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ended June 30, 1992 and 1993 to conform to the presentation used for the June 30, 1994 consolidated fInancial statements. ACCOUNTING FOR FUTURES CONTRACTS Periodically, the

company enters into futures contracts to hedge a portion of its future oil and gas production. The market value changes

of these contracts are recognized in revenues when the contracts are closed.

DEBT ISSUE COSTS Other assets relate primarily to debt issue costs associated with the issuance of Senior Notes (see Note 2) on March 31, 1994. The remaining unamortized

costs at June 30, 1994 totaled $2,448,000, and are being amortized over the life of the Senior Notes. NOTE 2. SENIOR NOTES

On March 31, 1994, the company completed a private

offering (the "Senior Note Offering") of 47,500 Units consisting of an aggregate of $47,500,000 principal amount of 12% Senior Notes due 2001 ("Senior Notes") and 486,875 warrants ("Warrants") to purchase 486,875 shares of the company's common stock ("Warrant Shares")

at an exercise price of $01 per Warrant Share. The

The only affiliate securities constituting a substantial portion of the collateral for the Notes are the general partner interests in CEX. The company is a holding

company and owns no operating assets and has no significant operations independent of its subsidiaries. Separate financial statements of the Subsidiary Guarantors have not been provided because the company believes they are not material to investors. CEX is a general partnership which is 90% owned by GUI, a wholly-owned subsidiary of the company, and 10%

owned directly by the company. GEX owns all of the company's producing properties. The CEX general partnership condensed financial statements were prepared

on a separate entity basis as reflected in the company's books and records and include all material costs of doing business as if the partnership were on a stand-alone basis. No provision has been made for income taxes because the partnership is not a taxpaying entity.

The company's bank credit agreement prohibits any distributions by CEX to its partners (the company and

Warrants expire on March 1, 1999. In exchange for 8,000 Units, the company acquired from TCW 576,923 shares of the company's 9% cumulative convertible preferred stock and all rights to dividends thereon, warrants to purchase 312,001 shares of the company's common stock and 50% of an outstanding overriding royalty interest held byTCW. In September 1994, the company offered to exchange the Senior Notes for 12% Senior Exchange Notes due 2001 ("Senior Exchange Notes") in a registered exchange offer. The Senior Notes and the Senior Exchange Notes have identical terms. The company also registered the Warrants and the Warrant Shares.

has been accelerated. The pledge agreement securing the company's obligations under the Notes requires that all dividends and distributions from Subsidiary Guarantors be paid to the collateral agent thereunder upon an event of default under the Indenture governing the Notes. There are no other restrictions on the payment of cash dividends by Subsidiary Guarantors. Set forth below are condensed consolidating financial statements of GEX, the other Subsidiary Guarantors, all

All subsidiaries of the company (the "Subsidiary

Subsidiary Guarantors combined and the company

Guarantors") have fully and unconditionally guaranteed


the company's obligations under the Notes on a joint and several basis. In addition, the securities of the Subsidiary Guarantors have been pledged to secure performance of such obligations. Each of the Subsidiary Guarantors is a direct or indirect wholly-owned subsidiary of the company.

GOT) if the maturity of any obligations owing to the lender



Profile for Chesapeake Energy

Annual Report 1994  

Annual Report 1994