Last Updated: 4:00 P.M., New York City time, on April 27, 2011

Indicative Average VWAP and Purchase Price for Chesapeake Energy Corporation's Cash Tender Offers for its Convertible Notes

On April 4, 2011, Chesapeake Energy Corporation (the “Company”) commenced three separate tender offers (each an “Offer” and collectively, the “Offers”) to purchase for cash the contingent convertible notes listed in the table below (collectively, the “Convertible Notes” and each a “Series” of Convertible Notes), upon the terms and subject to the conditions set forth in the Company’s Offer to Purchase, dated April 4, 2011 (the “Offer to Purchase”), and the related Letter of Transmittal (the “Letter of Transmittal”).

 

Convertible Notes

CUSIP

Number(s)

Principal Amount

Outstanding

Series Maximum

 

Conversion Factor

 

Tender Premium(1)

Maximum Purchase Price(2)

2.75% Contingent Convertible Senior Notes due 2035

165167BW6

$451,071,000

$300,000,000

17.9952

$577.00

$1,240.00

2.50% Contingent Convertible Senior Notes due 2037(3)

165167BZ9

165167CA3

$1,377,979,000

$350,000,000

16.5351

$556.00

$1,165.00

2.25% Contingent Convertible Senior Notes due 2038

165167CB1

$612,118,000

$350,000,000

7.5678

$688.00

$967.00

(1)      Per $1,000 in principal amount of Convertible Notes validly tendered (and not validly withdrawn) and accepted for purchase in the Offers.

(2)        Per $1,000 in principal amount of Convertible Notes validly tendered (and not validly withdrawn) and accepted for purchase in the Offers, and excluding accrued and unpaid interest from the last interest payment date applicable to the Convertible Notes of such Series, which will be paid in addition to the purchase price to, but not including, the applicable settlement date.

(3)        For the purposes of the Offers, including proration, and consistent with their terms, all of the 2.50% Contingent Convertible Senior Notes due 2037 will be treated as a single Series, notwithstanding any differences in CUSIP numbers.

 

Each Offer will expire at 11:59 P.M., New York City time, on Friday, April 29, 2011, unless extended or earlier terminated by the Company with respect to one or more Series (as may be extended by the Company, the “Expiration Date”).

The purchase price per $1,000 in principal amount of Convertible Notes offered by the Company pursuant to the Offers will be determined in accordance with the pricing formula described in the Offer to Purchase, provided that in no event will the purchase price per $1,000 in principal amount of Convertible Notes be more than the Maximum Purchase Price as indicated for each Series in the table above. 

The table below provides an indicative Average VWAP (as defined below) and the resulting indicative purchase price per $1,000 in principal amount of the Convertible Notes offered by the Company pursuant to the Offers, calculated using the pricing formula described in the Offer to Purchase.  The final purchase price that will be calculated on the Pricing Date (as defined below) will be subject to the Maximum Purchase Price described above.  The table below will be updated periodically, as described in the Offer to Purchase.

Current Trading Price of the Company’s Common Stock on the New York Stock Exchange on April 27, 2011 at 4:00PM:

$

33.12

Indicative Average VWAP:............................................................................................

$

32.6472

 

 

2.75% Contingent Convertible Senior Notes due 2035

2.50% Contingent Convertible Senior Notes due 2037

2.25% Contingent Convertible Senior Notes due 2038

VWAP x Conversion Factor

$587.49

$539.83

$247.07

Plus:  Tender Premium

$577.00

$556.00

$688.00

Resulting Indicative Purchase Price

$1,164.49

$1,095.83

$935.07

 

By 4:30 P.M., New York City time, on each trading day after the commencement date of the Offers and before the first day of the Averaging Period (as defined below), this webpage will show an indicative Average VWAP and the resulting indicative purchase price calculated as though that day were the Pricing Date (i.e., it will show the indicative Average VWAP for that day and the preceding five trading days and the resulting indicative purchase price).

During each trading day during the Averaging Period, the webpage will show the indicative Average VWAP and resulting indicative purchase price using cumulative actual trading data, updated every three hours starting at 10:30 A.M., New York City time, on each trading day as follows:

•     On the first trading day of the Averaging Period, this webpage will show the indicative Average VWAP and resulting indicative purchase price that reflect the actual Intra-Day VWAP (as defined below) during the elapsed portion of that trading day.

•     On each subsequent trading day of the Averaging Period, this webpage will show the indicative Average VWAP and resulting indicative purchase price that reflect the simple arithmetic average of the Daily VWAP (as defined below) on the preceding trading days of the Averaging Period and the actual Intra-Day VWAP during the elapsed portion of such subsequent trading day, weighting the Daily VWAP for each preceding trading day in the period the same as such actual Intra-Day VWAP. For example, at any time during the fifth trading day of the Averaging Period, the webpage will show the indicative Average VWAP equal to (a) the combined Daily VWAP for the preceding four trading days plus the actual Intra-Day VWAP during the elapsed portion of the fifth trading day divided by (b) five, as well as the resulting indicative purchase price.

•     Each time this webpage is updated, it will also show the closing trading price (or, after the Averaging Period starts, a reasonably current trading price) for the Company’s common stock on the New York Stock Exchange.

 

The “Average VWAP” means the sum of the Daily VWAPs for each day of the Averaging Period divided by 5. 

The “Averaging Period“ means the series of trading days beginning on April 20, 2011 and ending on the Pricing Date, but excluding April 22, 2011.

The “Pricing Date” means promptly after the close of trading on the New York Stock Exchange on April 27, 2011, as the same may be extended with respect to one or more Series of Convertible Notes. 

 “Intra-Day VWAP” at any time on any day means the volume weighted average price of the Company’s common stock on the New York Stock Exchange for the period beginning at the official open of trading on that day and ending as of that time on that day, as calculated by Bloomberg.  The data used to derive the Intra-Day VWAP during the Averaging Period will reflect a 20-minute reporting delay.

The “Daily VWAP” means, for each of the trading days during the Averaging Period, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “CHK <Equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such trading day (or if such volume-weighted average price is unavailable, the market value of one share of the Company’s common stock on such trading day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the Company). Daily VWAP will be determined without regard to after hours trading or any other trading outside of the regular trading session trading hours.

For the purposes of determining the purchase price, in the event that on a trading day there is a “market disruption event” which means (i) a failure by the primary United States national or regional securities exchange or market on which the Company’s common stock is listed or admitted to trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any scheduled trading day (as defined below) for the Company’s common stock for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Company’s common stock or in any options, contracts or future contracts relating to the Company’s common stock, then the Daily VWAP for such trading day shall be the market value of one share of the Company’s common stock on such trading day determined, using a volume-weighted average method, to the extent practicable by a nationally recognized independent investment banking firm retained for this purpose by the Company.

For the purposes of determining the purchase price, a “trading day” means any day other than a Saturday, Sunday or United States federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time.

The final Average VWAP and resulting final purchase price will be calculated as described in the Offer to Purchase and may be substantially different from the indicative information displayed above.

The Company will determine the final purchase price promptly after the close of trading on the New York Stock Exchange on the Pricing Date. The Company will announce the final purchase price no later than 9:00 A.M., New York City time, on the business day immediately following the Pricing Date, and the final purchase price will also be available by that time on this webpage and from Global Bondholder Services Corporation, as the information agent for the Offers which may be contacted at one of its telephone numbers listed below.

Further information regarding the exchange offer can be found using the links below:

·               Offer to Purchase

·               Letter of Transmittal

 

Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and RBS Securities Inc. are acting as the dealer managers for the Offer. Global Bondholder Services Corporation is acting as the depositary for the Offers and as the information agent for the Offers. Questions regarding the Offers may be directed to either Deutsche Bank Securities Inc. at (800) 503-4611 (US toll free) or (212) 250-5600 (collect) or Citigroup Global Markets Inc. at (800) 558-3745 (US toll free) or (212) 723-6106  (collect) or RBS Securities Inc. at (877) 297-9832 (U.S. toll free) or (203) 897-6145 (collect).  Requests for copies of the Offer to Purchase and the Letter of Transmittal may be directed to Global Bondholder Services Corporation by telephone at (866) 470-3800 (toll free) or (212) 430-3774 (collect) or in writing at Global Bondholder Services Corporation, Attention: Corporate Actions, 65 Broadway, Suite 404, New York, New York 10006.

None of the Company, its management or board of directors, the dealer managers, the depositary or the information agent makes any recommendation to any holder of Convertible Notes as to whether to tender any Convertible Notes. None of the Company, its management or board of directors, the dealer managers, the depositary or the information agent has authorized any person to give any information or to make any representation in connection with the Offers other than the information and representations contained in the Offer to Purchase or in the Letter of Transmittal. If anyone makes any recommendation or representation or gives any such information, you should not rely upon that recommendation, representation or information as having been authorized by the Company, the dealer managers, the depositary or the information agent.

This webpage shall not constitute an offer to purchase, a solicitation of an offer to purchase, or a solicitation of an offer to sell securities. The Offers may be made only pursuant to the terms and conditions of the Offer to Purchase, the Letter of Transmittal and the other related Offer materials. The Company will provide copies of the Offer materials upon request free of charge to holders of the Convertible Notes.