As reported by the firm's 10-K filing dated March 30, 2000, on March 3, 2000, the U.S. District Court for the Western District of Oklahoma dismissed a consolidated class action complaint styled In re Chesapeake Energy Corporation Securities Litigation. The complaint, which consolidated twelve purported class action suits filed in August and September 1997, alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by the Company and certain of its officers and directors. The action was brought on behalf of purchasers of the Company's common stock and common stock options between January 25, 1996 and June 27, 1997. The complaint alleged that the defendants made material misrepresentations and failed to disclose material facts about the Company's exploration and drilling activities
in the Louisiana Trend. The Court ruled that Chesapeake had disclosed the
precise risks of its Louisiana Trend activities.
According to the original complaint, the company promoted its development of the reserves of the Louisiana Austin Chalk Trend (which includes areas outside of Masters Creek). The complaint alleged that defendants failed to disclose that the drilling success rate achieved for the entire Louisiana Austin Chalk Trend did not reflect the results that could reasonably be achieved in the area outside of Masters Creek. Chesapeake is also alleged to have falsely represented its potential for expanding operations in the Louisiana Austin Chalk Trend. The complaint alleged that while the stock was artificially inflated by these statements, certain individual defendants disposed of substantial quantities of Chesapeake common stock while in possession of material adverse information.