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OKLAHOMA CITY--(BUSINESS WIRE)--Jan. 2, 2008--Chesapeake Energy
Corporation (NYSE: CHK) today announced it has monetized a portion of
its proved reserves and production in certain Chesapeake-operated
producing assets in Kentucky and West Virginia. The company has sold a
volumetric production payment (VPP) to affiliates of UBS AG and DB
Energy Trading LLC (a subsidiary of Deutsche Bank AG) for proceeds of
$1.1 billion. The VPP entitles the purchaser to receive scheduled
quantities of natural gas from Chesapeake's interests in over 4,000
producing wells, free of all production costs and production taxes
over a 15-year period. The transaction, which closed on December 31,
2007, includes approximately 210 bcfe of proved reserves and 55 mmcfe
per day of current net production, or approximately 2% of the
company's current proved reserves and net production. Chesapeake has
retained drilling rights on the properties below currently producing
intervals and outside of existing producing wellbores. The company's
operating and financial results will reflect reduced production and
proved reserve volumes following the closing of the VPP transaction.
Jefferies Randall & Dewey acted as financial advisor to Chesapeake.
Aubrey K. McClendon, Chesapeake's Chief Executive Officer,
commented: "We are pleased to successfully implement another component
of our 2007-2009 enhanced financial plan. The production from these
assets was monetized at a discount rate of 6.3% and the proceeds will
be redeployed into our low-risk drilling program at anticipated rates
of return in excess of 30%. Our first VPP transaction generated a high
level of interest from financial investors and we look forward to
further success in monetizing similar packages of mature properties in
2008 and 2009 for further proceeds of at least $2 billion."
This press release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Forward-looking statements
give our current expectations or forecasts of future events, including
estimates of oil and natural gas reserves, expected results from oil
and natural gas development drilling, and anticipated monetization
transactions that are part of our 2007-2009 enhanced financial plan.
We caution you not to place undue reliance on our forward-looking
statements, which speak only as of the date of this press release, and
we undertake no obligation to update this information. Factors that
could cause actual results to differ materially from expected results
are described in "Risks Related to our Business" under "Risk Factors"
in the Offer to Exchange attached as an exhibit to each of the two
Schedules TO we filed with the Securities and Exchange Commission on
October 23, 2007. These risk factors include the volatility of oil and
natural gas prices; the limitations our level of indebtedness may have
on our financial flexibility; the availability of capital on an
economic basis to fund reserve replacement costs; our ability to
replace reserves and sustain production; uncertainties inherent in
estimating quantities of oil and natural gas reserves and projecting
future rates of production and the amount and timing of development
expenditures, and our ability to execute planned monetization
transactions on terms that will be acceptable to us. Although we
believe the expectations and forecasts reflected in these and other
forward-looking statements are reasonable, we can give no assurance
they will prove to have been correct. They can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties.
Chesapeake Energy Corporation is the largest independent producer
and third-largest overall producer of natural gas in the United
States. Headquartered in Oklahoma City, the company's operations are
focused on exploratory and developmental drilling and corporate and
property acquisitions in the Mid-Continent, Fort Worth Barnett Shale,
Fayetteville Shale, Permian Basin, Delaware Basin, South Texas, Texas
Gulf Coast, Ark-La-Tex and Appalachian Basin regions of the United
States. The company's Internet address is www.chkenergy.com.
CONTACT: Chesapeake Energy Corporation
Jeffrey L. Mobley, CFA, 405-767-4763
Senior Vice President - Investor Relations and Research
jmobley@chkenergy.com
or
Marc Rowland, 405-879-9232
Executive Vice President and Chief Financial Officer
mrowland@chkenergy.com
SOURCE: Chesapeake Energy Corporation