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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) FEBRUARY 3, 1998
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CHESAPEAKE ENERGY CORPORATION
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(Exact name of Registrant as specified in its Charter)
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<S> <C> <C>
OKLAHOMA 1-13726 73-1395733
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(State or other jurisdiction (Commission (IRS Employer Identification No.)
of incorporation) File Number)
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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 February 3, 1998, Chesapeake Energy Corporation ("Chesapeake")
provided a status report on its drilling activities and pending transactions.
The February 3, 1998 press release is filed herewith as Exhibit 99, and is
incorporated herein by reference.
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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: /S/AUBREY K. MCCLENDON
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AUBREY K. MCCLENDON,
Chairman of the Board and
Chief Executive Officer
Dated: February 3, 1998
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EXHIBIT INDEX
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Exhibit
List Description
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Exhibit 99 Press Release issued by the Registrant
on February 3, 1998.
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EXHIBIT 99
CONTACT: MARC ROWLAND, CHIEF FINANCIAL OFFICER
(405)848-8000, EXT. 232
FOR IMMEDIATE RELEASE TOM PRICE, JR.,VICE PRESIDENT-
FEBRUARY 3, 1998 CORPORATE DEVELOPMENT
(405)848-8000, EXT. 257
CHESAPEAKE ENERGY CORPORATION PROVIDES STATUS REPORT
ON DRILLING ACTIVITIES AND PENDING TRANSACTIONS
OKLAHOMA CITY, OKLAHOMA, FEBRUARY 3, 1998 -- Chesapeake Energy Corporation
(NYSE:CHK) today provided a status report on its drilling activities and pending
transactions.
AUSTIN CHALK UPDATE
Subsequent to the October 22 and November 6 updates on the Louisiana Austin
Chalk Trend, Chesapeake has completed seven additional Austin Chalk wells, six
of which are producing and one of which is shut in waiting on a pipeline
connection. The current productive capacity of these seven wells is 68 million
cubic feet of natural gas equivalent (Mmcfe) per day. Six of these wells are in
Masters Creek with one located 35 miles to the southeast in the St. Landry area.
In addition, Chesapeake is currently drilling six Austin Chalk wells in the
Louisiana Trend, five in Masters Creek and one in South Brookeland. The company
is also participating in 8 of the 9 wells Union Pacific Resources Corporation is
currently drilling and in 4 of the 5 wells Sonat Exploration Company is
currently drilling. During 1998, Chesapeake anticipates drilling approximately
10-12 net Austin Chalk wells in Louisiana, accounting for approximately 20% of
its $230 million drilling budget for 1998.
TUSCALOOSA PROGRAM UNDERWAY
Chesapeake also announced the successful completion of two Tuscaloosa wells on
the company's Louisiana Trend acreage. The first, the Merrick Estate 1, is
located in the Judge Digby Field of Point Coupee Parish, Louisiana. The second
well, the Peevy 71, is located in the Comite Field of East Baton Rouge Parish,
Louisiana.
The Merrick Estate was drilled to a total depth of 21,756 feet, making it one of
the deepest producing wells in Louisiana. The well began producing in late 1997
and is currently producing at a daily rate of 15 Mmcfe with approximately 10,000
pounds of flowing tubing pressure. Through January 31, 1998, this well had
produced approximately one billion cubic feet of gas equivalent. Chesapeake owns
a 14% working interest in the well with Amoco Production Company, the operator,
owning the remainder.
The Peevy 71, operated by Chesapeake, was drilled to a total depth of 18,860
feet in the Tuscaloosa formation. The well is currently producing at a daily
rate of 10 Mmcfe with
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approximately 5,600 pounds of flowing tubing pressure. Chesapeake owns a 60%
working interest in this well.
Chesapeake's President and Chief Operating Officer, Tom L. Ward, stated, "Since
successfully completing our first Tuscaloosa well fifteen months ago, we have
developed the foundation for a high-impact 3-D based Tuscaloosa program. Our
excitement about the potential value of Chesapeake's Tuscaloosa drilling has
been generated by the promising location of our 150,000 acres in the area and
Amoco's successful use of 3-D seismic to further develop its holdings. We
understand that Amoco using 3-D seismic has discovered more than 400 Bcfe of
reserves during the past four years by successfully completing 16 of its 17
Tuscaloosa wells. After investing over a year to acquire and interpret 3-D
surveys to evaluate Chesapeake's acreage in the Morganza and Irene Fields, we
are ready to commence the drilling phase of our Tuscaloosa 3-D program. During
the next few months, we anticipate using two or three of the six Louisiana rigs
now drilling for Chesapeake to begin developing the 60,000 acre Morganza 3-D
shoot and the 30,000 acre Irene 3-D shoot. We anticipate our Tuscaloosa program
will account for approximately 20% of our $230 million drilling budget in 1998."
OTHER DRILLING ACTIVITY
Chesapeake has recently started drilling its first two Deep Simpson tests in the
Golden Trend Field. During the past year, Chesapeake has evaluated a large
portion of its extensive Golden Trend acreage through a 3-D seismic survey
covering approximately 35,000 acres. The results of the survey were encouraging
and the company has identified approximately 20 Deep Simpson prospects. The
company is targeting reserves of 3-5 Bcfe per well for completed well costs of
approximately $2.2 million.
In the Lovington area of eastern New Mexico, Chesapeake's 3-D seismic surveys
continue to provide favorable drilling results. The company has now drilled 16
out of 19 successful wells in this area and is drilling ahead with two rigs.
Chesapeake plans to drill 15-20 New Mexico wells in 1998 at a total cost of
approximately $15-20 million. The company is targeting reserves of 1.5-2.5 Bcfe
per well for completed well costs of approximately $1.0 million.
Chesapeake is also underway with its 88,000 acre Peach Creek 3-D survey located
in the Zeidman Trustee area of Wharton County, Texas. This 3-D survey, which
includes Coastal Corporation, Seagull Energy Corporation, TransTexas Gas
Corporation and Unocal Corporation as partners, should be completed in the next
120 days with drilling activity scheduled to begin this fall.
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TRANSACTION STATUS UPDATE
During the past three months, Chesapeake has entered into agreements to acquire
AnSon Production Company, the Mid-Continent assets of DLB Oil & Gas, Inc.,
Hugoton Energy Corporation, and the Anadarko Basin properties of Enervest
Management Company. The AnSon transaction closed in December and the Enervest
transaction is scheduled to close this week. The DLB and Hugoton transactions
are currently still pending, with the proxy solicitation materials scheduled for
mailing during the next two weeks.
In addition, Chesapeake's Canadian joint ventures with Pan East Petroleum Corp.
and Ranger Oil Limited have both closed and drilling activities are now underway
on the company's $15 million Canadian drilling program.
SUMMARY
Aubrey K. McClendon, Chesapeake's Chairman and Chief Executive Officer provided
the following summary, "In 1998, we believe Chesapeake's current and prospective
investors will recognize and appreciate the substantial modifications we have
made to our previous strategy. Our 1998 growth plan will be based upon combining
four strategies:
o building long-life reserves through acquisitions and development
drilling in the Mid-Continent and in western Canada;
o providing high-impact results from our 3-D based exploration projects in
Louisiana, Texas, Oklahoma, and New Mexico;
o continuing to develop our extensive inventory of Austin Chalk assets in
Texas and Louisiana; and
o developing additional alliances and joint ventures with industry
partners in new areas.
By building on a growth plan balanced between drilling and acquisitions,
drilling balanced between exploration and development, production balanced
between oil and natural gas, and reserve life matched to debt maturities, we
anticipate delivering significantly improved results to our shareholders in
1998."
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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 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
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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 fiscal year ended
June 30, 1997.
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