8-KOther Events

EXPAND ENERGY Corp 8-K Report (Dec 5, 2002)

Filed December 5, 2002For Securities:EXEEXEELEXEEWEXEEZ

Summary

Chesapeake Energy Corporation (CHK) filed an 8-K on December 5, 2002, to update its 2003 forecast. The primary driver for the revision is the anticipated acquisition of Mid-Continent gas properties from ONEOK, Inc., with a projected closing date of January 31, 2003. This acquisition is expected to significantly boost production volumes, with the updated forecast now projecting 207-212 billion cubic feet of gas equivalent (bcfe) for 2003, an increase from the previous 190-195 bcfe projection. In addition to the production increase, the company also announced a significant after-tax loss of $7.5 million related to the write-down of its investment in Seven Seas Petroleum Inc.'s senior secured debt. This write-down revises the carrying value from $20.0 million to $7.5 million and follows a previously reported $3.0 million impairment of its equity position in Seven Seas. Investors should note that these projections are forward-looking statements and subject to risks and uncertainties, including commodity price volatility and the potential impact of selling or trading Permian Basin assets.

Key Highlights

  • 1Chesapeake Energy Corporation (CHK) updated its 2003 forecast based on the planned acquisition of $300 million in Mid-Continent gas properties from ONEOK, Inc.
  • 2The acquisition is expected to close on January 31, 2003, and is projected to increase 2003 production to 207-212 bcfe (91% gas), up from the previous 190-195 bcfe (90% gas) guidance.
  • 3Projected per unit operating expenses are largely stable, with lease operating expenses revised slightly downward.
  • 4Marketing and other income and interest expense projections were slightly increased.
  • 5The company anticipates an average 2003 tax rate of 40%, expected to be deferred.
  • 6Guidance may need modification if Chesapeake successfully trades or sells its Permian Basin assets in 2003.
  • 7CHK will report a $7.5 million after-tax loss from a write-down of its investment in Seven Seas Petroleum Inc.'s senior secured debt, reducing its carrying value to $7.5 million.

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