Chesapeake Energy (CHK)

7. Recent Accounting Pronouncements

On March 30, 2005, the FASB issued Interpretation (FIN) No. 47, Accounting for Conditional Asset Retirement Obligations - An Interpretation of FASB Statement No. 143. The FASB issued FIN 47 to address the accounting treatment for conditional asset retirement obligations under the provisions of Statement of Financial Accounting Standards No. 143. FIN 47 is effective no later than the end of the fiscal year ending after December 15, 2005. The adoption of FIN 47 is not expected to have a material effect on our financial statements.

4. Recent Accounting Pronouncements

FAS 141-1 and FAS 142-1 – In April 2004, the FASB issued Staff Position Nos. FAS 141-1 and FAS 142-1, “Interaction of FASB Statements No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets.” This FSP amended Statement 141 and Statement 142 to address an inconsistency between the original pronouncements and the consensus of EITF Issue No. 04-2, Whether Mineral Rights Are Tangible or Intangible Assets, that mineral rights are a tangible asset. SFAS Statements 141 and 142 have been amended to exclude mineral rights as examples of intangible assets. Historically, the Company has included the cost of mineral rights as tangible assets, which is consistent with the EITF’s consensus. Accordingly, the adoption of Staff Position Nos. FAS 141-1 and FAS 142-1 did not impact our financial statements.

FAS 142-2 – In September 2004, the FASB issued Staff Position No. FAS 142-2, “Application of FASB Statement No. 142, Goodwill and Other Intangible Assets, to Oil and Gas Producing Entities.” This Staff Position provided clarification for the balance sheet classification and disclosures for drilling and mineral rights of oil and gas producing entities that are within the scope of FASB Statement No. 19, Financial Accounting and Reporting by Oil and Gas Producing Companies. Mineral rights of oil and gas producing entities that are within the scope of FASB Statement No. 19 are to be classified and disclosed as tangible assets. The adoption of Staff Position Nos. FAS 141-1 and FAS 142-1 did not impact our financial statements.

FIN No. 46 – In January 2003, the FASB issued Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. FIN 46, as revised in December 2003, clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. This interpretation requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. As a nonpublic enterprise, CER applied this interpretation to all applicable entities beginning January 1, 2005. The adoption of FIN 46 did not materially impact our financial statements.

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Columbia Energy Resources, LLC (a wholly owned

subsidiary of Triana Energy Holdings, LLC)

Notes to Consolidated Financial Statements (continued)

4. Recent Accounting Pronouncements (continued)

EITF Issue 03-11 – In July 2003, the EITF reached consensus on Issue 03-11, Reporting Realized Gains and Losses on Derivative Instruments that are Subject to FASB Statement No. 133 and not “Held for Trading Purposes” as Defined in Issue No. 02-3. The consensus stated that determining whether realized gains and losses on physically settled derivative contracts “held for trading purposes” should be reported in the income statement on a gross or net basis is a matter of judgment that depends on the relevant facts and circumstances. The consideration of the facts and circumstances, including economic substance, should be made in the context of the various activities of the entity rather than based solely on the terms of the individual contracts. The statement did not have a material effect on the Company’s financial condition or results of operations.