Chesapeake Energy 2006 Annual Report Download - page 21

2006 Total Production:
16 bcfe, +78%, 3%
12/31/06 Proved Reserves:
386 bcfe, +9%, 4%
12/31/06 Net Leasehold Acres:
494,000, +577%, 5%
2006 Total Production:
33 bcfe, +6%, 6%
12/31/06 Proved Reserves:
482 bcfe, -10%, 5%
12/31/06 Net Leasehold
Acres: 858,000, +61%, 8%
East Texas In East Texas, Chesapeake is focused on developing various tight
natural gas sand formations in medium to deep horizons, including the Pettet, Travis Peak, and
Cotton Valley f ormations. In addition, we are one of the top three leasehold owners in the emerging
Deep Bossier play that has recently yielded impressive exploration results. We are currently drilling
our first operated Deep Bossier well, a 22,000-foot well in Madison County.
Texas Gulf Coast Chesapeake has established a significant presence
in a number of counties along the prolific Texas Gulf Coast. Throughout this area we utilize 3-D
seismic data to delineate structural and stratigraphic traps, primarily in the Frio, Yegua and Wilcox
formations. During the past few years, Chesapeake has obtained 2,000 square miles of 3-D seismic
data and has drilled a number of significant wells as a result.
South Texas The South Texas area remained one of the largest areas of natural
gas production for Chesapeake in 2006. In South Texas, our operations are primarily focused in
Zapata County, which is Texas’ number one natural gas producing county and where Chesapeake
is the third-largest natural gas producer. During 2007, we will focus on developing deeper structural
opportunities under the traditional Lobo and Perdido objectives.
Permian Basin In the northern portion of the Permian Basin, Chesapeake
has focused on discovering and developing various shallow- to medium-depth oil and natural gas
plays and also operates a number of secondary recovery oil projects. In the southern portion of the
Permian, we have focused on developing new shallow- to medium-depth natural gas plays in the Val
Verde Basin where we have recently made a potentially significant new discovery.
Delaware Basin Chesapeake’s most significant land acquisition activities
during 2006 took place in the Delaware Basin in far West Texas where we have built the largest
leasehold position in the emerging Barnett and Woodford Shale plays. We believe that substantial
natural gas reserves exist in this stacked shale play and are working to determine its commerciality.
The Delaware Basin also includes the Deep Haley play, which is centered in Loving County, Texas.
In Haley, Chesapeake owns the industry’s second-largest leasehold where we are targeting the prolific
and over-pressured Strawn, Atoka and Morrow formations that are located at depths of 15,000-18,000
feet. Our production from Haley has recently doubled as a result of several prolific new wells.
Louisiana In Louisiana, Chesapeake is primarily focused on the northern portion
of the state where we are actively developing such prolific formations as the Hosston, Cotton Valley
and Deep Bossier, all of which are tight sand plays and offer significant upside potential. We also have
several new 3-D seismic surveys planned for Louisiana and are pursuing unconventional objectives
there as well.
Appalachia During 2006, Chesapeake successfully integrated the November
2005 $3 billion acquisition of Columbia Natural Resources and began laying the groundwork for
future growth and value creation from the area. Our 2006 reserve and production growth from
Appalachia benefited from an accelerated drilling program and exceeded our expectations. Often
referred to as America’s most drilled, but least explored area, Appalachia presents abundant growth
opportunities through the application of leading-edge exploration, drilling and production technologies
in which Chesapeake is a recognized industry leader. We are currently assessing the potential of deeper
drilling opportunities and will be aided by a substantial amount of new proprietary 3-D seismic data.
In addition, we are pursuing a variety of new initiatives to develop unconventional shales in Alabama,
southern Illinois and western Kentucky and will drill our first operated horizontal shale well in
Appalachia in mid-2007.
2006 Total Production:
16 bcfe, +23%, 3%
12/31/06 Proved Reserves:
243 bcfe, +22%, 3%
12/31/06 Net Leasehold
Acres: 667,000, +409%, 6%
2006 Total Production:
52 bcfe, +30%, 9%
12/31/06 Proved Reserves:
554 bcfe, +12%, 6%
12/31/06 Net Leasehold
Acres: 156,000, +2%, 1%
2006 Total Production:
45 bcfe, NM***, 8%
12/31/06 Proved Reserves:
1,491 bcfe, +15%, 17%
12/31/06 Net Leasehold
Acres: 3,837,000, +21%, 36%
2006 Total Production:
30 bcfe, -5%, 5%
12/31/06 Proved Reserves:
326 bcfe, -18%, 4%
12/31/06 Net Leasehold
Acres: 235,000, +1%, 2%
2006 Total Production:
27 bcfe, +13%, 5%
12/31/06 Proved Reserves:
107 bcfe, -17%, 1%
12/31/06 Net Leasehold Acres:
256,000, +13%, 2%
Chesapeake Energy Corporation 2006 Annual Report