This excerpt taken from the CHK 8-K filed Jul 9, 2008.
Disclosure of Material Terms of VPP Transaction
We believe the material terms of the December 2007 volumetric production payment (VPP) are disclosed on page 33 under 2008 - 2009 Financial PlanProducing Property Sales in Item 7 and on page 110 in note 13 of our financial statements. Our intention was to provide a plain-English description of the pertinent facts about this complex transaction, including the
Securities and Exchange Commission
June 13, 2008
Page 8 of 14
In your comment, you refer to the following disclosure that appears on page 110 in note 13 to our financial statements: Associated with the transaction, we have committed to purchase the VPP production over the 15 year term at market prices at the time of production, and the purchased gas will be resold. This arrangement was not a material term of the transaction and is economically immaterial to us. Our obligation is to buy the production at published index prices, less a market-based gathering fee adjusted annually for inflation. We do not believe this aspect of the transaction warrants further discussion as we expect to resell the purchased natural gas on similar market-based terms.