Chesapeake Energy 2000 Annual Report Download - page 31

pipelines and compressors and to perform capital workovers in Canada. We anticipate spending approximately
9% of our total budget for exploration and development activities in Canada during 2001 and expect
production of 15 bcfe in Canada, or 8% of our estimated total production for 2001.
Permian Basin. Chesapeake's Permian Basin proved reserves, consisting primarily of the Lovington area
in New Mexico, represented 21 bcfe, or 2% of our total proved reserves as of December 31, 2000. During 2000,
the Permian assets produced 6.2 bcfe, or 5% of our total production. We anticipate the Permian Basin will
contribute approximately 5 bcfe of production during 2001, or 3% of expected total production. During 2000,
we invested approximately $13.6 million to drill 13 (8.8 net) wells in the Permian Basin. For 2001, we
anticipate spending approximately 3% to 4% of our total budget for exploration and development activities in
the Permian Basin.
Other Operating Areas
In addition to the primary operating areas described above which consist primarily of natural gas
properties, Chesapeake maintains operations in the Williston Basin in North Dakota, Montana, and
Saskatchewan, Canada which are focused on developing oil properties. In 2000, these areas contributed
2.4 bcfe, or 2% of our total production. In 2001, production levels should increase to approximately 4 bcfe as a
result of allocating approximately 2% of our total budget for exploration and development activities in these
areas.
Oil and Gas Reserves
The tables below set forth information as of December 31, 2000 with respect to our estimated proved
reserves, and the associated estimated future net revenue and the present value at such date. Williamson
Petroleum Consultants, Inc. evaluated 31%, Ryder Scott Company L.P. evaluated 25%, and Lee Keeling and
Associates evaluated 16% of our combined discounted future net revenues from our estimated proved reserves
at December 31, 2000. The remaining 28% was evaluated internally by our engineers. All estimates were
prepared based upon a review of production histories and other geologic, economic, ownership and engineering
data we developed. The present value of estimated future net revenue shown is not intended to represent the
current market value of the estimated oil and gas reserves we own.
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Estimated Future
Net Revenue Proved Proved Total
as of December 31, 2000(a) Developed Undeveloped Proved
($ in thousands)
Estimated future net revenue $7,611,441 $3,091,533 $10,702,974
Present value of future net revenue $4,184,271 $1,861,757 $ 6,046,028
(a) Estimated future net revenue represents estimated future gross revenue to be generated from the production of proved reserves, net of
estimated production and future development costs, using prices and Costs fl effect at December 31, 2000. The amounts shown do
not give effect to non-property related expenses, such as general and administrative expenses, debt service and future income tax
expense or to depreciation, depletion and amortization. The prices used in the external and internal reports yield weighted average
prices of $26.41 per barrel of oil and $10.12 per mcf of gas.
The future net revenue attributable to our estimated proved undeveloped reserves of $3.1 billion at
December 31, 2000, and the $1.9 billion present value thereof, have been calculated assuming that we will
expend approximately $300 million to develop these reserves. The amount and timing of these expenditures
will depend on a number of factors, including actual drilling results, product prices and the availability of
capital.
Proved developed 15,445 858,463 951,133
Proved undeveloped 8,352 353,570 403,680
Total proved 23,797 1,212,033 1,354,813
Estimated Proved Reserves Oil Gas Total
as of December 31, 2000 (mbbl) (mmcf) (mmcfe)