EMPLOYMENT AGREEMENT

W I T N E S S E T H:

2.1

Specific Duties . During the term of this Agreement the Executive: (a) will serve as Chairman of the Board and Chief Executive Officer for the Company; (b) will be nominated for election or appointed to serve as a director of the Company; (c) will be appointed as an officer of one (1) or more of the Company’s subsidiaries; and (d) may be nominated for election or appointed to serve as a director of one (1) or more of the Company’s subsidiaries. The Executive agrees to use the Executive’s best efforts to perform all of the services required to fully and faithfully execute the offices and positions to which the Executive is appointed and such other services as may be reasonably directed by the Board of Directors of the Company in accordance with this Agreement.

2.2

Modifications . The precise duties to be performed by the Executive may be extended or curtailed in the discretion of the Board of Directors of the Company. However, except for termination for Cause (as hereinafter defined under paragraph 6.1.2 of this Agreement), the failure of the Executive to be elected, be reelected or serve as a director of the Company during the term of this Agreement, the removal of the Executive as a member of the board of directors of the Company, the withdrawal of

2.3

Rules and Regulations . From time to time, the Company may issue policies and procedures applicable to employees and the Executive including an Employment Policies Manual. The Executive agrees to comply with such policies and procedures, except to the extent such policies are inconsistent with this Agreement. Such policies and procedures may be supplemented, modified, changed or adopted without notice in the sole discretion of the Company at any time. In the event of a conflict between such policies and procedures and this Agreement, this Agreement will control unless compliance with this Agreement will violate any law or regulation applicable to the Company or its affiliated entities.

2.4

Stock Investment . During the term of this Agreement, the Executive agrees to hold shares of the Company’s common stock having an aggregate Investment Value (as hereafter defined) greater than five hundred percent (500%) of the compensation paid to the Executive under paragraphs 4.1 and 4.2 of this Agreement during such calendar year. Any shares of common stock acquired by the Executive prior to the date of this Agreement and still owned by the Executive during the term of this Agreement may be used to satisfy the requirement to own common stock. For purposes of this paragraph, the “Investment Value” of each share of stock will be as follows: (a) for shares purchased in the open market after the date of this Agreement the price paid by the Executive for such shares; (b) for shares acquired after the date of this Agreement through the exercise of stock options, the grant of restricted stock or the conversion of other securities other than through open market purchases, the fair market value of the common stock on the date the option is exercised, the restricted stock vests, or the stock is acquired through the conversion of another security or the date such stock is otherwise acquired; and (c) for shares acquired prior to the date of this Agreement, the closing price for the Company’s stock on the New York Stock Exchange (the “NYSE”) on the date of this Agreement adjusted for subsequent stock splits. This paragraph will automatically become null and void without notice or action by either party if the Company’s common stock ceases to be listed on the NYSE, the National Association of Securities Dealers Automated Quotation System or other national exchange. The Company has no obligation to sell or to purchase from the Executive any of the Company’s stock in connection with this paragraph 2.4 and has made no representations or warranties regarding the Company’s stock, operations or financial condition.

3.1

Surface Interests and Gifts . The foregoing restriction in clause (c) will not prohibit the ownership of (a) the interests in oil and gas described therein where the Executive acquires, owns or previously owned the surface of the land covered in whole or in part by such interest in oil and gas and the ownership, operation, development or use of the interest in oil and gas is incidental to the ownership of the surface estate or (b) interests or interests in oil and gas received by gift or inheritance. For purposes of this paragraph 3.1: (y) interests in oil and gas means any interest in oil and gas including, without implied limitation, any mineral interest, royalty interest, overriding royalty interest, working interest, net profits interest, production payment or similar interest in the production of oil and gas; and (z) the interests in oil and gas permitted to be owned under this paragraph 3.1 are not required to be acquired simultaneously with the acquisition of the surface estate, but may be acquired at any time the Executive owns the surface estate.

3.2

Existing Interests . The Executive has in the past conducted oil and gas activities individually, through Chesapeake Investments, an Oklahoma Limited Partnership, and through other entities owned or controlled by the Executive (collectively, the “Executive Affiliates”). The Executive will be permitted to continue to conduct oil and gas activities (including participation in new wells) directly or through the Executive Affiliates , but only to the extent such activities are conducted with respect to oil and gas leases or interests in oil and gas which the Executive or Executive Affiliates (a) owned or had the right to acquire as of the date of this

3.3

FWP Program . The Executive or the designated Executive Affiliate will be permitted to participate in the FWP Program in accordance with its terms. The parties hereto agree the FWP Program cannot be modified or amended without the prior written consent of the Board of Directors and the Executive.

4.1

Base Salary . A base salary (the “Base Salary”), in an annual rate of not less than Nine Hundred Seventy-Five Thousand Dollars ($975,000.00), will be paid to the Executive in equal bi-weekly installments, beginning July 1, 2007 during the term of this Agreement.

4.2

Bonus . . In addition to the Base Salary described in paragraph 4.1 of this Agreement, the Company may periodically pay bonus compensation to the Executive. Except as expressly provided in this Agreement, any bonus compensation will be awarded in the absolute discretion of the Company in such amounts and at such times as the Compensation Committee of the Board of Directors of the Company may determine.

4.3

Equity Compensation . In addition to the compensation set forth in paragraphs 4.1 and 4.2 of this Agreement, the Executive may periodically receive grants of stock options, restricted stock or other equity related awards from the Company’s various equity compensation plans, subject to the terms and conditions thereof.

4.4

Benefits . The Company agrees to extend to the Executive retirement benefits, deferred compensation, reimbursement of reasonable expenditures for dues, travel and entertainment and any other benefits the Company provides to other executives or officers from time to time on the same terms as such benefits are provided to such individuals. The Company will also provide the Executive the opportunity to apply for coverage under the Company’s medical, life and disability plans, if any. If the Executive is accepted for coverage under such plans, the Company

4.5

Vacation . The Executive will be entitled to take up to five (5) weeks of paid vacation each calendar year during the term of this Agreement. Except as provided in the Company’s general employment policies or as otherwise provided in this Agreement, no additional compensation will be paid for failure to take vacation and no vacation may be carried forward from one calendar year to another.

4.6

Travel . For safety, security and efficiency the Executive will utilize aircraft owned, leased or chartered by the Company for business and personal use and will not be required to reimburse the Company for any cost related to such use. The Executive will: (a) not owe any additional amounts to the Company under this paragraph for guests or family members traveling with the Executive; and (b) pay all personal income taxes accruing as a result of the personal use of the Company’s aircraft by the Executive and the Executive’s immediate family members under this paragraph.

4.7

Accounting Support . The Executive will be permitted to utilize the Company’s office space, computer facilities and personnel to provide accounting services, management services, records maintenance, tax advice, tax return preparation and other business services for the Executive’s (and the Executive’s immediate family members’) personal businesses, investments and activities. During the period the Company provides services to the Executive under this paragraph, the Executive agrees to reimburse the Company an amount equal to 100% of the salaries and cash bonuses paid by the Company to employees primarily engaged in providing such support services to the Executive. The cost of such items or personnel related to the provision of secretarial or general administrative support for the Executive will not be required to be reimbursed in whole or part by the Executive.

4.5

Compensation Review . The compensation of the Executive will be reviewed not less frequently than semi-annually by the Compensation Committee of the Board of Directors of the Company. The compensation of the Executive prescribed in paragraph 4 of this Agreement (including benefits) may be increased at the discretion of the Compensation Committee of the Board of Directors of the Company, but may not be reduced without the prior written consent of the Executive except as expressly provided herein. Notwithstanding the foregoing, the Board of

6.1

Termination by Company . The Company will have the following rights to terminate this Agreement:

6.1.1

Termination without Cause . The Company may terminate this Agreement without Cause at any time by the service of written notice of termination to the Executive specifying an effective date of such termination not sooner than ninety (90) business days after the date of such notice (the “Termination Date”). In the event the Executive is terminated without Cause (other than a CC Termination under paragraph 6.3 of this Agreement), the Executive will be entitled to the following: (a) payment of Base Compensation (as hereafter defined) in accordance with the Company’s policies during the remaining term of this Agreement, but in any event through the then current Expiration Date; (b) excepting participation in any retirement or deferred compensation plan maintained by the Company, continuation of the benefits provided by operation of paragraphs 4.4, 4.6 and 4.7 of this Agreement at the levels and on the terms provided on the date of termination hereunder, during the remaining term of this Agreement, but in any event through the then current Expiration Date; and (c) a lump sum cash payment for any accrued but unused vacation through the Termination Date in accordance with the Company’s Employment Policies Manual. For purposes of this Agreement the term “Base Compensation” means the Executive’s current Base Salary under paragraph 4.1 on the Termination Date plus the bonus compensation received by the