CHESAPEAKE ENERGY CORP.

Summary of Case: A securities class action has been filed against Chesapeake Energy Corp. (CHK) ("Chesapeake" or the "Company") on behalf of purchasers of Chesapeake stock issued pursuant to the registration statement and prospectus (collectively, the "Registration Statement") filed with the Securities and Exchange Commission ("SEC") in connection with Chesapeake's July 2008 secondary public stock offering (the "Offering").

The complaint alleges that on July 15, 2008, Chesapeake completed a secondary public offering of 28.75 million shares of common stock at $57.25 per share, receiving approximately $1.65 billion in gross proceeds, with net proceeds of $1.586 billion. The complaint alleges that the Registration Statement issued in connection with the Offering was materially false and misleading because it failed to disclose numerous facts which were required to be stated therein, including: (i) that the Company's exposure to natural gas price declines had not been adequately limited by the hedging actions the Company had undertaken prior to the Offering, including its decision to increase its hedge position from 20% to 80% of its production, as a growing proportion of the hedging agreements on Chesapeake's 2009 production contained so-called "knockout" provisions that eliminated the counter-party's financial obligation once the price of natural gas fell below a certain benchmark; (ii) though the Company disclosed it had entered into hedging contracts to protect its production from falling prices, the Registration Statement failed to disclose that a significant proportion of these contracts had been made with one of the underwriters in the Offering, Lehman Brothers, though based on Lehman Brothers' rapidly declining financial condition, Lehman Brothers would be unable to fulfill its financial commitment - rendering Chesapeake's "protection" meaningless; (iii) in the months leading up to the Offering, Chesapeake's aggressive hedging activities (and those of certain of the underwriter defendants) had been significantly running up the price of natural gas and Chesapeake's stock price, which moves in tandem with natural gas prices; (iv) that Chesapeake's "land men," i.e., lease brokers, had been aggressively bidding up the prices Chesapeake was obligated to pay in leases and royalty agreements in the months leading up to the Offering, causing Chesapeake to pay unreasonably high prices for certain leases and royalty contracts; (v) that the Company was failing to write down impaired goodwill on the assets it was acquiring, causing its balance sheet and financial results to be artificially inflated; and (vi) that the Company's internal controls were inadequate to prevent the Company from improperly reporting its goodwill. During late 2008 and early 2009, as these omitted facts were revealed to the market, the price of Chesapeake stock declined to less than $12 per share, approximately 80% below the Offering price.