Chesapeake Energy (CHK)

in Company’s Inventory Now 9.2 Tcfe

Chesapeake’s exploratory and development drilling programs and production enhancement operations on its existing and acquired properties continue to produce operational results that distinguish the company among its peers. During the 2006 first quarter, Chesapeake drilled 262 gross (210 net) operated wells and participated in another 371 gross (45 net) wells operated by other companies. The company’s drilling success rate was 97% for company-operated wells and 98% for non-operated wells. During the quarter, Chesapeake invested $505 million in operated wells (using an average of 77 operated rigs), $110 million in non-operated wells (using an average of 75 non-operated rigs) and $200 million in acquiring new 3-D seismic data and leases (exclusive of leases acquired through acquisitions).

Chesapeake attributes its strong organic growth rates during the 2006 first quarter and in this decade to management’s early recognition that oil and natural gas prices were undergoing structural change and its subsequent decision to invest aggressively in the building blocks of value creation in the E&P industry – people, land and seismic. Since 2000, Chesapeake has invested $3.8 billion in new leasehold and 3-D seismic acquisitions and now owns what it believes to be the largest inventories of onshore leasehold (8.9 million net acres) and 3-D seismic (12.3 million acres) in the U.S. On this leasehold, the company has more than a 10-year drilling inventory of an estimated 29,000 drilling locations on which it believes it can develop approximately 2.8 tcfe of proved undeveloped reserves and approximately 9.2 tcfe of unproved reserves.

In addition, Chesapeake has significantly strengthened its technical capabilities during the past five years by increasing its land, geoscience and engineering staff by 425% to over 650 employees. Today, the company has more than 3,600 employees, of which approximately 70% work in the company’s E&P operations and 30% work in the company’s oilfield service operations.

Chesapeake characterizes its drilling activity by one of four play types: conventional gas resource, unconventional gas resource, emerging gas resource and Appalachian Basin gas resource. In these plays, Chesapeake uses a probability-weighted statistical approach to estimate the potential number of drillsites and potential unproved reserves associated with such drillsites. The company’s leasehold, proved undeveloped and estimated potential unproved reserve totals by play type are set forth below:

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Chesapeake continues to actively acquire more acreage throughout its operating areas, having acquired approximately 500,000 net acres in the 2006 first quarter through an aggressive land acquisition program that is currently utilizing almost 1,000 contract landmen in the field.

Chesapeake’s most significant land acquisition activities during the quarter took place in the Arkansas Fayetteville Shale, Deep Bossier and other East Texas plays in which the company now owns more than 1,000,000, 150,000 and 125,000 net acres, respectively. To date, Chesapeake has drilled five vertical and two horizontal wells in the Fayetteville Shale and now has three operated rigs in the play drilling horizontal wells. If results are encouraging, the company may increase its drilling activity in the Fayetteville Shale later this year. In addition, Chesapeake will drill its first Deep Bossier well in East Texas and its first horizontal Woodford well in Southeastern Oklahoma this summer.

The company continues to achieve outstanding drilling results in the Barnett Shale play of Johnson and Tarrant Counties, Texas. To date, Chesapeake has drilled and completed 83 Barnett Shale horizontal wells and has current daily net production of 110 mmcfe (145 mmcfe gross). According to our recent review of the State of Texas’ production records as accessed through the database of the Energy Division of IHS Inc., Chesapeake’s Barnett Shale wells have been the most productive in the industry as calculated by peak month average daily production per horizontal well as set forth in the table below.

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Source: The Energy Division of IHS, Inc. based on production reported through January 2006 and including only operators of more than 25 horizontal wells.

The company believes this achievement reflects its substantial experience in drilling and completing horizontal wells in the U.S. Chesapeake has drilled more horizontal wells than any other company in the industry and believes it is the only company currently active in all of the following shale plays: the Barnett and Woodford Shale in West Texas; the Barnett Shale near Fort Worth, Texas; the Caney and Woodford Shales in southeastern Oklahoma; the Fayetteville Shale in Arkansas; the New Albany Shale in Illinois and Kentucky; and various Devonian Shale plays in Appalachia. Because of this unique position in the industry, the company believes that it has the distinct opportunity and competitive advantage to transfer knowledge and technology across all of the major shale plays east of the Rockies. Also, when combined with Chesapeake’s expertise and activity level in various tight gas sand plays in the southwestern U.S. and Appalachia, Chesapeake believes it has established the leading natural gas resource base in the U.S.

Company’s Inventory Now 8.8 Tcfe

Chesapeake’s exploratory and development drilling programs and production enhancement operations on its existing and acquired properties continue to produce operational results that exceed the company’s forecasts and distinguish the company among its peers. During 2005, Chesapeake drilled 902 gross (686 net) operated wells and participated in another 1,066 gross (130 net) wells operated by other companies. The company’s drilling success rate was 98% for company-operated wells and 95% for non-operated wells. During the year, Chesapeake invested $1.511 billion in operated wells (using an average of 73 operated rigs), $309 million in non-operated wells (using an average of 66 non-operated rigs) and $362 million in acquiring new 3-D seismic data and leases (exclusive of leases acquired through acquisitions).

Chesapeake attributes its strong organic growth rates during 2005 and in the past five years to management’s early recognition that oil and gas prices were undergoing structural change and its subsequent decision to invest aggressively in the building blocks of value creation in the E&P industry – people, land and seismic. During the past five years, Chesapeake has invested more than $3.0 billion in new leasehold and 3-D seismic acquisitions and now owns what it believes to be the largest inventories of onshore leasehold (8.4 million net acres) and 3-D seismic (11.6 million acres) in the U.S. On this leasehold, the company has identified more than a 10-year drilling inventory of approximately 28,000 drilling locations on which it believes it can develop approximately 2.8 tcfe of proved undeveloped reserves and approximately 8.8 tcfe of unproved reserves.

In addition, Chesapeake has significantly strengthened its technical capabilities during the past five years by increasing its land, geoscience and engineering staff by 400% to over 600 employees. Today, the company has more than 3,300 employees, of which approximately 70% work in the company’s E&P operations and 30% work in the company’s oilfield service operations.

Chesapeake characterizes its drilling activity by one of four play types: conventional gas resource, unconventional gas resource, emerging gas resource and Appalachian Basin gas resource. The company’s leasehold and proved undeveloped and unproved reserve totals by play type are set forth below:

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Chesapeake continues to actively acquire more acreage throughout its operating areas with more than 1.4 million acres acquired in 2005, of which almost 500,000 acres was acquired in the 2005 fourth quarter through an aggressive land acquisition program that is currently utilizing more than 900 contract landmen in the field.

Chesapeake’s most significant land acquisition activities during the quarter took place in the Arkansas Fayetteville Shale and Deep Bossier plays in which today the company owns 1,000,000 net acres and 125,000 net acres, respectively. To date, Chesapeake has drilled four vertical wells in the Fayetteville Shale and is preparing to complete its first horizontal well. The company has two rigs dedicated to exploring its Fayetteville Shale acreage position, and if results are encouraging, the company plans to increase its drilling activity during 2006. Chesapeake will drill its first Deep Bossier well in East Texas later this year.