, Chesapeake began acquiring leasehold in the Williston Basin, located in eastern Montana and western North Dakota, and as of June 30, 1997 owned more than 700,000 gross (500,000 net) acres. During fiscal 1997, the Company drilled and...

  • Page 21
    ...invested in a number of oil and gas related businesses and projects. The most significant of these was the Company's May 1997 initial investment in Bayard Drilling Technologies, Inc. ("Bayard"), consisting of an $18 million subordinated loan and the purchase of $7 million of common stock. In August...

  • Page 22
    ... sets forth certain information regarding the production volumes, revenue, average prices received and average production costs associated with the Company's sale of oil and gas for the periods indicated: Year Ended June 30, 1997 1996 1995 Net production: Oil (MBb1) Gas (MMcf) Gas equivalent (MMcfe...

  • Page 23
    ...fiscal 1997, the following three customers individually accounted for 10% or more of the Company's total oil and gas sales: ($ in thousands) Amount Percent of Oil and Gas Sales Aquila Southwest Pipeline Corporation Koch Oil Company GPM Gas Corporation 53,885 29,580 27,682 28% 15% 14% Management...

  • Page 24
    ...gas marketing services including commodity price structuring, contract administration and nomination services for the Company, its partners and other oil and natural gas producers in the geographical areas in which the Company is active. Hedging Activities Periodically the Company utilizes hedging...

  • Page 25
    ...to Oil and Gas Marketing Sales in the consolidated statements of operations and are not considered by management to be material. Competition The oil and gas industry is highly competitive. The Company competes with major and independent oil and gas companies for the acquisition of leasehold, proven...

  • Page 26
    ..., drilling, operating and in some instances, abandoning wells. In most instances, the regulatory requirements relate to the handling and disposal of drilling and production waste products and waste created by water and air pollution control procedures. Although the Company believes that compliance...

  • Page 27
    .... The Company provides safety training and personal protective equipment to its employees. OPA and Clean Water Act. Federal regulations require certain owners or operators of facilities that store or otherwise handle oil, such as the Company, to prepare and implement spill prevention control plans...

  • Page 28
    ... Oklahoma. The Company leases field office space in College Station and Navasota, Texas, Lafayette, Louisiana and Calgary, Canada. Reincorporation On December 31, 1996, the Company changed its state of incorporation from Delaware to Oklahoma by the merger of Chesapeake Energy Corporation, a Delaware...

  • Page 29
    ... generated from the production of proved reserves, net of estimated production and future development costs, using prices and costs in effect at the determination date, without giving effect to non-property related expenses such as general and administrative expenses, debt service and future income...

  • Page 30
    ...Acreage. Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and gas regardless of whether such acreage contains proved reserves. Working Interest. The operating interest which gives the owner the right to drill...

  • Page 31
    ...attorney-in-fact for Ghana Wolowitz v. Chesapeake Energy Corporation, Aubrey K. McClendon, Thomas L. Ward, Marcus C. Rowland, Shannon T. Self Walter C. Wilson, Henry J. Hood, Steven C. Dixon, and J. Mark Lester, filed in the U.S. District Court for the Western District of Oklahoma on August 21, 1997...

  • Page 32
    ... the Southern District of Texas, Houston Division, on September 17, 1997. Jamie Gottleib, et al. v. Chesapeake Energy Corporation, Aubrey K. McClendon, Thomas L. Ward, Marcus C. Rowland, Shannon T. Self Walter C. Wilson, Henry J. Hood, Steven C. Dixon, and J. Mark Lester, filed in the U.S. District...

  • Page 33
    ... record of Common Stock and approximately 18,000 beneficial owners. Dividends The Company initiated a quarterly dividend with the payment of $0.02 per common share on July 15, 1997. The payment of future cash dividends, if any, will be reviewed periodically by the Board of Directors and will depend...

  • Page 34
    ... August 1997, the Company's Board of Directors authorized the Company to expend up to $50 million in connection with purchases of the Company's outstanding common stock from time to time through open market transactions, block or privately negotiated purchases, or otherwise. To date, the Company has...

  • Page 35
    ... the Company declared a dividend of $0.02 per common share which was paid on July 15, 1997. Year Ended June 30, 1997 1996 1995 1994 1993 ($ in thousands, except per share data) Statement of Operations Data: Revenues: Oil and gas sales Oil and gas marketing sales Oil and gas service operations...

  • Page 36
    ... Condition and Results of Operations Overview Chesapeake's revenue, operating cash flow (exclusive of changes in working capital) and production reached record levels in fiscal 1997. However, significant expenditures for acreage acquisition and drilling costs followed by unfavorable exploration...

  • Page 37
    ..., the Company issued $300 million in Senior Notes in March 1997. The Company used the net proceeds from these offerings, along with cash flow from operations, to fund its net capital expenditures of $524 million, repay all amounts outstanding under its commercial bank credit facilities, and...

  • Page 38
    ...in fiscal 1997, 1996 and 1995, respectively. Oil and Gas Marketing Sales. In December 1995, the Company entered into the oil and gas marketing business by establishing a subsidiary to provide primarily natural gas marketing services including commodity price structuring, contract administration and...

  • Page 39
    ...capital expenditures to develop proved undeveloped reserves are depleted and charged to operations using the unit-ofproduction method based on the ratio of current production to proved oil and gas reserves as estimated by the Company's independent engineering consultants and Company engineers. Costs...

  • Page 40
    ... on June 27, 1997, issued a press release which included this estimate. Subsequently, based on the Company's final year-end estimates of its proved reserves and related estimated future net revenues, which took into account additional drilling and production results, management determined that as...

  • Page 41
    ... 1998 based on information available at this time. Hedging. Periodically the Company utilizes hedging strategies to hedge the price of a portion of its future oil and gas production. These strategies include (1) swap arrangements that establish an index-related price above which the Company pays the...

  • Page 42
    ... Oil and Gas Marketing Sales in the consolidated statements of operations and are not considered by management to be material. Liquidity and Capital Resources Cash Flows from Operating Activities. Cash provided by operating activities (inclusive of changes in components of working capital) decreased...

  • Page 43
    ... the Company's cost basis of $16.8 million as of June 30, 1997. The Company currently maintains no commercial bank credit facilities because of its substantial working capital position, anticipated proceeds from the sale of the investments described above, and expected cash flows from operations as...

  • Page 44
    ... environmental risks, drilling and operating risks, risks related to exploration and development drilling, the uncertainty inherent in estimating future oil and gas production or reserves, competition, government regulation, and the ability of the Company to implement its business strategy. ITEM 7A...

  • Page 45
    ... Years Ended June 30, 1997 and 1996 Report of Independent Accountants for the Year Ended June 30, 1995 Consolidated Balance Sheets June 30, 1997 and 1996 Consolidated Statements of Operations for the Years Ended June 30, 1997, 1996 and 1995 Consolidated Statements of Cash Flows for the Years Ended...

  • Page 46
    ...of Chesapeake Energy Corporation and its subsidiaries as of June 30, 1997 and 1996, and the consolidated results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Oklahoma City, Oklahoma September...

  • Page 47
    REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Chesapeake Energy Corporation In our opinion, the consolidated statements of operations, of cash flows and of stockholders' equity for the year ended June 30, 1995 present fairly, in all material respects, the results of...

  • Page 48
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS June 30, 1997 1996 (S in thousands) CURRENT ASSETS: Cash and cash equivalents Short-term investments Accounts receivable: Oil and gas sales Oil and gas marketing sales Joint interest and other, net of allowances of...

  • Page 49
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended June 30, 1997 1996 1995 ($ in thousands, except per share data) REVENUES: Oil and gas sales Oil and gas marketing sales Oil and gas service operations Interest and other Total Revenues COSTS AND ...

  • Page 50
    ... oil field service company Investment in gas marketing company, net of cash acquired Other investments Other property and equipment additions Cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of Common Stock Proceeds from long-term borrowings Payments on...

  • Page 51
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: The Company has a financing arrangement with a vendor to supply certain oil and gas equipment inventory. The total amounts owed ...

  • Page 52
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Year Ended June 30, 1997 1996 1995 ($ in thousands) COMMON STOCK: Balance, beginning of period Issuance of 8,972,000 shares of Common Stock Issuance of 5,989,500 shares of Common Stock Exercise of stock ...

  • Page 53
    ... production of crude oil and natural gas from underground reservoirs. The Company's properties are located primarily in Texas, Louisiana, Oklahoma, Montana, North Dakota and New Mexico. Principles of Consolidation The accompanying consolidated financial statements of Chesapeake Energy Corporation...

  • Page 54
    ... related to production, general corporate overhead or similar activities (see Note 11). Capitalized costs are amortized on a composite unit-of-production method based on proved oil and gas reserves. The Company's oil and gas reserves are estimated annually by independent petroleum engineers as well...

  • Page 55
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) the contractual services provided. The Company's economic interest in its oil and gas properties is not affected by the performance of these contractual services and all intercompany profits have...

  • Page 56
    ... Accounting Standards Board issued Statement No. 123 ("SFAS 123"), "Accounting for Stock Based Compensation". As permitted by SFAS 123, the Company has continued its previous method of accounting for stock compensation and has adopted the disclosure requirements of this Statement in fiscal 1997...

  • Page 57
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) leaseback transactions; lines of business; dividend and other payment restrictions affecting Guarantor Subsidiaries; mergers or consolidations; and transactions with affiliates. The Company is ...

  • Page 58
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING BALANCE SHEET As of June 30, 1997 ($ in thousands) ASSETS Guarantor Subsidiaries NonGuarantor Subsidiaries Company (Parent) Eliminations Consolidated CURRENT ASSETS: ...

  • Page 59
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) CONDENSED CONSOLIDATING BALANCE SHEET As Of June 30, 1996 ($ in thousands) ASSETS Guarantor Subsidiaries NonGuarantor Subsidiaries Company (Parent) Eliminations $ Consolidated CURRENT ASSETS:...

  • Page 60
    ... 33,744 2,566 73 149,422 8,303 COSTS AND EXPENSES: Production expenses and taxes Gas marketing expenses Oil and gas service operations Oil and gas depreciation, depletion and amortization Other depreciation and amortization General and administrative Interest and other Income (loss) before income...

  • Page 61
    ... Non-Guarantor Subsidiaries Company (Parent) Eliminations $ Consolidated $ For the Year Ended June 30, 1997: CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Oil and gas properties Proceeds from sale of assets Investment in service operations Long-term loans...

  • Page 62
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 3. Notes Payable and Long-Term Debt Notes payable and long-term debt consist of the following: June 30, 1997 1996 in thousands) $150,000 7.875% Senior Notes (see Note 2) (115) Discount on 7.875...

  • Page 63
    ... or results of operations of the Company. The Company has employment contracts with its two principal shareholders and its chief financial officer and various other senior management personnel which provide for annual base salaries, bonus compensation and various benefits. The contracts provide...

  • Page 64
    ...be realized. In the fourth quarter of fiscal 1997, the Company recorded a $236 million write-down related to the impairment of oil and gas properties. This writedown and significant tax net operating loss carryforwards (caused primarily by expensing intangible drilling costs for tax purposes) result...

  • Page 65
    ...for legal services provided by the law firm of which a director is a member. Employee Benefit Plans The Company maintains the Chesapeake Energy Corporation Savings and Incentive Stock Bonus Plan, a 401(k) profit sharing plan. Eligible employees may make voluntary contributions to the plan which are...

  • Page 66
    ... Committee of the Board of Directors. No options may be granted under the 1994 Plan after December 16, 2004 or under the 1996 Plan after October 14, 2006. The Company has elected to follow APB No. 25, Accounting for Stock Issued to Employees and related Interpretations in accounting for its employee...

  • Page 67
    ..., in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The Company's pro forma information follows: Year Ended June 30, 1997 1996 (In thousands, except per share amounts) Net Income (Loss) As reported Pro...

  • Page 68
    ...,824 $ 3.29 The exercise of certain stock options results in state and federal income tax benefits to the Company related to the difference between the market price of the Common Stock at the date of disposition (or sale) and the option price. During fiscal 1997, 1996 and 1995, $4,808,000, $7,950...

  • Page 69
    ...crude oil and natural gas hedging transactions are recognized as price adjustments in the month of related production. The Company estimates that had all of the crude oil and natural gas swap agreements in effect for production periods beginning July 1, 1997 terminated on June 30, 1997, based on the...

  • Page 70
    ... market rates. 11. Disclosures About Oil And Gas Producing Activities Net Capitalized Costs Evaluated and unevaluated capitalized costs related to the Company's oil and gas producing activities are summarized as follows: June 30, 1997 1996 ($ in thousands) Oil and gas properties: Proved...

  • Page 71
    CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Costs Incurred in Oil and Gas Acquisition, Exploration and Development Costs incurred in oil and gas property acquisition, exploration and development activities which have been capitalized are ...

  • Page 72
    ... wells with existing equipment and operating methods. All of the Company's oil and gas reserves are located in the United States. Presented below is a summary of changes in estimated reserves of the Company based upon the reports prepared by Williamson and the Company's petroleum engineers for 1997...

  • Page 73
    ... summary sets forth the Company's future net cash flows relating to proved oil and gas reserves based on the standardized measure prescribed in SFAS 69: June 30, 1997 1996 1995 ($ in thousands) Future cash inflows Future production costs Future development costs Future income tax provision...

  • Page 74
    ... future net cash flows are as follows: June 30, 1997 1996 1995 (S in thousands) Standardized measure, beginning of year Sales of oil and gas produced, net of production costs Net changes in prices and production costs Extensions and discoveries, net of production and development costs Changes in...

  • Page 75
    ... of estimated future net revenues less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. At June 30, 1997, capitalized costs of oil and gas properties exceeded the estimated present value of future net revenues for the...

  • Page 76
    ... Satellite Corporation of Rockville, Maryland and Amerac Energy Corporation of Houston, Texas. Mr. Wilson graduated in 1958 from Dartmouth College. Directors Whose Terms Expire in 1998 Tom L. Ward, age 38, has served as President, Chief Operating Officer, and a director of the Company since its...

  • Page 77
    ... with Tom L. Ward, the Company's President and Chief Operating Officer. Mr. McClendon is a member of the Board of Visitors of the Fuqua School of Business at Duke University, an Executive Committee member of the Texas Independent Producers and Royalty Owners Association, a director of the Oklahoma...

  • Page 78
    ... School of International Management in 1992. Dale W. Bossert, age 53, has served as Vice President Production since January 1997. Mr. Bossert was previously employed by Celsius Energy Company as Consulting General Manager - Canada in 1996 and by Union Pacific Resources Company of Fort Worth, Texas...

  • Page 79
    ... corporate/securities legal assistant with the law firm of Andrews Davis Legg Bixler Milsten & Price, Inc. in Oklahoma City. From 1973 to 1975, Ms. Dobbs was the Administrative Assistant to the President and General Counsel of Texas International Company, an oil and gas exploration and production...

  • Page 80
    Represents Company matching contributions to the Chesapeake Energy Corporation Savings and Incentive Stock Bonus Plan. Other annual compensation did not exceed the lesser of $50,000 or 10% of the executive officer's salary and bonus during the year. Stock Options Granted in Fiscal 1997 The ...

  • Page 81
    ...Agreements The Company has employment agreements with Messrs. McClendon and Ward, each of which provides, among other things, for an annual base salary of not less than $300,000 commencing July 1, 1997; bonuses at the discretion of the Board of Directors; eligibility for stock options; and benefits...

  • Page 82
    ... During fiscal 1997, the Compensation Committee was composed of Aubrey K. McClendon, Tom L. Ward, E.F. Heizer, Jr. and Frederick B. Whittemore. Mr. McClendon is Chairman of the Board and Chief Executive Officer of the Company. Mr. Ward is the Company's President and Chief Operating Officer. 65

  • Page 83
    ...1996 Plans with respect to executive officers or employee participants who are directors. Messrs. McClendon and Ward participate as working interest owners in the Company's oil and gas wells pursuant to the terms of their employment agreements with the Company. See "Employment Agreements." Accounts...

  • Page 84
    ... granted by the Company. Includes shares purchased on behalf of the executive officer in the Chesapeake Energy Corporation Savings and Incentive Stock Bonus Plan (Tom L. Ward, 3,522 shares; Aubrey K. McClendon, 1,643 shares; Steven C. Dixon, 937 shares; Marcus C. Rowland, 985 shares; J. Mark Lester...

  • Page 85
    ... drilled by the Company since their election as directors and have no present intention to acquire interests in any new wells of the Company. The table below presents information about drilling, completion, equipping and operating costs billed to the person named from July 1, 1996 to June 30, 1997...

  • Page 86
    ... statement on Form S-4 (No. 333-24995). 4.2 Indenture dated as of March 15, 1997 among the Registrant, as issuer, Chesapeake Operating, Inc., Chesapeake Gas Development Corporation and Chesapeake Exploration Limited Partnership, as Subsidiary Guarantors, and United States Trust Company of New York...

  • Page 87
    ... the Chesapeake Energy Corporation 1996 Stock Option Plan. Employment Agreement dated as of July 1, 1997 between Aubrey K. McClendon and Chesapeake Energy Corporation. Employment Agreement dated as of July 1, 1997 between Tom L. Ward and Chesapeake Energy Corporation. - Employment Agreement dated...

  • Page 88
    ... Company filed the following Current Reports on Form 8-K dated April 2, 1997 announcing the completion of its Brown #1-H in Washington County, Texas, April 24, 1997 reporting third quarter and first nine months fiscal 1997 results, and June 27, 1997 announcing refocused Louisiana drilling program...

  • Page 89
    ... thereunto duly authorized. CHESAPEAKE ENERGY CORPORATION Date October 13, 1997 By Is! AUBREY K. MCCLENDON Aubrey K. McClendon Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 90
    ... on July 15, 1997. The payment of future cash dividends, if any, will be reviewed periodically by the Board of Directors and will depend upon, among other things, the Company's Coopers & Lybrand L.L.P. 15 North Robinson, Suite 400 Oklahoma City, Oklahoma 73102 (405) 236-5800 Stock Transfer Agent...

  • Page 91
    CHESAPEAKE ENERGY CORPORATION 6100 North Western Avenue Oklahoma City, Oklahoma 73118