Chesapeake Energy 1999 Annual Report Download - page 21

it operates. The Company also has disposed of wastes in facilities other than those owned by the Company which
are commercial Class II injection wells.
Toxic Substances Control Act. The Toxic Substances Control Act ("TSCA") was enacted to control the adverse
effects of newly manufactured and existing chemical substances. Under the TSCA, the EPA has issued specific rules
and regulations governing the use, labeling, maintenance, removal from service and disposal of PCB items, such as
transformers and capacitors used by oil and gas companies. The Company may own such PCB items but does not
believe compliance with TSCA has or will have a material adverse effect on the Company's operations or financial
condition.
Titie to Properties
Title to properties is subject to royalty, overriding royalty, carried, net profits, working and other similar interests
and contractual arrangements customary in the oil and gas industry, to liens for current taxes not yet due and to other
encumbrances. As is customary in the industry in the case of undeveloped properties, only cursory investigation of
record title is made at the time of acquisition. Drilling title opinions are usually prepared before commencement of
drilling operations. From time to time, the Company's title to oil and gas properties is challenged through legal
proceedings. The Company is routinely involved in litigation involving title to certain of its oil and gas properties,
some of which management believes could be adverse to the Company, individually or in the aggregate. See Item 3
Legal Proceedings.
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 drilling activities involve greater risk of mechanical problems than vertical and
shallow 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 $75 million umbrella policy. The Company and its subsidiaries carry
workers' compensation insurance in all states in which they operate and a $75 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 424 full-time employees as of December 31, 1999. No employees are represented by
organized labor unions. The Company considers its employee relations to be good.
Facilities
The Company owns an office building complex in Oklahoma City totaling approximately 86,500 square feet and
nine acres of land that comprise its headquarters' offices. The Company also owns field offices in Lindsay and
Waynoka, Oklahoma and Garden City, Kansas. The Company leases office space in Oklahoma City and
Weatherford, Oklahoma; Fritch and Navasota, Texas; and in Dickinson, North Dakota. The Company also has
leased office space in College Station, Texas; Wichita, Kansas; and Calgary, Alberta, Canada, which have been sub-
leased.
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