This excerpt taken from the CHK 8-K filed Jun 8, 2006.
Fayetteville Shale in Arkansas
Chesapeake has acquired or agreed to acquire approximately 150,000 net acres in Brewster, Pecos and Reeves Counties in West Texas in two separate transactions. In these transactions, Chesapeake has assumed operation of one producing vertical Barnett Shale well and is drilling one vertical Barnett and Woodford Shale well and one horizontal Barnett Shale well. In addition, Chesapeake has assumed completion operations on two vertical Barnett and Woodford Shale wells, one horizontal Barnett Shale well and one horizontal Woodford Shale well. Chesapeake intends to commence an aggressive 3-D seismic and drilling program to determine the potential of these assets. In this area in West Texas, the Barnett Shale is 400-950 feet thick (compared to 100-400 feet in the Fort Worth Basin) and the deeper Woodford Shale is 400-500 feet thick (compared to approximately 150-250 feet thick in southeastern Oklahoma). Chesapeakes first vertical well is producing natural gas in commercial quantities from the Barnett Shale in Reeves County, Texas.
In addition, Chesapeake has recently completed several wells in the Fayetteville Shale play in Arkansas. Results to date cause the company to believe that at least 300,000 of its 1.1 million net acre leasehold position in the Fayetteville Shale will be commercially productive. Based on its analysis of its own wells and those drilled by others in the play, Chesapeake has concluded that per-well reserves of 1.2-1.5 bcfe may be achievable over a broad area of the play using a spacing pattern of approximately 10 wells per 640 acres. If so, Chesapeake believes its 300,000 net acres of potentially productive leasehold could support the drilling of up to 4,600 net wells on an unrisked basis. Efforts remain underway to determine the commercial potential of Chesapeakes other 800,000 net acres.
Drilling, completing and operating costs in the Fayetteville Shale remain high and current economics in the area do not yet rank the play among Chesapeakes 15 best plays. Nevertheless, the company remains hopeful that it can achieve further engineering and operational breakthroughs that will make the play more economically attractive than it is today.