Chesapeake Energy (CHK)

Item 1.02 Termination of a Material Definitive Agreement.

Effective with the resignation of Tom L. Ward, as discussed below in Item 5.02, the Fourth Amended and Restated Employment Agreement dated July 1, 2005 between Tom L. Ward and Chesapeake Energy Corporation was terminated on February 10, 2006. The agreement provided for Mr. Ward’s full-time employment as Chesapeake’s President and Chief Operating Officer of the company. In accordance with the terms of the agreement, upon Mr. Ward’s resignation, neither Chesapeake nor Mr. Ward has any further obligations thereunder including, without limitation, any obligation of Chesapeake to provide any further payments or benefits to Mr. Ward after the effective date of such resignation. See, however, Item 1.01 above which describes benefits (support staff and aircraft usage) extended during the Consulting Period pursuant to the Resignation Agreement.

Under the non-competition provisions of his employment agreement, Mr. Ward is prohibited from competing with the company in certain respects. For a period of six months, Mr. Ward is not permitted to directly or indirectly acquire or attempt to acquire (or aid another person in such activities) any oil and gas interests within any spacing unit in which Chesapeake owns an oil and gas interest on the date of Mr. Ward’s resignation. The foregoing restriction does not apply to certain activities described in Mr. Ward’s employment agreement, including existing interests, interests acquired under the FWPP (as defined below) and mineral interests acquired in connection with the acquisition of the surface estate. In addition, except as provided in the Resignation Agreement with respect to his direct support staff, Mr. Ward will not solicit, induce, entice or attempt to entice any employee, contractor, customer, vendor or subcontractor to terminate or breach any relationship with Chesapeake or its affiliates for Mr. Ward’s own account or for the benefit of another party.

2

The Chesapeake Energy Corporation Founder Well Participation Program (the “FWPP”) currently permits Mr. Ward to acquire an interest in the governmental, spacing or production unit for each grass roots well in which any of Chesapeake’s subsidiaries participates as a working interest owner. Under the terms of the FWPP, Mr. Ward’s right to participate in the FWPP will terminate at the same time the non-competition covenants in his employment agreement expire, which is six months after his resignation or August 10, 2006. Mr. Ward will retain all working interests he has acquired pursuant to the FWPP and under participation provisions in prior employment agreements. Mr. McClendon's right to participate in the FWPP is independent of Mr. Ward's and will reamin in effect after Mr. Ward's participation rights have terminated.

During his employment with Chesapeake, Mr. Ward participated in Chesapeake’s 401(k) profit sharing plan and its 401(k) make-up plan pursuant to which he elected to defer receipt of compensation previously earned and reported in Chesapeake’s respective proxy statements for the applicable periods. As a result of his compensation deferrals and company matching contributions, Mr. Ward is currently entitled to (i) 49,203 shares of Chesapeake common stock with a fair market value of approximately $1.5 million pursuant to the Chesapeake 401(k) profit sharing plan and (ii) a lump sum payment of approximately $1.8 million, $452,000 of which represents the fair market value of 15,255 shares of Chesapeake common stock, pursuant to the Chesapeake 401(k) make-up plan as of his resignation date.

The benefits to which Mr. Ward is entitled upon termination of employment are subject to the terms of the applicable plan. This summary of benefits is qualified in its entirety by reference to such plans, copies of which are filed as exhibits to this report and incorporated herein by reference.

Section 5 – Corporate Governance and Management