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CHK » Topics » Conventional Gas Resource Plays

This excerpt taken from the CHK 8-K filed Feb 15, 2008.
Conventional Gas Resource Plays– In its traditional conventional areas (i.e., portions of the Mid-Continent, Permian, Gulf Coast and South Texas regions), where exploration targets are typically deep and defined using 3-D seismic data, Chesapeake believes it has a meaningful competitive advantage due to its operating scale, deep drilling expertise and approximately 14 million acres of 3-D seismic data.  Chesapeake is producing approximately 1.0 bcfe net per day in conventional gas resource plays and is currently using 30 operated drilling rigs to further develop its inventory of 3.6 million net acres.  Chesapeake’s proved developed reserves in conventional gas resource plays are 3.0 tcfe, its proved undeveloped reserves are 1.0 tcfe and assuming 5,000 net wells are drilled in the years ahead, its estimated risked unproved reserves are 4.6 tcfe (22.7 tcfe of unrisked unproved reserves).  Three of Chesapeake’s most important conventional gas resource plays are described below:

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Southern Oklahoma (generally Pennsylvanian-aged formations in Bray, Cement, Golden Trend, Sholem Alechem and Texoma):  From various formations located in the Ardmore and Anadarko basins, the company is producing approximately 200 mmcfe net per day. The company is currently using seven operated rigs to further develop its 345,000 net acres of leasehold.  Chesapeake’s proved developed reserves in southern Oklahoma are an estimated 601 bcfe, its proved undeveloped reserves are an estimated 248 bcfe and assuming an additional 600 net wells are drilled in the years ahead, its estimated risked unproved reserves are approximately 800 bcfe (3.2 tcfe of unrisked unproved reserves).  The company’s targeted results for vertical southern Oklahoma wells are $3.5 million to develop 2.2 bcfe on approximately 120-acre spacing.
 
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South Texas:  Located primarily in Zapata and Hidalgo counties, Texas, Chesapeake's South Texas assets are producing approximately 130 mmcfe net per day.  The company is currently using five operated rigs to further develop its 145,000 net acres of leasehold.  Chesapeake’s proved developed reserves in South Texas are an estimated 294 bcfe, its proved undeveloped reserves are an estimated 134 bcfe and assuming an additional 400 net wells are drilled in the years ahead, its estimated risked unproved reserves are approximately 500 bcfe (1.9 tcfe of unrisked unproved reserves).  The company’s targeted results for vertical South Texas wells are $3.3 million to develop 2.0 bcfe on approximately 80-acre spacing.

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Mountain Front (primarily Morrow and Springer formations in western Oklahoma):  From these prolific formations located in the Anadarko Basin, the company is producing approximately 95 mmcfe net per day.  The company is currently using two operated rigs to further develop its 140,000 net acres of Mountain Front leasehold.  Chesapeake’s proved developed reserves in the Mountain Front area are an estimated 170 bcfe, its proved undeveloped reserves are an estimated 47 bcfe and assuming an additional 100 net wells are drilled in the years ahead, its estimated risked unproved reserves are approximately 300 bcfe (1.1 tcfe of unrisked unproved reserves).  The company’s targeted results for vertical Mountain Front wells are $9.0 million to develop 5.0 bcfe on approximately 320-acre spacing.

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