Abraham, Fruchter & Twersky, LLP Files Class Action Suit Against Chesapeake Energy Corporation

NEW YORK, NY--(Marketwire - February 26, 2009) - Abraham, Fruchter & Twersky, LLP filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of purchasers of Chesapeake Energy Corporation ("Chesapeake" or the "Company") (NYSE: CHK) 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 Chesapeake, certain of its officers and directors, and certain underwriters of the Offering with violation of the federal securities laws by issuing materially false and misleading statements about Chesapeake's business activities and financial condition in their Registration Statement. Chesapeake is the third largest independent producer of natural gas in the United States. Chesapeake engages in the acquisition, exploration, and development of properties for the production of crude oil and natural gas from underground reservoirs.

According to the complaint, 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.

Plaintiff seeks to recover damages on behalf of all purchasers of Chesapeake common stock during the Class Period (the "Class"). The Plaintiff is represented by Abraham, Fruchter & Twersky, LLP which has extensive experience in securities class action cases, and the firm has been ranked among the leading class action law firms in terms of recoveries achieved by a survey of class action law firms conducted by Institutional Shareholder Services. If you would like to discuss this action or if you have any questions concerning this notice or your rights as a potential class member or lead plaintiff, you may contact: Jack Fruchter or Arthur J. Chen of Abraham, Fruchter & Twersky, LLP at 212-279-5050, or via e-mail at jfruchter@aftlaw.com or achen@aftlaw.com, respectively. If you wish to serve as lead plaintiff, you must move the Court no later than April 27, 2009. Any member of the proposed class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed class.

Contact Information: Contact: Jack Fruchter, Esq. Arthur J. Chen, Esq. Abraham, Fruchter & Twersky, LLP One Penn Plaza, Suite 2805 New York, New York 10119 Tel.: (212) 279-5050