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) JUNE 27, 1997
CHESAPEAKE ENERGY CORPORATION
(Exact name of Registrant as specified in its Charter)
OKLAHOMA 1-13726 73-1395733
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6100 NORTH WESTERN AVENUE, OKLAHOMA CITY, OKLAHOMA 73118
(Address of principal executive offices) (Zip Code)
(405) 848-8000
(Registrant's telephone number, including area code)
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
On June 27, 1997, Chesapeake Energy Corporation ("Chesapeake") issued a
press release announcing refocused Louisiana drilling program and expected
asset writedown. The June 27, 1997 press release is filed herewith as Exhibit
99 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits. The following exhibit is filed herewith:
99 Press Release issued by the Registrant on June 27, 1997.
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: MARCUS C. ROWLAND
Marcus C. Rowland
Vice President - Chief Financial Officer
Dated: June 30, 1997
__________________________EXHIBIT INDEX______________________________
EXHIBIT DESCRIPTION METHOD OF FILING
- ------- ----------- ----------------
99 Press Release issued by the Filed herewith electronically
Registrant on June 27, 1997.
CONTACT: MARC ROWLAND, CHIEF FINANCIAL OFFICER
(405)848-8000, EXT. 232
FOR IMMEDIATE RELEASE TOM PRICE, JR.,VICE PRESIDENT-
JUNE 27, 1997 CORPORATE DEVELOPMENT
(405)848-8000, EXT. 257
CHESAPEAKE ENERGY CORPORATION ANNOUNCES
REFOCUSED LOUISIANA DRILLING PROGRAM
AND EXPECTED ASSET WRITEDOWN
OKLAHOMA CITY, OKLAHOMA, JUNE 27, 1997 -- Chesapeake Energy Corporation
(NYSE:CHK) today announced that as a result of recent disappointing drilling
results in the areas of Louisiana outside of Masters Creek, it has refocused
its Louisiana Austin Chalk Trend drilling program into the Masters Creek area.
Due to the significant leasehold and drilling costs associated with its
investments outside of Masters Creek, the company expects to incur a full-cost
ceiling writedown of approximately $150-200 million (pre-tax) as of June 30,
1997.
Because of Chesapeake's disappointing results outside of Masters Creek, the
company's Louisiana rig count is expected to remain at 8-12 rather than
increasing to the previously planned 15-20 rigs. The company estimates that
75-80% of these rigs will work in developing the company's approximate
inventory of 200 drillsites in Masters Creek. The other rigs in Louisiana will
work in developing more limited areas in South Brookeland, St. Landry, Baton
Rouge and Livingston where the company believes drilling success can be
achieved. An operations update and conference call will be scheduled in July.
As a consequence of Chesapeake's refocused Louisiana drilling program, the
company's capital expenditure budgets for fiscal years 1998 and 1999 have been
reduced to approximately $275-300 million per year from previously forecasted
amounts of $400-425 million per year. This lower level of capital expenditures
will lead to reduced production growth in fiscal years 1998 and 1999 from
previous estimates. Chesapeake's current estimates for its production are
21.5-22 Bcfe for the fourth quarter of fiscal 1997, approximately 80 Bcfe for
fiscal 1997, approximately 95-100 Bcfe for fiscal 1998, and approximately 115-
120 Bcfe for fiscal 1999. Analysts' estimates of cash flow from operations and
earnings for fiscal 1998 and 1999 will need to be reduced accordingly.
Aubrey K. McClendon, the company's Chief Executive Officer, stated: "We
believe the refocusing of our Louisiana drilling program, the anticipated asset
writedown, and the reduction of fiscal 1998 and 1999 production estimates
should set the stage for initiating the recovery of shareholder value at
Chesapeake. We believe the company is now operationally repositioned to
execute its business strategy of growth through the drillbit on a more
consistent basis than was achieved in fiscal 1997. Chesapeake is currently
active in five major drilling programs in Louisiana, Texas, Oklahoma, New
Mexico and North Dakota/Montana. In these projects, we have a backlog of more
than 1,000 undrilled locations on our two million acre undeveloped acreage
inventory. We also have cash and investments of approximately $250 million
that should fund our anticipated drilling program through at least fiscal 1999.
Additionally, as evidence of our confidence in the future of our Louisiana
drilling activities, a common stock repurchase program is under consideration.
We apologize to our shareholders for the difficult period we have experienced
and look forward to regaining your confidence through better drilling results
in fiscal 1998."
Chesapeake Energy Corporation is an independent oil and natural gas producer
headquartered in Oklahoma City which specializes in utilizing advanced seismic,
drilling and completion technologies to develop new reserves of oil and natural
gas. The company's operations are focused on exploratory and developmental
drilling in major onshore producing areas of the United States.
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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 EXPECTATION, 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, UNCERTAINTIES ABOUT ESTIMATES OF
RESERVES, COMPETITION, GOVERNMENT REGULATION, AND THE ABILITY OF THE COMPANY TO
IMPLEMENT ITS BUSINESS STRATEGY. THESE AND OTHER RISKS ARE DESCRIBED IN THE
COMPANY'S REPORTS THAT ARE AVAILABLE FROM THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION.