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UNITED STATES
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)
DECEMBER 2, 1998 (December 8, 1998)
CHESAPEAKE ENERGY CORPORATION
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(Exact name of registrant as specified in its charter)
OKLAHOMA 1-13726 73-1395733
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6100 NORTH WESTERN AVENUE, OKLAHOMA CITY, OKLAHOMA 73118
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(Address of principal executive offices) (Zip Code)
(405) 848-8000
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(Registrant's telephone number, including area code)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
On December 2, 1998, Chesapeake Energy Corporation ("Chesapeake")
issued a press release announcing completion of a significant Tuscaloosa
discovery.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits. The following exhibit is filed herewith:
99. Press Release issued by the Registrant on December 2, 1998.
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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 hereunto duly authorized.
CHESAPEAKE ENERGY CORPORATION
BY: /s/ AUBREY K. MCCLENDON
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Aubrey K. McClendon,
Chief Executive Officer
Dated: December 2, 1998
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION
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99 Press Release issued by the Registrant on December 2, 1998.
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EXHIBIT 99
CONTACT: MARC ROWLAND
CHIEF FINANCIAL OFFICER
(405) 879-9232
FOR IMMEDIATE RELEASE TOM PRICE, JR.,VICE PRESIDENT-
DECEMBER 2, 1998 CORPORATE DEVELOPMENT
(405) 879-9257
CHESAPEAKE ENERGY CORPORATION COMPLETES
SIGNIFICANT TUSCALOOSA DISCOVERY
OKLAHOMA CITY, OKLAHOMA, DECEMBER 2, 1998 -- Chesapeake Energy Corporation
(NYSE:CHK) today announced the completion of a significant Tuscaloosa discovery,
the State Lease 15421. Chesapeake believes the State Lease is one of the best
Tuscaloosa wells drilled recently in the rejuvenated Tuscaloosa Trend and is one
of the ten deepest producing wells in Louisiana.
The State Lease well began producing today at the daily rate of 18,100 thousand
cubic feet of natural gas equivalent (mcfe) on a 12/64" choke with flowing
tubing pressure of 14,600 psi. The well was only perforated in the deepest three
of the well's nine indicated pay zones. Additional zones may be completed at
later dates. Based on well log evaluation completed in early October and
preliminary flow rates, estimated reserves for the well should exceed 25 billion
cubic feet equivalent (bcfe). Chesapeake owns a 98% working interest in the
State Lease well, located in the company's 60,000 acre Morganza Field 3-D
seismic survey. Four miles to the east, Chesapeake is drilling ahead to
projected total depth of 21,900' on the Brown 22, the company's second Morganza
Field test.
DEVELOPMENT DRILLING UPDATE
In addition to its exploratory activity in the Louisiana Tuscaloosa Trend and
elsewhere, Chesapeake remains active with its Mid-Continent development drilling
program. In the shallow Sahara gas area of northwest Oklahoma, Chesapeake has
recently completed the Reese 2-2, Gail 1-4, Velma 1-7, and Loomis 1-14 wells,
which are producing at a combined daily rate of 5,000 mcfe. Chesapeake owns a
62% working interest in the Reese 2-2, 95% in the Gail 1-4, 98% in the Velma 1-7
and 76% in the Loomis 1-14. Chesapeake continues to maintain a four rig program
in Sahara where the company expects to develop average approximate reserves of
0.7 bcfe at an average per well cost of $300,000. Each Sahara rig is capable of
drilling 20-24 lower risk, shallow gas wells per year.
In the West Panhandle Field of Texas, Chesapeake has recently re-completed its
S.B. Burnett G-5 well in the Brown Dolomite formation at a depth of 2,900'.
Drilled as a dual lateral horizontal well, the well replaces a vertical well
that had produced 5.2 bcfe since the 1930's and was producing 230 mcfe per day
prior to the re-entry. The well is now producing 1,300 mcfe per day, a 465%
increase. The well's enhanced productivity and greater reserves indicate the
potential of further increasing Chesapeake's reserves and production in this
field.
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Although Chesapeake has postponed development of its oil-oriented Louisiana
Austin Chalk assets until prices improve, the company continues to successfully
drill in the Independence portion of the Texas Austin Chalk Trend where
production is 100% natural gas. Following completion of the Hahn 1-H during the
third quarter, a well that has produced 4.8 bcfe in its first 124 days of
production, the Hahn 2-H has been completed at a pipeline-constrained daily
production rate of approximately 30,000 mcfe. Estimated combined gross ultimate
reserves for the Hahn 1-H and 2-H wells are approximately 30 bcfe. Chesapeake
owns a 44% working interest in both Hahn wells with Belco, Union Pacific
Resources Corporation and Swift Energy Company owning 37%, 16% and 1%,
respectively. Chesapeake's newest well in the Independence area, the Salem 1-H,
should begin producing later this month. Chesapeake owns a 44% working interest
in the Salem with Belco owning 37% and Union Pacific owning 17%.
Chesapeake also confirmed that it will receive $26 million in cash this week
from the acquisition by Poco Petroleums Ltd. of Chesapeake's 20% interest in Pan
East Petroleum Corp. This transaction was announced on November 2 and closed on
November 27. In addition, Chesapeake expects to complete the sale of $50-75
million of non-core, oil assets by the end of March 1999.
Chesapeake's Chairman and CEO, Aubrey K. McClendon, commented, "In light of what
may be a period of extended low oil prices, we are pleased that our asset
acquisitions completed earlier this year were focused on lower-risk, natural gas
properties which have increased our natural gas reserves to 85% of the company's
total reserves. The company is now concentrating on reducing its operating cost
structure with the sale of low margin, oil-oriented properties and the further
reduction of operating overhead through district office consolidation. Although
we are witnessing a late start of the winter heating season, we remain bullish
about the fundamentals for increased natural gas prices."
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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, uncertainties about estimates of reserves, 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, competition, government regulation, and the ability of the company to
implement its business strategy. These and other risks are described in the
company's documents and reports that are available from the United States
Securities and Exchange Commission, including the report filed on Form 10-K for
the six-month transition period ended December 31, 1997 and the report filed on
Form 10-Q for the three months ended September 30, 1998.
Chesapeake Energy Corporation is an independent oil and natural gas producer
headquartered in Oklahoma City. The company's operations are focused on
exploratory and developmental drilling and producing property and corporate
acquisitions in major onshore producing areas of the United States and Canada.
The company's Internet address is http://www.chesapeake-energy.com.
