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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) OCTOBER 7, 1998
(October 5, 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 Identification No.)
of incorporation) File Number)
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 October 5, 1998, Chesapeake Energy Corporation ("Chesapeake") issued
a press release announcing 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 October 5, 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: October 7, 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 October 5, 1998.
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CONTACT: MARC ROWLAND, CHIEF FINANCIAL OFFICER
(405) 879-9232
FOR IMMEDIATE RELEASE TOM PRICE, JR., VICE PRESIDENT-
OCTOBER 5, 1998 CORPORATE DEVELOPMENT
(405) 879-9257
CHESAPEAKE ENERGY CORPORATION
ANNOUNCES SIGNIFICANT TUSCALOOSA DISCOVERY
OKLAHOMA CITY, OKLAHOMA, OCTOBER 5, 1998 -- Chesapeake Energy Corporation
(NYSE:CHK) announced that over the weekend it had successfully logged and is
setting a completion liner on its State Lease #15421 in the Morganza Field in
St. Landry Parish, Louisiana. Drilled to a total depth of 21,200', the State
Lease encountered more than 100 feet of log-calculated net pay. Based upon
comparisons to similar Morganza Tuscaloosa wells, the State Lease's reserves
should exceed 25 billion cubic feet of natural gas equivalent (bcfe). Chesapeake
owns a 98% working interest and a 79% net revenue interest in the well.
The Kaiser #50, Chesapeake's second Tuscaloosa well on a prospect identified by
3-D seismic, is nearing total depth of 19,200' in the Irene Field in East Baton
Rouge Parish, Louisiana. The company owns a 98% working interest and a 79% net
revenue interest in the Kaiser 50. The well should be logged by the end of
October.
Chesapeake's third 3-D Tuscaloosa well, the Brown 22, is located in the Morganza
Field in Pointe Coupee Parish, Louisiana approximately four miles from the State
Lease. The well was spud last week and should reach total depth of 21,900' in
120-150 days. In the Brown 22, Chesapeake owns a 83% working interest and a 64%
net revenue interest with Amoco owning a 15% working interest.
Among Chesapeake's four primary project areas, the Tuscaloosa 3-D seismic
project is the largest and most important. Earlier this year Amoco announced
that by using 3-D seismic, it had achieved a 100% success rate with its last 19
Tuscaloosa wells with reserves averaging 25 bcfe per well. Although Chesapeake's
evaluation of its 90,000 acres of proprietary Tuscaloosa 3-D seismic is not yet
complete, the company's geoscientists have already identified 35 prospects,
eight of which Chesapeake plans to drill in the next 15 months.
OTHER DRILLING ACTIVITY UPDATED
In Chesapeake's three other significant exploratory projects, the company
expects to reach total depth in its first Deep Arbuckle well in the Knox Field
in Oklahoma and in its first Tyler County, Texas well by the end of October.
Additionally, Chesapeake will spud its first Wharton County, Texas well in the
next two weeks to begin testing the company's 55,000 acre 3-D seismic survey
covering multiple Frio, Yegua and Wilcox targets.
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THIRD QUARTER PRODUCTION INCREASES 95% AND
1999 DRILLING BUDGET IS ANNOUNCED
During the third quarter, Chesapeake produced approximately 37 bcfe, an increase
of 95% from last year's third quarter. The company's average realized oil and
gas price during the 1998 third quarter was estimated to be $1.94 per mcfe,
which is 18% lower than the $2.37 received in the 1997 third quarter and 4%
lower than the $2.03 received in the 1998 second quarter.
Chesapeake is currently utilizing 19 operated rigs to develop its inventory of
more than 2,450 identified drillsites. Fourteen of these rigs are drilling
lower-risk Mid-Continent development wells and five are drilling higher-risk,
higher-potential Gulf Coast wells. The company is also currently participating
in approximately 20 wells being drilled by others. Chesapeake's drilling
schedule is expected to remain essentially the same during 1999 and accordingly,
the company has established a preliminary 1999 budget for drilling, seismic and
leasehold expenditures of $195 million.
The company anticipates funding its 1999 capital expenditure budget with cash
flow from operations, cash on hand, and up to $50 million in non-core asset
sales which are currently in process. Additionally, Chesapeake maintains a $50
million bank revolving credit facility which is currently unused. The company
intends to release its third quarter operational and financial results on
November 5, 1998.
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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 June 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.
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