Oklahoma

The United States District Court for the Western District ofOklahoma dismissed the securities litigation filed in late 1997against Chesapeake Energy and its officers and directors and ruledin their favor. The litigation, which originally consisted of 12lawsuits but which was consolidated into one class action suit in1998, charged that Chesapeake had misstated or omitted factsconcerning its activities in the Louisiana Austin Chalk Trend fromJan. 25, 1996 through June 25, 1997. The shareholder suits allegedthat they had been mislead by Chesapeake into thinking that thecompany expected to operate successfully in the entire Austin Chalkarea, including the area outside Masters Creek, resulting in aninflated share price. Shareholders said rather than disclosingunsuccessful drilling results in the outer Masters Creek area,company insiders disposed of nearly 200,000 company shares with amarket value of about $2.2 million. In June 1997, Chesapeakeannounced it expected to take a full-cost write-down of itsinvestment in areas of Louisiana outside of Masters Creek totaling$150 million to $200 million. Following that, Chesapeake’s stockprice plummeted. In dismissing the plaintiffs’ amended complaint onMarch 3, the Court found that throughout the alleged class period,Chesapeake had disclosed to its investors the “precise risks”associated with its investments and activities in the LouisianaTrend. The court also determined that the plaintiffs had providedno factual support for their allegations of misstatements oromissions by Chesapeake.

The United States District Court for the Western District ofOklahoma has dismissed the securities litigation filed in late 1997against Chesapeake Energy and its officers and directors and ruledin their favor, the company said yesterday. The litigation, whichoriginally consisted of 12 lawsuits but which was consolidated intoone class action suit in 1998, charged that Chesapeake hadmisstated or omitted facts concerning its activities in theLouisiana Austin Chalk Trend from Jan. 25, 1996 through June 25,1997.

As part of a continued streamlining, Kinder Morgan Inc. unloadedall of its Oklahoma, Kansas and West Texas gathering and processingbusinesses last week to ONEOK Inc. In addition, ONEOK agreed to buyKinder’s marketing and trading business as well as certain storageand transmission pipelines in the Midcontinent.

Kinder Morgan Inc. and ONEOK Inc. agreed for ONEOK to buy all ofKinder’s gas gathering and processing businesses in Oklahoma,Kansas and West Texas, the companies announced Tuesday. Inaddition, ONEOK agreed to buy Kinder’s marketing and tradingbusiness as well as certain storage and transmission pipelines inthe Midcontinent.

At an analyst meeting yesterday, executives from theOklahoma-City based Kerr-McGee, a major independent oil and gasproducer, outlined the company’s performance in 1999 and allowed afew glimpses into its strategy for next year.

Chesapeake Energy Corp. of Oklahoma City generated third-quarternet income of $18.1 million and cash flow from operations of $43.4million on 32.7 Bcfe of production. Average commodity pricesrealized during the quarter were $18.90/barrel of oil and $2.26/Mcfof gas for a gas equivalent price of $2.40/Mcfe.

Coho Energy Inc., a Dallas-based independent oil and gasproducer focused on exploitation of underdeveloped oil propertiesin Oklahoma and Mississippi, announced it has filed a petition forChapter 11 bankruptcy protection in Dallas’ Federal BankruptcyCourt. The decision to seek protection was taken by Coho andcertain subsidiaries because the resolution of a restructuringcannot be completed without the protection and assistance of thebankruptcy court, the company said. Timing of the bankruptcy filingwas imposed by several factors including the repayment accelerationof the Company’s $240 million debt by its bank creditors lastThursday (See Daily GPI, Aug. 20), the inability of the banks andthe bondholders (the two large creditor groups) to reach asatisfactory agreement with each other, and the potential for oneof the bondholder’s being granted a summary judgment in its lawsuitagainst Coho for full payment of principal and past due interest.Coho said it is continuing to discuss a solution to its capitalneeds with the banks, the bondholders and other potentialinvestors. The company expects to file a plan of reorganizationwith the bankruptcy court in the near future.

Chesapeake Energy Corp. of Oklahoma City, OK, fully exercised ona cash-less basis the common stock purchase warrant issued to itfrom Gothic Energy Corp. in March 1998 and had thereby acquired2,394,125 shares of Gothic common stock. Chesapeake now owns about13% of Gothic’s common stock. The warrant for 2,439,246 shares hadbeen issued to Chesapeake as part of a transaction involving theacquisition by Chesapeake of shares of Gothic’s senior redeemablepreferred stock, a 50% interest in Gothic’s Arkoma basin gas andoil properties and a 50% interest in substantially all of Gothic’sundeveloped acreage. The shares were issued pursuant to thecash-less exercise provisions of the warrant that permittedChesapeake to surrender the right to exercise the warrant inexchange for a number of shares (45,121) of Gothic common stock.

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