Chesapeake Energy 1999 Annual Report Download - page 71

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. At
December 31, 1998 and 1997 and June 30, 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 writedowns in the carrying value of oil and gas properties of $826 million, $110 million and $236
million, respectively.
Oil and Gas Reserve Quantities (unaudited)
The reserve information presented below is based upon reports prepared by independent petroleum engineers and
the Company's petroleum engineers.
As of December 31, 1999, Williamson Petroleum Consultants, Inc. ("Williamson"), Ryder Scott Company
L.P. ("Ryder Scott"), and the Company's internalreservoir engineers evaluated 50%, 16%, and 34% of the
Company's combined discounted future net revenues from the Company's estimated proved reserves,
respectively.
As of December 31, 1998, Williamson, Ryder Scott, H.J. Gruy and Associates, Inc. and the Company's
internal reservoir engineers evaluated 63%, 12%, 1% and 24% of the Company's combined discounted
future net revenues from the Company's estimated proved reserves, respectively.
o As of December 31, 1997, Williamson, Porter Engineering Associates, Netherland, Sewell & Associates,
Inc. and internal reservoir engineers evaluated approximately 53%, 42%, 3% and 2% of the Company's
combined discounted future net revenues from the Company's estimated proved reserves, respectively.
As of June 30, 1997, the reserves evaluated by Williamson constituted approximately 41% of the
Company's combined discounted future net revenues from the Company's estimated proved reserves, with
the remaining reserves being evaluated internally. The reserves evaluated internally in fiscal 1997 were
subsequently evaluated by Williamson with a variance of approximately 4% of total proved reserves.
The information is presented in accordance with regulations prescribed by the Securities and Exchange
Commission. The Company emphasizes that reserve estimates are inherently imprecise. The Company's reserve
estimates were generally based upon extrapolation of historical production trends, analogy to similar properties and
volumetric calculations. Accordingly, these estimates are expected to change, and such changes could be material
and occur in the near term as future information becomes available.
Proved oil and gas reserves represent the estimated quantities of crude oil, natural gas, and natural gas liquids
which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions. Proved developed oil and gas reserves are
those expected to be recovered through existing wells with existing equipment and operating methods. As of
December 31, 1997 and June 30, 1997, all of the Company's oil and gas reserves were located in the United States.
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