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) JULY 8, 1997
CHESAPEAKE ENERGY CORPORATION
(Exact name of Registrant as specified in its Charter)
OKLAHOMA 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)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
On July 8, 1997, Chesapeake Energy Corporation ("Chesapeake") issued a
press release announcing operations update. The July 8, 1997 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 July 8, 1997.
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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
BY: MARCUS C. ROWLAND
Marcus C. Rowland
Vice President - Chief Financial Officer
Dated: July 8, 1997
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__________________________EXHIBIT INDEX______________________________
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EXHIBIT DESCRIPTION METHOD OF FILING
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99 Press Release issued by the Filed herewith electronically
Registrant on July 8, 1997.
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CONTACT: MARC ROWLAND, CHIEF FINANCIAL OFFICER
(405)848-8000, EXT. 232
FOR IMMEDIATE RELEASE TOM PRICE, JR.,VICE PRESIDENT-
JULY 8, 1997 CORPORATE DEVELOPMENT
(405)848-8000, EXT. 257
CHESAPEAKE ENERGY CORPORATION
PROVIDES OPERATIONS UPDATE
OKLAHOMA CITY, OKLAHOMA, JULY 8, 1997 -- Chesapeake Energy Corporation
(NYSE:CHK) today provided the following update on its operations.
LOUISIANA AUSTIN CHALK TREND
As previously reported, Chesapeake has re-focused its Louisiana Trend drilling
efforts for the foreseeable future in the Masters Creek area. To date in
Masters Creek, Chesapeake has completed or participated in 21 wells that are
either producing or waiting on a pipeline connection, has abandoned one well as
a dry hole, is currently drilling eight new wells, and is participating in four
wells drilled by others.
Chesapeake owns 350,000 leasehold acres in Masters Creek on which it has
identified approximately 200 potential drillsites, representing up to five
years of drilling opportunities at the company's present pace of development.
Chesapeake's goal in Masters Creek is to drill wells that develop on average
five billion cubic feet equivalent (Bcfe) of oil and gas reserves at a cost of
$3.5 million.
Outside of Masters Creek, the company plans to continue exploring selected
blocks of its 950,000 acres of remaining Louisiana Trend leasehold with a 2-3
rig schedule. In particular, the company currently plans to focus on four
areas in which it is conducting or planning to conduct 3-D seismic activities.
Three of these 3-D seismic surveys will focus on further delineating Tuscaloosa
prospects in the Baton Rouge area. The fourth 3-D survey will evaluate a
portion of the southern Masters Creek area in Allen Parish with the Austin
Chalk and the shallower Wilcox formations as targets. Each of these 3-D
surveys is scheduled to be completed by late 1997 or early 1998 with associated
drilling activities to begin thereafter.
Despite the disappointing economics of Chesapeake's drilling outside of Masters
Creek, industry activity in the Louisiana Trend remains at high levels, with
Union Pacific Resources, Sonat, Amoco, Belco, and Oxy collectively utilizing 24
rigs to develop their Louisiana Trend leasehold. For development of its
leasehold outside of Masters Creek, Chesapeake will concentrate its drilling
activities in areas where its competitors have drilled successful wells.
GIDDINGS
Chesapeake is currently utilizing five rigs to continue developing its deep
Giddings leasehold. One of these rigs is drilling the Vaughn #1-H in Washington
County, Texas, in an area to the west of the Brown #1-H. In its first three
months of production, the Brown has produced 4.1 Bcfe, despite being shut in
during a portion of June as a result of drilling fluid interference from an
offset well being drilled. Furthermore, the company is awaiting the results of
the recently permitted UPR Jarmon and Goldberg wells, which should provide
important information regarding the potential value of Chesapeake's 5,000 acres
located to the south of the Brown and UPR Eberle wells. Chesapeake is
utilizing four other Giddings rigs to develop its leasehold in the main
Navasota River area.
OKLAHOMA
In the Knox, Golden Trend, Sholem Alechem and Arkoma Basin areas of Oklahoma,
Chesapeake is utilizing eight rigs to develop its approximate 200,000 acre
leasehold position. During the past five years, Chesapeake has drilled more
wells in Oklahoma than any other company and has developed considerable 3-D
seismic and deep vertical and horizontal drilling expertise in the process.
The company anticipates remaining active in Oklahoma for the foreseeable future
as it continues to develop its large inventory of drilling prospects.
WILLISTON BASIN
During fiscal 1997, Chesapeake commenced activities on three separate projects
in the Williston Basin, two of which have been successful to date. In the
first of these three project areas, the company is focusing on using 3-D
seismic to delineate Red River "C" and "D" prospects. To date, the company has
drilled three producers out of its first four wells in this area.
The company's second Williston project area is a horizontal project in North
Dakota targeting the Nesson formation. On its newly acquired 100,000 acres in
this project, Chesapeake has completed its first well, the Berger #1-22H, as an
oil producer and is currently drilling its second horizontal Nesson well, the
Sandberg #1-21H.
As previously reported, in the Red River "B" project area in the southern
portion of the Williston Basin, Chesapeake's first horizontal well was not
successful. However, the company is currently interpreting its first 3-D
seismic survey in the area and expects to commence further development of its
350,000 acres of Red River "B" leasehold in early 1998.
LOVINGTON
Chesapeake has now successfully drilled seven of eight wells in the Lovington
oil project in the Lea County, New Mexico portion of the Permian Basin. In this
project, the company is utilizing two rigs to develop its 3-D seismic
delineated prospects in the Strawn, Wolfcamp and Devonian formations.
Chesapeake has completed three seismic projects to date in Lovington and is
planning to commence four additional 3-D surveys in fiscal 1998. The company
believes it has identified 50 prospective locations to drill in Lovington.
DEEP WILCOX
In Wharton County, Texas, Chesapeake, Coastal Oil and Gas Corporation, and
Seagull Energy Corporation have begun a 55,000 acre 3-D seismic survey
surrounding Coastal and Seagull's Zeidman Trustee wells. Chesapeake owns
approximately 55% of the acreage in the survey and expects to begin drilling
its first Deep Wilcox well in early 1998.
3-D SEISMIC ACTIVITY
During the past two years, Chesapeake has emerged as one of the most active
onshore acquirers of 3-D seismic data. Chesapeake has now completed eleven 3-D
surveys and has an additional 15 3-D surveys in progress. When completed, the
26 surveys will provide approximately 715,000 acres of 3-D coverage which
should enable the company to further high-grade its drilling programs.
FISCAL 1997 EARNINGS UPDATE
As previously announced on June 27, Chesapeake will incur a full cost ceiling
writedown of between $150 and $200 million (pre-tax), primarily as a result of
the disappointing economics associated with its drilling results in the
Louisiana Trend outside of Masters Creek. The company believes the writedown
will be fully tax-effected and therefore expects that its final fiscal 1997
loss will be between $55 and $90 million. The company's final fiscal 1997
results should be available in late August or early September.
####
CHESAPEAKE ENERGY CORPORATION IS AN INDEPENDENT OIL AND NATURAL GAS PRODUCER
HEADQUARTERED IN OKLAHOMA CITY WHICH SPECIALIZES IN UTILIZING ADVANCED SEISMIC,
DRILLING AND COMPLETION TECHNOLOGIES TO DEVELOP NEW RESERVES OF OIL AND NATURAL
GAS. THE COMPANY'S OPERATIONS ARE FOCUSED ON EXPLORATORY AND DEVELOPMENTAL
DRILLING 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 EXPECTATION, 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
EXPLORATORY AND DEVELOPMENTAL 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.
