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12.31.93
FY 1997 “Since founding Chesapeake eight years ago, we
have tried to develop a company with distinctive characteris-
tics that could help us grow more quickly and profitably than
our competitors. While we have not always achieved our
ambitious growth objectives, we are proud that we have
developed a reputation for clearly articulating the methods by
which we seek to build shareholder value. We remain commit-
ted to certain fundamental beliefs: increasing reserves and
production through the drillbit, establishing dominant lease-
hold positions, using our technological leadership to achieve
high rates of return on our investments, and maintaining an
entrepreneurial culture. And to further broaden our business
strategy in 1998, we will consider selective acquisitions to
diversify and strengthen our reserve base.”
10.15.97
FY 1995 “A key feature distinguishing
Chesapeake from its peers has been its
ability to produce superior returns to share-
holders during periods of lower commodity
prices. We have built Chesapeake to grow
and prosper in adverse environments. Our
goal has been to create a new model for
success as an independent energy producer
by building on Chesapeake’s competitive
advantages. Chesapeake has grown during
the past six years from five employees and
$50,000 in assets to an industry leader with
200 employees and an enterprise value of
$500 million. This success underscores the
strengths of the company’s strategy, its
people, its assets, and its ability to utilize
new technologies to discover and develop
natural gas reserves.”
10.01.95
A Ten Year Retrospective
On February 4, 1993, Chesapeake priced its IPO at a
split-adjusted $1.33 per share. The timeline below shows
the company’s history through its stock price changes
with key events noted and through excerpts from our
letters to shareholders over the past ten years.
FY 1993 “Chesapeake’s business strategy is
based on our view that the ownership and
development of domestic energy reserves,
particularly natural gas, will create substan-
tial benefits to our shareholders. To maxi-
mize those benefits, we have concentrated
our efforts in two areas: the Giddings Field
in southern Texas and the Golden Trend
Field in southern Oklahoma. Our use of
advanced seismic, drilling and completion
technologies in these fields has enabled
Chesapeake to increase its annual produc-
tion by 2,600% during the past four years.
Our goals for 1994 and beyond remain
ambitious. We believe the rest of the
decade will be rewarding for well-managed,
gas-leveraged companies that have
demonstrated the capability to grow
through the drillbit.”
10.15.93
FY 1994 “Chesapeake has ‘broken the
code’ in the downdip Austin Chalk by
developing a drilling strategy around
three distinguishing characteristics.
First, Chesapeake has acquired large
contiguous leasehold blocks. Second,
Chesapeake has developed the
drilling expertise and geological
expertise within the field to identify
the most prolific sections of the
Austin Chalk formation. Finally,
Chesapeake has contributed to the
rapid rate of technological progress
in horizontal drilling tools. In the
future, we plan to continue our
proven strategy of growth through
the drillbit. Our plan centers on an
aggressive undeveloped leasehold
acquisition program on which we
intend to utilize advanced horizontal
and vertical drilling technologies to
generate continuing production
and reserve growth.”
10.10.94
12.31.94 12.31.95 12.31.96 12.31.97
2.04.93 Chesapeake
begins trading on
NASDAQ under the
symbol “CSPK” at
the split-adjusted
price of $1.33. 2.04.94 Chesapeake
completes the Lanicek
OL #I-H, the discovery
well for the Navasota
River area in the
Giddings Field of
southeast Texas.
4.04.94 Chesapeake
completes a $47.5 mm
senior notes offering.
4.28.95 Chesapeake
moves from NASDAQ
to the NYSE and
changes its stock
symbol to “CHK”.
50 employees 100 employees 200 employees 276 employees 300 employees 360 employees
$40
Stock
Price
$30
$20
$10
11.02.93 Chesapeake
announces Giddings
Field joint development
agreement with Union
Pacific Resources.
9.22.93 Chesapeake
announces Giddings
Field joint development
agreement with Belco Oil
& Gas Corporation.
11.16.94
Chesapeake
announces a
2-for-1 stock
split, its first of
four stock splits
during 1994-96.
5.25.95 Chesapeake
completes a $90 mm
senior notes offering.
12.05.95 Chesapeake
announces a 3-for-2
stock split.
4.04.96 Chesapeake announces
$120 mm senior notes and
$105 mm common stock offerings.
4.15.96 Chesapeake acquires
Amerada Hess’ assets in the
Knox and Goldern Trend
fields for $35 mm. 10.27.97 Chesapeake
announces agreement to
acquire AnSon Production
Corp. and DLB Oil & Gas,
Inc. for $200 mm.
11.13.97
Chesapeake
announces
agreement to
acquire Hugoton
Energy Corp.
for $325 mm.
6.27.97 Chesapeake
announces $235 mm
writedown associated
primarily with its
Louisiana assets.
12.3.96
Chesapeake
announces
a 2-for-1
stock split.
3.5.98
Chesapeake
announces
agreement to
acquire Mid-
Continent gas
assets from
OXY USA, Inc.
for $100 mm.
FY 1996 “Our company has led the sector in total share-
holder return for the past two years – 544% in fiscal 1995
and 431% in fiscal 1996. This success is attributable to
our clearly articulated strategy and to our experienced and
motivated management team, supported by technical
teams second to none. Since Chesapeake’s inception in
1989, our business strategy has been ‘growth through
the drillbit.’ Using this strategy, the company has rapidly
expanded its reserves and production through the develop-
ment of large blocks of acreage overlying deep, underdevel-
oped geological reservoirs. We are attracted to these reser-
voirs because they offer low geological risk, large reserve
potential, and the opportunity to earn attractive economic
returns through the application of advanced drilling and
completion techniques.”
10.01.96
3.15.97 Chesapeake
completes a $300 mm
senior notes offering.
Transition Year 1997 “Although 1997 was a year of great dis-
appointment for Chesapeake’s shareholders and employees, it
was also a year of tremendous accomplishment. During 1997,
we substantially modified the company’s strategy and signifi-
cantly strengthened and diversified our asset base. Historically,
the oil and gas industry has been subject to frequent and some-
times dramatic change. Management must be able to quickly
modify its strategy to capture the benefits created by industry
uncertainty. In the past nine months, we have transformed
Chesapeake into a more diversified company with a lower risk
profile, but with still significant growth potential. Chesapeake is
defined today by balance: balance between drillbit growth and
acquisitions, balance between development projects and explo-
ration upside and balance between long and short reserve life
properties.”
4.20.98
5.17.96 Chesapeake
announces first
Louisiana Austin
Chalk success and
a 3-for-2 stock split.
4.02.97 Chesapeake completes the
Brown #1-H well in the Giddings Field,
initial production exceeds 100 mmcfe
per day.
11.20.96 Chesapeake completes a
$300 mm common stock offering.
1.14.94 Chesapeake’s stock
falls to $ 0.47 per share, mark-
ing the end of a rocky first
year as a public company.