This excerpt taken from the CHK 8-K filed Feb 15, 2008.
Appalachian Basin Gas Resource Plays– Chesapeake’s Appalachian assets include both conventional and unconventional play types in various Devonian Shales and in other non-shale formations. Chesapeake is the largest leasehold owner in the region with 4.0 million net acres and is producing approximately 85 mmcfe net per day following the sale of approximately 55 mmcfe per day of net production through a volumetric production payment at year-end 2007. The company is currently using eight operated rigs in the region to further develop its extensive leasehold position. Chesapeake’s proved developed reserves in Appalachia are 850 bcfe, its proved undeveloped reserves are 552 bcfe and assuming an additional 8,850 net wells are drilled in the years ahead, its estimated risked unproved reserves are 3.5 tcfe (9.6 tcfe of unrisked unproved reserves). The company is actively developing traditional shallow Devonian Shale wells and tight gas sand wells, but is also conducting exploration programs in the Lower Huron and Marcellus Shale formations and in various non-shale deeper formations. Chesapeake’s position in the emerging Marcellus Shale is described below:
In addition, Chesapeake continues to actively generate new prospects and acquire additional leasehold throughout the company’s areas of operation in various conventional, unconventional and emerging unconventional plays not described above.
Company Sells 27,000 Net Acres of Arkoma Basin Woodford Shale Acreage for
$170 Million and Exits Williston Basin for $80 Million
To high-grade its leasehold inventories and to take advantage of industry enthusiasm for certain shale plays that are not as attractive to Chesapeake, the company sold approximately 27,000 net acres in the Woodford Shale play in the Arkoma Basin of southeastern Oklahoma for proceeds of approximately $170 million, or approximately $6,300 per acre. Additionally, Chesapeake exited the Williston Basin and sold properties in the Rocky Mountains that included approximately 10,000 net acres, 28 bcfe of proved reserves and five mmcfe of daily production for proceeds of approximately $80 million. These transactions were completed in 2008 and Meagher Oil & Gas Properties, Inc. acted as advisor to Chesapeake.
Aubrey K. McClendon, Chesapeake’s Chief Executive Officer, commented, “We are pleased to report outstanding production and reserve growth for the 2007 fourth quarter and full year. We are particularly proud of our success in growing through the drillbit that enabled the company to exceed its internal expectations and to lead the E&P industry in organic reserve and production growth.
“We are also excited to showcase the company’s unparalleled future growth opportunities that could potentially develop up to 100 tcfe of unproved reserves. Our early recognition that structurally higher natural gas prices, combined with improved drilling and completion technologies on unconventional reservoirs, has enabled Chesapeake’s engineering, geoscientific and lease acquisition teams to assemble the largest inventory of drilling opportunities and unrealized upside in the industry. This inventory should allow Chesapeake to deliver top-tier returns to shareholders through high rates of reserve and production growth for many years to come.”
Conference Call Information
A conference call to discuss this release has been scheduled for Friday morning, February 15, 2008, at 9:00 a.m. EST. The telephone number to access the conference call is