Chesapeake Energy 1999 Annual Report Download - page 68

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The table below presents principal cash flows and related weighted average interest rates by expected maturity
dates. The fair value of the long-term debt has been estimatedbased on quoted market prices.
Liabilities:
Long-term debt, including current
portion fixed rate $0.8
Average interest rate 9.1%
Long-term debt variable rate $
Average interest rate
Concentration of Credit Risk
2000 2001 2002
$0.8 $0.6
9.1% 9.1%
$ 43.5 $
9.75%
-58-
December 31, 1999
Years of Maturity
2003 2004
(S in millions) Thereafter Total Fair Value
$922.2
9.1%
$ 43.5
9.75%
Other financial instruments which potentially subject the Company to concentrations of credit risk consist
principally of cash, short-term investments in debt instruments and trade receivables. The Company's accounts
receivable are primarily from purchasers of oil and natural gas products and exploration and production companies
which own interests in properties operated by the Company. The industry concentration has the potential to impact
the Company's overall exposure to credit risk, either positively or negatively, in that the customers may be similarly
affected by changes in economic, industry or other conditions. The Company generally requires letters of credit for
receivables from customers which are judged to have sub-standard credit, unless the credit risk can otherwise be
mitigated. The cash and cash equivalents are deposited with major banks or institutions with high credit ratings.
Fair Value of Financial Instruments
The following disclosure of the estimated fair value of Imancial instruments is made in accordance with the
requirements of Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial
Instruments". The estimated fair value amounts have been determined by the Company using available market
information and valuation methodologies. Considerable judgment is required in interpreting market data to develop
the estimates of fair value. The use of different market assumptions or valuation methodologies may have a material
effect on the estimated fair value amounts.
The carrying values of items comprising current assets and current liabilities approximate fair values due to the
short-term maturities of these instruments. The Company estimates the fair value of its long-term (including current
maturities), fixed-rate debt using primarily quoted market prices. The Company's carrying amount for such debt at
December 31, 1999 and 1998 was $921.4 million and $919.1 million, respectively, compared to approximate fair
values of $838.7 million and $654.7 million, respectively. The carrying value of other long-term debt approximates
its fair value as interest rates are primarily variable, based on prevailing market rates. The Company estimates the
fair value of its convertible preferred stock, which was issued in April 1998, using quoted market prices. The
Company's carrying amount for such preferred stock at December 31, 1999 and 1998 was $229.8 million and $230.0
million, compared to an approximate fair value of $119.0 million and $48.9 million,respectively.
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:
$838.7
$43.5
$770.0
9.3%
$
$ 150.0
7.9%