Chesapeake Energy 1998 Annual Report Download - page 33

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Operating Hazards and Insurance
The oil and gas business involves a variety of operating risks, including the risk of fire, explosions, blow-outs,
pipe failure, abnormally pressured formations and environmental hazards such as oil spills, gas leaks, ruptures or
discharges of toxic gases, the occurrence of any of which could result in substantial losses to the Company due to
injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or
other environmental damage, clean-up responsibilities, regulatory investigation and penalties and suspension of
operations. The Company's horizontal and Deep Tuscaloosa drilling activities involve greater risk of mechanical
problems than conventional vertical drilling operations.
The Company maintains a $50 million oil and gas lease operator policy that insures the Company against certain
sudden and accidental risks associated with drilling, completing and operating its wells. There can be no assurance
that this insurance will be adequate to cover any losses or exposure to liability. The Company also carries
comprehensive general liability policies and a $60 million umbrella policy. The Company and its subsidiaries carry
workers' compensation insurance in all states in which they operate and a $35 million employment practice liability
policy. While the Company believes these policies are customary in the industry, they do not provide complete
coverage against all operating risks.
Employees
The Company had 481 full-time employees as of December 31, 1998 and reduced this level to 453 as of March
15, 1999. No employees are represented by organized labor unions. The Company considers its employee relations
to be good.
Facilities
The Company owns 13 buildings totaling approximately 86,500 square feet and nine acres of land in an office
complex in Oklahoma City that comprise its headquarters' offices. The Company also owns field offices in Lindsay,
Waynoka and Weatherford, Oklahoma and leases office space in Garden City, Hays and Wichita, Kansas;
Oklahoma City, Oklahoma; Big Lake, College Station, Fntch and Navasota, Texas; Lafayette, Louisiana; and in
Calgary, Alberta, Canada. The offices in Garden City, Wichita, College Station and Lafayette have been or will be
closed in the near future and the space sub-leased or tenninated.
Glossary
The terms defined in this section are used throughout this Form 10-K.
Bcf Billion cubic feet.
Bcfe. Billion cubic feet of gas equivalent.
Bbl. One stock tank barrel, or 42 U.S. gallons liquid volume, used herein in reference to crude oil or other liquid
hydrocarbons.
Btu. British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water from
58.5 to 59.5 degrees Fahrenheit.
Commercial Well; Commercially Productive Well. An oil and gas well which produces oil andgas in sufficient
quantities such that proceeds from the sale of such production exceed production expenses and taxes.
Developed Acreage. The number of acres which are allocated or assignable to producing wells or wells capable
of production.
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