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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) MARCH 5, 1998
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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 March 5, 1998, Chesapeake Energy Corporation ("Chesapeake")
announced a definitive agreement to acquire 100% of the stock of MC Panhandle
Corp., a wholly-owned subsidiary of Occidental Petroleum Corporation. The
March 5, 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/ MARCUS C. ROWLAND
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MARCUS C. ROWLAND
Senior Vice President - Finance
and Chief Financial Officer
Dated: March 5, 1998
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit 99.1 Press Release dated March 5, 1998.
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CONTACT: MARC ROWLAND, CHIEF FINANCIAL OFFICER
(405)848-8000, EXT. 232
FOR IMMEDIATE RELEASE TOM PRICE, JR.,VICE PRESIDENT-
MARCH 5, 1998 CORPORATE DEVELOPMENT
(405)848-8000, EXT. 257
CHESAPEAKE ENERGY CORPORATION ENHANCES POSITION IN TEXAS
PANHANDLE; AGREES TO PURCHASE PROPERTIES FROM
OCCIDENTAL PETROLEUM CORPORATION FOR $105 MILLION
OKLAHOMA CITY, OKLAHOMA, MARCH 5, 1998 -- Chesapeake Energy Corporation
(NYSE:CHK) today announced a definitive agreement to acquire 100% of the stock
of MC Panhandle Corp., a wholly owned subsidiary of Occidental Petroleum
Corporation. Chesapeake has agreed to pay $105 million in cash for estimated
proved reserves of approximately 100 billion cubic feet of natural gas (bcf) in
the West Panhandle Field in Carson, Gray, Hutchinson and Moore Counties of the
Texas Panhandle. The reserves are 100% natural gas, have an estimated
reserve-to-production index of eight years, and are 85% proved developed
producing. During 1997, the wells produced approximately 13 bcf (36 million
cubic feet of natural gas per day) net to Occidental's interest from 256 wells,
of which all but two were Oxy operated wells. Chesapeake will assume
operations of the acquired wells and will own an average working interest and
net revenue interest of 99.5% and 85.2%, respectively. The effective date of
the transaction is January 1, 1998 with closing scheduled for May 29, 1998.
With this purchase and pro forma for Chesapeake's pending Hugoton and DLB
transactions, Chesapeake's estimated proved reserves will increase to
approximately 1,050 bcfe.
Aubrey K. McClendon, Chesapeake's Chairman and Chief Executive Officer,
remarked, "The Oxy Texas Panhandle transaction is an excellent fit with the
Hugoton Energy Corporation Texas Panhandle properties we are scheduled to
acquire next week. In fact, Hugoton's Texas Panhandle properties were
originally acquired from Oxy in 1992 and as a result, we expect to be able to
operate these reunited properties very efficiently out of Hugoton's existing
Pampa, Texas field office. For example, proforma for these acquisitions, we
expect our direct production costs in the Texas Panhandle, excluding production
taxes, to average approximately $0.30 per mcf. These are high margin, low
maintenance wells that we believe will provide accretive results to our cash
flow in 1998 and beyond."
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Tom L. Ward, Chesapeake's President and Chief Operating Officer, stated, "The
West Panhandle Field is located within the southern portion of the giant
Hugoton Gas Field which reaches across southwest Kansas, the Oklahoma
Panhandle, and south into the Texas Panhandle. Discovered in 1918, the West
Panhandle Field has produced more than 3.3 trillion cubic feet of natural gas
from the Brown Dolomite and Red Cave formations and the field is expected to
produce for at least another 50 years. In West Panhandle, the Red Cave produces
from 1,350 to 2,300 feet and the Brown Dolomite produces from 2,000 to 3,700
feet. We believe significant deep potential underlies these shallow formations.
Additionally, our technical teams have identified numerous increased density
drilling and remedial stimulation opportunities for both the Brown Dolomite and
Red Cave.
This acquisition continues Chesapeake's diversification into longer life
reserves and lower risk areas while providing the opportunity to utilize the
company's technological expertise to add value to acquired properties. We look
forward to pursuing additional opportunities in the Mid-Continent during 1998
to continue building on our strengths in this core operating area."
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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 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.
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