Chesapeake is the largest leasehold owner and most active driller of new wells in the Haynesville Shale play in Northwest Louisiana and East Texas. Chesapeake now owns approximately 510,000 net acres of leasehold in the Haynesville Shale play. Chesapeake also has approximately 175,000 net acres of leasehold it believes is prospective for the Bossier Shale, which is not yet included in its unproved reserve estimates above. Chesapeake and its 20% joint venture partner, Plains Exploration & Production Company (NYSE:PXP) (which owns approximately 110,000 additional net acres), have drilled and completed 137 Chesapeake-operated horizontal wells in the Haynesville play and continue to experience outstanding drilling results. During the 2009 third quarter, Chesapeake’s average daily net production of 229 mmcfe in the Haynesville increased approximately 67% over the 2009 second quarter and approximately 573% over the 2008 third quarter. Chesapeake is currently producing a company record monthly average of approximately 330 mmcfe net per day (450 mmcfe gross operated) from the Haynesville and anticipates exceeding approximately 370 mmcfe net per day (500 mmcfe gross operated) by year-end 2009, approximately 500 mmcfe net per day (670 mmcfe gross operated) by year-end 2010 and approximately 690 mmcfe net per day (930 mmcfe gross operated) by year-end 2011. To further develop its 510,000 net acres of Haynesville leasehold, Chesapeake is currently drilling with 35 operated rigs and anticipates operating an average of approximately 40 rigs in 2010 to drill approximately 190 net wells. During the first three quarters of 2009, approximately $350 million of Chesapeake’s drilling costs in the Haynesville were paid for by its joint venture partner PXP. In August 2009, Chesapeake and PXP amended their joint venture agreement to accelerate the payment of PXP’s remaining joint venture drilling carries as of September 30, 2009 in exchange for an approximate 12% reduction in the total amount of drilling carry obligations due to Chesapeake. As a result, on September 29, 2009, Chesapeake received approximately $1.1 billion in cash from PXP and, beginning in the 2009 fourth quarter, Chesapeake and PXP will each pay their proportionate working interest costs on future drilling.

Assuming flat NYMEX natural gas prices of $7.00 per mcf over the life of the well (compared to a recent 10-year NYMEX strip price of approximately $7.25 per mcf), the company’s estimated pre-tax rate of return from a 6.5 bcfe horizontal Haynesville well drilled for $7.0 million is approximately 55%. In addition, Chesapeake’s leasehold investment in the Haynesville to date has been approximately $5.0 billion, of which approximately $2.8 billion, or 56%, has been recouped to date by selling a 20% interest in the company’s leasehold to PXP. The company’s net investment in its Haynesville leasehold is now about $4,300 per net acre on average.

Two notable recent wells completed by Chesapeake in the Haynesville are as follows:
• The Caspiana 13-15-12 H-1 in Caddo Parish, LA achieved a peak rate of 20.2 mmcf per day; and
• The Bradway 24-15-12 H-1 in Caddo Parish, LA achieved a peak rate of 18.6 mmcf per day.