Chesapeake Energy (CHK)

Over Production in the 2005 Second Quarter and the 2006 First Quarter

Daily production for the 2006 second quarter averaged 1.568 bcfe, an increase of 324 million cubic feet of natural gas equivalent (mmcfe), or 26%, over the 1.244 bcfe of daily production in the 2005 second quarter and an increase of 49 mmcfe, or 3.2%, over the 1.519 bcfe produced per day in the 2006 first quarter. Of the 324 mmcfe increase in daily production from the year ago quarter, 45% was generated from organic drillbit growth and 55% was generated from acquisitions, with the company’s trailing 12-month organic production growth rate calculated as 12.0%.

Of the 49 mmcfe daily increase in sequential quarterly production, 95% was generated from organic drillbit growth and 5% was generated from acquisitions, with the company’s sequential quarterly organic production growth rate calculated as 3.1%. Chesapeake is anticipating total production growth of at least 25% in 2006 and 11% in 2007, including organic growth rates of at least 10% each year. Please note that the company’s production forecast for 2006 excludes any provision for possible production curtailments that the industry and Chesapeake may experience as a result of high pipeline pressures and/or early filling of U.S. natural gas storage facilities.

Chesapeake’s 2006 second quarter production of 142.7 bcfe was comprised of 129.8 billion cubic feet of natural gas (bcf) (91% on a natural gas equivalent basis) and 2.14 million barrels of oil and natural gas liquids (mmbbls) (9% on a natural gas equivalent basis). Chesapeake’s average daily production for the quarter of 1.568 bcfe consisted of 1.427 bcf of natural gas and 23,549 barrels (bbls) of oil. The 2006 second quarter was Chesapeake’s 20th consecutive quarter of sequential U.S. production growth. Over these 20 quarters, Chesapeake’s U.S. production has increased 296%, for an average compound quarterly growth rate of 7.1% and an average compound annual growth rate of 31.7%.

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