This excerpt taken from the CHK 8-K filed Jul 9, 2008.
Results of Operations, page 42
Response: The company provided a comprehensive listing of its derivative positions as of December 31, 2007 on pages 55-57 in Item 7A, and we further provided an updated hedged percentage as of a current date on page 34 under Liquidity and Capital Resources. Our natural gas and oil derivatives allow us to predict with greater certainty the revenue we will receive for our hedged production, but we cannot predict the gains or losses we will realize from the derivatives. Gains or losses on open derivatives will be determined by future natural gas and oil prices at the time of settlement. Historically, the markets for natural gas and oil have been volatile and they are likely to continue to be volatile. We employ hedges primarily to mitigate the downside of price volatility but cannot reasonably predict what prices will be in future periods.
Securities and Exchange Commission
June 13, 2008
Page 10 of 14
We have disclosed on page 56 the aggregate amount of gains ($215 million as of December 31, 2007) we will realize in future periods, from 2008 through 2022, as a result of natural gas and oil hedges we have settled prior to maturity. Those gains are locked in and are not subject to future price changes.