Chesapeake Energy 2000 Annual Report Download - page 46

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of the related months of production. If the NYMEX price less $0.0675 does not exceed the Houston Ship
Channel Beaumont/Texas Index for each month, we will pay the counterparty. Gains or losses on basis swap
transactions are recognized as price adjustments in the month of related production. Subsequent to
December 31, 2000, we settled the natural gas basis protection swaps for January, February and March 2001.
A gain of $0.3 million, a loss of $0.1 million and a loss of $0 5 million will be recognized as price adjustments
in January, February and March, respectively.
As of December 31, 2000, we had open natural gas collar transactions designed to hedge 60,000 mmbtu
per day throughout 2001 at an average NYMEX-defined high strike price (cap) of $6.08 per mmbtu and an
average NYMEX-defined low strike price (floor) of $4.00 per mmbtu. If the collar transactions had been
settled on December 31, 2000, we would have incurred a loss of $18.5 million. Subsequent to December 31,
2000, we settled the natural gas collar transactions for January, February and March 2001. A loss of
$6.9 million and $1.4 million will be recognized as price adjustments in January and February, respectively.
The March 2001 contract was settled for no gain or loss.
As of December 31, 2000, we had the following open crude oil swap arrangements designed to hedge a
portion of our domestic crude oil production for periods after December 2000:
NYMEX-Index
Volume Strike Price
Months (bbls) (per bbl)
January 2001 165,000 $29.97
February 2001 150,000 29.92
March 2001 165,000 29.84
April 2001 160,000 29.80
May 2001 165,000 29.75
June 2001 160,000 29.71
July 2001 165,000 29.68
August 2001 165,000 29.65
September 2001 160,000 29.62
October 2001 165,000 29.59
November 2001 160,000 29.56
December 2001 165,000 29.54
If the swap arrangements listed above had been settled on December 31, 2000, we would have realized a
gain of $9.3 million. Subsequent to December 31, 2000, we settled the crude oil swap for January 2001 for a
gain of $0.1 million and February 2001 for a gain of $41,350, which will be recognized as a price adjustment in
January and February 2001.
Subsequent to December 31, 2000, we entered into the following natural gas swap arrangements designed
to hedge a portion of our domestic gas production for periods after December 2000:
NYMEX-Index
Volume Strike Price
Months (mmbtu) (per mmbtu)
March 2001 310,000 $5.93
April 2001 300,000 5.66
May 2001 930,000 5.34
June 2001 900,000 5.37
July 2001 930,000 5.40
August 2001 930,000 5.42
September 2001 900,000 5.38
October 2001 1,240,000 5.40
The natural gas swap for March 2001 was settled for a gain of $0.3 million which will be recognized as a
price adjustment in March 2001. If we had settled the remaining swaps (April through October) using
March 21, 2001 prices, we would have incurred a gain of $1.0 million.
Subsequent to December 31, 2000, we entered into the following natural gas collar transactions designed
to hedge a portion of our domestic gas production for periods after December 2000:
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