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)
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APRIL 10, 2003 (APRIL 9, 2003)
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 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
April 9, 2003. The following was included in the Press Release:
CHESAPEAKE ENERGY CORPORATION ANNOUNCES ITS FIRST QUARTER
2003 PRODUCTION WILL EXCEED PREVIOUS GUIDANCE
FULL-YEAR 2003 GUIDANCE ALSO INCREASED; COMPANY'S DEEP GAS DRILLING
RESULTS CONTINUE TO EXCEED EXPECTATIONS; EARLY CLOSING OF
EL PASO TRANSACTION ALSO BOOSTS FIRST QUARTER RESULTS
OKLAHOMA CITY, OKLAHOMA, APRIL 9, 2003 - Chesapeake Energy Corporation
(NYSE:CHK) today announced that it has increased its projected range of first
quarter 2003 production guidance to 55.0 - 55.5 billion cubic feet of natural
gas equivalent (bcfe), an increase of 8% from its February 25, 2003 guidance.
For the quarter, daily production is expected to average 611 - 617 million cubic
feet of gas equivalent (mmcfe), 90% of which will be natural gas.
Chesapeake's new first quarter 2003 guidance is an increase of 4.0 bcfe over the
previous range of 51.0 - 51.5 bcfe, or daily production of 567 - 572 mmcfe. Of
this increase, 50% is attributable to the El Paso transaction closing one month
earlier than expected and 50% is associated with Chesapeake's drilling programs
generating better than forecasted production levels.
Chesapeake is also announcing today an increase in its second quarter 2003 and
full-year 2003 production guidance to 60.0 - 60.5 bcfe and 237 - 243 bcfe,
increases of 5% and 3% from the previous ranges of 57.0 - 57.5 bcfe and 230 -
235 bcfe. Of the projected full-year 2003 increase of 7-8 bcfe, 25% is
attributable to the early El Paso closing with 75% related to Chesapeake's
better than forecasted drilling success. As a result of this recent drilling
success and an increasing number of newly identified high-potential exploration
prospects developed by the company's geoscientists, Chesapeake has decided to
increase its drilling, land and seismic capital expenditure budget to $575-600
million from previous guidance of $525 million.
MANAGEMENT COMMENTS
Aubrey K. McClendon, Chesapeake's Chief Executive Officer, commented, "We are
very pleased to announce updated production guidance generated by the success of
our Mid-Continent focused, deep-gas drilling program. Chesapeake's production
growth trends are significant, sustainable and being driven by teams of
geoscientists, engineers and landmen that are unmatched in their Mid-Continent
talent and experience. Although Chesapeake is only the 18th largest producer of
gas in the U.S. (and the 8th largest independent gas producer), the company is
conducting the 3rd most active drilling program and is drilling the deepest
wells in the country on average. In fact, 14 of Chesapeake's 33 operated rigs
are targeting formations deeper than 15,000 feet. In addition, 4 of the 10
deepest wells currently being drilled in the U.S. are operated by Chesapeake
(see attached tables)."
"Chesapeake is committed to the exploration of gas targets between 15-25,000
feet because of our conviction that it is at these depths where large new
reserves of natural gas are most likely to be found in the U.S. Our deep
drilling programs have been successful because of the company's unrivaled
commitment to leading-edge geoscience and to building an inventory of leasehold
that is second to none in the Mid-Continent. Chesapeake owns over 2.2 million
net acres of leasehold and 8,000 square miles of 3-D seismic, much of which is
proprietary to Chesapeake. In addition, the company will continue building the
foundation for future growth by committing $100 million this year to new land
and 3-D seismic acquisition and evaluation."
"Although our acquisition activity during the first quarter was extraordinary
and increased our proven reserves and production by more than 20%, the size of
the acquisitions and the related financings have obscured the strength of the
company's underlying organic production growth. In an industry where 13 of the
20 largest gas producers experienced U.S. gas production declines in 2002,
Chesapeake's ability to generate significant growth through the drillbit is
increasingly distinctive."
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PRESS RELEASE AND CONFERENCE CALL INFORMATION
Chesapeake has scheduled its first quarter 2003 earnings release after the close
of the NYSE trading on Monday afternoon, April 28, 2003. A conference call is
scheduled for Tuesday morning, April 29 at 9:00 am EDT to discuss the earnings
release. The telephone number to access the conference call is 913.981.5533. For
those unable to participate in the conference call, a replay will be available
from 12:00 pm EDT on Tuesday, April 29 through midnight Monday, May 12, 2003.
The number to access the conference call replay is 719.457.0820 and the passcode
is 643335. The conference call will also be simulcast live on the Internet and
can be accessed at www.chkenergy.com by selecting "Conference Calls" under the
"Investor Relations" section. The webcast of the conference call will be
available on the website indefinitely.
This document includes "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 give our current expectations
or forecasts of future events. They include statements regarding oil and gas
reserve estimates, planned capital expenditures, the drilling of oil and gas
wells and future acquisitions, expected oil and gas production, cash flow and
anticipated liquidity, business strategy and other plans and objectives for
future operations, expected future expenses and utilization of net operating
loss carryforwards. 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. Although we believe the expectations and
forecasts reflected in these and other forward-looking statements are
reasonable, we can give no assurance they will prove to have been correct. They
can be affected by inaccurate assumptions or by known or unknown risks and
uncertainties. Factors that could cause actual results to differ materially from
expected results are described under "Risk Factors" in Item 1 of our 2002 10K
and subsequent filings with the Securities and Exchange Commission and include
the volatility of oil and gas prices, our substantial indebtedness, the strength
and financial resources of our competitors, the cost and availability of
drilling and production services, our commodity price risk management
activities, including counterparty contract performance risk, uncertainties
inherent in estimating quantities of oil and gas reserves, projecting future
rates of production and the timing of development expenditures, our ability to
replace reserves, the availability of capital, uncertainties in evaluating oil
and gas reserves of acquired properties and associated potential liabilities,
declines in the values of our oil and gas properties resulting in ceiling test
write-downs, drilling and operating risks, our ability to generate future
taxable income sufficient to utilize our NOLs before expiration, future
ownership changes which could result in additional limitations to our NOLs,
adverse effects of governmental and environmental regulation, losses possible
from pending or future litigation and the loss of officers or key employees. We
caution you not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report, and we undertake no obligation
to update this information. We urge you to carefully review and consider the
disclosures made in this and our other reports filed with the Securities and
Exchange Commission that attempt to advise interested parties of the risks and
factors that may affect our business.
Chesapeake Energy Corporation is one of the 8 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
April 9, 2003 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.
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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: April 10, 2003
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