In the Fayetteville, Chesapeake is the second-largest leasehold owner and producer and the most active driller in the play with 465,000 net acres.  On its Fayetteville leasehold, the company estimates it has approximately 2.4 tcfe of proved reserves (based on the 10-year average NYMEX strip prices at June 30, 2010) and 7.7 tcfe of risked unproved resources.  As a result of continued strong production results, the company has recently raised its average EUR on its Fayetteville Shale acreage by approximately 8% from 2.4 bcfe per well to 2.6 bcfe per well.

During the 2010 second quarter, Chesapeake’s average daily net production of 370 mmcfe in the Fayetteville increased approximately 5% over the 2010 first quarter and approximately 65% over the 2009 second quarter.  The company’s average daily net production rate in the Fayetteville in July 2010 was approximately 370 mmcfe.  The company is currently drilling with eight operated rigs in the Fayetteville and anticipates operating an average of approximately 10 rigs in 2010 to drill approximately 85 net wells. The Fayetteville provides an excellent example of how the company is able to reduce its drilling activity once a play is substantially HBP.  Chesapeake lowered its drilling activity from an average of 18 operated rigs in 2009 to eight operated rigs currently and an average of eight operated rigs projected for 2011 and beyond.

Three notable recent wells completed by Chesapeake in the Fayetteville are as follows:

• The Merideth 7-16 2-2H in Conway County, AR achieved a peak 24-hour rate of 7.3 mmcf per day;
• The Ransom 7-8 1-21H16 in White County, AR achieved a peak 24-hour rate of 6.0 mmcf per day; and
• The Heggie 7-9 5-12H1 in White County, AR achieved a peak 24-hour rate of 4.9 mmcf per day.