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Gold/Mining/Energy : Chesapeake Energy CHK -- Ignore unavailable to you. Want to Upgrade?

To: Mark Adams who wrote (348)	3/6/1998 10:50:00 AM
From: Taylor Mill	Read Replies (1) \| Respond to of 726

This affects alot of companies who follow the Full Cost acctg standard. "Under Securities and Exchange Commission regulations, Chesapeake was forced to take a charge against earnings." Due to the precipitous price declines, CHK is just one of many E&P companies who have already announced writedowns at year end as a result of the Full Cost ceiling test. IMO, it was possible but highly unlikely that CHK might have avoided a ceiling test writedown because they took a large one in their FY ending in June 1997. But with the new change in FY to Dec 31 they had to apply the test again. With the huge exposure due to the crude oil price decline and no offsetting effect of gas prices, this charge was necessary and apparently surprised no one. The market seems to be clearly looking ahead and not behind and considers this report a non-event.