Chesapeake Energy (CHK)

Now 14.0 Tcfe, Bringing Total Reserve Base to 22.1 Tcfe

Chesapeake attributes its strong drilling results and organic growth rates during 2006 (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 science. During the past five years, Chesapeake has significantly strengthened its technical capabilities by increasing its land, geoscience and engineering staff by over 450% to nearly 800 employees. Today, the company has more than 4,100 employees, of which approximately 70% work in the company’s E&P operations and approximately 30% work in the company’s oilfield service operations.

Since 2000, Chesapeake has invested $4.7 billion in new leasehold and 3-D seismic acquisitions and now owns what it believes to be one of the largest inventories of onshore leasehold (9.7 million net acres) and 3-D seismic (12.9 million acres) in the U.S. On this leasehold, the company has an estimated 24,000 net drilling locations, representing an approximate 10-year inventory of drilling projects, on which it believes it can develop approximately 3.3 tcfe of proved undeveloped reserves and approximately 14.0 tcfe of unproved reserves. Adding the company’s total proved reserves of 8.1 tcfe to its estimated 14.0 tcfe of unproved reserves brings Chesapeake’s estimated total reserves to 22.1 tcfe.