Edgar Filing: CHESAPEAKE ENERGY CORP

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY , 2002

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CHESAPEAKE ENERGY CORPORATION
(Name of Registrant as specified in its charter)

OKLAHOMA 73-1395733
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

AUBREY K. MCCLENDON
CHAIRMAN OF THE BOARD AND
6100 NORTH WESTERN AVENUE CHIEF EXECUTIVE OFFICER
OKLAHOMA CITY, OKLAHOMA 73118 6100 NORTH WESTERN AVENUE
(405) 848-8000 OKLAHOMA CITY, OKLAHOMA 73118
(Address, including zip code, and telephone number, (405) 848-8000
including (Name, address, including zip code, and telephone
area code, of Registrant's principal executive number, including
offices) area code, of agent for service)

COPY TO:

JAMES M. PRINCE, ESQ.
VINSON & ELKINS L.L.P.
2300 FIRST CITY TOWER
1001 FANNIN STREET
HOUSTON, TEXAS 77002-6760
(713) 758-3710
(713) 615-5962 (FAX)

Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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6.75% Cumulative Convertible Preferred
Stock..................................... 3,000,000 shares $50.22 $150,660,000 $36,007.74
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Common Stock, par value $.01 per share...... (2) (3) (3) (3)
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(1) Estimated solely for purposes of calculating the registration fee.

(2) There are being registered hereunder an indeterminate number of shares of
common stock issuable upon conversion of the Preferred Stock. Initially, the
number of shares of common stock issuable upon conversion of the Preferred
Stock is 19,480,500. Each share of Preferred Stock is convertible into
6.4935 shares of common stock, subject to adjustments under certain
circumstances. Pursuant to Rule 416 under the Securities Act, such number of
shares of common stock registered hereby shall include an indeterminate
number of shares of common stock that may be issued in connection with a
stock split, stock dividend, recapitalization, or similar event or
adjustment in the number of shares issuable as provided in certificate of
designations of the Preferred Stock.

(3) The shares of common stock issuable upon conversion of the Preferred Stock
will be issued for no additional consideration, and therefore no
registration fee is required pursuant to Rule 457(i).

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED JANUARY , 2002

PRELIMINARY PROSPECTUS

3,000,000 SHARES

CHESAPEAKE ENERGY CORPORATION

6.75% CUMULATIVE CONVERTIBLE PREFERRED STOCK
(LIQUIDATION PREFERENCE $50 PER SHARE)

AND

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

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This prospectus relates to the offering for resale of Chesapeake Energy
Corporation Inc.'s 6.75% Cumulative Convertible Preferred Stock (liquidation
preference $50 per share) and the shares of our common stock issuable upon
conversion of the preferred stock. In this prospectus, the terms "Chesapeake",
"we", or "us" will each refer to Chesapeake Energy Corporation Inc. and its
subsidiaries. The preferred stock was offered to qualified institutional buyers,
as defined in, and in reliance on, Rule 144A under the Securities Act, in
transactions exempt from, or not subject to, the registration requirements of
the Securities Act, through the initial purchasers, Credit Suisse First Boston
Corporation, Bear Stearns, & Co. Inc., Lehman Brothers Inc. and Salomon Smith
Barney Inc. This prospectus will be used by selling securityholders to resell
their shares of our preferred stock and shares of our common stock issuable upon
conversion of their preferred stock. We will not receive any proceeds from sales
by the selling securityholders.

We are an Oklahoma corporation. Our principal offices are located at 6100
North Western Avenue, Oklahoma City, Oklahoma 73118, and our telephone number is
(405) 848-8000.

CONVERTIBILITY OF THE PREFERRED STOCK:

Holders may convert their preferred stock at any time into 6.4935 shares of
common stock of Chesapeake per share of preferred stock. The conversion rate may
be adjusted upon the occurrence of certain events. The common stock currently
trades on the New York Stock Exchange under the symbol "CHK." The closing price
of the common stock on the New York Stock Exchange was $ per share on
January , 2002.

MANDATORY CONVERSION OF THE PREFERRED STOCK AT OUR OPTION:

On or after November 20, 2004, we may, at our option, cause the preferred
stock to be automatically converted into that number of shares of common stock
that are issuable at the then prevailing conversion price. We may exercise our
conversion right only if, for 20 trading days within any period of 30
consecutive trading days (including the last trading day of such period), the
closing price of our common stock equals or exceeds 130% of the then prevailing
conversion price of the preferred stock.

In addition, if there are less than 250,000 shares of preferred stock
outstanding, we may, on or after November 20, 2006, at our option, cause the
preferred stock to be automatically converted into that number of shares of
common stock equal to the liquidation preference divided by the lesser of the
then prevailing conversion price or the average closing price of the common
stock for the five trading day period ending on the second day immediately
preceding the date fixed for conversion.

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INVESTING IN THE PREFERRED STOCK OR OUR COMMON STOCK INVOLVES RISKS. PLEASE
READ CAREFULLY THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE .

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
January , 2002

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF
THIS PROSPECTUS.

TABLE OF CONTENTS

PAGE
----

About This Prospectus.......................................
Prospectus Summary..........................................
Risk Factors................................................
Ratios of Earnings to Fixed Charges.........................
Use of Proceeds.............................................
Business....................................................
Description of the Preferred Stock..........................
Description of Chesapeake Capital Stock.....................
Federal Income Tax Considerations...........................
Notice to Canadian Residents................................
Selling Securityholders.....................................
Plan of Distribution........................................
Legal Matters...............................................
Experts.....................................................
Where You Can Find More Information.........................
Forward-Looking Statements..................................

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process or
continuous offering process. Under this shelf registration process, the selling
securityholders may, from time to time, sell the securities described in this
prospectus in one or more offerings. This prospectus provides you with a general
description of the securities which may be offered by the selling
securityholders. Each time a selling securityholder sells securities, the
selling security holder is required to provide you with this prospectus and, in
certain cases, a prospectus supplement containing specific information about the
selling security holder and the terms of the securities being offered. That
prospectus supplement may include additional risk factors or other special
considerations applicable to those securities. Any prospectus supplement may
also add, update, or change information in this prospectus. If there is any
inconsistency between the information in this prospectus and any prospectus
supplement, you should rely on the information in that prospectus supplement.
You should read both this prospectus and any prospectus supplement together with
additional information described under "Where You Can Find More Information."

PROSPECTUS SUMMARY

This summary may not contain all the information that may be important to
you. You should read this entire prospectus and the documents to which we have
referred you before making an investment decision. You should carefully consider
the information set forth under "Risk Factors." In addition, certain statements
include forward-looking information which involves risks and uncertainties. See
"Forward-Looking Statements."

THE COMPANY

We are among the ten largest independent natural gas producers in the
United States. We own interests in approximately 7,200 producing oil and gas
wells with approximately 1.6 tcfe of proved reserves in the United States, as of
September 30, 2001 (using oil and gas prices of 23.45 per barrel of oil and 3.50
per mcf of gas). More than 90% of our reserves are natural gas. Our primary
operating area is the Mid-Continent region of the United States, which includes
Oklahoma, western Arkansas, southwestern Kansas and the Texas Panhandle and in
which 85% of our reserves are located. We have smaller operations in the Deep
Giddings field in Texas, the Permian Basin region of southeastern New Mexico and
the Williston Basin of North Dakota and Montana.

Our executive offices are located at 6100 North Western Avenue, Oklahoma
City , Oklahoma 73118, and our telephone number is (408) 848-8000.

THE OFFERING

On November 13, 2001, we completed a private offering of the preferred
stock. We entered into a registration rights agreement with the initial
purchasers in the private offering in which we agreed, for the benefit of the
holders of the preferred stock, to file a shelf registration statement with the
SEC by January 12, 2002 with respect to resales of the preferred stock and
common stock issued upon the conversion thereof. We also agreed to use our
reasonable best efforts to cause the shelf registration statement to be declared
effective under the Securities Act by May 12, 2002 and to keep the shelf
registration statement effective until November 13, 2003 or such earlier date as
of which the preferred stock and common stock issued upon the conversion thereof
have been sold pursuant to the shelf registration statement.

SECURITIES OFFERED............ 3,000,000 shares of 6.75% cumulative
convertible preferred stock.

DIVIDENDS..................... Cumulative annual dividends of $3.375 per share
payable quarterly in cash on each February 15,
May 15, August 15 and November 15, commencing
February 15, 2002, when, as and if declared by
the board of directors. Dividends will be paid
in arrears on the basis of a 360-day year
consisting of twelve 30-day months. Dividends
on the preferred stock will accumulate and be
cumulative from the date of issuance thereof.
Accumulated dividends on the preferred stock
will not bear interest.

LIQUIDATION PREFERENCE........ $50 per share, plus accumulated and unpaid
dividends.

RANKING....................... The preferred stock will rank with respect to
dividend rights and rights upon our
liquidation, winding-up or dissolution:

- senior to all of our common stock and to all
of our other capital stock unless the terms
of that stock expressly provide that it ranks
senior to or on a parity with the preferred
stock;

- on a parity with any of our capital stock
issued in the future the terms of which
expressly provide that it will rank on a
parity with the preferred stock; and

- junior to all of our capital stock the terms
of which expressly provide that such stock
will rank senior to the preferred stock.

All of our outstanding capital stock will rank
junior to the preferred stock. We have no other
preferred stock outstanding.

REDEMPTION.................... Shares of preferred stock are not redeemable by
us.

CONVERSION RIGHTS............. Each share of preferred stock may be converted
at any time, at the option of the holder, into
6.4935 shares of common stock (which is
calculated using an initial conversion price of
$7.70 per share of common stock) plus cash in
lieu of fractional shares. The conversion price
is subject to adjustment upon the occurrence of
certain events.

MANDATORY CONVERSION.......... On or after November 20, 2004, we may, at our
option, cause the preferred stock to be
automatically converted into that number of
shares of common stock that are issuable at the
then prevailing conversion price. We may
exercise our conversion right only if, for 20
trading days within any period of 30
consecutive trading days (including the last
trading day of such period), the closing price
of our common stock equals or exceeds 130% of
the then prevailing conversion price of the
preferred stock.

In addition, if there are less than 250,000
shares of preferred stock outstanding, we may,
on or after November 20, 2006, at our option,
cause the preferred stock to be automatically
converted into that number of shares of common
stock equal to the liquidation preference
divided by the lesser of the then prevailing
conversion price and the average closing price
of the common stock for the five trading day
period ending on the second day immediately
preceding the date fixed for conversion.

CHANGE OF CONTROL............. Except as provided below, upon a change of
control, each holder of preferred stock shall,
in the event that the market value of our
common stock at such time is less than the
conversion price, have a one-time option to
convert all of its shares of preferred stock
into shares of common stock at an adjusted
conversion price equal to the greater of (x)
the market value of the common stock
(determined as described herein) and (y)
$4.0733, which is 66 2/3% of the recent common
stock price set forth on the cover of this
prospectus.

In lieu of issuing the shares of common stock
issuable upon conversion in the event of a
change of control, we may, at our option, make
a cash payment equal to the market value of
such common stock otherwise issuable as of the
change of control date.

Notwithstanding the foregoing, upon a change of
control in which (1) each holder of our common
stock receives consideration consisting solely
of common stock of the successor, acquiror or
other third party that is listed on a national
securities exchange or quoted on the NASDAQ
National Market and (2) all our common stock
has been exchanged for, converted into or
acquired for common stock of the successor,
acquiror or other third party and the preferred
stock becomes convertible solely into such
common stock, the conversion price will not be
adjusted as described above.
2

VOTING RIGHTS................. Except as required by Oklahoma law and our
certificate of incorporation, which includes
the certificate of designation for the
preferred stock, the holders of preferred stock
will have no voting rights unless dividends
payable on the preferred stock are in arrears
for six or more quarterly periods. In that
event, the holders of the preferred stock,
voting as a single class with the shares of any
other preferred stock or preference securities
having similar voting rights, will be entitled
at the next regular or special meeting of our
stockholders to elect two directors (or one
director if fewer than six directors compose
our board prior to appointment) and the number
of directors that compose our board will be
increased by the number of directors so
elected. These voting rights and the terms of
the directors so elected will continue until
such time as the dividend arrearage on the
preferred stock has been paid in full. The
affirmative consent of holders of at least
66 2/3% of the outstanding preferred stock will
be required for the issuance of any class or
series of stock (or security convertible into
stock) ranking senior to the preferred stock as
to dividend rights or rights upon our
liquidation, winding-up or dissolution and for
amendments to our certificate of incorporation
that would affect adversely the rights of
holders of the preferred stock.

TAX CONSEQUENCES.............. The U.S. Federal income tax consequences of
purchasing, owning and disposing of the
preferred stock and any common stock received
upon its conversion are described in "Federal
Income Tax Considerations." Prospective
investors are urged to consult their own tax
advisors regarding the tax consequences of
purchasing, owning and disposing of the
preferred stock and any common stock received
upon its conversion in light of their personal
investment circumstances, including
consequences resulting from the possibility
that actual or constructive distributions on
the preferred stock may exceed our current and
accumulated earnings and profits, as calculated
for U.S. Federal income tax purposes, in which
case they would not be treated as dividends for
U.S. Federal income tax purposes.

COMMON STOCK.................. Our common stock is listed for trading on the
NYSE under the symbol "CHK."

RISK FACTORS

AN INVESTMENT IN THE PREFERRED STOCK INVOLVES CERTAIN RISKS THAT A
POTENTIAL INVESTOR SHOULD CAREFULLY EVALUATE PRIOR TO MAKING AN INVESTMENT IN
THE PREFERRED STOCK. SEE "RISK FACTORS."

RISK FACTORS

In addition to the other information set forth elsewhere or incorporated by
reference in this prospectus, the following factors relating to our company, the
preferred stock and our common stock should be considered carefully in deciding
whether to participate in the exchange offer.

RISKS RELATED TO OUR BUSINESS

OIL AND GAS PRICES ARE VOLATILE. A DECLINE IN PRICES COULD ADVERSELY AFFECT
OUR FINANCIAL RESULTS, CASH FLOWS, ACCESS TO CAPITAL AND ABILITY TO GROW.

Our revenues, operating results, profitability, future rate of growth and
the carrying value of our oil and gas properties depend primarily upon the
prices we receive for our oil and gas. Prices also affect the amount of cash
flow available for capital expenditures and our ability to borrow money or raise
additional capital. The amount we can borrow from banks is subject to periodic
redeterminations based on current prices at the time of redetermination. In
addition, we may have ceiling test writedowns if prices decline significantly
from present levels.

Historically, the markets for oil and gas have been volatile, and they are
likely to continue to be volatile. Wide fluctuations in oil and gas prices may
result from relatively minor changes in the supply of and demand for oil and
natural gas, market uncertainty and other factors that are beyond our control,
including:

- political instability or armed conflict in oil producing regions;

- worldwide and domestic supplies of oil and gas;

- weather conditions;

- the level of consumer demand;

- the price and availability of alternative fuels;

- the availability of pipeline capacity;

- the price and level of foreign imports;

- domestic and foreign governmental regulations and taxes;

- the ability of the members of the Organization of Petroleum Exporting
Countries to agree to and maintain oil price and production controls; and

- the overall economic environment.

These factors and the volatility of the energy markets make it extremely
difficult to predict future oil and gas price movements with any certainty.
Declines in oil and gas prices would not only reduce revenue, but could reduce
the amount of oil and gas that we can produce economically and, as a result,
could have a material adverse effect on our financial condition, results of
operations and reserves. Further, oil and gas prices do not necessarily move in
tandem. Because approximately 91% of our proved reserves are currently natural
gas reserves, we are more susceptible to movements in natural gas prices.

The recent prices we have received for our natural gas are significantly
lower than what we received in early 2001. At year end 2000, Henry Hub natural
gas spot prices exceeded $10.00 per MMbtu. At September 28, 2001, the spot price
for Henry Hub gas dropped to $1.83 per MMbtu. On December 31, 2001 the NYMEX
spot price for Henry Hub natural gas was $2.74 per MMbtu. Recent spot prices
have continued to fluctuate.

OUR LEVEL OF INDEBTEDNESS MAY ADVERSELY AFFECT OPERATIONS AND LIMIT GROWTH,
AND WE MAY HAVE DIFFICULTY MAKING INTEREST AND PRINCIPAL PAYMENTS ON OUR
INDEBTEDNESS AS THEY BECOME DUE.

As of September 30, 2001, we had long-term indebtedness of approximately
$1.3 billion, which included bank indebtedness of approximately $189 million.
Our long-term indebtedness represented approximately 67%

of our total book capitalization at September 30, 2001. As of December 31, 2001,
we had long-term indebtedness of approximately $1.3 billion, which included no
bank indebtedness. We will continue to be highly leveraged after this exchange.

Our level of indebtedness affects our operations in several ways, including
the following:

- a substantial portion of our cash flows must be used to service our
indebtedness, and we cannot assure you that our business will generate
sufficient cash flow from operations to enable us to continue to meet our
obligations under our indebtedness;

- a high level of indebtedness increases our vulnerability to general
adverse economic and industry conditions;

- the covenants contained in the agreements governing our outstanding
indebtedness limit our ability to borrow additional funds, dispose of
assets, pay dividends and make certain investments;

- our debt covenants may also affect our flexibility in planning for, and
reacting to, changes in the economy and in our industry; and

- a high level of indebtedness may impair our ability to obtain additional
financing in the future for working capital, capital expenditures,
acquisitions or general corporate and other purposes.

We may incur additional debt, including significant secured indebtedness,
in order to make future acquisitions or to develop our properties. A higher
level of indebtedness increases the risk that we may default on our debt
obligations. Our ability to meet our debt obligations and to reduce our level of
indebtedness depends on our future performance. General economic conditions, oil
and gas prices and financial, business and other factors affect our operations
and our future performance. Many of these factors are beyond our control. We
cannot assure you that we will be able to generate sufficient cash flow to pay
the interest on our debt or that future working capital, borrowings or equity
financing will be available to pay or refinance such debt. Factors that will
affect our ability to raise cash through an offering of our capital stock or a
refinancing of our debt include financial market conditions, the value of our
assets and our performance at the time we need capital.

In addition, our bank borrowing base is subject to periodic
redeterminations. We could be forced to repay a portion of our bank borrowings
due to redeterminations of our borrowing base. We cannot assure you that we will
have sufficient funds to make such repayments. If we do not have sufficient
funds and are otherwise unable to negotiate renewals of our borrowings or
arrange new financing, we may have to sell significant assets. Any such sale
could have a material adverse effect on our business and financial results.

LOWER OIL AND GAS PRICES COULD NEGATIVELY IMPACT OUR ABILITY TO BORROW.

Lower natural gas prices could reduce our capacity to borrow under our bank
credit facility or under our indenture covenants. Natural gas prices at December
31, 2001 were significantly below prices prevailing at December 31, 2000. Our
current bank credit facility limits our borrowings to a borrowing base,
presently $225 million. The borrowing base is determined periodically at the
discretion of a majority of the banks and is based in part on oil and gas
prices. Additionally, some of our indentures contain covenants limiting our
incurrence of indebtedness. The indebtedness limitations in the indentures are
based on a variety of financial measurements including a ratio that is dependent
upon a percentage of our adjusted consolidated net tangible assets, which is
determined using discounted future net revenues from proved oil and gas reserves
as of the end of each year.

OUR INDUSTRY IS EXTREMELY COMPETITIVE.

The energy industry is extremely competitive. This is especially true with
regard to exploration for, and development and production of, new sources of oil
and natural gas. As an independent producer of oil and natural gas, we
frequently compete against larger and financially stronger companies in
acquiring properties

suitable for exploration, in contracting for drilling equipment and other
services and in securing trained personnel.

OUR COMMODITY PRICE RISK MANAGEMENT TRANSACTIONS MAY EXPOSE US TO THE RISK OF
FINANCIAL LOSS IN CERTAIN CIRCUMSTANCES.

In order to manage our exposure to price volatility in marketing our oil
and gas, we enter into oil and gas price risk management arrangements for a
portion of our expected production. These arrangements may expose us to the risk
of financial loss in certain circumstances, including instances in which:

- our production is less than expected;

- there is a widening of price differentials between delivery points for
our production and the delivery point assumed in the hedge arrangement;
or

- the counterparties to our contracts fail to perform the contracts.

Some of our commodity price risk management arrangements require us to
deliver cash collateral or other assurances of performance to the counterparties
in the event that our payment obligations with respect to our commodity price
risk management transactions exceed certain levels. Because of current commodity
prices, we have no cash collateral requirements under our present risk
management arrangements. Future collateral requirements are uncertain, but will
depend on arrangements with our counterparties and highly volatile natural gas
and oil prices.

ESTIMATES OF OIL AND GAS RESERVES ARE UNCERTAIN AND INHERENTLY IMPRECISE.

This prospectus contains estimates of our proved reserves and the estimated
future net revenues from our proved reserves. These estimates are based upon
various assumptions, including assumptions required by the Securities and
Exchange Commission relating to oil and gas prices, drilling and operating
expenses, capital expenditures, taxes and availability of funds. The process of
estimating oil and gas reserves is complex. The process involves significant
decisions and assumptions in the evaluation of available geological,
geophysical, engineering and economic data for each reservoir. Therefore, these
estimates are inherently imprecise.

Actual future production, oil and gas prices, revenues, taxes, development
expenditures, operating expenses and quantities of recoverable oil and gas
reserves most likely will vary from these estimates. Such variations may be
significant and could materially affect the estimated quantities and present
value of our proved reserves. In addition, we may adjust estimates of proved
reserves to reflect production history, results of exploration and development
drilling, prevailing oil and gas prices and other factors, many of which are
beyond our control. Our properties may also be susceptible to hydrocarbon
drainage from production by operators on adjacent properties. At December 31,
2000, approximately 30% (27% on a pro forma basis for the Gothic acquisition) by
volume of our estimated proved reserves were undeveloped. Recovery of
undeveloped reserves requires significant capital expenditures and successful
drilling operations. The estimates of these reserves included the assumption
that we would make significant capital expenditures to develop the reserves,
including $216 million ($235 million on a pro forma basis for the Gothic
acquisition) in 2001. Although we have prepared estimates of our oil and gas
reserves and the costs associated with these reserves in accordance with
industry standards, we cannot assure you that the estimated costs are accurate,
that development will occur as scheduled or that the results will be as
estimated.

You should not assume that the present values referred to in this
prospectus represent the current market value of our estimated oil and gas
reserves. In accordance with Securities and Exchange Commission requirements,
the estimates of present values are based on prices and costs as of the date of
the estimates, except as otherwise noted in this prospectus.

If the present value of our combined proved reserves were calculated using
NYMEX spot prices of $22.00 per barrel of oil and $3.00 per mcf of gas, adjusted
for our price differentials, the present value of our combined proved reserves
at December 31, 2000 would have been $1.65 billion ($1.52 billion excluding
Canadian reserves, which were sold on October 1, 2001).

Any changes in consumption by oil and gas purchasers or in governmental
regulations or taxation will also affect actual future net cash flows.

The timing of both the production and the expenses from the development and
production of oil and gas properties will affect both the timing of actual
future net cash flows from proved reserves and their present value. In addition,
the 10% discount factor, which is required by the Securities and Exchange
Commission to be used in calculating discounted future net cash flows for
reporting purposes, is not necessarily the most accurate discount factor. The
effective interest rate at various times and the risks associated with our
business or the oil and gas industry in general will affect the accuracy of the
10% discount factor.

IF WE ARE NOT ABLE TO REPLACE RESERVES, WE MAY NOT BE ABLE TO SUSTAIN
PRODUCTION.

Our future success depends largely upon our ability to find, develop or
acquire additional oil and gas reserves that are economically recoverable.
Unless we replace the reserves we produce through successful development,
exploration or acquisition, our proved reserves will decline over time. In
addition, approximately 30% (27% on a pro forma basis for the Gothic
acquisition) of our total estimated proved reserves at December 31, 2000 were
undeveloped. By their nature, undeveloped reserves are less certain. Recovery of
such reserves will require significant capital expenditures and successful
drilling operations. We cannot assure you that we can successfully find and
produce reserves economically in the future. In addition, we may not be able to
acquire proved reserves at acceptable costs.

IF WE DO NOT MAKE SIGNIFICANT CAPITAL EXPENDITURES, WE MAY NOT BE ABLE TO
REPLACE RESERVES.

Our exploration, development and acquisition activities require substantial
capital expenditures. Historically, we have funded our capital expenditures
through a combination of cash flows from operations, our bank credit facility,
debt and equity issuances and the sale of non-core assets. Future cash flows are
subject to a number of variables, such as the level of production from existing
wells, prices of oil and gas and our success in developing and producing new
reserves. If revenue were to decrease as a result of lower oil and gas prices or
decreased production, and our access to capital were limited, we would have a
reduced ability to replace our reserves. If our cash flow from operations is not
sufficient to fund our capital expenditure budget, there can be no assurance
that additional bank debt, debt or equity issuances or other methods of
financing will be available to meet these requirements.

ACQUISITIONS ARE SUBJECT TO THE UNCERTAINTIES OF EVALUATING RECOVERABLE
RESERVES AND POTENTIAL LIABILITIES.

Our recent growth is due in part to acquisitions of exploration and
production companies and producing properties. We expect acquisitions will also
contribute to our future growth. Successful acquisitions require an assessment
of a number of factors, many of which are beyond our control. These factors
include recoverable reserves, exploration potential, future oil and gas prices,
operating costs and potential environmental and other liabilities. Such
assessments are inexact and their accuracy is inherently uncertain. In
connection with our assessments, we perform a review of the acquired properties,
which we believe is generally consistent with industry practices. However, such
a review will not reveal all existing or potential problems. In addition, our
review may not permit us to become sufficiently familiar with the properties to
fully assess their deficiencies and capabilities. We do not inspect every well.
Even when we inspect a well, we do not always discover structural, subsurface
and environmental problems that may exist or arise.

We are generally not entitled to contractual indemnification for preclosing
liabilities, including environmental liabilities. Normally, we acquire interests
in properties on an "as is" basis with limited remedies for breaches of
representations and warranties. In addition, competition for producing oil and
gas properties is intense and many of our competitors have financial and other
resources which are substantially greater than those available to us. Therefore,
we cannot assure you that we will be able to acquire oil and gas properties that
contain economically recoverable reserves or that we will complete such
acquisitions on acceptable terms.

Additionally, significant acquisitions can change the nature of our
operations and business depending upon the character of the acquired properties,
which may have substantially different operating and geological characteristics
or be in different geographic locations than our existing properties. While it
is our current
7

intention to continue to concentrate on acquiring properties with development
and exploration potential located in the Mid-Continent region, there can be no
assurance that in the future we will not decide to pursue acquisitions or
properties located in other geographic regions. To the extent that such acquired
properties are substantially different than our existing properties, our ability
to efficiently realize the economic benefits of such transactions may be
limited.

FUTURE PRICE DECLINES MAY RESULT IN A WRITE-DOWN OF ASSET CARRYING VALUES.

We utilize the full cost method of accounting for costs related to our oil
and gas properties. Under this method, all such costs (productive and
nonproductive) are capitalized and amortized on an aggregate basis over the
estimated lives of the properties using the units-of-production method. These
capitalized costs are subject to a ceiling test, however, which limits such
pooled costs to the aggregate of the present value of future net revenues
attributable to proved oil and gas reserves discounted at 10% plus the lower of
cost or market value of unproved properties. The full cost ceiling is evaluated
at the end of each quarter utilizing the prices for oil and gas at that date. At
September 30, 2001, our unamortized costs of oil and gas properties exceeded
this ceiling amount by approximately $220 million due to low gas prices in
effect on that date. The NYMEX spot price for natural gas at Henry Hub was $1.83
per MMbtu on September 28, 2001. However, due to a subsequent recovery in market
prices for natural gas, we were not required to record a write-down of oil and
gas properties. The NYMEX spot price for Henry Hub natural gas on December 31,
2001 was $2.74 per MMbtu. A decline in gas and oil prices or other factors,
without other mitigating circumstances, could cause a future write-down of
capitalized costs and a non-cash charge against future earnings.

OIL AND GAS DRILLING AND PRODUCING OPERATIONS ARE HAZARDOUS AND EXPOSE US TO
ENVIRONMENTAL LIABILITIES.

Oil and gas operations are subject to many risks, including well blowouts,
cratering and explosions, pipe failure, fires, formations with abnormal
pressures, uncontrollable flows of oil, natural gas, brine or well fluids, and
other environmental hazards and risks. Our drilling operations involve risks
from high pressures and from mechanical difficulties such as stuck pipes,
collapsed casings and separated cables. If any of these risks occurs, we could
sustain substantial losses as a result of:

- injury or loss of life;

- severe damage to or destruction of property, natural resources and
equipment;

- pollution or other environmental damage;

- clean-up responsibilities;

- regulatory investigations and penalties; and

- suspension of operations.

Our liability for environmental hazards includes those created either by
the previous owners of properties that we purchase or lease or by acquired
companies prior to the date we acquire them. In accordance with industry
practice, we maintain insurance against some, but not all, of the risks
described above. We cannot assure you that our insurance will be adequate to
cover casualty losses or liabilities. Also, we cannot predict the continued
availability of insurance at premium levels that justify its purchase.

EXPLORATION AND DEVELOPMENT DRILLING MAY NOT RESULT IN COMMERCIALLY PRODUCTIVE
RESERVES.

We do not always encounter commercially productive reservoirs through our
drilling operations. We cannot assure you that the new wells we drill or
participate in will be productive or that we will recover all or any portion of
our investment in wells drilled. The seismic data and other technologies we use
do not allow us to know conclusively prior to drilling a well that oil or gas is
present or may be produced economically. The cost of drilling, completing and
operating a well is often uncertain, and cost factors can adversely affect the
economics of a project. Our efforts will be unprofitable if we drill dry wells
or wells that are productive but do

not produce enough reserves to return a profit after drilling, operating and
other costs. Further, our drilling operations may be curtailed, delayed or
canceled as a result of a variety of factors, including:

- unexpected drilling conditions;

- title problems;

- pressure or irregularities in formations;

- equipment failures or accidents;

- adverse weather conditions;

- compliance with environmental and other governmental requirements; and

- cost of, or shortages or delays in the availability of, drilling rigs and
equipment.

THE LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR ABILITY TO OPERATE.

We depend, and will continue to depend in the foreseeable future, on the
services of our officers and key employees with extensive experience and
expertise in evaluating and analyzing producing oil and gas properties and
drilling prospects, maximizing production from oil and gas properties and
marketing oil and gas production. Our ability to retain our officers and key
employees is important to our continued success and growth. The unexpected loss
of the services of one or more of these individuals could have a detrimental
effect on our business.

RISKS RELATED TO THE PREFERRED STOCK

WE MAY NOT BE ABLE TO PAY CASH DIVIDENDS ON THE PREFERRED STOCK.

We are required to pay all declared dividends on the preferred stock in
cash. Our existing indentures limit, and any indentures and other financing
agreements that we enter into in the future will likely limit, our ability to
pay cash dividends on our capital stock. Specifically, under our existing
indentures, we may pay cash dividends and make other distributions on or in
respect of our capital stock, including the preferred stock, only if certain
financial tests are met. From December 31, 1998 through March 31, 2000, we did
not meet the debt incurrence test contained in one of our indentures. As a
result, we were unable to pay dividends on our then existing preferred stock.
Beginning June 30, 2000, we met this debt incurrence test, and resume paying
quarterly preferred stock dividends on November 1, 2000. As of September 30,
2001, our coverage ratio, as calculated in accordance with our most restrictive
senior notes indenture, was approximately 7 to 1. In the event that any of our
indentures or other financing agreements in the future restrict our ability to
pay cash dividends on the preferred stock, we will be unable to pay cash
dividends on the preferred stock unless we can refinance amounts outstanding
under those agreements. Our failure to pay cash dividends on the preferred stock
could result in the election of up to two members of our board of directors by
the holders of the preferred stock.

Under Oklahoma law, cash dividends on capital stock may only be paid from
"surplus" or, if there is no "surplus," from the corporation's net profits for
the then current or the preceding fiscal year. Unless we continue to operate
profitably, our ability to pay cash dividends on the preferred stock would
require the availability of adequate "surplus," which is defined as the excess,
if any, of our net assets (total assets less total liabilities) over our
capital. Further, even if adequate surplus is available to pay cash dividends on
the preferred stock, we may not have sufficient cash to pay dividends on the
preferred stock.

RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS

For purposes of determining the ratio of earnings to fixed charges and
preferred dividends, earnings are defined as net income (loss) before income
taxes, extraordinary items, amortization of capitalized interest and fixed
charges, less capitalized interest. Fixed charges consist of interest (whether
expensed or capitalized), and amortization of debt expenses and discount or
premium relating to any indebtedness.

YEAR ENDED YEAR ENDED
JUNE 30, SIX MONTHS ENDED DECEMBER 31, NINE MONTHS ENDED
----------- DECEMBER 31, ------------------ SEPTEMBER 30,
1996 1997 1997 1998 1999 2000 2001
---- ---- ---------------- ---- ---- ---- -----------------

Ratio of earnings to
combined fixed charges and
preferred dividends....... 2.4x (a) (b) (c) 1.1x 2.8x 5.6x

---------------

(a) Earnings for such year were insufficient to cover combined fixed charges
and preferred dividends by approximately $185 million.

(b) Earnings for such six month period were insufficient to cover combined
fixed charges and preferred dividends by approximately $32 million.

(c) Earnings for such year were insufficient to cover combined fixed charges
and preferred dividends by approximately $927 million.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the preferred
stock or the common stock contemplated by this prospectus. See "Selling
Securityholders" for a list of the persons receiving proceeds from the sale of
the preferred stock or the underlying common stock.

BUSINESS

Additional information concerning our company is included in our reports
and other documents incorporated by reference in this prospectus. See "Where You
Can Find More Information."

DESCRIPTION OF THE PREFERRED STOCK

The following is a summary of certain provisions of the certificate of
designation for our 6.75% Cumulative Convertible Preferred Stock. A copy of the
certificate of designation and the form of Convertible Preferred Stock share
certificate are available upon request from Chesapeake at the address set forth
under "Where You Can Find More Information." The following summary of the terms
of Convertible Preferred Stock does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the provisions of the
certificate of designation. As used in this section, the term the "Company"
refers to Chesapeake Energy Corporation and not any of its subsidiaries.

GENERAL

Under the Company's certificate of incorporation, the Company's board of
directors (the "Board of Directors") is authorized, without further stockholder
action, to issue up to 10,000,000 shares of preferred stock, par value $.01 per
share, in one or more series, with such voting powers or without voting powers,
and with such designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions, as shall
be set forth in the resolutions providing therefor. The Company
10

currently has 3,000,000 shares of preferred stock outstanding. The Board of
Directors has also authorized the issuance of up to 250,000 shares of Series A
Junior Participating Convertible Preferred Stock in connection with the adoption
of the Company's share rights plan in July 1998. None of such shares is
outstanding. See "Description of Chesapeake Capital Stock."

The Convertible Preferred Stock and any common stock issued upon the
conversion of the Convertible Preferred Stock will be fully paid and
nonassessable. The holders of the Convertible Preferred Stock have no preemptive
or preferential right to purchase or subscribe to stock, obligations, warrants
or other securities of the Company of any class. The transfer agent, registrar,
redemption, conversion and dividend disbursing agent for shares of both the
Convertible Preferred Stock and common stock is UMB Bank, N.A.

The Convertible Preferred Stock is subject to mandatory conversion, as
described below in "-- Mandatory Conversion," but is not redeemable by the
Company.

RANKING

The Convertible Preferred Stock will, with respect to dividend rights or
rights upon the liquidation, winding-up or dissolution of the Company, ranks (i)
senior to all classes of common stock of the Company and to the Series A Junior
Participating Convertible Preferred Stock and each other class of capital stock
or series of preferred stock established after the original issue date of the
Convertible Preferred Stock (the "Issue Date"), by the Board of Directors, the
terms of which do not expressly provide that such class or series ranks senior
to or on a parity with the Convertible Preferred Stock as to dividend rights or
rights upon the liquidation, winding-up or dissolution of the Company
(collectively referred to as "Junior Stock"); (ii) on a parity with any class of
capital stock or series of preferred stock established after the Issue Date by
the Board of Directors, the terms of which expressly provide that such class or
series will rank on a parity with the Convertible Preferred Stock as to dividend
rights or rights upon the liquidation, winding-up or dissolution of the Company
(collectively referred to as "Parity Stock"); and (iii) junior to each class of
capital stock or series of preferred stock established after the Issue Date by
the Board of Directors, the terms of which expressly provide that such class or
series will rank senior to the Convertible Preferred Stock as to dividend rights
or rights upon the liquidation, winding-up or dissolution of the Company
("Senior Stock").

While any shares of Convertible Preferred Stock are outstanding, the
Company may not authorize, increase the authorized amount of, or issue any
shares of, any class or series of Senior Stock (or any security convertible into
Senior Stock) without the affirmative vote or consent of the holders of at least
66 2/3% of the outstanding shares of Convertible Preferred Stock. Without the
consent of any holder of Convertible Preferred Stock, however, the Company may
authorize, increase the authorized amount of, or issue any shares of, any class
or series of Parity Stock or Junior Stock. See "-- Voting Rights."

DIVIDENDS

Holders of shares of Convertible Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors out of funds of the
Company legally available for payment, cumulative cash dividends at the rate per
annum of 6.75% per share on the liquidation preference thereof of $50 per share
of Convertible Preferred Stock (equivalent to $3.375 per annum per share).
Dividends on the Convertible Preferred Stock will be payable quarterly on
February 15, May 15, August 15 and November 15 of each year, commencing February
15, 2002 (each, a "Dividend Payment Date") at such annual rate, and shall
accumulate from the most recent date as to which dividends shall have been paid
or, if no dividends have been paid, from the Issue Date of the Convertible
Preferred Stock, whether or not in any dividend period or periods there shall be
funds of the Company legally available for the payment of such dividends.
Dividends will be payable to holders of record as they appear on the Company's
stock register on the immediately preceding February 1, May 1, August 1 and
November 1 (each, a "Record Date"). Accumulations of dividends on shares of
Convertible Preferred Stock will not bear interest. Dividends payable on the
Convertible Preferred Stock for any period less than a full dividend period
(based upon the number of days elapsed during the period) will be computed on
the basis of a 360-day year consisting of twelve 30-day months.

No dividend will be declared or paid upon, or any sum set apart for the
payment of dividends upon, any outstanding share of the Convertible Preferred
Stock with respect to any dividend period unless all dividends

for all preceding dividend periods have been declared and paid or declared and a
sufficient sum set apart for the payment of such dividend, upon all outstanding
shares of Convertible Preferred Stock.

No dividends or other distributions (other than a dividend or distribution
payable solely in shares of Parity Stock or Junior Stock (in the case of Parity
Stock) or Junior Stock (in the case of Junior Stock) and cash in lieu of
fractional shares) may be declared, made or paid, or set apart for payment upon,
any Parity Stock or Junior Stock, nor may any Parity Stock or Junior Stock be
redeemed, purchased or otherwise acquired for any consideration (or any money
paid to or made available for a sinking fund for the redemption of any Parity
Stock or Junior Stock) by or on behalf of the Company (except by conversion into
or exchange for shares of Parity Stock or Junior Stock (in the case of Parity
Stock) or Junior Stock (in the case of Junior Stock)) unless all accumulated and
unpaid dividends have been or contemporaneously are declared and paid, or are
declared and a sum sufficient for the payment thereof is set apart for such
payment, on the Convertible Preferred Stock and any Parity Stock for all
dividend payment periods terminating on or prior to the date of such
declaration, payment, redemption, purchase or acquisition. Notwithstanding the
foregoing, if full dividends have not been paid on the Convertible Preferred
Stock and any Parity Stock, dividends may be declared and paid on the
Convertible Preferred Stock and such Parity Stock so long as the dividends are
declared and paid pro rata so that the amounts of dividends declared per share
on the Convertible Preferred Stock and such Parity Stock will in all cases bear
to each other the same ratio that accumulated and unpaid dividends per share on
the shares of the Convertible Preferred Stock and such Parity Stock bear to each
other. Holders of shares of the Convertible Preferred Stock will not be entitled
to any dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends.

The Company's ability to declare and pay cash dividends and make other
distributions with respect to its capital stock, including the Convertible
Preferred Stock, is limited by the terms of the Company's outstanding
indebtedness. In addition, the Company's ability to declare and pay dividends
may be limited by applicable Oklahoma law. See "Risk Factors -- Risks Related to
the Preferred Stock -- We may not be able to pay cash dividends on the preferred
stock."

LIQUIDATION PREFERENCE

In the event of any voluntary or involuntary liquidation, winding-up or
dissolution of the Company, each holder of Convertible Preferred Stock will be
entitled to receive and to be paid out of the Company's assets available for
distribution to its stockholders, before any payment or distribution is made to
holders of Junior Stock (including common stock), a liquidation preference in
the amount of $50 per share of the Convertible Preferred Stock, plus accumulated
and unpaid dividends thereon to the date fixed for liquidation, winding-up or
dissolution. If, upon any voluntary or involuntary liquidation, winding-up or
dissolution of the Company, the amounts payable with respect to the liquidation
preference of the Convertible Preferred Stock and all Parity Stock are not paid
in full, the holders of the Convertible Preferred Stock and the Parity Stock
will share equally and ratably in any distribution of assets of the Company in
proportion to the full liquidation preference and accumulated and unpaid
dividends to which they are entitled. After payment of the full amount of the
liquidation preference and accumulated and unpaid dividends to which they are
entitled, the holders of the Convertible Preferred Stock will have no right or
claim to any of the remaining assets of the Company. Neither the sale of all or
substantially all the assets or business of the Company (other than in
connection with the liquidation, winding-up or dissolution of its business), nor
the merger or consolidation of the Company into or with any other person, will
be deemed to be a voluntary or involuntary liquidation, winding-up or
dissolution of the Company.

The certificate of designation does not contain any provision requiring
funds to be set aside to protect the liquidation preference of the Convertible
Preferred Stock even though it is substantially in excess of the par value
thereof.

VOTING RIGHTS

The holders of the Convertible Preferred Stock have no voting rights except
as set forth below or as otherwise required by Oklahoma law from time to time.

If dividends on the Convertible Preferred Stock are in arrears and unpaid
for six or more quarterly periods (whether or not consecutive), the holders of
the Convertible Preferred Stock, voting as a single class with any other
preferred stock or preference securities having similar voting rights that are
exercisable, will be entitled at the next regular or special meeting of
stockholders of the Company to elect two additional directors of the Company
unless the Board of Directors is comprised of fewer than six directors at such
time, in which case such holders will be entitled to elect one additional
director. Upon the election of any additional directors, the number of directors
that compose the Board shall be increased by such number of additional
directors. Such voting rights and the terms of the directors so elected will
continue until such time as the dividend arrearage on the Convertible Preferred
Stock has been paid in full.

In addition, the affirmative vote or consent of the holders of at least
66 2/3% of the outstanding Convertible Preferred Stock is required for the
issuance of any class or series of Senior Stock (or any security convertible
into Senior Stock) of the Company and for amendments to the Company's
certificate of incorporation that would affect adversely the rights of holders
of the Convertible Preferred Stock. The certificate of designation provides that
the authorization of, the increase in the authorized amount of, or the issuance
of any shares of any class or series of Parity Stock or Junior Stock does not
require the consent of the holders of the Convertible Preferred Stock, and is
not deemed to affect adversely the rights of the holders of the Convertible
Preferred Stock.

In all cases in which the holders of Convertible Preferred Stock are
entitled to vote, each share of Convertible Preferred Stock shall be entitled to
one vote.

CONVERSION RIGHTS

Each share of Convertible Preferred Stock is convertible at any time at the
option of the holder thereof into 6.4935 shares of common stock (which is
calculated using an initial conversion price of $7.70 per share of common stock)
subject to adjustment as described below (such price or adjusted price being
referred to as the "Conversion Price").

With respect to any shares of Convertible Preferred Stock that are
"restricted securities" on the date of conversion, the shares of common stock
distributed upon conversion will be treated as "restricted securities," will
bear a legend to such effect and will not be transferable by the recipient
thereof except pursuant to an effective registration statement or pursuant to an
exemption from the registration requirements of the Securities Act. All such
shares will be issued in physical certificated form and will not be eligible for
receipt in global form through the facilities of the Depositary. With respect to
shares of Convertible Preferred Stock that are no longer "restricted securities"
on a conversion date, either as a result of a resale of the Convertible
Preferred Stock pursuant to the Shelf Registration Statement (as defined herein)
or otherwise, all shares of common stock distributed upon conversion will be
freely transferable without restriction under the Securities Act (other than by
affiliates of the Company), and such shares will be eligible for receipt in
global form through the facilities of the Depositary.

The holders of shares of Convertible Preferred Stock at the close of
business on a Record Date will be entitled to receive the dividend payment on
those shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following that Record Date or the Company's default in
payment of the dividend due on that Dividend Payment Date. However, shares of
Convertible Preferred Stock surrendered for conversion during the period between
the close of business on any Record Date and the close of business on the
business day immediately preceding the applicable Dividend Payment Date must be
accompanied by payment of an amount equal to the dividend payable on such shares
on that Dividend Payment Date. A holder of shares of Convertible Preferred Stock
on a Record Date who (or whose transferee) tenders any shares for conversion on
the corresponding Dividend Payment Date will receive the dividend payable by the
Company on the Convertible Preferred Stock on that date, and the converting
holder need not include payment in the amount of such dividend upon surrender of
shares of Convertible Preferred Stock for conversion. Except as provided above
with respect to a voluntary conversion, the Company will make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
or for dividends on the shares of common stock issued upon conversion.

MANDATORY CONVERSION

At any time on or after November 20, 2004, the Company may at its option
cause the Convertible Preferred Stock to be automatically converted into that
number of shares of common stock for each share of Convertible Preferred Stock
equal to $50.00 (the liquidation preference per share of Convertible Preferred
Stock) divided by the then prevailing Conversion Price. The Company may exercise
its right to cause a mandatory conversion only if the closing price of its
common stock equals or exceeds 130% of the then prevailing Conversion Price for
at least 20 trading days in any consecutive 30-day trading period, including the
last trading day of such 30-day period, ending on the trading day prior to the
Company's issuance of a press release announcing the mandatory conversion as
described below.

To exercise the mandatory conversion right described above, the Company
must issue a press release for publication on the Dow Jones News Service prior
to the opening of business on the first trading day following any date on which
the conditions described in the preceding paragraph are met, announcing such a
mandatory conversion. The Company will also give notice by mail or by
publication (with subsequent prompt notice by mail) to the holders of the
Convertible Preferred Stock (not more than four business days after the date of
the press release) of the mandatory conversion announcing the Company's
intention to convert the Convertible Preferred Stock. The conversion date will
be a date selected by the Company (the "Mandatory Conversion Date") and will be
no more than five days after the date on which the Company issues such press
release.

In addition to any information required by applicable law or regulation,
the press release and notice of a mandatory conversion shall state, as
appropriate:

(i) the Mandatory Conversion Date;

(ii) the number of shares of common stock to be issued upon conversion
of each share of Convertible Preferred Stock;

(iii) the number of shares of Convertible Preferred Stock to be
converted; and

(iv) that dividends on the Convertible Preferred Stock to be converted
will cease to accrue on the Mandatory Conversion Date.

On and after the Mandatory Conversion Date, dividends will cease to accrue
on the Convertible Preferred Stock called for a mandatory conversion and all
rights of holders of such Convertible Preferred Stock will terminate except for
the right to receive the shares of common stock issuable upon conversion
thereof. The dividend payment with respect to the Convertible Preferred Stock
called for a mandatory conversion on a date during the period between the close
of business on any Record Date for the payment of dividends to the close of
business on the corresponding Dividend Payment Date will be payable on such
Dividend Payment Date to the record holder of such share on such Record Date if
such share has been converted after such Record Date and prior to such Dividend
Payment Date. Except as provided in the immediately preceding sentence with
respect to a mandatory conversion, no payment or adjustment will be made upon
conversion of Convertible Preferred Stock for accumulated and unpaid dividends
or for dividends with respect to the common stock issued upon such conversion.

The Company may not authorize, issue a press release or give notice of any
mandatory conversion unless, prior to giving the conversion notice, all
accumulated and unpaid dividends on the Convertible Preferred Stock for periods
ended prior to the date of such conversion notice shall have been paid in cash.

In addition to the mandatory conversion provision described above, if there
are less than 250,000 shares of Convertible Preferred Stock outstanding, the
Company may, at any time on or after November 20, 2006, at its option, cause the
Convertible Preferred Stock to be automatically converted into that number of
shares of common stock equal to $50.00 (the liquidation preference per share of
Convertible Preferred Stock) divided by the lesser of the then prevailing
Conversion Price and the Market Value (as defined below under "-- Conversion
Price Adjustment") for the five trading day period ending on the second trading
day immediately prior to the Mandatory Conversion Date. The provisions of the
immediately preceding four paragraphs shall apply to any such mandatory
conversion; provided that (i) the Mandatory Conversion Date will not be less
than 15 days nor more than 30 days after the date on which the Company issues a
press release
14

announcing such mandatory conversion and (ii) the press release and notice of
mandatory conversion will not state the number of shares of common stock to be
issued upon conversion of each share of Convertible Preferred Stock.

FRACTIONAL SHARES

No fractional shares of common stock or securities representing fractional
shares of common stock will be issued upon conversion, whether voluntary or
mandatory. Any fractional interest in a share of common stock resulting from
conversion will be paid in cash based on the last reported sale price of the
common stock on the New York Stock Exchange (or such other national securities
exchange or automated quotation system on which the common stock is then listed
or authorized for quotation or, if not so listed or authorized for quotation, an
amount determined in good faith by the Board of Directors to be the fair value
of the common stock) at the close of business on the trading day next preceding
the date of conversion.

CONVERSION PRICE ADJUSTMENT

The Conversion Price is subject to adjustment (in accordance with formulas
set forth in the certificate of designation) in certain events, including:

(i) any payment of a dividend (or other distribution) payable in
shares of common stock on any class of capital stock of the Company (other
than the issuance of shares of common stock in connection with the payment
in conversion of Convertible Preferred Stock);

(ii) any issuance to all holders of shares of common stock of rights,
options or warrants entitling them to subscribe for or purchase shares of
common stock or securities convertible into or exchangeable for shares of
common stock at less than the Market Value (as defined below) for the
period ending on the date of issuance; provided, however, that no
adjustment shall be made with respect to such a distribution if the holder
of shares of Convertible Preferred Stock would be entitled to receive such
rights, options or warrants upon conversion at any time of shares of
Convertible Preferred Stock into common stock and provided further,
however, that if such rights, options or warrants are only exercisable upon
the occurrence of certain triggering events, then the Conversion Price will
not be adjusted until such triggering events occur;

(iii) any subdivision, combination or reclassification of the common
stock;

(iv) any dividend or distribution to all holders of shares of common
stock (other than a dividend or distribution referred to in (ii) above)
made pursuant to any shareholder rights plan, "poison pill" or similar
arrangement and excluding dividends payable upon the Convertible Preferred
Stock;

(v) any distribution consisting exclusively of cash (excluding any
cash portion of distributions referred to in (iv) above, or cash
distributed upon a merger or consolidation to which the fourth succeeding
paragraph applies) to all holders of shares of common stock in an aggregate
amount that, combined together with (a) all other such all-cash
distributions made within the then-preceding 12-months in respect of which
no adjustment has been made and (b) any cash and the fair market value of
other consideration paid or payable in respect of any tender offer by the
Company or any of its subsidiaries for shares of common stock concluded
within the then-preceding 12-months in respect of which no adjustment has
been made, exceeds 15% of the Company's market capitalization (defined as
the product of the then-current market price of the common stock times the
number of shares of common stock then outstanding) on the record date of
such distribution;

(vi) the completion of a tender or exchange offer made by the Company
or any of its subsidiaries for shares of common stock that involves an
aggregate consideration that, together with (a) any cash and other
consideration payable in a tender or exchange offer by the Company or any
of its subsidiaries for shares of common stock expiring within the
then-preceding 12-months in respect of which no adjustment has been made
and (b) the aggregate amount of any such all-cash distributions referred to
in (v) above to all holders of shares of common stock within the
then-preceding 12-months in respect of which no

adjustments have been made, exceeds 15% of the Company's market
capitalization on the expiration of such tender offer; or

(vii) a distribution to all holders of common stock consisting of
evidences of indebtedness, shares of capital stock other than common stock
or assets (including securities, but excluding those dividends, rights,
options, warrants and distributions referred to above).

No adjustment of the Conversion Price will be required to be made until the
cumulative adjustments (whether or not made) amount to 1.0% or more of the
Conversion Price as last adjusted. The Company reserves the right to make such
reductions in the Conversion Price in addition to those required in the
foregoing provisions as it considers to be advisable in order that any event
treated for Federal income tax purposes as a dividend of stock or stock rights
will not be taxable to the recipients. In the event the Company elects to make
such a reduction in the Conversion Price, the Company will comply with the
requirements of securities laws and regulations thereunder if and to the extent
that such laws and regulations are applicable in connection with the reduction
of the Conversion Price.

The term "Market Value" means the average closing price of the common stock
for a five consecutive trading day period on the New York Stock Exchange (or
such other national securities exchange or automated quotation system on which
the common stock is then listed or authorized for quotation or, if not so listed
or authorized for quotation, an amount determined in good faith by the Board of
Directors to be the fair value of the common stock).

In the event that the Company distributes rights or warrants (other than
those referred to in (ii) above) pro rata to holders of shares of common stock,
so long as any such rights or warrants have not expired or been redeemed by the
Company, the holder of any Convertible Preferred Stock surrendered for
conversion will be entitled to receive upon such conversion, in addition to the
shares of common stock then issuable upon such conversion (the "Conversion
Shares"), a number of rights or warrants to be determined as follows:

(i) if such conversion occurs on or prior to the date for the
distribution to the holders of rights or warrants of separate certificates
evidencing such rights or warrants (the "Distribution Date"), the same
number of rights or warrants to which a holder of a number of shares of
common stock equal to the number of Conversion Shares is entitled at the
time of such conversion in accordance with the terms and provisions
applicable to the rights or warrants; and

(ii) if such conversion occurs after such Distribution Date, the same
number of rights or warrants to which a holder of the number of shares of
common stock into which such Convertible Preferred Stock was convertible
immediately prior to such Distribution Date would have been entitled on
such Distribution Date had such Convertible Preferred Stock been converted
immediately prior to such Distribution Date in accordance with the terms
and provisions applicable to the rights or warrants.

The Conversion Price will not be subject to adjustment on account of any
declaration, distribution or exercise of such rights or warrants.

Following any reclassification, consolidation or merger of the Company with
or into another person or any merger of another person with or into the Company
(with certain exceptions), or any sale or other disposition of all or
substantially all of the assets of the Company (computed on a consolidated
basis), each share of Convertible Preferred Stock then outstanding will, without
the consent of any holder of Convertible Preferred Stock, be convertible at any
time at the option of the holder thereof only into the kind and amount of
securities, cash and other property receivable upon such reclassification,
consolidation, merger, sale or other disposition by a holder of the number of
shares of common stock into which such Convertible Preferred Stock was
convertible immediately prior thereto, after giving effect to any adjustment
event.

CHANGE OF CONTROL

Except as provided below, upon a Change of Control (as defined below),
holders of Convertible Preferred Stock shall, in the event that the Market Value
at such time is less than the Conversion Price, have a one-time option to
convert all of their outstanding shares of Convertible Preferred Stock into
shares of common stock at

an adjusted Conversion Price equal to the greater of (i) the Market Value (as
defined above under "-- Conversion Rights") as of the Change of Control Date and
(ii) $4.0733. This option shall be exercisable during a period of not less than
30 days nor more than 60 days commencing on the third business day after notice
of the Change of Control is given by the Company in the manner specified in the
certificate of designation. In lieu of issuing the shares of common stock
issuable upon conversion in the event of a Change of Control, the Company may,
at its option, make a cash payment equal to the Market Value for each share of
such common stock otherwise issuable determined for the period ending on the
Change of Control Date. Notwithstanding the foregoing, upon a Change of Control
in which (x) each holder of common stock of the Company receives consideration
consisting solely of common stock of the successor, acquiror or other third
party (and cash paid in lieu of fractional shares) that is listed on a national
securities exchange or quoted on the NASDAQ National Market and (y) all the
common stock of the Company has been exchanged for, converted into or acquired
for common stock of the successor, acquiror or other third party (and cash in
lieu of fractional shares), and the Convertible Preferred Stock becomes
convertible solely into such common stock, the Conversion Price will not be
adjusted as described in this paragraph.

The certificate of designation defines "Change of Control" as any of the
following events:

(i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the Company's assets
(determined on a consolidated basis) to any person or group (as such term
is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than to Permitted Holders;

(ii) the adoption of a plan the consummation of which would result in
the liquidation or dissolution of the Company;

(iii) the acquisition, directly or indirectly, by any person or group
(as such term is used in Section 13(d)(3) of the Exchange Act), other than
Permitted Holders, of beneficial ownership (as defined in Rule 13d-3 under
the Exchange Act) of more than 50% of the aggregate voting power of the
voting stock of the Company; provided, however, that the Permitted Holders
beneficially own (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, in the aggregate a lesser percentage of the
total voting power of the voting stock of the Company than such other
person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors (for the purposes of this definition, such other person shall be
deemed to beneficially own any voting stock of a specified corporation held
by a parent corporation, if such other person is the beneficial owner (as
defined above), directly or indirectly, of more than 35% of the voting
power of the voting stock of such parent corporation and the Permitted
Holders beneficially own (as defined in this proviso), directly or
indirectly, in the aggregate a lesser percentage of the voting power of the
voting stock of such parent corporation and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of such parent corporation);
or

(iv) during any period of two consecutive years, individuals who at
the beginning of such period composed the Board of Directors (together with
any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by
a vote of 66 2/3% of the directors of the Company then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office.

For purposes of the definition of "Change of Control," the term "Permitted
Holders" means Aubrey K. McClendon and Tom L. Ward and their respective
Affiliates.

The phrase "all or substantially all" of the assets of the Company is
likely to be interpreted by reference to applicable state law at the relevant
time, and will be dependent on the facts and circumstances existing at such
time. As a result, there may be a degree of uncertainty in ascertaining whether
a sale or transfer is of "all or substantially all" of the assets of the
Company.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The certificate of designation provides that the Company, without the
consent of the holders of any of the outstanding Convertible Preferred Stock,
may consolidate with or merge into any other person or convey, transfer or lease
all or substantially all its assets to any person or may permit any person to
consolidate with or merge into, or transfer or lease all or substantially all
its properties to, the Company; provided, however that (a) the successor,
transferee or lessee is organized under the laws of the United States or any
political subdivision thereof; (b) the shares of Convertible Preferred Stock
will become shares of such successor, transferee or lessee, having in respect of
such successor, transferee or lessee the same powers, preferences and relative
participating, optional or other special rights and the qualification,
limitations or restrictions thereon, the Convertible Preferred Stock had
immediately prior to such transaction; and (c) certain other conditions are met.

Under any consolidation by the Company with, or merger by the Company into,
any other person or any conveyance, transfer or lease of all or substantially
all the assets of the Company as described in the preceding paragraph, the
successor resulting from such consolidation or into which the Company is merged
or the transferee or lessee to which such conveyance, transfer or lease is made,
will succeed to, and be substituted for, and may exercise every right and power
of, the Company under the shares of Convertible Preferred Stock, and thereafter,
except in the case of a lease, the predecessor (if still in existence) will be
released from its obligations and covenants with respect to the Convertible
Preferred Stock.

SEC REPORTS

Whether or not the Company is required to file reports with the SEC, if any
shares of Convertible Preferred Stock are outstanding, the Company shall file
with the SEC all such reports and other information as it would be required to
file with the SEC by Sections 13(a) or 15(d) under the Exchange Act. See "Where
You Can Find More Information." The Company shall supply each holder of
Convertible Preferred Stock, upon request, without cost to such holder, copies
of such reports or other information.

DESCRIPTION OF CHESAPEAKE CAPITAL STOCK

The description of our capital stock set forth below is not complete and is
qualified by reference to our certificate of incorporation (including our
certificates of designation) and bylaws. Copies of our certificate of
incorporation (including our certificates of designation) and bylaws are
available from us upon request these documents have also been filed with the
SEC. See "Where You Can Find More Information."

AUTHORIZED CAPITAL STOCK

Our authorized capital stock consists of 350,000,000 shares of common
stock, par value $.01 per share, and 10,000,000 shares of preferred stock, par
value $.01 per share, of which 250,000 shares are designated as Series A Junior
Participating Preferred Stock.

COMMON STOCK

Holders of our common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Subject to
preferences that may be applicable to any outstanding preferred stock, holders
of our common stock are entitled to receive ratably such dividends as may be
declared by the board of directors out of funds legally available for dividends.
In the event of our liquidation or dissolution, holders of our common stock are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference of any outstanding preferred stock.

Holders of our common stock have no preemptive rights and have no rights to
convert their common stock into any other securities. All of the outstanding
shares of common stock are duly authorized, validly issued, fully paid and
nonassessable.

PREFERRED STOCK

The Series A Preferred Stock is described below under "-- Share Rights
Plan."

We have 6,750,000 shares of authorized preferred stock which are
undesignated. 3,000,000 shares are designated as 6.75% Cumulative Convertible
Preferred Stock. Our board of directors has the authority, without further
shareholder approval, to issue shares of preferred stock from time to time in
one or more series, with such voting powers or without voting powers, and with
such designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions, as shall be set
forth in the resolutions providing thereof.

While providing desirable flexibility for possible acquisitions and other
corporate purposes, and eliminating delays associated with a shareholder vote on
specific issuances, the issuance of preferred stock could adversely affect the
voting power of holders of common stock, as well as dividend and liquidation
payments on both common and preferred stock. It also could have the effect of
delaying, deferring or preventing a change in control.

ANTI-TAKEOVER PROVISIONS

Our certificate of incorporation and bylaws and the Oklahoma General
Corporation Act include a number of provisions which may have the effect of
encouraging persons considering unsolicited tender offers or other unilateral
takeover proposals to negotiate with our board of directors rather than pursue
non-negotiated takeover attempts. These provisions include a classified board of
directors, authorized blank check preferred stock, restrictions on business
combinations and the availability of authorized but unissued common stock.

Classified Board of Directors. Our certificate of incorporation and bylaws
contain provisions for a staggered board of directors with only one-third of the
board standing for election each year. Directors can only be removed for cause.
A staggered board makes it more difficult for shareholders to change the
majority of the directors.

Oklahoma Business Combination Statute. Section 1090.3 of the Oklahoma
General Corporation Act prevents an "interested shareholder" from engaging in a
"business combination" with an Oklahoma corporation for three years following
the date the person became an interested shareholder, unless:

- prior to the date the person became an interested shareholder, the board
of directors of the corporation approved the transaction in which the
interested shareholder became an interested shareholder or approved the
business combination;

- upon consummation of the transaction that resulted in the interested
shareholder becoming an interested shareholder, the interested
shareholder owns stock having at least 85% of all voting power of the
corporation at the time the transaction commenced, excluding stock held
by directors who are also officers of the corporation and stock held by
certain employee stock plans; or

- on or subsequent to the date of the transaction in which the person
became an interested shareholder, the business combination is approved by
the board of directors of the corporation and authorized at a meeting of
shareholders by the affirmative vote of the holders of two-thirds of all
voting power not attributable to shares owned by the interested
shareholder.

- The statute defines a "business combination" to include:

- any merger or consolidation involving the corporation and an interested
shareholder;

- any sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with an interested shareholder of 10% or more of the
assets of the corporation;

- subject to certain exceptions, any transaction which results in the
issuance or transfer by the corporation of any stock of the corporation
to an interested shareholder;

- any transaction involving the corporation which has the effect of
increasing the proportionate share of the stock of any class or series
or voting power of the corporation owned by the interested shareholder;

- the receipt by an interested shareholder of any loans, guarantees,
pledges or other financial benefits provided by or through the
corporation; or

- any share acquisition by the interested shareholder pursuant to Section
1090.1 of the Oklahoma General Corporation Act. For purposes of Section
1090.3, the term "corporation" also includes the corporation's
majority-owned subsidiaries.

In addition, Section 1090.3 defines an "interested shareholder," generally,
as any person that owns stock having 15% or more of all voting power of the
corporation, any person that is an affiliate or associate of the corporation and
owned stock having 15% or more of all voting power of the corporation at any
time within the three-year period prior to the time of determination of
interested shareholder status, and any affiliate or associate of such person.

Stock Purchase Provisions. Our certificate of incorporation includes a
provision which requires the affirmative vote of two-thirds of the votes cast by
the holders, voting together as a single class, of all then outstanding shares
of capital stock, excluding the votes by an interested shareholder, to approve
the purchase of any of our capital stock from the interested shareholder at a
price in excess of fair market value, unless the purchase is either (1) made on
the same terms offered to all holders of the same securities or (2) made on the
open market and not the result of a privately negotiated transaction.

SHARE RIGHTS PLAN

The Rights. On July 7, 1998, our board of directors declared a dividend
distribution of one preferred stock purchase right for each outstanding share of
common stock. The distribution was paid on July 27, 1998 to the shareholders of
record on that date. Each right entitles the registered holder to purchase from
us one one-thousandth of a share of Series A Preferred Stock at a price of
$25.00, subject to adjustment.

The following is a summary of these rights. The full description and terms
of the rights are set forth in a rights agreement with UMB Bank, N.A., as rights
agent. Copies of the rights agreement and the certificate of designation for the
Series A Preferred Stock are available free of charge. This summary description
of the rights and the Series A Preferred Stock does not purport to be complete
and is qualified in its entirety by reference to all the provisions of the
rights agreement and the certificate of designation for the Series A Preferred
Stock.

Initially, the rights attached to all certificates representing shares of
our outstanding common stock, and no separate rights certificates were
distributed. The rights will separate from our common stock and the distribution
date will occur upon the earlier of:

- ten days following the date of public announcement that a person or group
of persons has become an acquiring person; or

- ten business days (or a later date set by the board of directors prior to
the time a person becomes an acquiring person) following the commencement
of, or the announcement of an intention to make, a tender offer or
exchange offer upon consummation of which the offeror would, if
successful, become an acquiring person. The earlier of these dates is
called the distribution date.

The term "acquiring person" means any person who or which, together with
all of its affiliates and associates, is the beneficial owner of 15% or more of
our outstanding common stock, but does not include:

- us or any of our subsidiaries or employee benefit plans;

- Aubrey K. McClendon, his spouse, lineal descendants and ascendants,
heirs, executors or other legal representatives and any trusts
established for the benefit of the foregoing or any other person or
entity in which the foregoing persons or entities are at the time of
determination the direct record and beneficial owners of all outstanding
voting securities (each a "McClendon shareholder");
20

- Tom L. Ward, his spouse, lineal descendants and ascendants, heirs,
executors or other legal representatives and any trusts established for
the benefit of the foregoing, or any other person or entity in which the
foregoing persons or entities are at the time of determination the direct
record and beneficial owners of all outstanding voting securities (each a
"Ward shareholder"),

- Morgan Guaranty Trust Company of New York, in its capacity as pledgee of
shares beneficially owned by a McClendon or Ward shareholder, or both,
under any pledge agreement in effect on September 11, 1998, to the extent
that upon the exercise by the pledgee of any of its rights or duties as
pledgee, other than the exercise of any voting power by the pledgee or
the acquisition of ownership by the pledgee, such pledgee becomes a
beneficial owner of pledged shares, or

- any person (other than the pledgee just described) that is neither a
McClendon nor Ward shareholder, but who or which is the beneficial owner
of common stock beneficially owned by a McClendon or Ward shareholder (a
"second tier shareholder"), but only if the shares of common stock
otherwise beneficially owned by a second tier shareholder ("second tier
holder shares") do not exceed the sum of (A) the holder's second tier
holder shares held on September 11, 1998 and (B) 1% of the shares of our
common stock then outstanding (collectively, "exempt persons").

The rights agreement provides that, until the distribution date, the rights
will be transferred with and only with the common stock. Until the distribution
date (or earlier redemption or expiration of the rights), new common stock
certificates issued after July 27, 1998, upon transfer or new issuance of common
stock, will contain a notation incorporating the rights agreement by reference.
Until the distribution date or earlier redemption or expiration of the rights,
the surrender for transfer of any certificate for common stock, outstanding as
of July 27, 1998, even without a notation or a copy of a summary of the rights
being attached, will also constitute the transfer of the rights associated with
the common stock represented by the certificate. As soon as practicable
following the distribution date, separate certificates evidencing the rights
will be mailed to holders of record of the common stock as of the close of
business on the distribution date and these separate rights certificates alone
will evidence the rights.

The rights are not exercisable until the distribution date. The rights will
expire on July 27, 2008.

The purchase price payable, and the number of one one-thousandths of a
share of Series A Preferred Stock or other securities or property issuable, upon
exercise of the rights are subject to adjustment from time to time to prevent
dilution:

- in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Series A Preferred Stock;

- upon the grant to holders of the Series A Preferred Stock of certain
rights or warrants to subscribe for or purchase shares of Series A
Preferred Stock at a price, or securities convertible into Series A
Preferred Stock with a conversion price, less than the then current
market price of the Series A Preferred Stock; or

- upon the distribution to holders of the Series A Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash
dividends paid or dividends payable in Series A Preferred Stock) or of
subscription rights or warrants (other than those referred to above).

The number of outstanding rights and the number of one one-thousandths of a
share of Series A Preferred Stock issuable upon exercise of each right are also
subject to adjustment in the event of a stock split of the common stock or a
stock dividend on the common stock payable in the common stock or subdivisions,
consolidations or combinations of the common stock occurring, in any such case,
prior to the distribution date.

In the event that following the date of public announcement that an
acquiring person has become an acquiring person, we are acquired in a merger or
other business combination transaction or more than 50% of our consolidated
assets or earning power is sold, proper provision will be made so that each
holder of a right will thereafter have the right to receive, upon the exercise
of the right at the then current exercise price of the right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of the
right (the "flip-over right").
21

In the event that a person, other than an exempt person, becomes an
acquiring person, proper provision will be made so that each holder of a right,
other than the acquiring person and its affiliates and associates, will
thereafter have the right to receive upon exercise that number of shares of
common stock, or, if applicable, cash, other equity securities or property of
us, having a market value equal to two times the purchase price of the rights
(the "flip-in right"). Any rights that are or were at any time owned by an
acquiring person will then become void.

With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least 1% in
the purchase price. Upon exercise of the rights, no fractional shares of Series
A Preferred Stock will be issued other than fractions which are integral
multiples of one one-hundredth of a share of Series A Preferred Stock. Cash will
be paid in lieu of fractional shares of Series A Preferred Stock that are not
integral multiples of one one-hundredth of a share of Series A Preferred Stock.

At any time prior to the earlier to occur of (1) 5:00 p.m., Oklahoma City,
Oklahoma time on the tenth day after the stock acquisition date or (2) the
expiration of the rights, we may redeem the rights in whole, but not in part, at
a price of $0.01 per right; provided, that (a) if the board of directors
authorizes redemption on or after the time a person becomes an acquiring person,
then the authorization must be by board approval and (b) the period for
redemption may, upon board approval, be extended by amending the rights
agreement. Board approval means the approval of a majority of our directors.
Immediately upon any redemption of the rights described in this paragraph, the
right to exercise the rights will terminate and the only right of the holders of
rights will be to receive the redemption price.

Our board of directors may amend the terms of the rights without the
consent of the holders of the rights at any time and from time to time provided
that any amendment does not adversely affect the interests of the holders of the
rights. In addition, during any time that the rights are subject to redemption,
the terms of the rights may be amended by the approval of a majority of the
directors, including an amendment that adversely affects the interests of the
holders of the rights, without the consent of the holders of rights.

Until a right is exercised, a holder will have no rights as a shareholder,
including, without limitation, the right to vote or to receive dividends. While
the distribution of the rights will not be taxable to us or our shareholders,
shareholders may, depending upon the circumstances, recognize taxable income in
the event that the rights become exercisable for Series A Preferred Stock, or
other consideration.

The Series A Preferred Stock. Each one-thousandth of a share of the Series
A Preferred Stock (a "preferred share fraction") that may be acquired upon
exercise of the rights will be nonredeemable and junior to any other shares of
preferred stock that we may issue.

Each preferred share fraction will have a minimum preferential quarterly
dividend rate of $0.01 per preferred share fraction but will, in any event, be
entitled to a dividend equal to the per share dividend declared on the common
stock.

In the event of liquidation, the holder of a preferred share fraction will
receive a preferred liquidation payment equal to the greater of $0.01 per
preferred share fraction or the per share amount paid in respect of a share of
common stock.

Each preferred share fraction will have one vote, voting together with the
common stock. The holders of preferred share fractions, voting as a separate
class, will be entitled to elect two directors if dividends on the Series A
Preferred Stock are in arrears for six fiscal quarters.

In the event of any merger, consolidation or other transaction in which
shares of common stock are exchanged, each preferred share fraction will be
entitled to receive the per share amount paid in respect of each share of common
stock.

The rights of holders of the Series A Preferred Stock to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions.

Because of the nature of the Series A Preferred Stock's dividend,
liquidation and voting rights, the economic value of one preferred share
fraction that may be acquired upon the exercise of each right should approximate
the economic value of one share of our common stock.

SHAREHOLDER ACTION

Except as otherwise provided by law or in our certificate of incorporation
or bylaws, the approval by holders of a majority of the shares of common stock
present in person or represented by proxy at a meeting and entitled to vote is
sufficient to authorize, affirm, ratify or consent to a matter voted on by
shareholders. Our bylaws provide that all questions submitted to shareholders
will be decided by a plurality of the votes cast, unless otherwise required by
law, our certificate of incorporation, stock exchange requirements or any
certificate of designation. The Oklahoma General Corporation Act requires the
approval of the holders of a majority of the outstanding stock entitled to vote
for certain extraordinary corporate transactions, such as a merger, sale of
substantially all assets, dissolution or amendment of the certificate of
incorporation. Our certificate of incorporation provides for a vote of the
holders of two-thirds of the issued and outstanding stock having voting power,
voting as a single class, to amend, repeal or adopt any provision inconsistent
with the provisions of the certificate of incorporation limiting director
liability and stock purchases by us, and providing for staggered terms of
directors and indemnity for directors. The same vote is also required for
shareholders to amend, repeal or adopt any provision of our bylaws.

Under Oklahoma law, shareholders may take actions without the holding of a
meeting by written consent or consents signed by the holders of a sufficient
number of shares to approve the transaction had all of the outstanding shares of
our capital stock entitled to vote thereon been present at a meeting. If
shareholder action is taken by written consent, the rules and regulations of the
SEC require us to send each shareholder entitled to vote on the matter, but
whose consent was not solicited, an information statement containing information
substantially similar to that which would have been contained in a proxy
statement.

TRANSFER AGENT AND REGISTRAR

UMB Bank, N.A. is the transfer agent and registrar for our common stock and
the Convertible Preferred Stock.

FEDERAL INCOME TAX CONSIDERATIONS

The following discussion summarizes the material U.S. Federal income tax
consequences to U.S. holders (as defined below) of the purchase, ownership, and
disposition of the preferred stock and any common stock received upon its
conversion. This discussion is based upon the provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), the final, temporary and proposed
Treasury Regulations promulgated thereunder, and administrative rulings and
judicial decisions now in effect, all of which are subject to change (possibly
with retroactive effect) or different interpretations. This summary does not
purport to deal with all aspects of U.S. Federal income taxation that may be
relevant to an investor's decision to purchase shares of preferred stock, nor
any tax consequences arising under the laws of any state, locality or foreign
jurisdiction. This summary is not intended to be applicable to all categories of
investors, such as dealers in securities, banks, insurance companies, tax-exempt
organizations, foreign persons, persons that hold the preferred stock or common
stock as part of a straddle or conversion transaction, or holders subject to the
alternative minimum tax, which may be subject to special rules. In addition,
this discussion is limited to persons who hold the preferred stock or common
stock as "capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Code. As used in this section, a "U.S. holder" is
a beneficial owner of preferred stock or common stock that is for U.S. Federal
income tax purposes:

- an individual U.S. citizen or resident alien;

- a corporation, or entity taxable as a corporation that was created under
U.S. law (federal or state); or

- an estate or trust whose world-wide income is subject to U.S. Federal
income tax.

If a partnership holds preferred stock or common stock, the tax treatment
of a partner will generally depend upon the status of the partner and upon the
activities of the partnership.

YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, AND
FOREIGN TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, CONVERSION, AND DISPOSITION
OF PREFERRED STOCK AND COMMON STOCK RECEIVED AS A RESULT OF A CONVERSION OF
PREFERRED STOCK.

CONSEQUENCES TO HOLDERS OF PREFERRED STOCK OR COMMON STOCK

Distributions. The amount of any distribution to you with respect to
preferred stock or common stock will be treated as a dividend, taxable as
ordinary income to you, to the extent of our current or accumulated earnings and
profits ("earnings and profits") as determined under U.S. Federal income tax
principles. To the extent the amount of such distribution exceeds our earnings
and profits, the excess will be applied against and will reduce your tax basis
(on a dollar-for-dollar basis) in the preferred stock or common stock, as the
case may be. Any amount in excess of your tax basis will be treated as capital
gain. If we are not able to pay dividends on the preferred stock, the accreted
liquidation preference of the preferred stock will increase and such increase
may give rise to deemed dividend income to holders of the preferred stock in the
amount of all, or a portion of, such increase.

Dividends to Corporate Shareholders. In general, a distribution which is
treated as a dividend for U.S. Federal income tax purposes and is made to a
corporate shareholder with respect to the preferred stock or common stock will
qualify for the 70% dividends-received deduction under Section 243 of the Code.
Corporate shareholders should note, however, there can be no assurance that the
amount of distributions made with respect to the preferred stock or the common
stock will not exceed the amount of our earnings and profits in the future.
Accordingly, there, can be no assurance that the dividends-received deduction
will be available in respect of distributions on the preferred stock or common
stock.

In addition, there are many exceptions and restrictions relating to the
availability of such dividends-received deduction such as restrictions relating
to:

- the holding period of stock the dividends on which are sought to be
deducted;

- debt-financed portfolio stock;

- dividends treated as "extraordinary dividends" for purposes of Section
1059 of the Code; and

- taxpayers that pay corporate alternative minimum tax.

Corporate shareholders should consult their own tax advisors regarding the
extent, if any, to which such exceptions and restrictions may apply to their
particular factual situation.

Sale or Other Disposition; Redemption. Upon a sale or other disposition of
preferred stock or common stock (other than an exchange of preferred stock for
common stock pursuant to the conversion privilege), you generally will recognize
capital gain or loss equal to the difference between the amount of cash and the
fair market value of property you receive on the sale or other disposition and
your adjusted tax basis in the preferred stock or common stock. Such capital
gain or loss will be long-term capital gain or loss if your holding period for
the preferred stock or common stock, as applicable, is more than one year.

If, following a change of control, a holder of the preferred stock
exercises the option described in "Description of Preferred Stock -- Change of
Control" and we elect to satisfy payment in cash, the transaction will generally
be treated as a redemption for U.S. Federal income tax purposes. The U.S.
Federal income tax treatment of such a redemption to a holder will depend on the
particular facts relating to such holder at the time of the redemption. The
receipt of cash in connection with such redemption will be treated as gain or
loss from the sale or other disposition of the preferred stock (as discussed in
the preceding paragraph),

if, taking into account stock that is actually or constructively owned as
determined under Section 318 of the Code:

- your interest in our common and preferred stock is completely terminated
as a result of such redemption;

- your percentage ownership in our voting stock immediately after such
redemption is less than 80% of your percentage ownership immediately
before such redemption; or

- such redemption is "not essentially equivalent to a dividend" (within the
meaning of Section 302(b)(1) of the Code).

If none of the above tests giving rise to sale treatment is satisfied, then
a payment made in redemption of the preferred stock will be treated as a
distribution that is taxable in the same manner as described above under
"Distributions," and your adjusted tax basis in the redeemed preferred stock
will be transferred to any remaining shares you hold in us. If you do not retain
any stock ownership in us following such redemption, then you may lose your
basis completely.

Conversion of Preferred Stock in Exchange for Common Stock. You generally
will not recognize gain or loss by reason of receiving common stock in exchange
for preferred stock upon conversion of the preferred stock, except gain or loss
will be recognized with respect to any cash received in lieu of fractional
shares and the fair market value of any shares of common stock attributable to
dividend arrearages will be treated as a constructive distribution as described
above under "Distributions." The adjusted tax basis of the common stock
(including fractional share interests) so acquired will be equal to the tax
basis of the shares of preferred stock exchanged and the holding period of the
common stock received will include the holding period of the preferred stock
exchanged. The tax basis of any common stock treated as a constructive
distribution will be equal to its fair market value on the date of the exchange.

Adjustment of Conversion Price. Holders of preferred stock may, in certain
circumstances, be deemed to have received constructive distributions of stock if
the conversion rate for the preferred stock is adjusted. Adjustments to the
conversion price made pursuant to a bona fide reasonable adjustment formula
which has the effect of preventing the dilution of the interest of the holders
of the preferred stock, however, generally will not be considered to result in a
constructive distribution of stock. Certain of the possible adjustments provided
in the anti-dilution provisions of the preferred stock, including, without
limitation, adjustments in respect of stock dividends or the distribution of
rights to subscribe for common stock should qualify as being pursuant to a bona
fide reasonable adjustment formula and should not result in a constructive
distribution. In contrast, adjustments in respect of distributions of our
indebtedness or assets to our stockholders, for example, will not qualify as
being pursuant to a bona fide reasonable adjustment formula. In addition, an
adjustment triggered by a change of control as described under "Description of
Preferred Stock" may not so qualify. If such adjustments are made, the holders
generally will be deemed to have received constructive distributions in amounts
based upon the value of such holders' increased interests in our equity
resulting from such adjustments. The amount of the distribution will be treated
as a distribution to a holder with the tax consequences specified above under
"Distributions." Accordingly, you could be considered to have received
distributions taxable as dividends to the extent of our earnings and profits
even though you did not receive any cash or property as a result of such
adjustments.

Conversion of Preferred Stock After Dividend Record Date. If a holder
exercises its right to convert the preferred stock into shares of common stock
after a dividend record date but before payment of the dividend, then upon
conversion, the holder generally will be required to pay to us in cash an amount
equal to the portion of such dividend attributable to the current quarterly
dividend period, which amount would increase the tax basis of the common stock
received. When the dividend is received, the holder would recognize the dividend
payment in accordance with the rules described under "-- Distributions" above.

Backup Withholding. Under the backup withholding provisions of the Code
and applicable Treasury Regulations, you may be subject to backup withholding at
a maximum rate of 30.5% with respect to dividends paid on, or the proceeds of a
sale, exchange or redemption of, preferred stock or common stock unless:

- you are a corporation or come within certain other exempt categories and
when required demonstrate this fact, or

- within a reasonable period of time, you provide a taxpayer identification
number, certify as to no loss of exemption from backup withholding, and
otherwise comply with applicable requirements of the backup withholding
rules.

The amount of any backup withholding from a payment to you will be allowed as a
credit against your U.S. Federal income tax liability and may entitle you to a
refund, provided that the required information is furnished to the Internal
Revenue Service.

THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO YOU IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES
AND INCOME TAX SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE
SPECIFIC TAX CONSEQUENCES THAT WOULD RESULT FROM YOUR PURCHASE, OWNERSHIP AND
DISPOSITION OF THE PREFERRED STOCK, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
FEDERAL OR OTHER TAX LAWS.

NOTICE TO CANADIAN RESIDENTS

RIGHTS OF ACTION (ONTARIO PURCHASERS)

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

ENFORCEMENT OF LEGAL RIGHTS

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of preferred stock to whom the Securities Act (British
Columbia) applies is advised that the purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any preferred stock acquired by the purchaser pursuant to this offering. The
report must be in the form attached to British Columbia Securities Commission
Blanket Order BOR #95/17, a copy of which may be obtained from us. Only one
report must be filed for preferred stock acquired on the same date and under the
same prospectus exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

Canadian purchasers of preferred stock should consult their own legal and
tax advisors with respect to the tax consequences of an investment in the
preferred stock in their particular circumstances and about the eligibility of
the preferred stock for investment by the purchaser under relevant Canadian
legislation.

SELLING SECURITYHOLDERS

The preferred stock, and any shares of our common stock issued upon
conversion of the preferred stock, are being offered by the selling
securityholders listed in the table below. We issued and sold the preferred
stock in a private placement to the Initial Purchasers, Credit Suisse First
Boston Corporation, Bear Stearns, & Co. Inc., Lehman Brothers Inc. and Salomon
Smith Barney Inc. The selling securityholders purchased their preferred stock
from the Initial Purchasers or from subsequent holders in transactions exempt
from registration under the Securities Act. Selling securityholders selling
common stock, issued upon conversion of the preferred stock, acquired such stock
from the Initial Purchasers or from subsequent holders in transactions exempt
from registration under the Securities Act, or from the Company, through
conversion of their previously acquired preferred stock.

This prospectus covers sales, by the named selling securityholders, of
preferred stock and shares of common stock issued upon conversion of the
preferred stock. This prospectus will not cover subsequent sales of common stock
received upon conversion of preferred stock purchased from a selling
securityholder named in this prospectus.

No offer or sale under this prospectus may be made by a securityholder
unless that holder is listed in the table below, in a supplement to this
prospectus or in an amendment to the related registration statement that has
become effective. We will supplement or amend this prospectus to include
additional selling security holders upon request and upon provision of all
required information to us, subject to the terms of the Registration Rights
Agreement dated as of November 6, 2001 between Chesapeake Energy Corporation and
the Initial Purchasers.

The following table sets forth, the name of each selling securityholder,
the nature of any position, office, or other material relationship which the
selling securityholder has had, within the past three years, with us or with any
of our predecessors or affiliates, the amount of Preferred Stock and shares of
our common stock beneficially owned by such securityholder prior to the
offering, the amount being offered for the securityholder's account and the
amount to be owned by such security holder after completion of the offering.

We prepared the table based on information supplied to us by the selling
securityholders. We have not sought to verify such information. Additionally,
some or all of the selling securityholders may have sold or transferred some or
all of their Preferred Stock, in transactions exempt from the registration
requirements of the Securities Act, or some or all of their shares of our common
stock, in exempt or non-exempt transactions, since the date on which the
information in the table was provided to us. Other information about the selling
securityholders may also change over time.

NUMBER OF SHARES NUMBER OF SHARES
NUMBER OF SHARES NUMBER OF SHARES OF PREFERRED STOCK OF COMMON STOCK
OF PREFERRED STOCK OF PREFERRED STOCK TO BE OWNED AFTER BENEFICIALLY OWNED
BENEFICIALLY OWNED BEING OFFERED COMPLETION OF THE PRIOR TO THE
NAME PRIOR TO THE OFFERING HEREBY OFFERING OFFERING(1)
---- --------------------- ------------------ ------------------ ------------------

AIG Soundshore Holdings
Ltd. ..................... 139,500 139,500 0 905,843
AIG Soundshore Opportunity
Holding Fund Ltd. ........ 76,400 76,400 0 496,103
AIG Soundshore Strategic
Holding Fund Ltd. ........ 46,100 46,100 0 299,350
Alpine Associates.......... 100,000 100,000 0 649,350
Alpine Partners, L.P. ..... 15,000 15,000 0 97,403
Bear, Stearns & Co.
Inc. ..................... 5,000 5,000 0 32,468
BGI Global Investors c/o
Forest Investment Mngt.
L.L.C. ................... 5,000 5,000 0 32,468
Banc of America Securities
LLC....................... 180,000 180,000 0 1,168,830
CSFB Convertible and
Quantitative Strategies... 50,000 50,000 0 324,675
First Union National
Bank...................... 295,000 295,000 0 1,915,583

NUMBER OF SHARES
NUMBER OF SHARES OF COMMON STOCK
OF COMMON STOCK TO BE OWNED AFTER
BEING OFFERED COMPLETION OF THE
NAME HEREBY OFFERING
---- ---------------- -----------------

AIG Soundshore Holdings
Ltd. ..................... 905,843 0
AIG Soundshore Opportunity
Holding Fund Ltd. ........ 496,103 0
AIG Soundshore Strategic
Holding Fund Ltd. ........ 299,350 0
Alpine Associates.......... 649,350 0
Alpine Partners, L.P. ..... 97,403 0
Bear, Stearns & Co.
Inc. ..................... 32,468 0
BGI Global Investors c/o
Forest Investment Mngt.
L.L.C. ................... 32,468 0
Banc of America Securities
LLC....................... 1,168,830 0
CSFB Convertible and
Quantitative Strategies... 324,675 0
First Union National
Bank...................... 1,915,583 0

FIST -- Franklin
Convertible Securities
Fund...................... 40,000 40,000 0 259,740
Forest Alternative
Strategies II............. 1,500 1,500 0 9,740
Forest Fulcrum Fund
L.L.P. ................... 16,000 16,000 0 103,896
Forest Global Convertible
Fund Series A-5........... 60,500 60,500 0 392,857
FTIF -- Franklin Income
Fund...................... 1,000 1,000 0 6,494
Franklin Custodian Fund --
Income Fund............... 270,800 270,800 0 1,758,440
FTVIPT -- Franklin Income
Securities Fund........... 18,000 18,000 0 116,883
Global Bermuda Limited
Partnership............... 4,000 4,000 0 25,974
Lakeshore International
Ltd....................... 16,000 16,000 0 103,896
Lipper Convertibles,
L.P. ..................... 150,000 150,000 0 974,025
LLT Limited................ 5,000 5,000 0 32,468
Lyxor Master Fund.......... 2,000 2,000 0 12,987
Navigator Offshore Fund,
Ltd. ..................... 15,000 15,000 0 97,403
Navigator Partners L.P. ... 3,000 3,000 0 19,481
The Northwestern Mutual
Life Insurance Company.... 30,000 30,000 0 194,805
Peoples Benefit Life
Insurance
Company/ TEAMSTERS........ 17,500 17,500 0 113,636
Ramius Capital Group....... 10,000 10,000 0 64,935
RBC Capital Services Inc.
c/o Forest Investment
Mngt. LLC................. 1,000 1,000 0 6,494
RCG Halifax Master Fund
Ltd. ..................... 5,000 5,000 0 32,468
RCG Latitude Master Fund
Ltd. ..................... 15,000 15,000 0 97,403
RCG Multi Strategy LP...... 10,000 10,000 0 64,935
Retail Clerks Pension Trust
#2........................ 17,500 17,500 0 113,636
UBS O'Connor LLC F/B/O UBS
Global Equity Arbitrage
Master Ltd. .............. 70,000 70,000 0 454,545
White River Securities
L.L.C. ................... 5,000 5,000 0 32,468
Yield Strategies Fund I,
LP........................ 7,500 7,500 0 48,701
Yield Strategies Fund II,
LP........................ 7,500 7,500 0 48,701
Zurich Master Hedge Fund
c/o Forest Investment
Mngt. L.L.C. ............. 5,000 5,000 0 32,468
---------
Total...................... 1,715,800
=========

NUMBER OF SHARES
NUMBER OF SHARES OF COMMON STOCK
OF COMMON STOCK TO BE OWNED AFTER
BEING OFFERED COMPLETION OF THE
NAME HEREBY OFFERING
---- ---------------- -----------------

FIST -- Franklin
Convertible Securities
Fund...................... 259,740 0
Forest Alternative
Strategies II............. 9,740 0
Forest Fulcrum Fund
L.L.P. ................... 103,896 0
Forest Global Convertible
Fund Series A-5........... 392,857 0
FTIF -- Franklin Income
Fund...................... 6,494 0
Franklin Custodian Fund --
Income Fund............... 1,758,440 0
FTVIPT -- Franklin Income
Securities Fund........... 116,883 0
Global Bermuda Limited
Partnership............... 25,974 0
Lakeshore International
Ltd....................... 103,896 0
Lipper Convertibles,
L.P. ..................... 974,025 0
LLT Limited................ 32,468 0
Lyxor Master Fund.......... 12,987 0
Navigator Offshore Fund,
Ltd. ..................... 97,403 0
Navigator Partners L.P. ... 19,481 0
The Northwestern Mutual
Life Insurance Company.... 194,805 0
Peoples Benefit Life
Insurance
Company/ TEAMSTERS........ 113,636 0
Ramius Capital Group....... 64,935 0
RBC Capital Services Inc.
c/o Forest Investment
Mngt. LLC................. 6,494 0
RCG Halifax Master Fund
Ltd. ..................... 32,468 0
RCG Latitude Master Fund
Ltd. ..................... 97,403 0
RCG Multi Strategy LP...... 64,935 0
Retail Clerks Pension Trust
#2........................ 113,636 0
UBS O'Connor LLC F/B/O UBS
Global Equity Arbitrage
Master Ltd. .............. 454,545 0
White River Securities
L.L.C. ................... 32,468 0
Yield Strategies Fund I,
LP........................ 48,701 0
Yield Strategies Fund II,
LP........................ 48,701 0
Zurich Master Hedge Fund
c/o Forest Investment
Mngt. L.L.C. ............. 32,468 0
Total......................

---------------

(1) The stated amounts, to the extent they describe common stock issuable upon
conversion of the holder's preferred stock, assume conversion of all of the
holders' preferred stock at a conversion ratio of 6.4935 shares of our
common stock per share of preferred stock. This conversion ratio, however,
will be subject to adjustment as described under "Description of the
Preferred Stock -- Conversion Rights". As a result, the number of shares of
our common stock issuable upon conversion of the preferred stock and,
therefore, attributable to holders of preferred stock, may increase or
decrease in the future.

PLAN OF DISTRIBUTION

The preferred stock and the common stock are being registered to permit
public secondary trading of these securities by the holders thereof from time to
time after the date of this prospectus. We have agreed, among other things, to
bear all expenses (other than underwriting discounts and selling commissions) in
connection with the registration and sale of the preferred stock and the common
stock covered by this prospectus.

We will not receive any of the proceeds from the offering of preferred
stock or the common stock by the selling securityholders. We have been advised
by the selling securityholders that the selling securityholders may sell all or
a portion of the preferred stock and common stock beneficially owned by them and
offered hereby from time to time on any exchange on which the securities are
listed on terms to be determined at the times of such sales. The selling
securityholders may also make private sales directly or through a broker or
brokers. Alternatively, any of the selling securityholders may from time to time
offer the preferred stock or the common stock beneficially owned by them through
underwriters, dealers or agents, who may receive compensation in the form of
underwriting discounts, commissions or concessions from the selling
securityholders and the purchasers of the preferred stock and the common stock
for whom they may act as agent. The aggregate proceeds to the selling
securityholders from the sale of the preferred stock or common stock offering by
them hereby will be the purchase price of such preferred stock or common stock
less discounts and commissions, if any.

The preferred stock and common stock may be sold from time to time in one
or more transactions at fixed offering prices, which may be changed, or at
varying prices determined at the time of sale or at negotiated prices. These
prices will be determined by the holders of such securities or by agreement
between these holders and underwriters or dealers who may receive fees or
commissions in connection therewith.

These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.

In connection with sales of the preferred stock or our common stock or
otherwise, the selling securityholder may enter into hedging transactions with
broker-dealers or others, which may in turn engage in short sales of the
preferred stock or our common stock in the course of hedging the positions they
assume. The selling securityholder may also sell preferred stock or our common
stock short and deliver preferred stock or our common stock to close out short
positions, or loan or pledge preferred stock or our common stock to
broker-dealers or others that in turn may sell such securities. The selling
securityholder may pledge or grant a security interest in some or all of the
preferred stock or our common stock issued upon conversion of the preferred
stock owned by it and if it defaults in the performance of its secured
obligations, the pledgees or secured parties may offer and sell the preferred
stock or our common stock from time to time pursuant to this prospectus. The
selling securityholder also may transfer and donate preferred stock or shares of
our common stock issuable upon conversion of the preferred stock in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling securityholder for purposes of the
prospectus. The selling securityholder may sell short our common stock and may
deliver this prospectus in connection with such short sales and use the shares
of our common stock covered by the prospectus to cover such short sales. In
addition, any preferred stock or shares of our common stock covered by this
prospectus that qualify for sale pursuant to Rule 144, Rule 144A or any other
available exemption from registration under the Securities Act may be sold under
Rule 144, Rule 144A or such other available exemption.

At the time a particular offering of preferred stock or shares of our
common stock issuable upon conversion of the preferred stock is made, a
prospectus supplement, if required, will be distributed which will set forth the
aggregate amount of preferred stock or number of shares of our common stock
being offered and the terms of the offering, including the name or names of any
underwriters, dealers, brokers or agents, if any, and any discounts, commissions
or concessions allowed or reallowed to be paid to brokers or dealers.

Our outstanding common stock is listed for trading on the New York Stock
Exchange.

The preferred stock was issued and sold on November 13, 2001 in
transactions exempt from the registration requirements of the Securities Act to
persons reasonably believed by the Initial Purchasers to be "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act). We
have agreed to indemnify the Initial Purchasers and each selling securityholder,
and each selling securityholder had agreed to indemnify us, the Initial
Purchasers and each other selling shareholder against certain liabilities
arising under the Securities Act.

Selling securityholders and any underwriters, dealers, brokers or agents
who participate in the distribution of the preferred stock or our common stock
may be deemed to be "underwriters" within the meaning of the

Securities Act and any profits on the sale of the preferred stock and our common
stock by them and any discounts, commissioners or concessions received by any
such underwriters, dealers, brokers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act.

The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M which may limit the timing of purchases and sales of the preferred stock and
our common stock by the selling securityholders and any other such person.
Furthermore, Regulation M under the Exchange Act may restrict the ability of any
person engaged in a distribution of the preferred stock and our common stock
being distributed for a period of up to five business days prior to the
commencement of such distribution. All of the foregoing may affect the
marketability of the preferred stock and our common stock and the ability of any
person or entity to engage in market-making activities with respect to the
preferred stock and our common stock.

We will use our reasonable efforts to keep the registration statement of
which this prospectus is a part effective until the earliest of (a) the sale
pursuant to the shelf registration statement of all the preferred stock and the
shares of common stock issuable upon conversion of the preferred stock
thereunder, (b) the expiration of the holding period applicable to such
securities held by persons that are not our affiliates under Rule 144(k) under
the Securities Act or any successor provision, subject to certain permitted
exceptions, and (c) the date all preferred stock and common stock issuable upon
conversion of the preferred stock cease to be outstanding.

LEGAL MATTERS

The validity of the issuance of the preferred stock and the validity of the
common stock issuable upon conversion of the preferred stock have been passed
upon for us by Vinson & Elkins L.L.P. In giving such opinion, Vinson & Elkins
L.L.P. has relied upon Commercial Law Group, P.C. as to all matters of Oklahoma
law.

Shannon T. Self, a shareholder in Commercial Law Group, P.C., is a director
of Chesapeake, and he beneficially owns 30,576 shares of our common stock.

EXPERTS

The consolidated financial statements of Chesapeake Energy Corporation and
Gothic Energy Corporation, incorporated in this prospectus by reference to
Chesapeake's annual report on Form 10-K/A for the year ended December 31, 2000,
have been so incorporated in reliance on the reports of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.

Estimates of the oil and gas reserves of Chesapeake Energy Corporation and
Gothic Energy Corporation and related future net cash flows and the present
values thereof, included in Chesapeake's annual report on Form 10-K for the year
ended December 31, 2000, were based upon reserve reports prepared by Williamson
Petroleum Consultants, Inc., Ryder Scott Company, L.P. and Lee Keeling and
Associates, Inc., independent petroleum engineers. We have incorporated these
estimates in reliance on the authority of each such firm as experts in such
matters.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may inspect and copy such material at the public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for more information on the public reference room. You can also
find our SEC filings at the SEC's website at www.sec.gov and on our website at
www.chkenergy.com. Information contained on our website is not part of this
prospectus.

In addition, reports, proxy statements and other information concerning us
can be inspected at the NYSE, 20 Broad Street, New York, New York 10005, where
our common stock is listed.

The following documents we filed with the SEC pursuant to the Exchange Act
are incorporated herein by reference:

1. Annual Report on Form 10-K, as amended, for the fiscal year ended
December 31, 2000;

2. Definitive Proxy Statement dated April 30, 2001 for our 2001
Annual Meeting of Stockholders;

3. Current Reports on Form 8-K filed on January 17, January 24,
January 31, February 6, February 13, February 21, March 27, March 29, April
2, April 3, April 9, April 16, April 17, April 27, July 17, July 27, August
13, October 3, October 24 (as amended on October 26), October 25, October
29, November 1, November 2, November 7, and December 5, 2001 (excluding any
information filed pursuant to Item 9 on any such Current Report on Form
8-K); and

4. Quarterly Reports on Form 10-Q for the quarters ended March 31,
2001, June 30, 2001 and September 30, 2001.

All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this prospectus and prior to the
termination of this offering shall be deemed to be incorporated in this
prospectus and to be a part hereof from the date of the filing of such document.
Any statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained in this prospectus, or in any other subsequently filed
document which is also incorporated or deemed to be incorporated by reference,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.

We will provide without charge to each person to whom this prospectus is
delivered, upon written or oral request of such person, a copy of any or all
documents incorporated by reference in this prospectus. Requests for such copies
should be directed to Jennifer M. Grigsby, Secretary, Chesapeake Energy
Corporation, 6100 North Western Avenue, Oklahoma City, Oklahoma 73118, by mail,
or if by telephone at (405) 848-8000.

FORWARD-LOOKING STATEMENTS

This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act.
Forward-looking statements give our current expectations or forecasts of future
events. They include statements regarding oil and gas reserve estimates, planned
capital expenditures, the drilling of oil and gas wells and future acquisitions,
expected oil and gas production, cash flow and anticipated liquidity, business
strategy and other plans and objectives for future operations and expected
future expenses and use of net operating loss carryforwards.

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" and include:

- the volatility of oil and gas prices;

- our substantial indebtedness;

- our commodity price risk management activities;

- our ability to replace reserves;

- the availability of capital;

- uncertainties inherent in estimating quantities of oil and gas reserves;

- projecting future rates of production and the timing of development
expenditures;

- uncertainties in evaluating oil and gas reserves of acquired properties
and associated potential liabilities;

- drilling and operating risks;

- adverse effects of governmental and environmental regulation;

- losses possible from pending or future litigation;

- the strength and financial resources of our competitors; and

- the loss of officers or key employees.

We caution you not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus, and we undertake
no obligation to update this information. We urge you to carefully review and
consider the disclosures made in this prospectus and our reports filed with the
SEC and incorporated by reference herein that attempt to advise interested
parties of the risks and factors that may affect our business.

APPENDIX A

GLOSSARY

The terms defined below are used throughout this prospectus.

Bbl. One stock tank barrel, or 42 U.S. gallons liquid volume, used herein
in reference to crude oil or other liquid hydrocarbons.

Btu. British thermal unit, which is the heat required to raise the
temperature of a one-pound mass of water from 58.5 to 59.5 degrees Fahrenheit.

Dry Hole; Dry Well. A well found to be incapable of producing either oil
or gas in sufficient quantities to justify completion as an oil or gas well.

Formation. A succession of sedimentary beds that were deposited under the
same general geologic conditions.

Mcf. One thousand cubic feet of gas.

MMbtu. One million Btus.

Present Value or PV-10. When used with respect to oil and gas reserves,
present value or PV-10 means the estimated future gross revenue to be generated
from the production of proved reserves, net of estimated production and future
development costs, using prices and costs in effect at the determination date,
without giving effect to nonproperty related expenses such as general and
administrative expenses, debt service and future income tax expense or to
depreciation, depletion and amortization, discounted using an annual discount
rate of 10%.

Proved Reserves. The estimated quantities of crude oil, natural gas and
natural gas liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions.

Tcfe. Trillion cubic feet of gas equivalent on the basis of 6 Mcf of gas
per Bbl of oil.

Working Interest. The operating interest which gives the owner the right
to drill, produce and conduct operating activities on the property and a share
of production.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Section 1031 of the Oklahoma General Corporation Act, under which
Chesapeake is incorporated, authorizes the indemnification of directors and
officers under certain circumstances. Article VIII of the Certificate of
Incorporation of Chesapeake and Article VI of the Bylaws of Chesapeake also
provide for indemnification of directors and officers under certain
circumstances. These provisions, together with Chesapeake's indemnification
obligations under individual indemnity agreements with its directors and
officers, may be sufficiently broad to indemnify such persons for liabilities
under the Securities Act of 1933 (the "Securities Act"), as amended. In
addition, Chesapeake maintains insurance, which insures its directors and
officers against certain liabilities.

The Oklahoma General Corporation Act provides for indemnification of each
of Chesapeake's officers and directors against (a) expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with any action, suit or proceeding
brought by reason of such person being or having been a director, officer,
employee or agent of Chesapeake, or of any other corporation, partnership, joint
venture, trust or other enterprise at the request of Chesapeake, other than an
action by or in the right of Chesapeake. To be entitled to indemnification, the
individual must have acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interest of Chesapeake, and with respect to
any criminal action, the person seeking indemnification had no reasonable cause
to believe that the conduct was unlawful and (b) expenses, including attorneys'
fees, actually and reasonably incurred in connection with the defense or
settlement of any action or suit by or in the right of Chesapeake brought by
reason of the person seeking indemnification being or having been a director,
officer, employee or agent of Chesapeake, or any other corporation, partnership,
joint venture, trust or other enterprise at the request of Chesapeake, provided
the actions were in good faith and were reasonably believed to be in or not
opposed to the best interest of Chesapeake, except that no indemnification shall
be made in respect of any claim, issue or matter as to which the individual
shall have been adjudged liable to Chesapeake, unless and only to the extent
that the court in which such action was decided has determined that the person
is fairly and reasonably entitled to indemnity for such expenses which the court
deems proper. Article VIII of Chesapeake's Certificate of Incorporation provides
for indemnification of Chesapeake's director and officers. The Oklahoma General
Corporation Act also permits Chesapeake to purchase and maintain insurance on
behalf of Chesapeake's directors and officers against any liability arising out
of their status as such, whether or not Chesapeake would have the power to
indemnify them against such liability. These provisions may be sufficiently
broad to indemnify such persons for liabilities arising under the Securities
Act.

Chesapeake has entered into indemnity agreements with each of its directors
and executive officers. Under each indemnity agreement, Chesapeake will pay on
behalf of the indemnitee any amount which he is or becomes legally obligated to
pay because of (a) any claim or claims from time to time threatened or made
against him by any person because of any act or omission or neglect or breach of
duty, including any actual or alleged error or misstatement or misleading
statement, which he commits or suffers while acting in his capacity as a
director and/or officer of Chesapeake or an affiliate or (b) being a party, or
being threatened to be made a party, to any threatened, pending or contemplated
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was an officer, director,
employee or agent of Chesapeake or an affiliate or is or was serving at the
request of Chesapeake as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The payments
which Chesapeake would be obligated to make under an indemnification agreement
could include damages, charges, judgments, fines, penalties, settlements and
costs, cost of investigation and cost of defense of legal, equitable or criminal
actions, claims or proceedings and appeals therefrom, and costs of attachment,
supersedeas, bail, surety or other bonds. Chesapeake also provides liability
insurance for each of its directors and executive officers.

II-1

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

The following exhibits are filed herewith pursuant to the requirements of
Item 601 of Regulation S-K:

EXHIBIT
NUMBER DESCRIPTION
------- -----------

2.1 Senior Secured Discount Notes Purchase Agreement dated June
23, 2000 between Chesapeake Energy Marketing, Inc. and
Appaloosa Investment Limited Partnership I, Palomino Fund
Ltd. and Tersk L.L.C. Incorporated herein by reference to
Exhibit 2.1 to Chesapeake's Form S-1 Registration Statement
(No. 333-41014).
2.2 Senior Secured Discount Notes Purchase Agreement dated June
23, 2000 between Chesapeake Energy Marketing, Inc. and
Oppenheimer Strategic Income Fund, Oppenheimer Champion
Income Fund, Oppenheimer High Yield Fund, Oppenheimer
Strategic Bond Fund/VA and Atlas Strategic Income Fund.
Incorporated herein by reference to Exhibit 2.2 to
Chesapeake's Form S-1 Registration Statement (No.
333-41014).
2.3 Senior Secured Discount Notes Purchase Agreement dated June
26, 2000 between Chesapeake Energy Marketing, Inc. and John
Hancock High Yield Bond Fund and John Hancock Variable
Annuity High Yield Bond Fund. Incorporated herein by
reference to Exhibit 2.3 to Chesapeake's Form S-1
Registration Statement (No. 333-41014).
2.4 Agreement and Plan of Merger dated September 8, 2000 among
Chesapeake Energy Corporation, Chesapeake Merger 2000 Corp.
and Gothic Energy Corporation, as amended by Amendment No. 1
to Agreement and Plan of Merger dated October 31, 2000.
Incorporated herein by reference to Annex A to proxy
statement/prospectus included in Amendment No. 1 to
Chesapeake's registration statement on Form S-4 (No.
333-47330).
3.1 Chesapeake's Certificate of Incorporation, as amended.
Incorporated herein by reference to Exhibit 3.1 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended June 30, 2001.
3.1.1* Chesapeake's Certificate of Designation of 6.75% Cumulative
Convertible Preferred Stock.
3.2 Chesapeake's Bylaws. Incorporated herein by reference to
Exhibit 3.2 to Chesapeake's quarterly report on Form 10-Q
for the quarter ended June 30, 2001.
4.1 Indenture dated as of March 15, 1997 among Chesapeake, as
issuer, Chesapeake Operating, Inc., Chesapeake Gas
Development Corporation and Chesapeake Exploration Limited
Partnership, as Subsidiary Guarantors, and The Bank of New
York (formerly United States Trust Company of New York), as
Trustee, with respect to 7.875% Senior Notes due 2004.
Incorporated herein by reference to Exhibit 4.1 to
Chesapeake's registration statement on Form S-4 (No.
333-24995). First Supplemental Indenture dated December 17,
1997 and Second Supplemental Indenture dated February 16,
1998. Incorporated herein by reference to Exhibit 4.1.1 to
Chesapeake's transition report on Form 10-K for the six
months ended December 31, 1997. Second [Third] Supplemental
Indenture dated April 22, 1998. Incorporated herein by
reference to Exhibit 4.1.1 to Chesapeake's registration
statement on Form S-3 registration statement (No.
333-57235). Fourth Supplemental Indenture dated July 1,
1998. Incorporated herein by reference to Exhibit 4.1.1 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended September 30, 1998. Fifth Supplemental Indenture dated
November 19, 1999. Incorporated herein by reference to
Exhibit 4.1.1 to Chesapeake's quarterly report on Form 10-Q
for the quarter ended March 31, 2001. Sixth Supplemental
Indenture dated December 31, 1999. Incorporated herein by
reference to Exhibit 4.1.1 to Chesapeake's quarterly report
on Form 10-Q for the quarter ended September 30, 2001.
Seventh Supplemental Indenture dated September 12, 2001.
Incorporated herein by reference to Exhibit 4.1.2 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended September 30, 2001. Eighth Supplemental Indenture
dated October 1, 2001. Incorporated herein by reference to
Exhibit 4.1.3 to Chesapeake's quarterly report on Form 10-Q
for the quarter ended September 30, 2001.
4.1.1* Ninth Supplemental Indenture, dated as of December 17, 2001,
to Indenture dated as of March 15, 1997 among Chesapeake
Energy Corporation, as Issuer, its subsidiaries signatory
thereto, as Subsidiary Guarantors, and Bank of New York, as
Trustee, with respect to 7 7/8% Senior Notes due 2004.

II-2

EXHIBIT
NUMBER DESCRIPTION
------- -----------

4.2 Indenture dated as of March 15, 1997 among Chesapeake, as
issuer, Chesapeake Operating, Inc., Chesapeake Gas
Development Corporation and Chesapeake Exploration Limited
Partnership, as Subsidiary Guarantors, and The Bank of New
York (formerly United States Trust Company of New York), as
Trustee, with respect to 8.5% Senior Notes due 2012.
Incorporated herein by reference to Exhibit 4.3 to
Chesapeake's registration statement on Form S-4 (No.
333-24995). First Supplemental Indenture dated December 17,
1997 and Second Supplemental Indenture dated February 16,
1998. Incorporated herein by reference to Exhibit 4.2.1 to
Chesapeake's transition report on Form 10-K for the six
months ended December 31, 1997. Second [Third] Supplemental
Indenture dated April 22, 1998. Incorporated herein by
reference to Exhibit 4.2.1 to Chesapeake's Amendment No. 1
to Form S-3 registration statement (No. 333-57235). Fourth
Supplemental Indenture dated July 1, 1998. Incorporated
herein by reference to Exhibit 4.2.1 to Chesapeake's
quarterly report on Form 10-Q for the quarter ended
September 30, 1998. Fifth Supplemental Indenture dated
November 19, 1999. Incorporated herein by reference to
Exhibit 4.2.1 to Chesapeake's quarterly report on Form 10-Q
for the quarter ended March 31, 2001. Sixth Supplemental
Indenture dated December 31, 1999. Incorporated herein by
reference to Exhibit 4.2.1 to Chesapeake's quarterly report
on Form 10-Q for the quarter ended September 30, 2001.
Seventh Supplemental Indenture dated September 12, 2001.
Incorporated herein by reference to Exhibit 4.2.2 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended September 30, 2001. Eighth Supplemental Indenture
dated October 1, 2001. Incorporated herein by reference to
Exhibit 4.2.3 to Chesapeake's quarterly report on Form 10-Q
for the quarter ended September 30, 2001.
4.2.1* Ninth Supplemental Indenture, dated as of December 17, 2001,
to Indenture dated as of March 15, 1997 among Chesapeake
Energy Corporation, as Issuer, its subsidiaries signatory
thereto, as Subsidiary Guarantors, and Bank of New York, as
Trustee, with respect to 8 1/2% Senior Notes due 2012.
4.3 Indenture dated as of April 6, 2001 among Chesapeake, as
issuer, its subsidiaries signatory thereto, as Subsidiary
Guarantors, and The Bank of New York (formerly United States
Trust Company of New York), as Trustee, with respect to
8.125% Senior Notes due 2011. Incorporated herein by
reference to Exhibit 4.6 to Chesapeake's quarterly report on
Form 10-Q for the quarter ended March 31, 2001. Supplemental
Indenture dated May 14, 2001. Incorporated herein by
reference to Exhibit 4.6 to Chesapeake's quarterly report on
Form 10-Q for the quarter ended March 31, 2001. Second
Supplemental Indenture dated September 12, 2001.
Incorporated herein by reference to Exhibit 4.3.1 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended September 30, 2001. Third Supplemental Indenture dated
October 1, 2001. Incorporated herein by reference to Exhibit
4.3.2 to Chesapeake's quarterly report on Form 10-Q for the
quarter ended September 30, 2001.
4.3.1* Fourth Supplemental Indenture, dated as of December 17,
2001, to Indenture dated as of April 6, 2001 among
Chesapeake Energy Corporation, as Issuer, its subsidiaries
signatory thereto, as Subsidiary Guarantors, and Bank of New
York, as Trustee, with respect to 8 1/8% Senior Notes due
2011.
4.5 Agreement to furnish copies of unfiled long-term debt
instruments. Incorporated herein by reference to
Chesapeake's transition report on Form 10-K for the six
months ended December 31, 1997.
4.6 $225,000,000 Second Amended and Restated Credit Agreement,
dated as of June 11, 2001, among Chesapeake Energy
Corporation, Chesapeake Exploration Limited Partnership, as
Borrower, Bear Stearns Corporate Lending Inc., as
Syndication Agent, Union Bank of California, N.A., as
Administrative Agent and Collateral Agent, BNP Paribas and
Toronto Dominion (Texas), Inc., as Co-Documentation Agents
and other lenders party thereto. Incorporated herein by
reference to Exhibit 4.6 to Chesapeake's quarterly report on
Form 10-Q for the quarter ended June 30, 2001. Consent and
waiver letter dated September 10, 2001 and consent and
waiver letter dated October 5, 2001 incorporated herein by
reference to Exhibits 4.6.1 and 4.6.2 to Chesapeake's
quarterly report on Form 10-Q for the quarter ended
September 30, 2001, respectively.

II-3

EXHIBIT
NUMBER DESCRIPTION
------- -----------

4.6.1 Consent and waiver letter dated November 2, 2001 with
respect to Second Amended and Restated Credit Agreement,
dated as of June 11, 2001, among Chesapeake Energy
Corporation, Chesapeake Exploration Limited Partnership, as
Borrower, Bear Stearns Corporate Lending Inc., as
Syndication Agent, Union Bank of California, N.A., as
Administrative Agent and Collateral Agent, and other lenders
party thereto. Incorporated herein by reference to Exhibit
4.6.1 to Chesapeake's registration statement on Form S-4
(No. 333-74584).
4.9 Warrant Agreement dated as of September 9, 1997 between
Gothic Energy Corporation and UMB Bank, N.A. (formerly
American Stock Transfer & Trust Company), as warrant agent,
and Supplement to Warrant Agreement dated as of January 16,
2001. Incorporated herein by reference to Exhibit 4.9 to
Registrant's annual report on Form 10-K for the year ended
December 31, 2000.
4.10 Registration Rights Agreement dated as of September 9, 1997
among Gothic Energy Corporation, two of its subsidiaries,
Oppenheimer & Co., Inc., Banc One Capital Corporation and
Paribas Corporation. Incorporated herein by reference to
Exhibit 4.10 to Registrant's annual report on Form 10-K for
the year ended December 31, 2000.
4.11 Warrant Agreement dated as of January 23, 1998 between
Gothic Energy Corporation and UMB Bank, N.A. (formerly
American Stock Transfer & Trust Company), as warrant agent.
Incorporated herein by reference to Exhibit 4.11 to
Registrant's annual report on Form 10-K for the year ended
December 31, 2000.
4.12 Common Stock Registration Rights Agreement dated as of
January 23, 1998 among Gothic Energy Corporation and
purchasers of its senior redeemable preferred stock.
Incorporated herein by reference to Exhibit 4.12 to
Registrant's annual report on Form 10-K for the year ended
December 31, 2000.
4.13 Substitute Warrant to Purchase Common Stock of Chesapeake
Energy Corporation dated as of January 16, 2001 issued to
Amoco Corporation. Incorporated herein by reference to
Exhibit 4.13 to Registrant's annual report on Form 10-K for
the year ended December 31, 2000.
4.14 Warrant Agreement dated as of April 21, 1998 between Gothic
Energy Corporation and American Stock Transfer & Trust
Company, as warrant agent, and Supplement to Warrant
Agreement dated as of January 16, 2001. Incorporated herein
by reference to Exhibit 4.14 to Registrant's annual report
on Form 10-K for the year ended December 31, 2000.
4.15 Warrant Registration Rights Agreement dated as of April 21,
1998 among Gothic Energy Corporation and purchasers of units
consisting of its 14 1/8% senior secured discount notes due
2006 and warrants to purchase its common stock. Incorporated
herein by reference to Exhibit 4.15 to Registrant's annual
report on Form 10-K for the year ended December 31, 2000.
4.16 Indenture dated as of November 5, 2001 among Chesapeake, as
issuer, its subsidiaries signatory thereto, as Subsidiary
Guarantors and The Bank of New York, with respect to 8.375%
Senior Notes due 2008. Incorporated herein by reference to
Exhibit 4.16 to Chesapeake's registration statement on Form
S-4 (No. 333-74584).
4.16.1* First Supplemental Indenture, dated as of December 17, 2001,
to Indenture dated as of November 5, 2001 among Chesapeake
Energy Corporation, as Issuer, its subsidiaries signatory
thereto, as Subsidiary Guarantors, and The Bank of New York,
as Trustee, with respect to 8 3/8% Senior Notes due 2008.
4.17 Registration Rights Agreement dated October 25, 2001 among
Chesapeake and certain of its Subsidiaries, as guarantors,
and Bear, Stearns & Co. Inc., Lehman Brothers Inc., Salomon
Smith Barney Inc. and Credit Suisse First Boston
Corporation. Incorporated herein by reference to Exhibit
4.17 to Chesapeake's registration statement on Form S-4 (No.
333-74584).
5.1* Opinion of Commercial Law Group, P.C. regarding the validity
of the securities being registered.
8.1* Opinion of Vinson & Elkins L.L.P. regarding certain tax
matters.
10.1.1+ Chesapeake's 1992 Incentive Stock Option Plan. Incorporated
herein by reference to Exhibit 10.1.1 to Chesapeake's
registration statement on Form S-4 (No. 33-93718).
10.1.2+ Chesapeake's 1992 Nonstatutory Stock Option Plan, as
Amended. Incorporated herein by reference to Exhibit 10.1.2
to Chesapeake's quarterly report on Form 10-Q for the
quarter ended December 31, 1996.

II-4

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.1.3+ Chesapeake's 1994 Stock Option Plan, as amended.
Incorporated herein by reference to Exhibit 10.1.3 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended December 31, 1996.
10.1.4+ Chesapeake's 1996 Stock Option Plan. Incorporated herein by
reference to Chesapeake's Proxy Statement for its 1996
Annual Meeting of Shareholders and to Chesapeake's quarterly
report on Form 10-Q for the quarter ended December 31, 1996.
10.1.5+ Chesapeake's 1999 Stock Option Plan. Incorporated herein by
reference to Exhibit 10.1.5 to Chesapeake's quarterly report
on Form 10-Q for the quarter ended June 30, 1999.
10.1.6+ Chesapeake's 2000 Employee Stock Option Plan. Incorporated
herein by reference to Exhibit 10.1.6 to Chesapeake's
quarterly report on Form 10-Q for the quarter ended March
31, 2000.
10.1.7+ Chesapeake's 2000 Executive Officer Stock Option Plan.
Incorporated herein by reference to Exhibit 10.1.7 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended March 31, 2000.
10.1.8+ Registrant's 2001 Stock Option Plan. Incorporated herein by
reference to Exhibit B to Registrant's definitive proxy
statement for its 2001 annual meeting of shareholders filed
April 30, 2001.
10.1.9+ Registrant's 2001 Executive Officer Stock Option Plan.
Incorporated herein by reference to Exhibit 10.1.9 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended June 30, 2001.
10.1.10+ Registrant's 2001 Nonqualified Stock Option Plan.
Incorporated herein by reference to Exhibit 10.1.10 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended June 30, 2001.
10.2.1+ Second Amended and Restated Employment Agreement dated as of
July 1, 2001, between Aubrey K. McClendon and Chesapeake
Energy Corporation. Incorporated herein by reference to
Exhibit 4.7 to Chesapeake's quarterly report on Form 10-Q
for the quarter ended September 30, 2001.
10.2.2+ Second Amended and Restated Employment Agreement dated as of
July 1, 2001, between Tom L. Ward and Chesapeake Energy
Corporation. Incorporated herein by reference to Exhibit 4.8
to Chesapeake's quarterly report on Form 10-Q for the
quarter ended September 30, 2001.
10.2.3+ Amended and Restated Employment Agreement dated as of August
1, 2000 between Marcus C. Rowland and Chesapeake Energy
Corporation. Incorporated herein by reference to Exhibit
10.2.3 to Chesapeake's registration statement on Form S-1
(No. 333-45872).
10.2.5+ Employment Agreement dated as of July 1, 2000, between
Steven C. Dixon and Chesapeake Energy Corporation.
Incorporated herein by reference to Exhibit 10.2.5 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended June 30, 2000.
10.2.6+ Employment Agreement dated as of July 1, 2000, between J.
Mark Lester and Chesapeake Energy Corporation. Incorporated
herein by reference to Exhibit 10.2.6 to Chesapeake's
quarterly report on Form 10-Q for the quarter ended June 30,
2000.
10.2.7+ Employment Agreement dated as of July 1, 2000, between Henry
J. Hood and Chesapeake Energy Corporation. Incorporated
herein by reference to Exhibit 10.2.7 to Chesapeake's
quarterly report on Form 10-Q for the quarter ended June 30,
2000.
10.2.8+ Employment Agreement dated as of July 1, 2000, between
Michael A. Johnson and Chesapeake Energy Corporation.
Incorporated herein by reference to Exhibit 10.2.8 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended June 30, 2000.
10.2.9+ Employment Agreement dated as of July 1, 2000, between
Martha A. Burger and Chesapeake Energy Corporation.
Incorporated herein by reference to Exhibit 10.2.9 to
Chesapeake's quarterly report on Form 10-Q for the quarter
ended June 30, 2000.
10.3+ Form of Indemnity Agreement for officers and directors of
Chesapeake and its subsidiaries. Incorporated herein by
reference to Exhibit 10.30 to Chesapeake's registration
statement on Form S-1 (No. 33-55600).
10.4.1 Amended and Restated Consulting Agreement dated January 11,
2001 between Chesapeake Energy Corporation and Michael
Paulk. Incorporated herein by reference to Exhibit 10.4.1 to
Chesapeake's annual report on Form 10-K for the year ended
December 31, 2000.

II-5

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.4.2 Amended and Restated Consulting Agreement dated January 11,
2001 between Chesapeake Energy Corporation and Steven P.
Ensz. Incorporated herein by reference to Exhibit 10.4.2 to
Chesapeake's annual report on Form 10-K for the year ended
December 31, 2000.
10.5 Rights Agreement dated July 15, 1998 between Chesapeake and
UMB Bank, N.A., as Rights Agent. Incorporated herein by
reference to Exhibit 1 to Chesapeake's registration
statement on Form 8-A filed July 16, 1998. Amendment No. 1
dated September 11, 1998. Incorporated herein by reference
to Exhibit 10.3 to Chesapeake's quarterly report on Form
10-Q for the quarter ended September 30, 1998.
10.10 Partnership Agreement of Chesapeake Exploration Limited
Partnership dated December 27, 1994 between Chesapeake
Energy Corporation and Chesapeake Operating, Inc.
Incorporated herein by reference to Exhibit 10.10 to
Chesapeake's registration statement on Form S-4 (No.
33-93718).
10.11 Amended and Restated Limited Partnership Agreement of
Chesapeake Louisiana, L.P. dated June 30, 1997 between
Chesapeake Operating, Inc. and Chesapeake Energy Louisiana
Corporation. Incorporated herein by reference to Exhibit
10.11 to Chesapeake's annual report on Form 10-K for the
year ended June 30, 1997.
12* Computation of Ratios of Earnings to Fixed Charges and
Preferred Dividends.
21 Subsidiaries of Chesapeake. Incorporated herein by reference
to Exhibit 21 to Chesapeake's registration statement on Form
S-4 (No. 333-74584).
23.1* Consent of PricewaterhouseCoopers LLP as to Chesapeake.
23.2* Consent of PricewaterhouseCoopers LLP as to Gothic Energy
Corporation.
23.3* Consent of Williamson Petroleum Consultants, Inc.
23.4* Consent of Ryder Scott Company L.P.
23.5* Consent of Lee Keeling and Associates, Inc. as to Chesapeake
Energy Corporation and Gothic Energy Corporation.
23.6* Consent of Vinson & Elkins L.L.P. (included in Exhibit 8.1).
23.7* Consent of Commercial Law Group, P.C. (included in Exhibit
5.1).
24.1* Power of Attorney (included in the signature page of this
Registration Statement).

---------------

* Filed herewith.

+ Management contract or compensatory plan or arrangement.

(b) Financial Statement Schedules. Incorporated herein by reference to Item 8
of Chesapeake's annual report on Form 10-K for the year ended December 31, 2000,
as amended.

ITEM 22. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-6

The registrant hereby undertakes

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(a) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;

(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; and

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrants annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.

(6) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in this Registration Statement when it
became effective.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Oklahoma City, State of
Oklahoma on January 9, 2002.

CHESAPEAKE ENERGY CORPORATION

By: /s/ AUBREY K. MCCLENDON
------------------------------------
Aubrey K. McClendon
Chairman of the Board and
Chief Executive Officer

Each person whose signature appears below authorizes Aubrey K. McClendon
and Marcus C. Rowland, and each of them, each of whom may act without joinder of
the other, to execute in the name of each such person who is then an officer or
director of the company and to file any amendments to this registration
statement necessary or advisable to enable the company to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration of the securities which are the subject of this registration
statement, which amendments may make such changes in the registration statement
as such attorney may deem appropriate. Pursuant to the requirements of the
Securities Act of 1933, this registration statement has been signed by the
following persons in the capacities and on the date indicated.

SIGNATURE CAPACITY DATE
--------- -------- ----

/s/ AUBREY K. MCCLENDON Chairman of the Board, Chief January 9, 2002
------------------------------------------------ Executive Officer and Director
Aubrey K. McClendon (Principal Executive Officer)

/s/ TOM L. WARD President, Chief Operating January 9, 2002
------------------------------------------------ Officer and Director
Tom L. Ward (Principal Executive Officer)

/s/ MARCUS C. ROWLAND Executive Vice President and January 9, 2002
------------------------------------------------ Chief Financial Officer
Marcus C. Rowland (Principal Financial Officer)

/s/ MICHAEL A. JOHNSON Senior Vice President -- January 9, 2002
------------------------------------------------ Accounting (Principal
Michael A. Johnson Accounting Officer)

/s/ EDGAR F. HEIZER, JR. Director January 9, 2002
------------------------------------------------
Edgar F. Heizer, Jr.

/s/ BREENE M. KERR Director January 9, 2002
------------------------------------------------
Breene M. Kerr

/s/ SHANNON T. SELF Director January 9, 2002
------------------------------------------------
Shannon T. Self

/s/ FREDERICK B. WHITTEMORE Director January 9, 2002
------------------------------------------------
Frederick B. Whittemore

II-8

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
------- -----------

3.1.1 Chesapeake's Certificate of Designation of 6.75% Cumulative
Convertible Preferred Stock.
4.1.1 Ninth Supplemental Indenture, dated as of December 17, 2001,
to Indenture dated as of March 15, 1997 among Chesapeake
Energy Corporation, as Issuer, its subsidiaries signatory
thereto, as Subsidiary Guarantors, and Bank of New York, as
Trustee, with respect to 7 7/8% Senior Notes due 2004.
4.2.1 Ninth Supplemental Indenture, dated as of December 17, 2001,
to Indenture dated as of March 15, 1997 among Chesapeake
Energy Corporation, as Issuer, its subsidiaries signatory
thereto, as Subsidiary Guarantors, and Bank of New York, as
Trustee, with respect to 8 1/2% Senior Notes due 2012.
4.3.1 Fourth Supplemental Indenture, dated as of December 17,
2001, to Indenture dated as of April 6, 2001 among
Chesapeake Energy Corporation, as Issuer, its subsidiaries
signatory thereto, as Subsidiary Guarantors, and Bank of New
York, as Trustee, with respect to 8 1/8% Senior Notes due
2011.
4.16.1 First Supplemental Indenture, dated as of December 17, 2001,
to Indenture dated as of November 5, 2001 among Chesapeake
Energy Corporation, as Issuer, its subsidiaries signatory
thereto, as Subsidiary Guarantors, and The Bank of New York,
as Trustee, with respect to 8 3/8% Senior Notes due 2008.
5.1 Opinion of Commercial Law Group, P.C. regarding the validity
of the securities being registered.
8.1 Opinion of Vinson & Elkins L.L.P. regarding certain tax
matters.
12 Computation of Ratios of Earnings to Fixed Charges and
Preferred Dividends.
23.1 Consent of PricewaterhouseCoopers LLP as to Chesapeake.
23.2 Consent of PricewaterhouseCoopers LLP as to Gothic Energy
Corporation.
23.3 Consent of Williamson Petroleum Consultants, Inc.
23.4 Consent of Ryder Scott Company L.P.
23.5 Consent of Lee Keeling and Associates, Inc. as to Chesapeake
Energy Corporation and Gothic Energy Corporation.
23.6 Consent of Vinson & Elkins L.L.P. (included in Exhibit 8.1).
23.7 Consent of Commercial Law Group, P.C. (included in Exhibit
5.1).
24.1 Power of Attorney (included in the signature page of this
Registration Statement).