1
EXHIBIT 99.1
DLB OIL & GAS, INC.
1601 N.W. Expressway, Suite 700
Oklahoma City, OK 73118-1401
Phone: 405-848-8808
Fax: 405-848-9449
NEWS RELEASE
For Further Information FOR IMMEDIATE RELEASE
Contact: Fred Standefer
Vice President Corporation Development
(405) 848-8808
DLB TO MERGE MID-CONTINENT/BARBADOS
ASSETS INTO CHESAPEAKE ENERGY CORPORATION,
AND SPIN-OFF BAYARD AND WRT
OKLAHOMA CITY, OKLAHOMA - October 22, 1997 - DLB Oil & Gas, Inc. (NASDAQ-DLBI)
today announced that it has entered into a definitive merger agreement with
Chesapeake Energy Corporation pursuant to which DLB shareholders will realize
the value of their DLB shares in the form of three separate securities.
Consideration will consist of $65 million of Chesapeake common stock and the
assumption of approximately $85 million in debt and other liabilities for DLB's
Mid-Continent and Barbados oil and gas assets. As of June 30, 1997, proved
reserves attributable to these properties were estimated by the Company to be
approximately 27 million barrels of oil equivalent. In addition, as part of the
transaction, DLB shareholders will receive their proportionate share of the
common stock of Bayard Drilling Technologies, Inc. (Bayard) and WRT Energy,
Inc. (WRT) owned by DLB. DLB currently owns 2,955,000 shares of Bayard and
10,354,198 shares of WRT, all of which will be distributed to DLB shareholders.
Charles Davidson, DLB's Chairman, said, "This merger will allow DLB
shareholders to enjoy the benefits of direct ownership of the three distinct
assets currently in our portfolio. First, each of us as shareholders will own
equity in Bayard Drilling, which is one of the largest land contract drilling
companies in the United States. Second, we will achieve significant operational
synergies by combining our Mid-Continent assets and our team with Chesapeake.
Third, by virtue of our WRT position, we will also own interests in a focused
South Louisiana exploration and production company with excellent core assets
in one of the most exciting areas in the country. We believe this realignment
of our three core businesses will ultimately maximize the value inherent in
each unique segment."
2
Mark Liddell, DLB's President, stated "Strategically, we believe this
transaction creates the best way to participate in the rapid consolidation we
see occurring in both oil field services and exploration and production. Our
fellow shareholders will experience higher liquidity, diversification, and
increased exposure to the positive effects of the consolidation process."
Under the terms of the merger, a subsidiary of Chesapeake will merge with and
into DLB. In the merger, shares of DLB common stock will be converted into the
right to receive: (1) a fractional interest in a share of Chesapeake common
stock equal to $65 million divided by the average of the closing prices of
Chesapeake stock for each of the first 20 consecutive trading days in the
period commencing 25 trading days prior to the date of DLB's special
stockholders meeting with respect to the merger, divided by the number of
shares outstanding on the closing date, (2) a number of shares of Bayard common
stock equal to 2,955,000 divided by the number of DLB shares outstanding on the
closing date, and (3) a number of shares of WRT common stock equal to
10,354,198 divided by the number of DLB shares outstanding on the closing date.
In the event that the average closing price for Chesapeake common stock used in
this calculation is less than $7.50 per share, each of DLB and Chesapeake shall
have the right, but not the obligation, to terminate the merger agreement.
Chesapeake will have the option to pay $65 million in cash rather than in
shares of Chesapeake common stock.
The merger is subject to approval of the holders of at least a majority of the
outstanding shares of DLB common stock as of the record date for the DLB
special shareholders meeting. The company anticipates a mid-January date for
the special meeting of shareholders. DLB currently has 12,975,000 shares
outstanding. Option acceleration under existing incentive plans may affect the
shares outstanding at closing. Charles Davidson, Mark Liddell and Mike Liddell,
who collectively own over 75% of DLB's outstanding common stock, have entered
into an agreement with Chesapeake pursuant to which, among other things, they
have agreed to vote in favor of the merger at the DLB special meeting.
The distributions of the WRT and Bayard shares will be subject to the
effectiveness of registration statements for such shares under the Securities
Act of 1933. In addition, the shares of Bayard, assuming a successful initial
public offering, will not be distributed until the expiration of 180 days from
the date of the pricing of Bayard's IPO. Pending distribution of the WRT and
Bayard shares, the shares will be held in escrow by the exchange agent for the
merger.
Lehman Brothers acted as DLB's financial advisor in connection with the merger
and DLB's review of strategic alternatives.
Chesapeake Energy Corporation (NYSE-CHK) is an Oklahoma City based independent
oil and gas exploration company with approximately 67 million barrels of oil
equivalent of proved reserves at June 30, 1997. The company utilizes advanced
drilling and completion techniques to develop significant new oil and natural
gas discoveries in major onshore producing areas of the United States.
Bayard Drilling Technologies is a leading provider of contract drilling
services to major and independent oil and gas companies and operates the fifth
largest land drilling fleet in the United
3
States and is the market-share leader in Oklahoma. As of August 15, 1997, the
Bayard fleet consisted of 54 rigs primarily focused on deep drilling
applications (well depths of 15,000 feet or greater). Bayard is headquartered
in Oklahoma City. DLB acquired its interest in Bayard on October 16, 1997 upon
the merger of DLB's Bonray Drilling subsidiary with a Bayard subsidiary,
realizing a substantial return on its investment of approximately $18 million
in Bonray.
WRT Energy Corporation is an Oklahoma City-based independent oil and gas
exploration company, which owns interests in 19 field in south Louisiana. As of
December 31, 1996, WRT proved reserves, as estimated by Netherland, Sewell, and
Associates, Inc. totaled approximately 28 million barrels of oil equivalent.
DLB Oil and Gas, Inc. is an Oklahoma City-based independent energy company
engaged primarily in oil and gas exploration, development and production, and
in the acquisition of producing properties. The Company's common stock trades
under the symbol of DLBI.
This material includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1993, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, prepared by the Company and
security analysts. The opinions, forecasts, projections or other statements
other than statements of historical fact, including, without limitation,
estimates of proved reserves of oil and gas, reserve potential and plans and
objectives of management of the Company for financing, are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Certain risks and
uncertainties inherent in the Company's business are set forth in the filings
of the Company with the Securities and Exchange Commission.