Printer Friendly Version (pdf format)
Company to Acquire Approximately 8,600 Net Acres of Leasehold in
Tarrant and Johnson Counties, Texas and Enters into Land Services
Agreement for Future Leasehold Acquisitions
Chesapeake's Barnett Leasehold Position Reaches 255,000 Net Acres;
Company's Total Undrilled Backlog in the Play Exceeds 2,800 Net
Locations
Company's Gross Barnett Production Reaches 600 MMcfe per Day, Net
Production Exceeds 400 MMcfe per Day, Chesapeake Now Second Largest
Barnett Shale Producer
OKLAHOMA CITY--(BUSINESS WIRE)--Jan. 9, 2008--Chesapeake Energy
Corporation (NYSE:CHK) today announced that it has agreed to acquire
approximately 8,600 net undeveloped leasehold acres in the heart of
the Barnett Shale play in Tarrant and Johnson Counties, Texas, from
Paloma Barnett, LLC. In addition, Chesapeake announced that it has
entered into a Land Services Agreement (LSA) whereby Paloma has agreed
to work on an exclusive basis in certain areas of Tarrant County,
Texas to acquire leases on Chesapeake's behalf. This arrangement will
complement similar LSAs Chesapeake has in place with Dale Property
Services, LLC, Four Sevens Oil Co., Ltd. and Western Production
Company covering different portions of Tarrant County. Chesapeake now
has approximately 255,000 net acres of leasehold in the Barnett Shale
play, including 215,000 net acres in the Core and Tier 1 area of
Tarrant, Johnson and western Dallas counties, and the company's
drilling inventory in the play has expanded to over 2,800 net
locations.
Including these LSAs and its own landmen and lease brokers,
Chesapeake now has more than 1,000 landmen and lease brokers dedicated
to acquiring additional undeveloped leasehold in Tarrant, Johnson and
western Dallas counties, the industry's largest commitment to
acquiring new Barnett leasehold in the most prospective area of the
play. Chesapeake believes its leasehold acquisition capabilities in
the Barnett should enable it to continue acquiring approximately
40,000 net leasehold acres per year in what are the most prolific
counties in the Barnett Shale play. This anticipated yearly addition
to the company's leasehold inventory should provide an additional
500-600 drilling locations per year, largely offsetting the number of
wells Chesapeake plans to drill in the Barnett during the next few
years.
Chesapeake is currently using 38-40 operated rigs to further
develop its 255,000 net acres of leasehold in the Barnett Shale play.
At this pace of drilling, Chesapeake expects to be completing, on
average, a new Barnett Shale well approximately every 15 hours through
at least 2010. The company's gross daily production has recently
exceeded 600 million cubic feet of natural gas equivalent (mmcfe) and
its net production is approximately 400 mmcfe per day. Chesapeake
believes it is now the second-largest producer and most active driller
in the Barnett Shale play.
Management Comments
Chris O'Sullivan, Paloma's President remarked, "We are pleased to
join forces with Chesapeake in the Barnett Shale. The combination of
our lease acquisition skills and Chesapeake's technical expertise in
the challenging operational environment of this play should create
significant value for both Chesapeake and Paloma's owners. Clearly
Chesapeake has become the partner of choice for smaller companies in
the Barnett and we are proud to join Dale, Four Sevens and Western on
Chesapeake's Barnett lease acquisition team."
Aubrey K. McClendon, Chesapeake's Chief Executive Officer,
commented, "We are excited to announce our new leasehold acquisition
and LSA with Paloma and its owners. With our own landmen and lease
brokers teamed up with the Paloma, Western, Dale and Four Sevens
leasing teams, we will be able to continue acquiring a steady stream
of valuable leasehold in Tarrant, Johnson and western Dallas counties
that will provide Chesapeake with substantial growth opportunities for
years to come.
"In addition, we are pleased to announce that our 2007 gross
production exit rate from the Barnett Shale was 600 mmcfe per day (400
mmcfe per day net). This compares very favorably to our 2006 gross
production exit rate of 250 mmcfe per day and we now will focus on
achieving our 2008 gross production exit rate target of 900 - 1,000
mmcfe per day."
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
expected results from oil and natural gas development drilling, and
anticipated acquisition of leasehold. 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. Chesapeake's Internet address is www.chk.com.
CONTACT: Chesapeake Energy Corporation
Investor Contact:
Jeffrey L. Mobley, CFA, 405-767-4763
Senior Vice President - Investor Relations and Research
jeff.mobley@chk.com
or
National Media Contact:
Thomas S. Price, Jr., 405-879-9257
Senior Vice President - Corporate Development
tom.price@chk.com
or
Barnett Shale Area Media Contact:
Julie H. Wilson, 817-870-1250
Vice President - Corporate Development
julie.wilson@chk.com
SOURCE: Chesapeake Energy Corporation