This excerpt taken from the CHK 8-K filed Nov 1, 2005.
Prepaid Forward Gas Sales
In connection with the acquisition of CER in August 2003, the Company assumed an obligation under forward gas sales agreements with Mahonia II Limited (Mahonia) to deliver a total of 86.7 Bcf of natural gas to Mahonia through 2006. The obligation, for which no future compensation will be forthcoming, was adjusted to its estimated fair value at the date of acquisition based upon the cost expected to be incurred to satisfy the obligations under the contract, as determined by an outside valuation firm. These contracts are recorded as a prepaid forward gas sales liability, with the related income recognized at time of delivery. During 2004 and 2003, 41.2 and 14.6 Bcf of natural gas were delivered, representing approximately $138.1 and $52.5 million in revenues, respectively. The following is a summary of scheduled future deliveries and revenues to be recognized under the contract: