Chesapeake Energy Corporation Posts Strong Operational and Financial Results For the Third Quarter of 2003
Third Quarter 2003 Net Income Available to Common Shareholders Reaches $82 Million on Revenue of $455 Million and Production of 71 Bcfe
Company Also Reports Significant Additions to Its Oil and Natural Gas Hedging Positions, Increases Its 2003 and 2004 Production Forecasts Once Again And Announces $200 Million Acquisition of Natural Gas Properties
PRNewswire-FirstCall
OKLAHOMA CITY

Chesapeake Energy Corporation today reported its financial and operating results for the 2003 third quarter. For the quarter, Chesapeake generated net income available to common shareholders of $81.9 million ($0.33 per fully diluted common share), operating cash flow of $247.7 million (defined as cash flow from operating activities before changes in assets and liabilities) and ebitda of $285.3 million (defined as income before income taxes, interest expense, and depreciation, depletion and amortization expense) on revenue of $454.5 million.

The company's 2003 third quarter net income available to common shareholders included a $0.4 million ($0.00 per share) after-tax non-cash unrealized gain recorded in oil and gas sales resulting from the application of SFAS 133 to the company's oil and natural gas derivative contracts that do not qualify for hedge accounting. In addition, interest expense included a $1.9 million ($0.01 per share) after-tax non-cash unrealized loss resulting from the application of SFAS 133 to the company's interest rate derivative contracts that do not qualify for hedge accounting.

During the third quarter, Chesapeake produced 71.0 billion cubic feet of natural gas equivalent (bcfe), which compares favorably to the 46.7 bcfe produced in the 2002 third quarter and the 67.3 produced in the 2003 second quarter. The 2003 third quarter's 71.0 bcfe of production was comprised of 63.7 billion cubic feet of natural gas (bcf) (90% on a natural gas equivalent basis) and 1.2 million barrels of oil and natural gas liquids (mmbo) (10% on a natural gas equivalent basis). Chesapeake's average daily production rate for the quarter was 772 million cubic feet of natural gas equivalent production (mmcfe), which consisted of 692 mmcf of gas and 13,220 barrels of oil and natural gas liquids.

Oil and natural gas production in the 2003 third quarter increased 52% year-over-year from the 2002 third quarter and 5.4% sequentially from the 2003 second quarter. Of the 3.6 bcfe in sequential production growth during the third quarter, 34% was internally generated organic drillbit growth. This 1.2 bcfe of organic sequential production growth equals a sequential quarterly organic growth rate of just under 2% and an annualized organic growth rate of 8%. The 2003 third quarter was Chesapeake's ninth consecutive quarter of sequential production growth. During the past nine quarters, Chesapeake's production has increased 81%, for an average sequential quarterly growth rate of 7% and an annualized growth rate of 30%.

Average prices realized during the 2003 third quarter (including realized gains or losses from oil and gas derivatives, but excluding unrealized gains or losses on such derivatives) were $26.20 per barrel of oil (bo) and $4.92 per thousand cubic feet of natural gas (mcf), for a realized gas equivalent price of $4.86 per thousand cubic feet of natural gas equivalent (mcfe). Chesapeake's realized pricing differentials to NYMEX during the quarter averaged a negative $2.07 per bo and a negative $0.44 per mcf. Realized gains or losses from hedging activities generated a $1.68 loss per bo and a $0.31 gain per mcf.

Key Operational and Financial Statistics for the 2003 Third Quarter

The table below summarizes Chesapeake's key statistics during the 2003 third quarter and compares them to the 2003 second quarter and the 2002 third quarter:

                                                  Three Months Ended:
                                              9/30/03   6/30/03  9/30/02
  Average daily production (in mmcfe)           772       740      507
  Gas as % of total production                   90        89       89
  Natural gas production (in bcf)              63.7      60.0     41.4
  Average realized gas price ($/mcf) (A)       4.92      4.73     3.39
  Oil production (in mbbls)                   1,216     1,224      872
  Average realized oil price ($/bo) (A)       26.20     26.24    25.67
  Natural gas equivalent production (in bcfe)  71.0      67.3     46.7
  Gas equivalent realized price ($/mcfe) (A)   4.86      4.70     3.49
  General and administrative costs ($/mcfe)    0.08      0.09     0.08
  Production taxes ($/mcfe)                    0.30      0.25     0.15
  Lease operating expenses ($/mcfe)            0.51      0.51     0.53
  Interest expense ($/mcfe) (A)                0.53      0.56     0.61
  DD&A of oil and gas properties ($/mcfe)      1.38      1.36     1.25
  Operating cash flow ($ in millions) (B)     247.7     226.1    101.8
  Operating cash flow ($/mcfe)                 3.49      3.36     2.18
  Ebitda ($ in millions) (C)                  285.3     266.4    116.3
  Ebitda ($/mcfe)                              4.02      3.96     2.49
  Net income available to common
   shareholders ($ millions)                   81.9      76.3     14.1


   (A)  includes the effects of realized gains or (losses) from hedging, but
        does not include the effects of unrealized gains or (losses) from
        hedging
   (B)  defined as cash flow provided by operating activities before changes
        in assets and liabilities
   (C)  defined as income before income taxes, interest expense, and
        depreciation, depletion and amortization expense


     Chesapeake Updates Production Forecasts and Hedging Information

Chesapeake's initial 2003 fourth quarter and updated full-year 2003 and 2004 forecasts are attached to this release in a new Outlook dated October 30, 2003 that is labeled Schedule "A". The company's previous Outlook of July 28, 2003 is provided as an attachment for comparative reference only and is labeled Schedule "B".

The October 30 Outlook reflects a projected 2003 fourth quarter production level of 74.0-74.5 bcfe (807 mmcfe per day) and a projected 2003 full-year production volume of 269-270 bcfe (738 mmcfe per day), an increase of 3.7% from the 258-262 bcfe projected in the company's July 28 Outlook. The company has now increased its full-year 2003 production estimate by approximately 40% since the beginning of the year. Furthermore, the October 30 Outlook reflects a 7.5% increase in the company's projected 2004 production volumes to 297-303 bcfe (822 mmcfe per day) from the 277-281 bcfe projected in its July 28 Outlook. Chesapeake believes its 2004 production will exceed 2003's production by at least 11%.

Chesapeake significantly increased its hedging positions during the run-up in gas prices that occurred earlier this month. During the first two weeks of October, the company hedged 86 bcf of natural gas at an average NYMEX price of $5.13 per mcf and 700 mbo at an average NYMEX price of $30.85 per bo. The following tables compare projected 2003-2007 oil and natural gas production that was hedged as of October 30, 2003 versus what was hedged as of July 28, 2003:

                   Hedged Positions as of October 30, 2003

                             Oil               Natural Gas
  Quarter or Year   % Hedged    $ NYMEX    % Hedged   $ NYMEX
  4Q 2003             100%       $28.69       83%       $5.64
  2004                 94%       $28.61       51%       $5.28
  2005                ---           ---       16%       $4.82
  2006                ---           ---        9%       $4.74
  2007                ---           ---        8%       $4.76


                     Hedged Positions as of July 28, 2003
                             Oil                Natural Gas
  Quarter or Year   % Hedged    $ NYMEX    % Hedged   $ NYMEX
  4Q 2003              79%       $28.07       63%       $5.72
  2004                 63%       $27.85       26%       $5.51
  2005                ---           ---       15%       $4.79
  2006                ---           ---        9%       $4.74
  2007                ---           ---        9%       $4.76


Depending on changes in oil and natural gas futures markets and management's view of underlying oil and natural gas supply and demand trends, Chesapeake may either increase or decrease its hedging positions at any time in the future without notice.

      Chesapeake Provides Operational Update and Announces Agreement
     to Acquire $200 Million of Natural Gas Properties in South Texas

As evidenced by Chesapeake's strong organic production growth during the quarter, the company's drilling programs continue to generate exceptional results. During the quarter, Chesapeake drilled 100 gross operated (81 net) wells, completing 95% of these as successful producers. The company's operated rig count during the quarter averaged 43 rigs compared to 35 and 28 rigs in the 2003 second and first quarters, respectively. Today the company's operated rig count is 43.

In addition to Chesapeake's primary focus area of the Mid-Continent, the company is also active in two secondary areas: the Permian Basin in west Texas and eastern New Mexico and the onshore Gulf Coast in Texas and Louisiana. These two areas are currently responsible for 11% of Chesapeake's production and 8% of the company's proved reserves. Although these areas are and will remain secondary in importance to the company, Chesapeake periodically finds acquisition candidates that are attractive in these areas.

The company has recently entered into one such acquisition in south Texas. Chesapeake has agreed to acquire $200 million of south Texas natural gas assets from Houston-based privately-owned Laredo Energy, L.P. and its partners. In this transaction, Chesapeake will acquire an internally estimated 196 bcfe of reserves, of which 108 bcfe are proved and 88 bcfe are probable or possible. After allocating $48 million of the $200 million purchase price to unevaluated leasehold for the probable and possible reserves and exploratory acreage, Chesapeake's acquisition cost per mcfe of proved reserves will be $1.41. Including future leasehold and drilling costs for fully developing the proved, probable and possible reserves, Chesapeake estimates that its all-in acquisition cost for the 196 bcfe to be acquired will be $1.51 per mcfe.

Current production from the acquired properties is approximately 30 mmcfe per day. The proved reserves have a reserves-to-production index of 10 years, are 100% natural gas and are 32% proved developed. Initial lease operating expenses on the acquired properties should average $0.09 per mcfe, compared to $0.52 per mcfe for Chesapeake during the first three quarters of 2003 and approximately $0.70 per mcfe for the company's peer group during the first three quarters of 2003. The company has hedged 100% of the projected Laredo production volumes at average NYMEX prices of $5.76 per mcf for November and December 2003 and $5.20 per mcf for the full-year 2004.

The Laredo acquisition is scheduled to close on October 31, 2003. The company intends to finance the acquisition using cash on hand and borrowings from its bank credit facility. Chesapeake expects to repay these borrowings using its excess cash flow in the months ahead and has not yet made a decision on whether or how to permanently finance the Laredo acquisition.

The Laredo properties are located in the Zapata County portion of the south Texas Lobo Trend. Over the past two years, Chesapeake has built a growing operational presence in south Texas where the company believes its deep drilling, 3-D seismic and tight sands expertise can provide competitive advantages and attractive returns on its invested capital.

Management Comments

Aubrey K. McClendon, Chesapeake's Chief Executive Officer, commented, "We are pleased to announce another strong quarter of operational and financial performance. The 2003 third quarter featured delivery of excellent results from the business strategy set forth below:

   --  establishing strong organic production growth from our drilling
       programs,
   --  completing focused and complementary acquisitions of high-margin,
       geographically concentrated natural gas properties,
   --  opportunistically hedging high oil and natural gas prices,
   --  continuing balance sheet improvement,
   --  maintaining low operating costs, and
   --  generating high returns on invested capital.

Chesapeake's value-creating financial and operating strategies should enable the company to continue generating significant increases in shareholder value in the years ahead."

Conference Call Information

A conference call has been scheduled for Friday morning, October 31, 2003 at 9:00 a.m. EST to discuss this earnings release. The telephone number to access the conference call is 913.981.5533. For those unable to participate in the conference call, a replay will be available from 12:00 p.m. EST on Friday, October 31, 2003 through midnight EST on Friday, November 14, 2003. The number to access the conference call replay is 719.457.0820 and the passcode is 670672. The conference call will also be simulcast live on the Internet and can be accessed at www.chkenergy.com by selecting "Conference Calls" under the "Investor Relations" section. The webcast of the conference call will be available on the website for one year.

This press release and the accompanying Outlooks include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our current expectations or forecasts of future events. They include estimates of oil and gas reserves, expected oil and gas production and future expenses, projections of future oil and gas prices, planned capital expenditures for drilling, leasehold acquisitions and seismic data, and statements concerning anticipated cash flow and liquidity, business strategy and other plans and objectives for future operations. Disclosures concerning derivative contracts and their estimated contribution to our future results of operations are based upon market information as of a specific date. These market prices are subject to significant volatility. Although we believe the expectations and forecasts reflected in these and other forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Factors that could cause actual results to differ materially from expected results are described under "Risk Factors" in Item 1 of our 2002 Form 10-K/A and subsequent filings with the Securities and Exchange Commission. They include the volatility of oil and gas prices; adverse effects our substantial indebtedness could have on our operations and future growth; our ability to compete effectively against strong independent oil and gas companies and majors; the cost and availability of drilling and production services; possible financial losses as a result of our commodity price and interest rate risk management activities; uncertainties inherent in estimating quantities of oil and gas reserves, including reserves we acquire, projecting future rates of production and the timing of development expenditures; exposure to potential liabilities of acquired properties; our ability to replace reserves; the availability of capital; changes in interest rates; and drilling and operating risks. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release, and we undertake no obligation to update this information.

The Securities and Exchange Commission has generally permitted oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use the terms "probable" and "possible" reserves or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC's guidelines may prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the company.

Chesapeake Energy Corporation is one of the six largest independent U.S. natural gas producers. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and producing property acquisitions in the Mid-Continent region of the United States. The company's Internet address is www.chkenergy.com .

                        CHESAPEAKE ENERGY CORPORATION
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in 000's, except per share data)
                                 (unaudited)
  THREE MONTHS ENDED:                 September 30, 2003  September 30, 2002
                                           $     $/mcfe        $     $/mcfe
  REVENUES:
    Oil and gas sales                  $345,587   $4.87    $154,249   $3.30
    Oil and gas marketing sales         108,962    1.53      42,216    0.90
      Total Revenues                    454,549    6.40     196,465    4.20

  OPERATING COSTS:
    Production expenses                  35,944    0.51      24,950    0.53
    Production taxes                     21,638    0.30       6,807    0.15
    General and administrative            5,589    0.08       3,777    0.08
    Oil and gas marketing expenses      105,849    1.49      41,148    0.88
    Oil and gas depreciation,
     depletion, and amortization         97,947    1.38      58,334    1.25
    Depreciation and amortization
     of other assets                      4,841    0.07       3,727    0.08
      Total Operating Costs             271,808    3.83     138,743    2.97

  INCOME FROM OPERATIONS                182,741    2.57      57,722    1.23

  OTHER INCOME (EXPENSE):
    Interest and other income              (188)    ---       1,806    0.04
    Interest expense                    (40,851)  (0.57)    (26,599)  (0.57)
    Loss on investment in Seven Seas        ---     ---      (4,770)  (0.10)
    Loss on repurchases of Chesapeake debt  ---     ---        (489)  (0.01)
      Total Other Income (Expense)      (41,039)  (0.57)    (30,052)  (0.64)

  Income Before Income Taxes            141,702    2.00      27,670    0.59

  Income Tax Expense:
    Current                                 330    0.00         ---    0.00
    Deferred                             53,513    0.76      11,070    0.24
      Total Income Tax Expense           53,843    0.76      11,070    0.24

  NET INCOME                             87,859    1.24      16,600    0.35

  Preferred Stock Dividends              (5,979)  (0.09)     (2,526)  (0.05)

  NET INCOME AVAILABLE TO COMMON
   SHAREHOLDERS                         $81,880   $1.15     $14,074   $0.30


  EARNINGS PER COMMON SHARE:
     Basic                                $0.38               $0.08
     Assuming dilution                    $0.33               $0.08


  WEIGHTED AVERAGE COMMON AND COMMON
   EQUIVALENT SHARES OUTSTANDING
   (in 000's)
    Basic                               216,080             166,144
    Assuming dilution                   265,545             171,182


                        CHESAPEAKE ENERGY CORPORATION
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in 000's, except per share data)
                                 (unaudited)
  NINE MONTHS ENDED:                  September 30, 2003  September 30, 2002
                                           $     $/mcfe        $     $/mcfe
  REVENUES:
    Oil and gas sales                  $951,125   $4.87    $367,810   $2.79
    Oil and gas marketing sales         309,566    1.59     112,334    0.85
      Total Revenues                  1,260,691    6.46     480,144    3.64

  OPERATING COSTS:
    Production expenses                 101,664    0.52      71,252    0.54
    Production taxes                     57,336    0.29      19,934    0.15
    General and administrative           17,254    0.09      11,930    0.09
    Oil and gas marketing expenses      302,064    1.55     108,836    0.82
    Oil and gas depreciation,
     depletion, and amortization        266,131    1.36     157,731    1.20
    Depreciation and amortization
     of other assets                     12,647    0.07      10,489    0.08
      Total Operating Costs             757,096    3.88     380,172    2.88

  INCOME FROM OPERATIONS                503,595    2.58      99,972    0.76

  OTHER INCOME (EXPENSE):
    Interest and other income             1,356    0.01       7,343    0.06
    Interest expense                   (115,891)  (0.59)    (77,779)  (0.59)
    Loss on investment in Seven Seas        ---     ---      (4,770)  (0.04)
    Loss on repurchases of Chesapeake debt  ---     ---      (1,353)  (0.01)
      Total Other Income (Expense)     (114,535)  (0.58)    (76,559)  (0.58)

  Income Before Income Taxes and
   Cumulative Effect of Accounting
   Change                               389,060    2.00      23,413    0.18

  Income Tax Expense:
    Current                                 330     ---         ---     ---
    Deferred                            147,511    0.76       9,366    0.07
      Total Income Tax Expense          147,841    0.76       9,366    0.07

  NET INCOME BEFORE CUMULATIVE EFFECT
    OF ACCOUNTING CHANGE                241,219    1.24      14,047    0.11

  Cumulative Effect of Accounting
   Change, Net of Tax                     2,389    0.01         ---     ---

  NET INCOME                            243,608    1.25      14,047    0.11

  Preferred Stock Dividends             (15,484)  (0.08)     (7,588)  (0.06)

  NET INCOME AVAILABLE TO COMMON
   SHAREHOLDERS                        $228,124   $1.17      $6,459   $0.05


  EARNINGS PER COMMON SHARE:

    Basic
      Income Before Cumulative Effect
       of Accounting Change               $1.08               $0.04
      Cumulative Effect of Accounting
       Change                              0.01                 ---
      Net Income                          $1.09               $0.04

    Assuming dilution
      Income Before Cumulative Effect
       of Accounting Change               $0.95               $0.04
      Cumulative Effect of Accounting
       Change                              0.01                 ---
      Net Income                          $0.96               $0.04

  WEIGHTED AVERAGE COMMON AND COMMON
    EQUIVALENT SHARES OUTSTANDING
    (in 000's):

    Basic                               209,394             165,829

    Assuming dilution                   253,567             171,540


                        CHESAPEAKE ENERGY CORPORATION
          SUPPLEMENTAL DATA - OIL AND GAS SALES AND INTEREST EXPENSE
                                  (in 000's)
                                 (unaudited)

                                      Three Months Ended  Nine Months Ended
                                        September 30,       September 30,
                                       2003      2002      2003       2002

  Oil and Gas Sales:
    Oil sales                        $33,908   $24,302   $101,811   $63,017
    Oil derivatives - realized
     gains (losses)                   (2,045)   (1,918)    (8,924)    1,176
    Oil derivatives - unrealized
     gains (losses)                      185    (1,364)      (993)   (8,180)
          Total oil sales             32,048    21,020     91,894    56,013

    Gas sales                        293,309   116,551    889,598   309,827
    Gas derivatives - realized
     gains (losses)                   19,781    24,078    (65,028)   82,973
    Gas derivatives - unrealized
     gains (losses)                      449    (7,400)    34,661   (81,003)
          Total gas sales            313,539   133,229    859,231   311,797

          Total oil and gas sales   $345,587  $154,249   $951,125  $367,810

  Average Sales Price (excluding
   gains (losses) on derivatives):
    Oil ($ per bbl)                   $27.88    $27.87     $29.09    $24.96
    Gas ($ per mcf)                   $ 4.61    $ 2.81     $ 5.11    $ 2.65
    Gas equivalent ($ per mcfe)       $ 4.61    $ 3.02     $ 5.08    $ 2.83

  Average Sales Price (excluding
   unrealized gains (losses) on
   derivatives):
    Oil ($ per bbl)                   $26.20    $25.67     $26.54    $25.42
    Gas ($ per mcf)                   $ 4.92    $ 3.39     $ 4.74    $ 3.36
    Gas equivalent ($ per mcfe)       $ 4.86    $ 3.49     $ 4.70    $ 3.46

  Interest Expense:
    Interest                        $(38,855) $(29,381) $(113,011) $(82,616)
    Derivatives - realized
     gains (losses)                    1,097     1,065      2,453     2,650
    Derivatives - unrealized
     gains (losses)                   (3,093)    1,717     (5,333)    2,187
         Total Interest Expense     $(40,851) $(26,599) $(115,891) $(77,779)


                        CHESAPEAKE ENERGY CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (in 000's)
                                 (unaudited)

                                      September 30,  December 31,
                                          2003          2002

  Cash                                  $38,478       $247,637
  Other current assets                  338,252        187,680
       TOTAL CURRENT ASSETS             376,730        435,317

  Oil and gas properties, net         3,623,657      2,283,566
  Other fixed assets, net               151,620        106,318
  Deferred tax asset                        ---          2,071
  Other assets                          105,482         48,336
       TOTAL ASSETS                  $4,257,489     $2,875,608

  Current liabilities                  $426,177       $265,552
  Long term debt                      2,024,336      1,651,198
  Long term liabilities                  71,282         50,983
  Deferred tax liability                151,324            ---
       TOTAL LIABILITIES              2,673,119      1,967,733

  SHAREHOLDERS' EQUITY                1,584,370        907,875

  TOTAL LIABILITIES & SHAREHOLDERS'
   EQUITY                            $4,257,489     $2,875,608

  COMMON SHARES OUTSTANDING             216,403        190,144


                        CHESAPEAKE ENERGY CORPORATION
                    CONDENSED CONSOLIDATED CASH FLOW DATA
                                  (in 000's)
                                 (unaudited)


  THREE MONTHS ENDED:                September 30,   September 30,
                                         2003            2002

  Cash provided by operating
   activities                          $276,884        $138,833

  Cash (used in) investing
   activities                         $(284,994)      $(292,611)

  Cash provided by financing
   activities                           $10,679        $172,860


                        CHESAPEAKE ENERGY CORPORATION
                 RECONCILIATION OF CERTAIN FINANCIAL MEASURES
                                  (in 000's)
                                 (unaudited)

  THREE MONTHS ENDED:                September 30,   September 30,
                                         2003            2002

  CASH PROVIDED BY OPERATING
   ACTIVITIES                          $276,884        $138,833

  Adjustments:
    Changes in assets and liabilities   (29,175)        (37,064)

  OPERATING CASH FLOW*                 $247,709        $101,769


   *  Operating cash flow represents net cash provided by operating
      activities before changes in assets and liabilities.  Operating cash
      flow is presented because management believes it is a useful adjunct
      to net cash provided by operating activities under accounting
      principles generally accepted in the United States (GAAP).  Operating
      cash flow is widely accepted as a financial indicator of an oil and
      gas company's ability to generate cash which is used to internally
      fund exploration and development activities and to service debt.  This
      measure is widely used by investors and rating agencies in the
      valuation, comparison, rating and investment recommendations of
      companies within the oil and gas exploration and production industry.
      Operating cash flow is not a measure of financial performance under
      GAAP and should not be considered as an alternative to cash flows from
      operating, investing, or financing activities as an indicator of cash
      flows, or as a measure of liquidity.


  THREE MONTHS ENDED:                 September 30,   September 30,
                                          2003            2002

  Net income                            $87,859         $16,600

  Income tax expense                     53,843          11,070
  Interest expense                       40,851          26,599
  Depreciation and amortization
   of other assets                        4,841           3,727
  Oil and gas depreciation, depletion
   and amortization                      97,947          58,334

  EBITDA**                             $285,341        $116,330


   **  Ebitda represents net income (loss) before income tax expense
       (benefit), interest expense, and depreciation, depletion and
       amortization expense.  Ebitda is presented as a supplemental
       financial measurement in the evaluation of our business.  We believe
       that it provides additional information regarding our ability to meet
       our future debt service, capital expenditures and working capital
       requirements.  This measure is widely used by investors and rating
       agencies in the valuation, comparison, rating and investment
       recommendations of companies.  Ebitda is also a financial measurement
       that, with certain negotiated adjustments, is reported to our banks
       under our bank credit facilities and is used in our financial
       covenants under our bank credit facilities and the indentures
       governing our senior notes.  Ebitda is not a measure of financial
       performance under GAAP.  Accordingly, it should not be considered as
       a substitute for net income, income from operations, or cash flow
       provided by operating activities prepared in accordance with GAAP.
       Ebitda is reconciled to cash provided by operating activities as
       follows:


  THREE MONTHS ENDED:                September 30,   September 30,
                                         2003            2002

  CASH PROVIDED BY OPERATING
   ACTIVITIES                          $276,884        $138,833

  Changes in assets and liabilities     (29,175)        (37,064)
  Interest expense                       40,851          26,599
  Unrealized gains (losses) on oil
   and gas derivatives                      634          (8,764)
  Other non-cash items                   (3,853)         (3,274)

  EBITDA                               $285,341        $116,330


                               SCHEDULE "A"

                           CHESAPEAKE'S OUTLOOK

                          As of October 30, 2003

Quarter Ending December 31, 2003; Year Ending December 31, 2003; Year Ending

December 31, 2004.

We have adopted a policy of periodically providing investors with guidance on certain factors that affect our future financial performance. As of October 30, 2003, we are using the following key operating assumptions in our projections for the fourth quarter of 2003, full year 2003, and full year 2004.

The primary changes from our July 28, 2003 guidance are explained as follows:

   1)  We have updated the projected effects from changes in our hedging
       positions.
   2)  We have included our expectations for future NYMEX oil and gas prices
       to illustrate hedging effects only.  They are not a forecast of our
       expectations for 2003 or 2004 oil and natural gas prices.
   3)  We have increased our projected natural gas production for the full
       year 2003 and 2004.
   4)  We have included fourth quarter 2003 projections for the first time.


                                 Quarter Ending  Year Ending  Year Ending
                                  December 31,   December 31, December 31,
                                     2003          2003          2004
  Estimated Production:
    Oil - Mbo                       1,200         4,700         4,700
    Gas - Bcf                     66.8-67.3     241 - 242     269 - 275
    Gas Equivalent - Bcfe         74.0-74.5     269 - 270     297 - 303
    Daily gas equivalent
     midpoint - in Mmcfe              807           738           822
  NYMEX Prices (for calculation
   of realized hedging effects
   only):
    Oil - $/Bo                     $26.00        $29.74        $24.00
    Gas - $/Mcf                     $4.50         $5.36         $4.25
  Estimated Differentials to
   NYMEX Prices:
    Oil - $/Bo                     -$2.50        -$2.23        -$2.50
    Gas - $/Mcf                    -$0.60        -$0.55        -$0.60
  Estimated Realized Hedging
   Effects (based on expected
   NYMEX prices above):
    Oil - $/Bo                     +$2.73        -$1.20        +$4.22
    Gas - $/Mcf                    +$1.00        +$0.01        +$0.63
  Operating Costs per Mcfe of
   Projected Production:
    Production expense          $0.53 - 0.57  $0.53 - 0.57  $0.57 - $0.60
    Production taxes (generally
     7% of O&G revenues)        $0.31 - 0.33  $0.31 - 0.33  $0.27 - $0.30
    General and administrative  $0.09 - 0.10  $0.09 - 0.10  $0.09 - $0.10
    DD&A - oil and gas          $1.38 - 1.40  $1.38 - 1.40  $1.40 - $1.45
    Depreciation of other
     assets                     $0.08 - 0.10  $0.08 - 0.10  $0.08 - $0.10
    Interest expense (A)        $0.55 - 0.60  $0.55 - 0.60  $0.50 - $0.55
  Other Income and Expense
   per Mcfe: (B)
    Marketing and other income  $0.02 - 0.04  $0.02 - 0.04  $0.02 - $0.04

  Book Tax Rate                      38%           38%           38%
  Equivalent Shares Outstanding:
    Basic                          217,000 m     212,000 m     220,000 m
    Diluted                        267,000 m     257,000 m     270,000 m

  Capital Expenditures:
    Drilling, Land and Seismic   $175 - $200mm $675 - $725 mm $675 - $725 mm


   (A)  Does not include gains or losses on interest rate derivatives (SFAS
        133).
   (B)  Does not include the cumulative effect of the adoption of SFAS 143
        as of January 1, 2003.


  Commodity Hedging Activities

Periodically the Company utilizes hedging strategies to hedge the price of a portion of its future oil and gas production. These strategies include:

   (i)  For swap instruments, we receive a fixed price for the hedged
        commodity and pay a floating market price, as defined in each
        instrument, to the counterparty.  The fixed-price payment and the
        floating-price payment are netted, resulting in a net amount due to
        or from the counterparty.
   (ii) For cap-swaps, Chesapeake receives a fixed price and pays a floating
        market price.  The fixed price received by Chesapeake includes a
        premium in exchange for a "cap" limiting the counterparty's
        exposure.  In other words, there is no limit to Chesapeake's
        exposure but there is a limit to the downside exposure of the
        counterparty.
   (iii)Basis protection swaps are arrangements that guarantee a price
        differential of oil or gas from a specified delivery point.
        Chesapeake receives a payment from the counterparty if the price
        differential is greater than the stated terms of the contract and
        pays the counterparty if the price differential is less than the
        stated terms of the contract.


Commodity markets are volatile, and as a result, Chesapeake's hedging activity is dynamic. As market conditions warrant, the Company may elect to settle a hedging transaction prior to its scheduled maturity date and, as a result, look in the gain or loss on the transaction.

Chesapeake enters into oil and natural gas derivative transactions in order to mitigate a portion of its exposure to adverse market changes in oil and natural gas prices. Accordingly, associated gains or loses from the derivative transactions are reflected as adjustments to oil and gas sales. All realized gains and losses from oil and natural gas derivatives are included in oil and gas sales in the month of related production. Pursuant to SFAS 133, certain derivatives do not qualify for designation as cash flow hedges. Changes in the fair value of these non-qualifying derivatives that occur prior to their maturity (i.e. because of temporary fluctuations in value) are reported currently in the consolidated statement of operations as unrealized gains (losses) within oil and gas sales.

Following provisions of SFAS 133, changes in the fair value of derivative instruments designated as cash flow hedges, to the extent effective in offsetting cash flows attributable to hedged risk, are recorded in other comprehensive income until the hedged item is recognized in earnings. Any change in fair value resulting from ineffectiveness is recognized currently in oil and natural gas sales.

  The Company currently has in place the following natural gas swaps:

                                                            % Hedged
                     Avg. NYMEX              Avg. NYMEX  Assuming  Positions
                       Strike                   Price       Gas    as a % of
                       Price                 Including  Production Estimated
           Open Swaps Of Open   Gain from  Open & Locked    in    Total Gas
            in Bcf's   Swaps  Locked Swaps   Positions  Bcf's of: Production
  2003:
  4th Qtr    55.4      $5.59     $0.05         $5.64       67.0       83%

  2004:
  1st Qtr    45.5      $5.92     $0.05         $5.97       67.6       67%
  2nd Qtr    37.3      $4.96     $0.00         $4.96       67.6       55%
  3rd Qtr    30.4      $4.84     $0.00         $4.84       68.4       44%
  4th Qtr    23.3      $5.01     $0.00         $5.01       68.4       34%
  Total
   2004     136.5      $5.26     $0.02         $5.28      272.0       51%

  Total
   2005      45.6      $4.82     $0.00         $4.82      282.0       16%

  Total
   2006      25.6      $4.74     $0.00         $4.74      292.0        9%

  Total
   2007      25.6      $4.76     $0.00         $4.76      302.0        8%

  TOTALS
  2003-2007 288.7      $5.16     $0.02         $5.18      1,215       24%


Chesapeake has also entered into the following natural gas basis protection swaps:

                                                 Assuming Gas
                      Annual                      Production
                  Volume in Bcf's   NYMEX less:  in Bcf's of:  % Hedged
  2003 Remaining      41.4            $0.190        67.0          62%
  2004               157.4             0.173       272.0          58%
  2005               109.5             0.156       282.0          39%
  2006                47.5             0.155       292.0          16%
  2007                63.9             0.166       302.0          21%
  2008                64.0             0.166       312.0          21%
  2009                37.0             0.160       322.0          11%
  Totals             520.7            $0.167*    1,849.0          28%

   * weighted average

  The Company has entered into the following crude oil hedging arrangements:


                                                  % Hedged
                                                          Open Swap
                                                        Positions as
                            Avg. NYMEX  Assuming Oil     % of Total
               Open Swaps     Strike     Production       Estimated
               in Mmbo's      Price     in Mmbo's of:     Production

  Q4 - 2003*     1,223       $28.69        1,225             100%

  Q1 - 2004*     1,270       $28.58        1,275             100%

  Q2 - 2004*     1,161       $28.62        1,175              99%

  Q3 - 2004*     1,044       $28.75        1,150              91%

  Q4 - 2004*       920       $28.46        1,100              84%

  Total 2004     4,395       $28.61        4,700              94%

   * Swaps with a knockout price of $21.00, with the exception of 2,000 bopd
     in 2004 with a knockout price of $24.00, 1,000 bopd in Q3 and Q4 2004
     with a knockout price of $23.00, 1,000 bopd in Q4 2003 with a knockout
     price of $26.00, 3,000 bopd for 11/03 and 12/03 at a knockout price of
     $22.00, 2,000 bopd for 1/04 and 3-8/04 at a knockout price of $22.00,
     and 3,000 bopd in 2/04 at a knockout price of $22.00.


                               SCHEDULE "B"

            CHESAPEAKE'S PREVIOUS OUTLOOK AS OF JULY 28, 2003
                      (PROVIDED FOR REFERENCE ONLY)

             NOW SUPERSEDED BY OUTLOOK AS OF OCTOBER 30, 2003

 Quarter Ending September 30, 2003;  Year Ending December 31, 2003;  Year
                        Ending December 31, 2004.

We have adopted a policy of periodically providing investors with guidance on certain factors that affect our future financial performance. As of July 28, 2003, we are using the following key operating assumptions in our projections for the third quarter of 2003, full year 2003, and full year 2004.

The primary changes from our June 24, 2003 guidance are explained as follows:

   1)  We have updated the projected effects from changes in our hedging
       positions.
   2)  We have included our expectations for future NYMEX oil and gas prices
       to illustrate hedging effects only, they are not a forecast of our
       expectations for 2003 oil and natural gas prices.
   3)  We have increased our projected oil and natural gas production for
       the full year 2003 and 2004.
   4)  We have included third quarter 2003 projections for the first time.

                          Quarter Ending  Year Ending  Year Ending
                          September 30,   December 31, December 31,
                                2003         2003         2004
  Estimated Production:
    Oil - Mbo                  1,200        4,700        4,700
    Gas - Bcf               60.5 - 61.0   230 - 234    249 - 253
    Gas Equivalent - Bcfe   67.5 - 68.0   258 - 262    277 - 281
    Daily gas equivalent
     midpoint - in Mmcfe        735          710          765
  NYMEX Prices (for
   calculation of hedging
   effects only):
    Oil - $/Bo                $25.00       $28.19       $24.00
    Gas - $/Mcf                $5.43        $5.79        $4.50
  Estimated Differentials to
   NYMEX Prices:
    Oil - $/Bo                -$2.50       -$2.23       -$2.00
    Gas - $/Mcf               -$0.50       -$0.50       -$0.50
  Estimated Hedging Effects
   (based on expected
   NYMEX prices above):
    Oil - $/Bo                +$2.64       -$0.24       +$2.43
    Gas - $/Mcf               +$0.24       -$0.25       +$0.29
  Operating Costs per Mcfe
   of Projected Production:
    Production expense     $0.53 - 0.57 $0.53 - 0.57 $0.57 - $0.60
    Production taxes
     (generally 6% of
      O&G revenues)        $0.31 - 0.33 $0.31 - 0.33 $0.27 - $0.30
    General and
     administrative        $0.09 - 0.10 $0.09 - 0.10 $0.09 - $0.10
    DD&A - oil and gas     $1.35 - 1.40 $1.35 - 1.40 $1.37 - $1.42
    Depreciation of other
     assets                $0.08 - 0.10 $0.08 - 0.10 $0.08 - $0.10
    Interest expense       $0.60 - 0.65 $0.60 - 0.65 $0.55 - $0.60
  Other Income and Expense
   per Mcfe: (A)
    Marketing and Other
     income                $0.02 - 0.04 $0.02 - 0.04 $0.02 - $0.04

  Book Tax Rate -
   All Deferred                 38%           38%           38%
  Equivalent Shares
   Outstanding:
    Basic                    216,000 m     214,000 m      218,000
    Diluted                  266,000 m     258,000 m      268,000

  Capital Expenditures:
    Drilling, Land
     and Seismic         $150 - $155 mm  $600 - $650 mm  $600 - $650 mm


   (A)  Does not include the cumulative effect of the adoption of SFAS 143.


  Commodity Hedging Activities

Periodically the Company utilizes hedging strategies to hedge the price of a portion of its future oil and gas production. These strategies include:

    (i)  swap arrangements that establish an index-related price above which
         the Company pays the counterparty and below which the Company is
         paid by the counterparty,
    (ii) the purchase of index-related puts that provide for a "floor" price
         below which the counterparty pays the Company the amount by which
         the price of the commodity is below the contracted floor,
   (iii) the sale of index-related calls that provide for a "ceiling" price

         above which the Company pays the counterparty the amount by which
         the price of the commodity is above the contracted ceiling,
    (iv) basis protection swaps, which are arrangements that guarantee the
         price differential of oil or gas from a specified delivery point or
         points, and
    (v)  collar arrangements that establish an index-related price below
         which the counterparty pays the Company and a separate index-
         related price above which the Company pays the counterparty.

Commodity markets are volatile, and as a result, Chesapeake's hedging activity is dynamic. As market conditions warrant, the Company may elect to settle a hedging transaction prior to its scheduled maturity date and, as a result, realize a gain or loss on the transaction.

Results from commodity hedging transactions are reflected in oil and gas sales to the extent related to the Company's oil and gas production. The Company only enters into commodity hedging transactions related to the Company's oil and gas production volumes or Chesapeake Energy Marketing, Inc.'s physical purchase or sale commitments. Gains or losses on crude oil and natural gas hedging transactions are recognized as price adjustments in the months of related production.

The Company currently has in place the following natural gas hedging arrangements:

                                                            % Hedged
                     Avg. NYMEX              Avg. NYMEX  Assuming  Positions
                       Strike                   Price       Gas    as a % of
                       Price                 Including  Production Estimated
           Open Swaps Of Open   Gain from  Open & Locked    in    Total Gas
            in Bcf's   Swaps  Locked Swaps   Positions  Bcf's of: Production

  2003:

  3rd Qtr     37.7     $5.45     $0.05         $5.50      60.8        62%

  4th Qtr     38.3     $5.65     $0.07         $5.72      60.9        63%

  Remaining
   2003       76.0     $5.55     $0.06         $5.61     121.7        62%


             NOW SUPERSEDED BY OUTLOOK AS OF OCTOBER 30, 2003

                                                            % Hedged
                     Avg. NYMEX              Avg. NYMEX  Assuming  Positions
                       Strike                   Price       Gas    as a % of
                       Price                 Including  Production Estimated
           Open Swaps Of Open   Gain from  Open & Locked    in    Total Gas
            in Bcf's   Swaps  Locked Swaps   Positions  Bcf's of: Production

  2004:

  1st Qtr    26.4      $6.12     $0.08        $6.20       61.4       43%

  2nd Qtr    17.0      $5.06     $0.00        $5.06       62.3       27%

  3rd Qtr    11.0      $4.92     $0.00        $4.92       63.5       17%

  4th Qtr    11.0      $5.13     $0.00        $5.13       63.8       17%

  Total
   2004      65.4      $5.48     $0.03        $5.51      251.0       26%

  Total
   2005      40.2      $4.79     $0.00        $4.79      260.0       15%

  Total
   2006      25.6      $4.74     $0.00        $4.74      270.0        9%

  Total
   2007      25.6      $4.76     $0.00        $4.76      280.0        9%


Chesapeake has also entered into the following natural gas basis protection swaps:

                                                 Assuming Gas
                      Annual                      Production
                  Volume in Bcf's   NYMEX less:  in Bcf's of:  % Hedged
  2003 Remaining      82.8            $0.188        121.7         68%
  2004               157.4             0.173        251.0         63%
  2005               109.5             0.156        260.0         42%
  2006                47.5             0.155        270.0         18%
  2007                63.9             0.166        280.0         23%
  2008                64.0             0.166        290.0         22%
  2009                37.0             0.160        300.0         12%
                     562.1            $0.169*     1,772.7         32%
  * weighted average


             NOW SUPERSEDED BY OUTLOOK AS OF OCTOBER 30, 2003

  The Company has entered into the following crude oil hedging arrangements:

                                                   % Hedged
                                                            Open Swap
                                             Assuming     Positions as
                        Open    Avg. NYMEX      Oil        % of Total
                      Swaps in    Strike    Production      Estimated
                       Mmbo's     Price    in Mmbo's of:    Production

  Q3 - 2003*            948      $28.07        1,200           79%

  Q4 - 2003*            948      $28.07        1,200           79%

  Remaining 2003      1,896      $28.07        2,400           79%

  Q1 - 2004*            877      $27.76        1,175           75%

  Q2 - 2004*            797      $27.81        1,175           68%

  Q3 - 2004*            644      $27.94        1,175           55%

  Q4 - 2004*            644      $27.94        1,175           55%

  Total 2004          2,962      $27.85        4,700           63%


*Swaps with a knockout provision for days in which NYMEX closes below $21.00.

NOW SUPERSEDED BY OUTLOOK AS OF OCTOBER 30, 2003

SOURCE: Chesapeake Energy Corporation

CONTACT: Marc Rowland, Executive Vice President and Chief Financial
Officer, +1-405-879-9232, or Tom Price, Jr., Senior Vice President-Investor
Relations, +1-405-879-9257, both of Chesapeake Energy Corporation