Chesapeake Energy Corporation Announces Updated 2001-2002 Forecasts And Revised 2001-2002 Gas Hedging Program

Apr 02, 2001, 01:00 ET from Chesapeake Energy Corporation

    OKLAHOMA CITY, April 2 /PRNewswire/ -- The following was released today by
 Chesapeake Energy Corporation:
 
     Chesapeake Energy Corporation (NYSE:   CHK) today announced that as a result
 of pricing an $800 million offering of 8.125% senior notes due 2011 and
 entering into additional natural gas hedges for 2001 and 2002, the company has
 updated its forecasts and estimates for both years.  The attached three-page
 exhibit has been filed on Form 8-K with the SEC and has been posted on our
 website at www.chkenergy.com.
     Chesapeake's forecasts and estimates are forward-looking statements within
 the meaning of the Private Securities Litigation Reform Act of 1995.  Actual
 results may differ materially due to the risks and uncertainties identified at
 the end of this release.  Furthermore, these projections do not reflect the
 potential impact of unforeseen events that may occur subsequent to the
 issuance of this release.
     Chesapeake's 2001 guidance is based on currently projected capital
 expenditures of $310 million for drilling, leasehold, and seismic expenditures
 and $140 million for acquisitions and investments.  The company is using mid-
 point projections for 2001 production estimates of 175 bcfe (90% gas) and per
 mcfe lease operating expenses of $0.40, production taxes of $0.35, interest
 costs of $0.58, general and administrative costs of $0.10 and DD&A of oil and
 gas properties of $1.03.  In addition, Chesapeake expects its tax rate to
 average 40%, of which at least 95% should be deferred.
     If the forecasted targets described above are achieved and if NYMEX oil
 and gas prices average $25.43 per bo and $5.61 per mcf in 2001 (for a realized
 per mcfe price of $4.94 per mcfe), Chesapeake expects to generate ebitda of
 $725 million, operating cash flow of $625 million and recurring net income of
 $275 million in 2001.  The company's net income estimate does not include the
 effect of an estimated $44 million after-tax charge expected in the second
 quarter for the early extinguishment of debt.
     The company's 2001 gas price projection of $5.61 per mcf is based on
 actual NYMEX index prices of $9.91 for January, $6.22 for February, $5.03 for
 March, and $5.35 for April, and an average of $5.09 for the remaining 8 months
 of 2001.  For the next 8 months, Chesapeake has hedged approximately 57% of
 its projected gas production via swaps at an average price of $5.20 per mcf
 and collars at prices ranging from $4.00 to $6.26.  Chesapeake has also hedged
 approximately 63% of its expected oil production for the next 8 months at an
 average NYMEX price of $29.66.  In addition, the company has also protected
 approximately 39% of its estimated annual 2002 natural gas production via
 swaps at an average of $5.09 per mcf and collars at prices ranging from
 $4.00 to $5.75 per mcf.
 
                               Management Summary
 
     Aubrey K. McClendon, Chesapeake's Chairman and Chief Executive Officer,
 stated, "Last week's $800 million debt offering was a momentous event for our
 company.  Our shareholders will greatly benefit from the offering because
 resulting interest expense should decline by $15 million per year and average
 debt maturities have been extended to almost 10 years.  Our proactive and
 conservative management of our balance sheet and income statement through the
 debt offering and hedging activities should create substantial shareholder
 value in the years to come."
 
     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 reserves,
 the substantial capital expenditures required to fund 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
 those discussed under Risk Factors in the report filed on Form 10-K for the
 year ended December 31, 2000.
     Chesapeake Energy Corporation is among the 10 largest independent natural
 gas producers in the U.S.  Headquartered in Oklahoma City, the company's
 operations are focused on exploratory and developmental drilling and producing
 property acquisitions in the Mid-Continent region of the United States.  The
 company's Internet address is www.chkenergy.com.
 
 
                         CHESAPEAKE ENERGY CORPORATION
 
                                    OUTLOOK
 
                                 April 2, 2001
 
     Quarters Ending March 31 and June 30, 2001; Years Ending December 31, 2001
 and 2002.
 
     We have adopted a policy of providing investors with guidance on certain
 factors that affect our future financial performance.  As of April 2, 2001, we
 are using the following key operating assumptions in our projections for the
 first two quarters of 2001 and full years 2001 and 2002.  The key operating
 assumptions for 2001 include the completion of the merger with Gothic Energy
 Corporation which occurred on January 16, 2001.
 
 
                       Quarter      Quarter         Year              Year
                       Ending        Ending        Ending            Ending
                      March 31,     June 30,      Dec. 31,          Dec. 31,
                        2001          2001          2001              2002
 
     Estimated
      Production
       Oil - Mbo       600-675      700-750     2,750-3,250       3,000-3,500
       Gas - Bcf        35-36        37-39        154-160           162-168
       Gas
        Equivalent-
        Bcfe           38.5-40       41-43        170-180           183-187
     Estimated NYMEX
      Prices
       Oil - $/Bo      $28.73        $25.00        $25.43            $23.00
       Gas - $/Mcf      $7.05        $5.12         $5.61             $4.19
     Estimated
      Differentials
      to NYMEX Prices
       Oil - $/Bo      -$0.80        -$0.80        -$0.80            -$0.75
       Gas - $/Mcf     -$0.31        -$0.34        -$0.32            -$0.29
     Estimated Hedging
      Effects
      (based on expected
      NYMEX prices above)
       Oil - $/Bo      +$0.90        +$3.24        +$2.81            +$0.00
       Gas - $/Mcf     -$0.80        -$0.23        -$0.25            +$0.28
     Estimated Realized
      Prices (includes
      hedging)
       Oil - $/Bo      $28.91        $27.44        $27.29            $22.25
       Gas - $/Mcf      $5.87        $4.54         $4.98             $4.18
       Gas Equivalent
        - $/Mcfe        $5.77        $4.55         $4.94             $4.13
     Operating Costs
      per Mcfe
       Production
        expense      $0.38-0.42    $0.36-0.40    $0.36-0.40        $0.40-0.45
       Production
        taxes (6.5%
        of O&G
        revenues)    $0.38-0.42    $0.28-0.32    $0.32-0.35        $0.23-0.27
       General and
        admin.       $0.09-0.11    $0.09-0.11    $0.10-0.11        $0.09-0.11
       DD&A - oil
        and gas      $0.90-0.93    $0.96-0.99    $1.00-1.06        $1.08-1.12
       Depreciation of
        other assets $0.05-0.06    $0.05-0.06    $0.05-0.06        $0.05-0.06
       Interest
        expense      $0.66-0.70    $0.68-0.72    $0.56-0.60        $0.45-0.49
     Other Income and
      expense per
      mcfe(B)(C)
       Marketing gross
        profit       $0.02-0.04    $0.02-0.04    $0.02-0.04        $0.02-0.04
       Other income  $0.01-0.03    $0.01-0.03    $0.01-0.05        $0.01-0.05
     Book Tax Rate
      - primarily
      deferred         35-40%        35-40%        35-40%            35-40%
     Equivalent shares
      outstanding
       Basic          155,000 m    159,000 m     159,000 m         163,000 m
       Diluted        168,000 m    169,000 m     169,000 m         171,000 m
     Capital
      Expenditures:
       Drilling       $79,000 m    $84,000 m     $300,000 -        $315,000 -
                                                 $325,000 m        $345,000 m
     Sensitivity to
      price change
      - for each
      $1.00/bbl
       PV 10%         $15 mm(A)    $15 mm(A)     $15 mm(A)         $15 mm(A)
       Cash flow from
        operations   $0.7 mm(A)    $0.7 mm(A) $2.5-$3.0 mm(A)  $2.5-$3.0 mm(A)
     Sensitivity to
      price change
      - for each
      $0.10/mcf
       PV 10%          $72 mm        $72 mm        $72 mm            $72 mm
       Cash flow from
        operations     $4.0 mm      $4.0 mm      $15-$16 mm        $15-$16 mm
 
     A)  Current reserves inclusive of Gothic reserves.
     B)  Does not include non-recurring charges of an estimated $3.4 million
         (pre-tax) related to the Gothic acquisition in quarter ended 3/31/01.
     C)  Does not include an anticipated extraordinary charge of $44 mm (after-
         tax) related to early debt extinguishment in quarter ended 6/30/01.
 
     Commodity Hedging Activities
     Periodically the Company utilizes hedging strategies to hedge the price of
 a portion of its future oil and gas production.  These strategies include:
      (i)   swap arrangements that establish an index-related price above
            which the Company pays the counterparty and below which the
            Company is paid by the counterparty,
      (ii)  the purchase of index-related puts that provide for a "floor"
            price below which the counterparty pays the Company the amount by
            which the price of the commodity is below the contracted floor,
      (iii) the sale of index-related calls that provide for a "ceiling" price
            above which the Company pays the counterparty the amount by which
            the price of the commodity is above the contracted ceiling,
      (iv)  basis protection swaps, which are arrangements that guarantee the
            price differential of oil or gas from a specified delivery point
            or points, and
      (v)   collar arrangements that establish an index-related price below
            which the counterparty pays the Company and a separate index-
            related price above which the Company pays the counterparty.
 
     Commodity markets are volatile, and as a result, Chesapeake's hedging
 activity is dynamic.  As market conditions warrant, the Company may elect to
 settle a hedging transaction prior to its scheduled maturity date and, as a
 result, realize a gain or loss on the transaction.
     Results from commodity hedging transactions are reflected in oil and gas
 sales to the extent related to the Company's oil and gas production.  The
 Company only enters into commodity hedging transactions related to the
 Company's oil and gas production volumes or CEMI's physical purchase or sale
 commitments.  Gains or losses on crude oil and natural gas hedging
 transactions are recognized as price adjustments in the months of related
 production.
 
     The Company has entered into the following "no-cost" natural gas collar
 transactions:
 
 
                                       Estimated   NYMEX-Index   NYMEX-Index
                          Monthly        % of      Floor Price  Ceiling Price
                       Volume (mmbtu) Production   (per mmbtu)   (per mmbtu)
     2001
     April               1,800,000        14%        $4.00         $6.08
     May                 1,860,000        14%         4.00          6.08
     June                2,400,000        19%         4.25          6.26
     July                2,480,000        19%         4.25          6.26
     August              2,480,000        19%         4.25          6.26
     September           2,400,000        18%         4.25          6.26
     October             1,860,000        13%         4.00          6.08
     November            1,800,000        13%         4.00          6.08
     December            1,860,000        13%         4.00          6.08
     Totals/Averages    18,940,000        16%        $4.13         $6.17
 
     2002
     January               620,000         5%        $4.00         $5.75
     February              560,000         5%         4.00          5.75
     March                 620,000         4%         4.00          5.75
     April               1,200,000         9%         4.00          5.38
     May                 1,240,000         9%         4.00          5.38
     June                1,200,000         9%         4.00          5.38
     July                1,240,000         9%         4.00          5.38
     August              1,240,000         9%         4.00          5.38
     September           1,200,000         9%         4.00          5.38
     October             1,240,000         9%         4.00          5.38
     November              600,000         5%         4.00          5.75
     December              620,000         4%         4.00          5.75
     Totals/Averages    11,580,000         7%        $4.00         $5.47
 
 
      The Company has entered into the following natural gas swap arrangements:
 
                                                                   NYMEX-
                                   Monthly         Estimated       Index
                          Months    Volume            % of      Strike Price
                                   (MMBtu)         Production   (per MMBtu)
 
     January 2001                  4,960,000          40%          $6.03
     February 2001                 5,320,000          49%           6.12
     March 2001                    4,650,000          36%           5.11
     April 2001                    5,400,000          43%           4.84
     May 2001                      8,060,000          61%           4.97
     June 2001                     6,600,000          52%           5.04
     July 2001                     6,820,000          51%           5.05
     August 2001                   6,820,000          51%           5.05
     September 2001                6,600,000          50%           5.02
     October 2001                  3,720,000          26%           4.76
     November 2001                 2,400,000          17%           6.00
     December 2001                 2,480,000          17%           6.10
     January 2002 (A)              2,790,000          20%           6.03
     February 2002 (A)             2,520,000          20%           5.82
     March 2002 (A)                2,790,000          20%           5.48
     April 2002 (A)                5,700,000          42%           4.85
     May 2002 (A)                  5,890,000          42%           4.81
     June 2002 (A)                 5,700,000          42%           4.80
     July 2002 (A)                 5,890,000          42%           4.81
     August 2002 (A)               5,890,000          42%           4.81
     September 2002 (A)            5,700,000          42%           4.81
     October 2002 (A)              5,890,000          42%           4.80
     November 2002 (A)             2,100,000          16%           4.97
     December 2002 (A)             2,170,000          15%           5.06
     Totals/Averages
      (2001 & 2002 combined)     116,860,000          36%           5.21
 
     (A)  Cap swap - limits payment by counter party to $1.00-$1.50/mmbtu.
 
     The Company has entered into crude oil swap arrangements designed to hedge
 5,000 barrels per day at a NYMEX Index strike price of $29.76 per barrel in
 January through December 2001, and 10,000 barrels per month at an average
 price of $29.12 per barrel.
 
 

SOURCE Chesapeake Energy Corporation
    OKLAHOMA CITY, April 2 /PRNewswire/ -- The following was released today by
 Chesapeake Energy Corporation:
 
     Chesapeake Energy Corporation (NYSE:   CHK) today announced that as a result
 of pricing an $800 million offering of 8.125% senior notes due 2011 and
 entering into additional natural gas hedges for 2001 and 2002, the company has
 updated its forecasts and estimates for both years.  The attached three-page
 exhibit has been filed on Form 8-K with the SEC and has been posted on our
 website at www.chkenergy.com.
     Chesapeake's forecasts and estimates are forward-looking statements within
 the meaning of the Private Securities Litigation Reform Act of 1995.  Actual
 results may differ materially due to the risks and uncertainties identified at
 the end of this release.  Furthermore, these projections do not reflect the
 potential impact of unforeseen events that may occur subsequent to the
 issuance of this release.
     Chesapeake's 2001 guidance is based on currently projected capital
 expenditures of $310 million for drilling, leasehold, and seismic expenditures
 and $140 million for acquisitions and investments.  The company is using mid-
 point projections for 2001 production estimates of 175 bcfe (90% gas) and per
 mcfe lease operating expenses of $0.40, production taxes of $0.35, interest
 costs of $0.58, general and administrative costs of $0.10 and DD&A of oil and
 gas properties of $1.03.  In addition, Chesapeake expects its tax rate to
 average 40%, of which at least 95% should be deferred.
     If the forecasted targets described above are achieved and if NYMEX oil
 and gas prices average $25.43 per bo and $5.61 per mcf in 2001 (for a realized
 per mcfe price of $4.94 per mcfe), Chesapeake expects to generate ebitda of
 $725 million, operating cash flow of $625 million and recurring net income of
 $275 million in 2001.  The company's net income estimate does not include the
 effect of an estimated $44 million after-tax charge expected in the second
 quarter for the early extinguishment of debt.
     The company's 2001 gas price projection of $5.61 per mcf is based on
 actual NYMEX index prices of $9.91 for January, $6.22 for February, $5.03 for
 March, and $5.35 for April, and an average of $5.09 for the remaining 8 months
 of 2001.  For the next 8 months, Chesapeake has hedged approximately 57% of
 its projected gas production via swaps at an average price of $5.20 per mcf
 and collars at prices ranging from $4.00 to $6.26.  Chesapeake has also hedged
 approximately 63% of its expected oil production for the next 8 months at an
 average NYMEX price of $29.66.  In addition, the company has also protected
 approximately 39% of its estimated annual 2002 natural gas production via
 swaps at an average of $5.09 per mcf and collars at prices ranging from
 $4.00 to $5.75 per mcf.
 
                               Management Summary
 
     Aubrey K. McClendon, Chesapeake's Chairman and Chief Executive Officer,
 stated, "Last week's $800 million debt offering was a momentous event for our
 company.  Our shareholders will greatly benefit from the offering because
 resulting interest expense should decline by $15 million per year and average
 debt maturities have been extended to almost 10 years.  Our proactive and
 conservative management of our balance sheet and income statement through the
 debt offering and hedging activities should create substantial shareholder
 value in the years to come."
 
     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 reserves,
 the substantial capital expenditures required to fund 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
 those discussed under Risk Factors in the report filed on Form 10-K for the
 year ended December 31, 2000.
     Chesapeake Energy Corporation is among the 10 largest independent natural
 gas producers in the U.S.  Headquartered in Oklahoma City, the company's
 operations are focused on exploratory and developmental drilling and producing
 property acquisitions in the Mid-Continent region of the United States.  The
 company's Internet address is www.chkenergy.com.
 
 
                         CHESAPEAKE ENERGY CORPORATION
 
                                    OUTLOOK
 
                                 April 2, 2001
 
     Quarters Ending March 31 and June 30, 2001; Years Ending December 31, 2001
 and 2002.
 
     We have adopted a policy of providing investors with guidance on certain
 factors that affect our future financial performance.  As of April 2, 2001, we
 are using the following key operating assumptions in our projections for the
 first two quarters of 2001 and full years 2001 and 2002.  The key operating
 assumptions for 2001 include the completion of the merger with Gothic Energy
 Corporation which occurred on January 16, 2001.
 
 
                       Quarter      Quarter         Year              Year
                       Ending        Ending        Ending            Ending
                      March 31,     June 30,      Dec. 31,          Dec. 31,
                        2001          2001          2001              2002
 
     Estimated
      Production
       Oil - Mbo       600-675      700-750     2,750-3,250       3,000-3,500
       Gas - Bcf        35-36        37-39        154-160           162-168
       Gas
        Equivalent-
        Bcfe           38.5-40       41-43        170-180           183-187
     Estimated NYMEX
      Prices
       Oil - $/Bo      $28.73        $25.00        $25.43            $23.00
       Gas - $/Mcf      $7.05        $5.12         $5.61             $4.19
     Estimated
      Differentials
      to NYMEX Prices
       Oil - $/Bo      -$0.80        -$0.80        -$0.80            -$0.75
       Gas - $/Mcf     -$0.31        -$0.34        -$0.32            -$0.29
     Estimated Hedging
      Effects
      (based on expected
      NYMEX prices above)
       Oil - $/Bo      +$0.90        +$3.24        +$2.81            +$0.00
       Gas - $/Mcf     -$0.80        -$0.23        -$0.25            +$0.28
     Estimated Realized
      Prices (includes
      hedging)
       Oil - $/Bo      $28.91        $27.44        $27.29            $22.25
       Gas - $/Mcf      $5.87        $4.54         $4.98             $4.18
       Gas Equivalent
        - $/Mcfe        $5.77        $4.55         $4.94             $4.13
     Operating Costs
      per Mcfe
       Production
        expense      $0.38-0.42    $0.36-0.40    $0.36-0.40        $0.40-0.45
       Production
        taxes (6.5%
        of O&G
        revenues)    $0.38-0.42    $0.28-0.32    $0.32-0.35        $0.23-0.27
       General and
        admin.       $0.09-0.11    $0.09-0.11    $0.10-0.11        $0.09-0.11
       DD&A - oil
        and gas      $0.90-0.93    $0.96-0.99    $1.00-1.06        $1.08-1.12
       Depreciation of
        other assets $0.05-0.06    $0.05-0.06    $0.05-0.06        $0.05-0.06
       Interest
        expense      $0.66-0.70    $0.68-0.72    $0.56-0.60        $0.45-0.49
     Other Income and
      expense per
      mcfe(B)(C)
       Marketing gross
        profit       $0.02-0.04    $0.02-0.04    $0.02-0.04        $0.02-0.04
       Other income  $0.01-0.03    $0.01-0.03    $0.01-0.05        $0.01-0.05
     Book Tax Rate
      - primarily
      deferred         35-40%        35-40%        35-40%            35-40%
     Equivalent shares
      outstanding
       Basic          155,000 m    159,000 m     159,000 m         163,000 m
       Diluted        168,000 m    169,000 m     169,000 m         171,000 m
     Capital
      Expenditures:
       Drilling       $79,000 m    $84,000 m     $300,000 -        $315,000 -
                                                 $325,000 m        $345,000 m
     Sensitivity to
      price change
      - for each
      $1.00/bbl
       PV 10%         $15 mm(A)    $15 mm(A)     $15 mm(A)         $15 mm(A)
       Cash flow from
        operations   $0.7 mm(A)    $0.7 mm(A) $2.5-$3.0 mm(A)  $2.5-$3.0 mm(A)
     Sensitivity to
      price change
      - for each
      $0.10/mcf
       PV 10%          $72 mm        $72 mm        $72 mm            $72 mm
       Cash flow from
        operations     $4.0 mm      $4.0 mm      $15-$16 mm        $15-$16 mm
 
     A)  Current reserves inclusive of Gothic reserves.
     B)  Does not include non-recurring charges of an estimated $3.4 million
         (pre-tax) related to the Gothic acquisition in quarter ended 3/31/01.
     C)  Does not include an anticipated extraordinary charge of $44 mm (after-
         tax) related to early debt extinguishment in quarter ended 6/30/01.
 
     Commodity Hedging Activities
     Periodically the Company utilizes hedging strategies to hedge the price of
 a portion of its future oil and gas production.  These strategies include:
      (i)   swap arrangements that establish an index-related price above
            which the Company pays the counterparty and below which the
            Company is paid by the counterparty,
      (ii)  the purchase of index-related puts that provide for a "floor"
            price below which the counterparty pays the Company the amount by
            which the price of the commodity is below the contracted floor,
      (iii) the sale of index-related calls that provide for a "ceiling" price
            above which the Company pays the counterparty the amount by which
            the price of the commodity is above the contracted ceiling,
      (iv)  basis protection swaps, which are arrangements that guarantee the
            price differential of oil or gas from a specified delivery point
            or points, and
      (v)   collar arrangements that establish an index-related price below
            which the counterparty pays the Company and a separate index-
            related price above which the Company pays the counterparty.
 
     Commodity markets are volatile, and as a result, Chesapeake's hedging
 activity is dynamic.  As market conditions warrant, the Company may elect to
 settle a hedging transaction prior to its scheduled maturity date and, as a
 result, realize a gain or loss on the transaction.
     Results from commodity hedging transactions are reflected in oil and gas
 sales to the extent related to the Company's oil and gas production.  The
 Company only enters into commodity hedging transactions related to the
 Company's oil and gas production volumes or CEMI's physical purchase or sale
 commitments.  Gains or losses on crude oil and natural gas hedging
 transactions are recognized as price adjustments in the months of related
 production.
 
     The Company has entered into the following "no-cost" natural gas collar
 transactions:
 
 
                                       Estimated   NYMEX-Index   NYMEX-Index
                          Monthly        % of      Floor Price  Ceiling Price
                       Volume (mmbtu) Production   (per mmbtu)   (per mmbtu)
     2001
     April               1,800,000        14%        $4.00         $6.08
     May                 1,860,000        14%         4.00          6.08
     June                2,400,000        19%         4.25          6.26
     July                2,480,000        19%         4.25          6.26
     August              2,480,000        19%         4.25          6.26
     September           2,400,000        18%         4.25          6.26
     October             1,860,000        13%         4.00          6.08
     November            1,800,000        13%         4.00          6.08
     December            1,860,000        13%         4.00          6.08
     Totals/Averages    18,940,000        16%        $4.13         $6.17
 
     2002
     January               620,000         5%        $4.00         $5.75
     February              560,000         5%         4.00          5.75
     March                 620,000         4%         4.00          5.75
     April               1,200,000         9%         4.00          5.38
     May                 1,240,000         9%         4.00          5.38
     June                1,200,000         9%         4.00          5.38
     July                1,240,000         9%         4.00          5.38
     August              1,240,000         9%         4.00          5.38
     September           1,200,000         9%         4.00          5.38
     October             1,240,000         9%         4.00          5.38
     November              600,000         5%         4.00          5.75
     December              620,000         4%         4.00          5.75
     Totals/Averages    11,580,000         7%        $4.00         $5.47
 
 
      The Company has entered into the following natural gas swap arrangements:
 
                                                                   NYMEX-
                                   Monthly         Estimated       Index
                          Months    Volume            % of      Strike Price
                                   (MMBtu)         Production   (per MMBtu)
 
     January 2001                  4,960,000          40%          $6.03
     February 2001                 5,320,000          49%           6.12
     March 2001                    4,650,000          36%           5.11
     April 2001                    5,400,000          43%           4.84
     May 2001                      8,060,000          61%           4.97
     June 2001                     6,600,000          52%           5.04
     July 2001                     6,820,000          51%           5.05
     August 2001                   6,820,000          51%           5.05
     September 2001                6,600,000          50%           5.02
     October 2001                  3,720,000          26%           4.76
     November 2001                 2,400,000          17%           6.00
     December 2001                 2,480,000          17%           6.10
     January 2002 (A)              2,790,000          20%           6.03
     February 2002 (A)             2,520,000          20%           5.82
     March 2002 (A)                2,790,000          20%           5.48
     April 2002 (A)                5,700,000          42%           4.85
     May 2002 (A)                  5,890,000          42%           4.81
     June 2002 (A)                 5,700,000          42%           4.80
     July 2002 (A)                 5,890,000          42%           4.81
     August 2002 (A)               5,890,000          42%           4.81
     September 2002 (A)            5,700,000          42%           4.81
     October 2002 (A)              5,890,000          42%           4.80
     November 2002 (A)             2,100,000          16%           4.97
     December 2002 (A)             2,170,000          15%           5.06
     Totals/Averages
      (2001 & 2002 combined)     116,860,000          36%           5.21
 
     (A)  Cap swap - limits payment by counter party to $1.00-$1.50/mmbtu.
 
     The Company has entered into crude oil swap arrangements designed to hedge
 5,000 barrels per day at a NYMEX Index strike price of $29.76 per barrel in
 January through December 2001, and 10,000 barrels per month at an average
 price of $29.12 per barrel.
 
 SOURCE  Chesapeake Energy Corporation