Chesapeake Energy 2010 Annual Report Download - page 67

Title to Properties
Our title to properties is subject to royalty, overriding royalty, carried, net profits, working and other similar
interests and contractual arrangements customary in the natural gas and oil industry, to liens for current taxes
not yet due and to other encumbrances. As is customary in the industry in the case of undeveloped properties,
only cursory investigation of record title is made at the time of acquisition. Drilling title opinions are usually
prepared before commencement of drilling operations. We believe we have satisfactory title to substantially all
of our active properties in accordance with standards generally accepted in the natural gas and oil industry.
Nevertheless, we are involved in title disputes from time to time which result in litigation.
Operating Hazards and Insurance
The natural gas and oil business involves a variety of operating risks, including the risk of fire, explosions,
blow-outs, pipe failure, abnormally pressured formations and environmental hazards such as oil spills, natural
gas leaks, ruptures or discharges of toxic gases. If any of these should occur, Chesapeake could incur legal
defense costs and could suffer substantial losses due to injury or loss of life, severe damage to or destruction
of property, natural resources and equipment, pollution or other environmental damage, clean-up
responsibilities, regulatory investigation and penalties, and suspension of operations. Our horizontal and deep
drilling activities involve greater risk of mechanical problems than vertical and shallow drilling operations.
Chesapeake maintains a $75 million control of well policy that insures against certain sudden and
accidental risks associated with drilling, completing and operating our wells. There is no assurance that this
insurance will be adequate to cover all losses or exposure to liability. Chesapeake also carries a $400 million
comprehensive general liability umbrella policy and a $130 million pollution liability policy. We provide workers’
compensation insurance coverage to employees in all states in which we operate. While we believe these
policies are customary in the industry, they do not provide complete coverage against all operating risks. In
addition, our insurance does not cover penalties or fines that may be assessed by a governmental authority. A
loss not fully covered by insurance could have a material adverse effect on our financial position, results of
operations and cash flows. The insurance coverage that we maintain may not be sufficient to cover every claim
made against us in the future.
Facilities
Chesapeake owns an office complex in Oklahoma City and we continue to construct additional buildings in
Oklahoma City and in our operating areas as needed to accommodate our ongoing growth. We also own or
lease various field or administrative offices in the areas in which we conduct operations.
Employees
Chesapeake had approximately 10,000 employees as of December 31, 2010.
Glossary of Natural Gas and Oil Terms
The terms defined in this section are used throughout this Form 10-K.
Bcf. Billion cubic feet.
Bcfe. Billion cubic feet of natural gas equivalent.
Bbl. One stock tank barrel, or 42 U.S. gallons liquid volume, used herein in reference to crude oil or other
liquid hydrocarbons.
Bbtu. One billion British thermal units.
Btu. British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water
from 58.5 to 59.5 degrees Fahrenheit.
Commercial Well; Commercially Productive Well. A natural gas and oil well which produces natural gas
and oil in sufficient quantities such that proceeds from the sale of such production exceed production expenses
and taxes.
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