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 5, 2002
(December 4, 2002)
CHESAPEAKE ENERGY CORPORATION
(Exact name of Registrant as specified in its Charter)
Oklahoma 1-13726 73-1395733
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) 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)
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 9. REGULATION FD DISCLOSURE
Chesapeake Energy Corporation ("Chesapeake") issued a Press Release on
December 4, 2002 announcing updated 2003 Forecast. The following was included in
the press release:
OKLAHOMA CITY, OKLAHOMA, DECEMBER 4, 2002 - Chesapeake Energy Corporation
(NYSE:CHK) today announced an updated 2003 forecast that revises and replaces in
its entirety Chesapeake's previous 2003 forecast, which had been last updated on
November 4, 2002. The company'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 updated guidance incorporates the effects of the company's
agreement to purchase $300 million of Mid-Continent gas properties from
Tulsa-based, ONEOK, Inc. The forecast assumes the transaction closes as
scheduled on January 31, 2003. For 2003, the company is now projecting
production of 207-212 billion cubic feet of gas equivalent (bcfe) (91% gas)
compared to its previous projection of 190-195 bcfe (90% gas). Projected per
unit operating expenses are expected to remain largely unchanged from the
company's previous guidance: per mcfe lease operating expenses of $0.52-$0.56
(reduced from $0.58-$0.62), production taxes of $0.22-$0.24, marketing and other
income of $0.04-$0.07 (increased from $0.03-$0.06), interest expense of
$0.63-$0.67 (increased from $0.60-$0.65), general and administrative costs of
$0.09-$0.10 and DD&A of oil and gas properties of $1.30-$1.35. Chesapeake's tax
rate in 2003 should average 40%, all of which should be deferred. If the company
is successful in trading or selling its Permian Basin assets in 2003, this
guidance may need to be modified.
Chesapeake also expects to report with its fourth quarter results a $7.5
million after-tax loss from the company's decision to write-down the carrying
value of its investment in Seven Seas Petroleum Inc.'s senior secured debt
(including accrued interest) to $7.5 million from $20.0 million. Chesapeake
previously reported a $3.0 million after-tax impairment of the company's equity
position in Seven Seas during the third quarter of 2002.
This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements include estimates and give our
current expectations or forecasts of future events. They are based on our
historical operating trends, our existing commodity hedging position and our
current estimate of proved reserves. Although we believe our forward-looking
statements are reasonable, they can be affected by inaccurate assumptions or by
known or unknown risks and uncertainties. For example, statements concerning the
fair values of derivative contracts and their estimated contribution to our
future results of operations are based upon market information as of a specific
date. These market prices are subject to significant volatility. Factors that
could cause actual operating and financial results to differ materially from
expected results include the volatility of oil and gas prices, our substantial
indebtedness, our commodity price risk management activities, the cost and
availability of drilling and production services, our ability to replace
reserves, the availability of capital, uncertainties inherent in evaluating our
own reserves and the reserves we acquire, drilling and operating risks and other
risk factors described in the company's 2001 annual report on Form 10-K and
subsequent filings with the Securities and Exchange Commission.
Chesapeake Energy Corporation is one of 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.
With the filing of this report on Form 8-K, we are updating the outlook on
our website at www.chkenergy.com. We caution you that our outlook is given as of
December 4, 2002 based on currently available information, and that we are not
undertaking any obligation to update our estimates as conditions change or other
information becomes available.
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: December 5, 2002