SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 29, 1996
CHESAPEAKE ENERGY CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 1-13726 73-1395733
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6100 North Western Avenue, Oklahoma City, Oklahoma 73118
(Address of principal executive offices) (Zip Code)
(405) 848-8000
(Registrant's telephone number, including area code)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. Other Events
On August 29, 1996, Chesapeake Energy Corporation ("Chesapeake") issued
a press release announcing fourth quarter earnings and cash flow results.
The August 29, 1996 press release is filed herewith as Exhibit 99 and
incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits. The following exhibit is filed herewith:
99 Press Release issued by the Registrant on August 29, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHESAPEAKE ENERGY CORPORATION
MARCUS C. ROWLAND
Marcus C. Rowland
Vice President-Chief Financial Officer
Dated: August 30, 1996
<PAGE>
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EXHIBIT INDEX
<CAPTION>
Exhibit Description Method of Filing
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<S> <C> <C>
99 Press Release issued by the Filed herewith
Registrant on August 29, 1996. electronically
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FOR IMMEDIATE RELEASE
August 29, 1996
CONTACT: MARC ROWLAND, CHIEF FINANCIAL OFFICER
(405)848-8000, EXT. 232
TOM PRICE, JR.,VICE PRESIDENT-
CORPORATE DEVELOPMENT
(405)848-8000, EXT. 257
CHESAPEAKE ENERGY REPORTS RECORD EARNINGS, CASH FLOW, REVENUE, PRODUCTION,
AND OIL AND GAS RESERVES FOR FISCAL 1996
OKLAHOMA CITY, OKLAHOMA, AUGUST 29, 1996 -- Chesapeake Energy Corporation
today reported preliminary financial results for the fiscal 1996 year ended
June 30. For the year, Chesapeake expects to report net earnings of $23.4
million, or $0.80 per common share, on total revenue of $149.4 million.
This is a 100% increase over fiscal 1995's net earnings of $11.7 million,
or $0.42 per common share, on total revenue of $67.3 million. Cash flow
from operating activities for fiscal 1996 doubled to $90.3 million
from $45.1 million in fiscal 1995. Chesapeake anticipates releasing final
financial results for the fourth quarter and year-end periods on or before
September 15, 1996.
Fourth Quarter Earnings and Cash Flow Results
For the quarter, the company expects to report net earnings of $7.4 million,
or $0.23 per common share, on total revenue of $49.5 million. This compares
with net earnings of $3.8 million, or $0.13 per common share, on total
revenue of $23.4 million in the fourth quarter of fiscal 1995. For the
fiscal 1996 quarter, cash flow from operating activities increased to $28.0
million from $15.9 million in the comparable period for 1995, an increase
of 76%.
Production Volumes Reach Record Levels
During fiscal 1996, Chesapeake's oil and natural gas production totaled
60.2 billion cubic feet of natural gas equivalent (Bcfe), an increase of
88% compared to the 31.9 Bcfe produced in fiscal 1995. During the fourth
quarter, production increased 47% to 17.6 Bcfe from 11.9 Bcfe in the same
quarter last year.
Chesapeake's daily production volume, as measured in million cubic feet of
natural gas equivalent (MMcfe), averaged 164 MMcfe during the year and
193 MMcfe during the fourth quarter. Average prices received were $1.84 per
thousand cubic feet of natural gas equivalent (Mcfe) for the year and $1.91
per Mcfe for the quarter.
Oil and Gas Reserve Value Increases 193% to $547 Million
Independent reservoir engineers have estimated that as of June 30, 1996,
Chesapeake's proved reserves increased to 12.2 million barrels of oil and
351 billion cubic feet of natural gas, or 425 Bcfe, a 76% increase over
last year's 242 Bcfe of proved reserves. During fiscal 1996, Chesapeake
replaced more than 400% of its 60 Bcfe of production. Of the company's
proved reserves, 45% are located in Oklahoma, 41% in Texas and 14% in
Louisiana and other.
The present value of the estimated future net revenue attributable to
Chesapeake's 425 Bcfe of proved reserves (before income taxes and
discounted at 10%) was $547 million, a 193% increase over last year's
present value of $187 million.
Low Costs Generate High Operating Margins
In fiscal 1996, Chesapeake's depreciation, depletion, and amortization
costs for oil and gas properties averaged $0.85 per Mcfe, general and
administrative costs were $0.08 per Mcfe and lease operating costs were
$0.14 per Mcfe. These low operating costs enabled the company during
fiscal 1996 to realize cash flow from operating activities of $1.50
per Mcfe and earnings of $0.39 per Mcfe.
Louisiana Austin Chalk Trend Update
Chesapeake's first well in the Louisiana Trend, the James #7-1, has
produced 125,000 barrels of oil and 550 million cubic feet of natural
gas, or approximately 1.3 Bcfe in its first two months of production
and has generated over $4 million of gross revenue. Sales from the
Cloud #9-1, the company's second Louisiana Trend well, should commence
by September 15.
The Lyles #31-1, Chesapeake's third Louisiana Trend well, is located
12 miles to the east of the James on a 25,000 acre leasehold block.
This well has recently been tested and failed to produce commercially.
The well will be temporarily abandoned until activity in the area
warrants additional testing or drilling.
Chesapeake's fourth Louisiana Trend well, the Rice-Land Lumber #33-1,
is building the curve in its third sidetrack for the horizontal portion
of the well. The company has recently encountered hydrocarbon shows in
the Austin Chalk and remains optimistic that the Rice-Land well will be
a successful producer.
The company's fifth Louisiana Trend well, the Lawton #25-1, is located
13 miles west of the James and has encountered encouraging shows of oil
and natural gas in both the downdip and updip laterals. Chesapeake
believes it will be able to commence production from the Lawton in
early October. Chesapeake's sixth Louisiana Trend well, the Lord #19-1,
is located two miles south and 500 feet downdip of the James well and is
building the curve for the horizontal portion of the well.
The company's seventh Louisiana Trend well, the Martin #11-1, is located
midway between the Cloud and the James and is drilling vertically. The
company's eighth Louisiana Trend well, the Thomas #40-1, is located in
the Baton Rouge area and is drilling vertically as a test of both the
Tuscaloosa and Austin Chalk formations. Chesapeake has also recently
spudded the USA/LROC #34-1 as an Austin Chalk and Tuscaloosa test in
the Masters Creek area. Additionally, five miles north and 15 miles
northwest of the Rice its second and third tests of the South Brookeland
area. The company plans to commence operations on approximately ten other
Louisiana Trend wells during the next four months.
Bank Credit Facility Expanded
Chesapeake has recently expanded its revolving credit facility to $125
million. The bank facility is managed by Union Bank with Bankers Trust
participating.
####
Chesapeake Energy Corporation is an independent energy producer
headquartered in Oklahoma City. The company focuses on utilizing advanced
drilling and completion technologies to develop significant new oil and
natural gas discoveries in major onshore producing areas of the United
States.
The information in this release includes certain forward-looking statements
that are based on assumptions that in the future may prove not to have been
accurate. Those statements, and Chesapeake Energy Corporation's business and
prospects, are subject to a number of risks, including production variances
from expectations, volatility of oil and gas prices, the need to develop and
replace its reserves, the substantial capital expenditures required to fund
its operations, environmental risks, drilling and operating risks, risks
related to exploration and development drilling, uncertainties about
estimates of reserves, competition, government regulation, and the ability
of the company to implement its business strategy. These and other risks are
described in the company's reports that are available from the United States
Securities and Exchange Commission.
