Summary
Chesapeake Energy Corporation (EXE) announced on September 3, 2002, significant updates regarding its hedging strategies and the completion of several strategic acquisitions. The company has enhanced its 2003 hedging positions, securing prices for a substantial portion of its projected natural gas and oil production. This proactive approach aims to mitigate commodity price volatility and provide greater revenue predictability. Furthermore, Chesapeake has successfully closed three of its previously announced Mid-Continent gas acquisitions, with a fourth expected to close imminently. These acquisitions significantly boost the company's estimated proved reserves and current production. The company emphasizes its focused strategy on consolidating Mid-Continent gas assets, positioning itself as a leading producer in a key U.S. supply basin, with the goal of delivering superior investor returns through operational efficiencies and strategic growth.
Key Highlights
- 1Company has hedged 56% of projected Q1 2003 natural gas volumes at an average NYMEX price of $4.00 per mmbtu.
- 2100% of projected full-year 2003 oil volumes are hedged at an average NYMEX price of $27.50 per barrel.
- 3Three Mid-Continent gas acquisitions have been completed, with a fourth pending, increasing estimated proved reserves by 125 Bcfe and current production by 28 Mmcfe per day.
- 4Total estimated proved reserves now exceed 2.1 Tcfe and daily production surpasses 500 Mmcfe.
- 5New gas hedges are straight swaps, while existing gas hedges include cap-swaps and collars.
- 6New oil hedges are swaps with a counterparty cancellation option if NYMEX oil prices fall below $21.00 per barrel.
- 7The company believes decreasing natural gas production and stable to increasing demand will support higher gas prices in 2003.