Chesapeake Energy 1998 Annual Report Download - page 89

Download and view the complete annual report

Please find page 89 of the 1998 Chesapeake Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 105

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105

Oil and Gas Reserve Quantities (unaudited)
The reserve information presented below is based upon reports prepared by independent petroleum engineers
and the Company's petroleum engineers. As of December 31, 1998, Williamson Petroleum Consultants, Inc.
("Williamson"), Ryder Scott Company Petroleum Engineers, H.J. Gruy and Associates, Inc. and the Company's
internal reservoir engineers evaluated 63%, 12%, 1% and 24% of the Company's combined discounted future net
revenues from the Company's estimated proved reserves, respectively. As of December 31, 1997, Williamson,
Porter Engineering Associates, Netherland, Sewell & Associates, Inc. and internal reservoir engineers evaluated
approximately 53%, 42%, 3% and 2% the Company's combined discounted future net revenues from the
Company's estimated proved reserves, respectively. As of June 30, 1997 and 1996, the reserves evaluated by
Williamson constituted approximately 41% and 99% of the company's combined discounted future net revenues
from the Company's estimated proved reserves, respectively, with the remaining reserves being evaluated
internally. The reserves evaluated internally in fiscal 1997 were subsequently evaluated by Williamson with a
variance of approximately 4% of total proved reserves. The information is presented in accordance with regulations
prescribed by the Securities and Exchange Commission. The Company emphasizes that reserve estimates are
inherently imprecise. The Company's reserve estimates were generally based upon extrapolation of historical
production trends, analogy to similar properties and volumetric calculations. Accordingly, these estimates are
expected to change, and such changes could be material and occur in the near term as future information becomes
available.
Proved oil and gas reserves represent the estimated quantities of crude oil, natural gas, and natural gas liquids
which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions. Proved developed oil and gas reserves are
those expected to be recovered through existing wells with existing equipment and operating methods. As of
December 31, 1997, all of the Company's oil and gas reserves were located in the United States.
Presented below is a summary of changes in estimated reserves of the Company for 1998, the six months ended
December 31, 1997 and for the fiscal years 1997 and 1996:
December 31 1998
69
U.S. Canada Combined
Oil
(MBbI) Gas
(MMcf) Oil Gas
(MBbl) (MMcfl Oil
(MIlbi) Gas
(MMcf)
Proved reserves, beginning of period 18,226 339,118 18,226 339,118
Extensions, discoveries and other
additions 3,448 90,879 3,448 90,879
Revisions of previous estimates (4,082) (60,477) (4,082) (60,477)
Production (5,975) (86,681) (1) (7,740) (5,976) (94,421)
Sale of reserves-in-place (30) (3,515) (30) (3,515)
Purchase of reserves-in-place 10,973 444,694 34 239,513 1L22 684,207
Proved reserves, end of period 22,560 724,018 33 231,773 955,791
Proved developed reserves:
Beginning of period 10,087 178,082 10,087 178,082
End ofperiod 18,003 552,953 33 105,990 18,036 658,943