Chesapeake Energy 2011 Annual Report Download

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2011 ANNUAL REPORT
BOLD MOVES
BIG FUTURE

Table of contents

  • Page 1
    2011 ANNUAL REPORT BOLD MOVES BIG FUTURE

  • Page 2
    ... City, the company's operations are focused on discovering and developing unconventional natural gas and oil fields onshore in the U.S. Chesapeake owns leading positions in the Barnett, Haynesville, Bossier, Marcellus and Pearsall natural gas shale plays and in the Eagle Ford, Utica, Granite Wash...

  • Page 3
    ... resources CHESAPEAKE'S COMMON STOCK PRICE $ 70 $ 60 Chesapeake's Stock Price at Month End Henry Hub Natural Gas Spot Price at...peer group is comprised of Anadarko Petroleum Corporation, Apache Corporation, Devon Energy Corporation, Encana Corporation and EOG Resources, Inc. 2011 Annual Report...

  • Page 4
    ... (bcfe) Sales price per mcfe**** Production expense per mcfe Production taxes per mcfe General and administrative expense per mcfe Depreciation, depletion and amortization expense per mcfe Number of employees (full-time at end of period) Cash dividends declared per common share Stock price (at end...

  • Page 5
    ....71 3 0.3 4 2.68 0.67 - 0.84 1.09 150 - 1.18 155-156 of our Form 10-K for information on the standardized measure of discounted future net cash ï¬,ows. 2011 Annual Report | 2

  • Page 6
    ... and developing an organization capable of operating a large-scale drilling program. In the beginning, we pursued this strategy with limited financial resources amid a great deal of industry, research analyst and investor skepticism. Many observers of our company bet that natural gas prices would...

  • Page 7
    ... active company. The RTC helps us find new plays and perfect existing ones through the skillful analysis of daily production data from the more than 20,000 wells we operate, as well as the daily data gathered from our industry-leading drilling program, which operates more than twice as many rigs as...

  • Page 8
    ... our company (and others) in late 2008 closed the shale gas "Land Rush" chapter of our industry's history that began in 2005. During that time, Chesapeake established the #2 position in the Barnett and Fayetteville natural gas shale plays and the #1 position in the Haynesville, Bossier and Marcellus...

  • Page 9
    ... by providing the critical oilfield services we need to grow our business. Turning to the right, Raymond Bohnet, Driller, left in photo, and Frank Pacheco, Floorman, crew on Nomac rig #35 in the Mississippi Lime, a liquids-rich play that straddles the Oklahoma-Kansas border. 2011 Annual Report | 7

  • Page 10
    ... Utica Shale play in Ohio, West Virginia and Pennsylvania; the Mississippi Lime carbonate play in northern Oklahoma and southern Kansas; the Granite Wash, Cleveland and Tonkawa tight sand plays of the Anadarko Basin in western Oklahoma and the Texas Panhandle; and the #2 position in the Eagle Ford...

  • Page 11
    .... In other words, Chesapeake has produced only 2% of the resource base we own. This bodes extremely well for the predictability of our growth and the ultimate value of the company's assets and stock price. In addition, much of our shale gas leasehold has been initially drilled upon and is now...

  • Page 12
    ... General Electric Company (NYSE:GE) to bring to market CNG In A Boxâ„¢ - preassembled kits that will enable corporate and governmental ï¬,eet managers and convenience store and travel center operators to more quickly and e ciently add modern natural gas refueling options to their locations through...

  • Page 13
    ... oil. CHESAPEAKE INITIATIVES We are collaborating with GE to develop infrastructure solutions that will help accelerate the adoption of natural gas as a transportation fuel. GE has committed to provide more than 250 "CNG In A Boxâ„¢" modular and standardized CNG compression stations for natural gas...

  • Page 14
    ...However, despite the Aubrey McClendon, Chairman and Chief Executive Officer, and Je Mobley, Senior Vice President - Investor Relations and Research, accepting the Industry Leadership Award and Deal of the Year Award at the 13th Annual Platts Global Energy Awards Program in New York. 12 | Letter to...

  • Page 15
    ... with the opportunity to develop a new foreign policy that capitalizes on America's emerging ability to rely on its own endowment of unconventional resources to become energy independent from OPEC. This could very well be one of the most liberating events in our nation's history. I look forward to...

  • Page 16
    ... by Chesapeake since 1989. The fact is more than 90% of new American nat- I am very proud of our distinctive, innovative and hardworking company. ural gas wells employ the use of fracture stimulation to enhance productivity. The most extreme of the claims against us - that fracing harms humans and...

  • Page 17
    ... and the commitment of Chesapeake's 12,600 employees, that every day we will keep working hard to create increasing shareholder value and an improving future for our communities, our states and our country through the continued development of American unconventional natural gas and oil. Best regards...

  • Page 18
    ... of new wells in the U.S. The company has built the industry's largest onshore U.S. oil and natural gas resource base including high-quality assets and leading positions in the Barnett, Haynesville, Bossier, Marcellus and Pearsall natural gas shale plays and in the Eagle Ford, Utica, Granite Wash...

  • Page 19
    A new day in a new play, Nomac rig #245 drills to the liquids-rich Utica Shale in Tuscarawas County, Ohio. 2011 Annual Report | 19

  • Page 20
    ... and East Texas and the Barnett Shale play in the Fort Worth Basin of north-central Texas. During 2011, we invested approximately $2.7 billion to drill 1,104 gross (550 net) wells, net of $417 million in drilling and completion cost carries paid by our Barnett Shale joint venture partner, Total...

  • Page 21
    ... tripled its rig count in the Utica during 2011 and began to ramp up liquids production in the play. In early 2012, Chesapeake announced plans to further reduce its operated dry gas drilling activity and capital expenditures in the Marcellus Shale in response to the lowest natural gas price in the...

  • Page 22
    ... up drilling activity and production from our recent discovery in the Utica Shale play in eastern Ohio where we have very high expectations. I Je Mobley Senior Vice President - Investor Relations and Research How has CHK been able to discover the most new U.S. unconventional resource plays? he...

  • Page 23
    ..., to find achievable and scalable solutions sooner rather than later to bring the tremendous benefits of natural gas to ever-increasing numbers of American businesses and consumers. Tom Price, Jr. Senior Vice President - Corporate Development and Government Relations 2011 Annual Report | 21

  • Page 24
    ... used in hydraulic fracturing operations in our major shale plays have been replaced or eliminated during the past two years Making sweat equity investments in our communities Employees volunteered 42,000 hours through the company's H.E.L.P. Initiative (Helping Energize Local Progress) 22 | Social...

  • Page 25
    Chesapeake volunteer mentor John Carney, IT Supervisor - Business Systems, enjoys the company-sponsored Christmas Party at Horace Mann Elementary School, where more than 330 students benefit from having Chesapeake mentors. 2011 Annual Report | 23

  • Page 26
    ... booming, and communities where Chesapeake operates have been sharing in the boom. From the Marcellus Shale in Pennsylvania and West Virginia through the Utica Shale in Ohio to the Eagle Ford Shale in South Texas, new enterprises are emerging and established businesses are thriving in response to an...

  • Page 27
    ... 10,000 butions. Employees dug deep this year strands of holiday lights to local organizations and 2011 IN-KIND DONATIONS in the annual United Way drive, with schools. The incandescent lights had adorned the laptops the company matching every donation company's Oklahoma City campus until 2009, when...

  • Page 28
    ...We host regular Town Hall meetings, meet with landowner organizations and provide our This School Rocks program in classrooms each year, which teaches elementary to high school students the basics about natural gas and oil. In addition, we host regular rig tours and provide shale school training for...

  • Page 29
    ... endeavor, Chesapeake's Employee Assistance Program (EAP) provides free, confidential services including consultation on legal and financial matters, help locating child care, assistance for estate and college planning, resources for purchasing a home and other life events or issues. Employees and...

  • Page 30
    ... Officer The Nickles Group, LLC Washington, D.C. Former U.S. Senator, Oklahoma Aubrey K. McClendon Chairman of the Board and Chief Executive Officer Chesapeake Energy Corporation Oklahoma City, Oklahoma Richard K. Davidson (1) Chief Executive Officer Davidson Enterprises Bonita Springs, Florida...

  • Page 31
    ... Vice President - Investor Relations and Research Thomas S. Price, Jr. Senior Vice President - Corporate Development and Government Relations J. Mike Stice Senior Vice President - Natural Gas Projects and Chief Executive Officer of Chesapeake Midstream Partners, L.P. Cathy L. Tompkins Senior Vice...

  • Page 32
    ... Michael Falen Mark Falk Shawn Fields Tom Flesher Viel Flores Adam Gaskill Tamara Gathers Fred Gipson Lisa Glover Cornelio Gomez David Gouker Steve W. Hall Melvin Harper John D. Henry John Hornsby John Hurst Todd Ice Bud Jackson Jay Jarvis Danny Jech Jim Jinkins Gary D. Johnson William D. Johnson...

  • Page 33
    ... Jennifer Granger Angie Green Coty Greer Bonnie Griggs Mark Hadlock Victor Haley Katy Hampton Rachael Hanoch Andrew Hanscom Robert Hart Melanie Harvey Linda Havrilla Heather Hawkins Rebecca Henderson Tim Henley Chris Henry Francisco Hernandez Randy Herring J. D. Hertweck Melissa Heusel Kevin Hill...

  • Page 34
    ... Ray INTEGRATION Critical services and Melissa Reed equipment are provided by employees Nathan Reed such as Jim Shell, a driver with Oilfield Stevie Reed Trucking Solutions. Brian Reeder Lorrie Renfro Paul Lafferty Eligah Mills Philip Renner Sidney Lane Tom Mills R.J. Retzer Karen Langley Maya Mims...

  • Page 35
    ... Hoecker Eric Hoehne Chad Hoffman Henry Hoffman Lisa Hoffman Tom Holland Bradley Holman Bryce Holmes Timothy Holmes Michael Holson Larry Holt Dustin Homesley Michael Hommertzheim Bill Hooper Kevin Hooper David Hoover Melissa Hoppe Ronnie Hoskins Bonnie House Debbie Houston Scott Howard Seth Howard...

  • Page 36
    ...Fields Elyse Fischer Jill Fisher Ranson Fisher Sam Flaming Matt Fletcher Armando Flores Otoniel Flores Rob Ford Christopher Fore Kodi Foreman Jim Forney Jake Forrest Douglas Fortney II Russell Fory Jerry Foster Jr. Daniel Foulke Jake Fowler Sonia Fowler Tamara Fox Patrick Franklin Daron Fredrickson...

  • Page 37
    ... Perry Sharla Petty Philip Pfister Lisa Phelps Jonathan Piper Brad Pipins Brian Plum Carl Poe Jr. Neal Poindexter Randy Pons Dennis Pool Eddie Posey J.P. Potter Fred Powell Jerry Powell Jr. Troy Powell Kenneth Prangler Jr. Judy Pratt David Prenatt Elizabeth Price Amanda Proctor Gary Pruett Barkley...

  • Page 38
    ...MOVES IN NEW PLAYS Floorhand Alfonso Blanco and other employees of Nomac Drilling help the company execute aggressive ramp-ups in hot new plays such as Ohio's Utica Shale. Matt Finney Neil Fisher Derek Flesner Kevin Flores Mara Flores Pete Flores David Floyd Tara Ford Leonard Foreman Patrick Foreman...

  • Page 39
    ... Kyle Woods Monty Woods Billy Wooten Daniel Wortham Emily Worthen Brandon J. Wright Dan Wright Kandice Wright Mike R. Wright Tom Wright Carolynn Wylder Jennifer Yeahquo Tonya York Andrew Yost Kevin Yost Scot Young Terri Young Tammi Yount Juan Zapata Jr. Debra Zimmerman Linda Zimmerman Melvin Zinke...

  • Page 40
    ... Greg Hakman Brian Hale Brandon Hall Dustin Hall Renee Hall Lynne Hames James Hamilton William Han Nick Hancock Kristi Hanna Sean Hansen David Harbin Daniel Hardy II Stephen Hardy Alysia Hargus Aaron Harper Adam Harper Christopher Harper Jerry Harris Berlin Harrison Mark R. Harrison Kevin Hart Larry...

  • Page 41
    ...Carroll Shawn Carroll Robbie Carson Dustin Carter Gail Carter BOLD MOVES IN CNG DEVELOPMENT James Roller, Manager - Corporate Development, welcomes the public to a new compressed natural gas fueling station in Oklahoma. Anthony Bear Robe-Hofwolt Jessse Beason Brent Beaty Mira Beavers Gubany Becerra...

  • Page 42
    ... Dykes Jude Dysart Richard Eads Stephanie Eagle Mark Earl Reed Early Brian Earnest BOLD MOVES IN BENEFITS More than 300 children experience the ultimate in developmental child care while their parents work next door at Chesapeake's Oklahoma City headquarters. Derek Dehoyos Mike Delauder Heather...

  • Page 43
    ... Kinsey Scott Kinter David Kio Jeff Kirk Jennifer Kirk Austin Klavan Tommy Klein Chris Klingman Seth Knapp Sandra Knarr Wade Knickerbocker Daniel Knight Kevin Knight Nicholas Knight Virgil Knotts Jr. Jeremy Knutson Keri Kobs Richard Koch Seyi Kolajo Josh Koon Tom Koontz Jon Kopec William Kosik Ken...

  • Page 44
    ... Rhodes Patrick Riban Jon... Rowell Brian Rowland Justin Roy Kevin Rubin ...Clinton ... Jay Soulek Jim...Wells Daniel Wells Shelli Wells...Brian D. Williams Brooke Williams Cameron Williams Cody L. Williams Daniel Williams David Williams Eric Williams Fariba Williams Glenn Williams Lisa...Zybach 2011 (4,035...Employees

  • Page 45
    ...Jeremiah Anderson Jim Anderson Joe Anderson Kevin Anderson Kimberly Anderson Leslie Anderson Powers Anderson ...MIDSTREAM Painstaking construction and stringent maintenance programs ensure the safety and integrity of Chesapeake Midstream's pipelines wherever they operate...Cody 2011 Annual Report | 43

  • Page 46
    ... EXCELLENCE Kade Kusik, EHS Field Specialist, uses an infrared camera to confirm the absence of methane emissions at Chesapeake operating sites in western Oklahoma. Alan Daugherty David Dauzat Kyle Davenport Luke Davenport Lindsay Davidson Robert Davidson Sharon Davidson Ben Davis Brooke Davis...

  • Page 47
    ... Hart Steven Hart Nick Hartley David Hartman Rusty Hartse Kareem Harvey Dirk Harzman Mark Haskin Tavis Haskins Caitlin Hassell Nathan Hassinger Matt Hatami Hatcher Hatcher Kevin Hathaway Gary Hauck Raymon Haugen Cory Haught Brad Havens Brad Havron Brian Hawk Steve Hawke Kenneth Hawken Austin Hawkins...

  • Page 48
    ... Manteris Jerry Manuel Fonda Manwell Holly Marburger John Marcellus Devin March Paul Marchesani Daniel Marick Curtis Marker Jim Markin Jim Marlatt ... Cody O'Brien Ward O'Neal Frank Pacheco III Albert Pachl Jr. Derek Pacula Meghan Padgett Luis Pagan Craig Page Jeff Page Josh Page Patrick Pahl Dan Paine...

  • Page 49
    ... Jesse Skaggs Melanie Skaggs Jamie Skeen BOLD MOVES IN FRACING Performance Technologies employeesTimTullis andTadesse Underwood, Equipment Operators, and Perry Mooney,Supervisor -Service, oversee pressure pumping at aChesapeake well completion site. Jared Rucker Deborah Rudisill Ricardo Ruiz Rick...

  • Page 50
    ... Charlie Weathers Jerry Weathers Wesley Weathers Laci Webb Lee Webb Paul Webb Zachary Webb Hudson Webber Timothy Weber Nathan Weckbacher Richard Wega Jesse Weiler Carly Weisgerber Cody B. Weiss Lucas Welch David Wells Roy Wells Thomas Wells Travis Wells Bert Wendling II Scott Wesseler Brian West...

  • Page 51
    CORPORATE INFORMATION CORPORATE HEADQUARTERS 6100 North Western Avenue Oklahoma City, OK 73118 (405) 848-8000 reserves, expected production, assumptions regarding future natural gas and oil prices, planned drilling activity and capital expenditures, and future asset sales, as well as statements ...

  • Page 52
    CHESAPEAKE ENERGY CORPORATION | 2011 ANNUAL REPORT 6100 NORTH WESTERN AVENUE OKLAHOMA CITY, OK 73118 WWW.CHK.COM