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To: Mark Fowler who wrote (4940)	1/18/2001 7:40:21 PM
From: Libbyt	Read Replies (2) \| Respond to of 57684

CHK.... Mark....just FYI, in case you haven't seen this about CHK. quicken.com NEW YORK (Standard & Poor's CreditWire) Jan. 18, 2001--Standard & Poor's today upgraded its senior unsecured, preferred stock, and corporate credit ratings on Chesapeake Energy Corp. and its senior secured debt rating on Gothic Production Corp. (see list below). At the same time, Standard & Poor's removed these ratings from CreditWatch with positive implications, where they were placed on July 11, 2000. In addition, Standard & Poor's assigned its double-'B' bank loan rating to Chesapeake's $275 million bank credit facility and has withdrawn Gothic Energy Corp.'s corporate credit rating and senior secured debt rating. The outlook is positive. The ratings upgrade on Chesapeake Energy and Gothic Production reflects the following: - Management's commitment to a less leveraged capital structure, which has been demonstrated by the elimination of more than $200 million of obligations in large part through the issuance of new common equity since the start of 2000. As a result, pro forma for the Gothic transaction, total debt plus preferred stock per thousand cubic feet equivalent (mcfe) has fallen to about 73 cents per mcfe from about $1.00 per mcfe at the start of 2000. Management is targeting a capital structure of less than 50 cents of debt per mcfe, although realization of this objective is unlikely in the very near term. - Completion of Chesapeake's acquisition of Gothic. For Chesapeake, the acquisition of Gothic should enable the company to cut costs in its Midcontinent operating region, while providing substantial natural gas development opportunities on high-quality acreage. In addition, the company will have a better operational balance between its Gulf Coast and Midcontinent properties, enabling greater predictability of future production. An increased percentage of proved developed reserves (72% versus 49% in early 1997) should also provide for greater flexibility in capital expenditures during periods of depressed pricing. Although Gothic will remain an unguaranteed subsidiary, Standard & Poor's believes that Gothic will remain a key unit of Chesapeake and is likely to become fully integrated after Chesapeake calls Gothic's high-cost senior secured notes in May 2002. - Enhanced cash flow generation resulting from a timely and well-priced acquisition of cost-competitive properties. Chesapeake likely will add $65 million to $85 million of incremental cash flow in 2001, while incurring only about $200 million of incremental debt. - Chesapeake is paying a low price (about $1.08 per mcfe after allocation of $20 million to Gothic's unevaluated leasehold) relative to comparable transactions during the current period of very high commodity prices. - Improved liquidity because of a new bank credit facility and abundant near-term operating cash flow. - Increased certainty of capturing high commodity prices because of extensive commodity price hedging in 2001. Additional hedging is expected for 2002. The upgrade to Gothic Production's senior secured notes and the notching-up of Chesapeake's bank loan rating reflect significant overcollateralization. Gothic Production's notes currently are well secured and are likely to be extinguished early next year. Assets that are valued at more than three times the amount of debt outstanding will collateralize Chesapeake's bank loan facility. Pro forma for the Gothic transaction, Chesapeake Energy's proved reserve base totals about 1.65 billion cubic feet of natural gas equivalent (bcfe) with production that is highly exposed to North American natural gas (about 90% pro forma for the Gothic transaction), which is a commodity with favorable intermediate-term supply/demand fundamentals. Chesapeake's core areas of operation are the U.S. Midcontinent (about 65% of total production of 465 million cubic feet per day) and the Austin Chalk Trend of Texas and Louisiana (20% of production but a higher percentage of cash flow given richer margins). The emphasis on the relatively long-lived and low-risk Midcontinent region counterbalances the very short-lived nature of the company's Austin Chalk properties. The combined company will be fairly efficient, with production costs of 60 cents to 65 cents per mcfe, including production taxes. However, Chesapeake may be challenged to prevent finding and development costs from rising given escalating acquisition prices and increasing services costs. Production increases are likely now that the Austin Chalk represents a much smaller part of total production, although the company still may be challenged by the maturity of its asset base. The Gothic transaction and management's actions in 2000 have improved Chesapeake's financial profile, although it remains highly leveraged and will be subject to material refinancing risk between 2003 and 2006. At the closing of the transaction, Chesapeake's total obligations are about $1.2 billion. Projected 2001 discretionary cash flow of the combined entity should greatly exceed projected capital spending of $240 million to $270 million, which could afford additional opportunities for future net debt reduction, potentially involving the repayment and/or refinancing of Gothic's senior secured notes in 2002. Pro forma for the transaction, Chesapeake's total debt to projected EBITDA--assuming a return to mid-cycle prices in 2001--will remain high at 3 times (x) to 3.5x. However, these credit measures mark a meaningful improvement from pre-transaction estimates of 4x to 4.5x. Financial flexibility remains adequate in the near term because of the company's strong operating cash flow and new bank credit facility, but $770 million of long-term debt and the company's bank credit facility mature between 2003 and 2006, which could pose refinancing risk if the company does not continue to improve its financial profile. OUTLOOK: POSITIVE Chesapeake's management is expected to continue to deleverage the company. The company's financial profile could improve substantially in 2001 if it exploits robust natural gas markets and productively reinvests free cash flow. The potential elimination of Gothic's high-cost senior secured debt with restrictive financial covenants in 2002 could spur lower ongoing fixed charges and greater financial flexibility, Standard & Poor's said. RATINGS UPGRADED AND REMOVED FROM CREDITWATCH WITH POSITIVE IMPLICATIONS: TO FROM -Chesapeake Energy Corp. Corporate credit rating B+ B Senior unsecured debt B+ B Preferred stock B- D -Gothic Production Co. Senior secured debt BB CCC RATINGS WITHDRAWN: -Gothic Energy Corp. Corporate credit rating NR CCC Senior secured debt NR CC RATING ASSIGNED: -Chesapeake Energy Corp. Bank loan rating BB

To: Mark Fowler who wrote (4940)	1/18/2001 7:41:19 PM
From: Si_Detective	Read Replies (1) \| Respond to of 57684

Actually I like mxim more than lltc. Lltc is more conservative, they're very focus in high performance analog products, all the income goes to bank. Mxim more aggressive in investing in future growth, one example is they bought Tektronics' specialty fab for high speed few years back, now it's enabling them into com sector. Both are well run company and has highest profit margin, highest employee ownership, highest ... :)