Chesapeake Energy 1999 Annual Report Download - page 77

(a) Total revenue less total operating costs.
Capitalized costs, less accumulated amortization and related deferred income taxes, cannot exceed an amount
equal to the sum of the present value 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, June 30, 1998 and March 31, 1998, 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 $360 million, $216 million and $250 million,
respectively.
During the fourth quarter of 1998, the Company incurred a $55 million impairment charge to adjust certain non-
oil and gas producing assets to their estimated fair values. Of this amount, $30 million related to the Company's
investment in preferred stock of Gothic Energy Corporation, and the remainder was related to certain of the
Company's gas processing and transportation assets located in Louisiana.
14. Acquisitions
During 1998, the Company acquired approximately 750 Bcfe of proved reserves through mergers or through
purchases of oil and gas properties. The total consideration given for the acquisitions was $280 million of cash, 30.8
million shares of Company common stock, the assumption of $205 million of debt, and the incurrence of
approximately $20 million of other acquisition related costs.
In March 1998, the Company acquired Hugoton Energy. Corporation ("Hugoton") pursuant to a merger by
issuing 25.8 million shares of the Company's common stock in exchange for 100% of Hugoton' s common stock.
The acquisition of Hugoton was accounted for using the purchase method as of March 1, 1998, and the results of
operations of Hugoton have been included since that date.
The following unaudited pro forma information has been prepared assuming Hugoton had been acquired as of the
beginning of the periods presented. The pro forma information is presented for informational purposes only and is
not necessarily indicative of what would have occurred if the acquisition had been made as of those dates. In
addition, the pro forma information is not intended to be a projection of future results and does not reflect the
efficiencies expected to result from the integration of Hugoton.
Pro Forina Information (Unaudited)
The Company acquired other businesses and oil and gas properties during 1999 and 1998. The results of
operations of each of these businesses and properties, taken individually, were not material in relation to the
Company's consolidated results of operations.
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Quarters Ended
March 31,
1998 June 30,
1998 September 30,
1998 December 31, 1998
Netsales $ 76,765 $109,310 $106,338 $85,533
Gross profit (loss) (246,036) (218,645) 13,650 (405,166)
Net income (loss) before extraordinary item (256,500) (234,739) (4,149) (425,132)
Net income (loss) (256,500) (248,073) (4,149) (425,132)
Net income (loss) per share before extraordinary item:
Basic (3.19) (2.29) (0.08) (4.44)
Diluted (3.19) (2.29) (0.08) (4.44)
Years Ended December 31,
1998 1997
(S in thousands, except per share data)
Revenues $ 387,638 $ 379,546
Loss before extraordinary item (921,969) (215,350)
Net loss (935,303) (215,527)
Loss before extraordinary item per common share (9.41) (2.23)
Net loss per common share (9.55) (2.23)