Chesapeake Energy 1998 Annual Report Download - page 88

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Production costs include lease operating expenses and production taxes.
The imputed income tax provision is hypothetical (at the statutory rate) and determined without regard to the Company's deduction for
general and administrative expenses, interest costs and other income tax credits and deductions, nor whether the hypothetical tax benefits
will be realized.
Capitalized costs, less accumulated amortization and related deferred income taxes, cannot exceed an amount
equal to the sum of the present value (discounted at 10%) 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.
During 1998, capitalized costs of oil and gas properties exceeded the estimated present value of future net revenues
from the Company's proved reserves, net of related income tax considerations, resulting in a writedown in the
carrying value of oil and gas properties of $826 million. At December 31, 1997, capitalized costs of oil and gas
properties exceeded the estimated present value of future net revenues for the Company's proved reserves, net of
related income tax considerations, resulting in a writedown in the carrying value of oil and gas properties of $110
million. At June 30, 1997, capitalized costs of oil and gas properties also exceeded the estimated present value of
future net revenues for the Company's proved reserves, net of related income tax considerations, resulting in a
writedown in the carrying value of oil and gas properties of $236 million.
68
Year Ended December 31, 1998 U.S. Canada Combined
(S in thousands)
Oil and gas sales $248,909 S7,978 $ 256,887
Production costs (a) (57,663) (1,834) (59,497)
Impairment of oil and gas properties (810,610) (15,390) (826,000)
Depletion and depreciation (143,283) (3,361) (146,644)
Imputed income tax (provision) benefit (b) 285,981 5,673 291,654
Results of operations from oil and gas producing activities $(476,666) $(6,934) $ (483,600)
Six Months Ended December 31, 1997 U.S. Canada Combined
(S in thousands)
Oil and gas sales $95,657 $$95,657
Production costs (a) (10,094) (10,094)
Impairment of oil and gas properties (110,000) (110,000)
Depletion and depreciation (60,408) (60,408)
Imputed income tax (provision) benefit (b) 31,817 31,817
Results of operations from oil and gas producing activities $(53,028) $$(53,028)
Year Ended June 30, 1997 U.S. Canada Combined
($ in thousands)
Oil and gas sales $192,920 $$ 192,920
Production costs (a) (15,107) (15,107)
Impairment of oil and gas properties (236,000) (236,000)
Depletion and depreciation (103,264) (103,264)
Imputed income tax (provision) benefit (b) 60,544 60,544
Results of operations from oil and gas producing activities $(100,907) $$ (100,907)
Year Ended June 30, 1996 U.S. Canada Combined
(5 in thousands)
Oil and gas sales $110,849 $$ 110,849
Production costs (a) (8,303) (8,303)
Impairment of oil and gas properties -
Depletion and depreciation (50,899) (50,899)
Imputed income tax (provision) benefit (b) (18,335) (18,335)
Results of operations from oil and gas producing activities $33,312 $$33,312