OKLAHOMA CITY, Jun 27, 2011 (BUSINESS WIRE) --
Chesapeake Energy Corporation (NYSE:CHK) rejected an inaccurate and
misleading article in the Sunday, June 26, 2011 edition of the New
York Times that accused the company of exaggerating natural gas
shale wells' productivity and industry reserve estimates of future well
performance despite numerous available sources verifying the estimates.
Aubrey K. McClendon, Chesapeake's Chief Executive Officer, commented,
"Chesapeake stands behind all of its statements to shareholders,
partners and the public regarding our natural gas discoveries and
production. Our industry's operations and investment decisions are
informed and guided by the best geoscientific, petrophysical and 3-D
seismic data available and analyzed by some of the best drilling,
completion, production and reservoir engineers in the business. The
results of the industry's efforts to revolutionize natural gas
development and production have been extraordinary and continue to
"The Times story was obviously motivated by an anti-natural gas
agenda. It is telling that the reporter chose not to interview a single
reliable source and instead selectively quoted emails from unnamed
sources or well-known industry critics dating back to as early as 2007
to invent a series of inaccurate and misleading allegations. If the Times
was interested in reporting the facts and advancing the debate about the
prospective benefits of natural gas usage to energy consumers, it could
easily have contacted respected independent reservoir evaluation and
consulting firms that annually provide reserve certifications to the
U.S. Securities and Exchange Commission or contacted experts at the U.S.
Energy Information Administration, the Colorado School of Mines'
Potential Gas Committee, the Massachusetts Institute of Technology,
Navigant Consulting and others who would gladly have gone on record to
confirm the abundant resources that have been made available thanks to
the horizontal drilling and hydraulic fracturing techniques that
Chesapeake and other industry peers have pioneered in deep shale
formations across the U.S.
"By analyzing our own and industry peer well performance, we know that
the initial productivity of a majority of the industry's shale gas wells
have been steadily improving, both in initial production rates and the
expected ultimate recoveries of natural gas. We fully expect that the
majority of these wells will be productive for 30-50 years, or even
longer. In fact, Chesapeake and the industry are currently producing
from vertical Devonian Shale natural gas wells in Appalachia that were
drilled more than 100 years ago, and new horizontal wells that interface
with a significantly greater amount of shale that may produce that long
as well. In fact, Chesapeake operates or has an interest in nearly 8,000
wells that are more than 30 years old and we believe there is ample
evidence that shale gas wells can produce for as long as other gas wells
have been able to produce.
"The Times questioned the economic merits of shale gas production
in complete disregard and/or ignorance of supply and demand fundamentals
as well as recent and forward market natural gas prices. No one would
argue that with today's natural gas prices the economics of dry gas
projects have lower rates of return than they do at prices of
$5.00-$6.00 per thousand cubic feet (mcf), which we believe will
ultimately be the prevailing price when higher natural gas demand
arrives in the years ahead from the utility and transportation sectors.
The primary focus of our current drilling program - as we've said on
numerous occasions through our various press releases and conference
calls - has been on identifying and developing new natural gas plays in
the U.S. wherein natural gas liquids and oil will add significantly to
the overall project economics. Nevertheless, we and others in the
industry continue to have learning-curve benefits that make U.S. shale
gas projects attractive to the global energy industry.
"In addition to Chesapeake, the list of large companies now active in
shale gas development in the U.S. includes such world class energy
companies as Anadarko, BG, BHP, BP, Chevron, CNOOC, Conoco, Devon,
EnCana, ENI, EOG, ExxonMobil, KNOC, Marathon, Mitsubishi, Mitsui,
PetroChina, Reliance, Shell, Statoil, Talisman, and Total, among others.
Consider whether it could really be possible that all of these
well-respected energy leaders, with a combined market cap of almost $2
trillion, know less about the economics of shale gas production than a
single New York Times reporter, a few environmental activists and
a handful of shale gas doubters?
"It is also absurd to conclude that shale gas wells are underperforming
while America is awash in natural gas and benefiting from natural gas
prices less than half of what they averaged in 2008. I also note that
Chesapeake and other shale gas producers are routinely beating natural
gas production forecasts. In fact, in 2009, thanks to shale gas, the
U.S. passed Russia as the largest natural gas producer in the world.
Today shale gas production represents approximately 25% of total U.S.
natural gas production. How can shale gas wells be underperforming if
shale gas companies are beating their production forecasts, natural gas
prices remain low and U.S. natural gas demand is at a record high?
"Finally, I am proud to be associated with the American natural gas
industry - an industry that is providing a direct economic stimulus to
the U.S. economy of more than $250 million a day through lower natural
gas prices than in 2008. The indirect economic effects are likely many
times this amount. In addition, the U.S. natural gas industry has
created more than 500,000 jobs in the past seven years of the gas shale
revolution and created tens of billions of dollars in economic value,
while at the same time reducing the need to perpetuate massive trade
deficits from reliance on foreign energy sources. Natural gas is the
only available, scalable and affordable fuel that can reduce oil
imports, reduce air pollution, create jobs, enhance national security
and save Americans money on energy costs. Chesapeake will continue to
deliver natural gas in increasing quantities in the years ahead to meet
the increasing market demand from consumers for this American treasure."
Chesapeake Energy Corporation is the second-largest producer of
natural gas, a Top 15 producer of oil and natural gas liquids and the
most active driller of new wells in the U.S.Headquartered
in Oklahoma City, the company's operations are focused on discovering
and developing unconventional natural gas and oil fields onshore in the
U.S.Chesapeake owns leading positions in the Barnett,
Haynesville, Bossier, Marcellus and Pearsall natural gas shale plays and
in the Granite Wash, Cleveland, Tonkawa, Mississippian, Bone Spring,
Avalon, Wolfcamp, Wolfberry, Eagle Ford, Niobrara, Three Forks/Bakken
and Utica unconventional liquids plays.The company has
also vertically integrated its operations and owns substantial
midstream, compression, drilling and oilfield service assets.Chesapeake's
stock is listed on the New York Stock Exchange under the symbol CHK.Further information is available at www.chk.com
where Chesapeake routinely posts announcements, updates, events,
investor information, presentations and press releases.
SOURCE: Chesapeake Energy Corporation
Chesapeake Energy Corporation
Jeffrey L. Mobley, CFA, 405-767-4763
John J. Kilgallon, 405-935-4441
Michael Kehs, 405-935-2560