Chesapeake Energy 1994 Annual Report Download - page 6

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production per share increased 63% and our proved reserves increased to 23 MCFE
per share, among the highest in our peer group.
TEAMWORK + TECHNOLOGY = SUPERIOR PERFORMANCE
As reflected by the increases in production and reserves and the decreases in unit
operating costs, Chesapeake's operations team performed exceptionally well in fiscal
1994. We expect this performance to continue as we enhance Chesapeake's position
as an industry leader by implementing state-of-the-art horizontal drilling techniques
in the Giddings Field.
We have now drilled 63 horizontal wells in Giddings and have developed a specific
expertise in the high pressure and high temperature environment of the downdip, or
deeper, portion of the Giddings Field. Chesapeake is drilling or has drilled eight of
the 12 deepest horizontal wells in the Giddings Field. The company is presently
capable of drilling its Giddings wells to a combined vertical and horizontal depth in
excess of 20,000 feet.
Since our IPO in February 1993, Chesapeake has drilled 52 horizontal wells in
the Giddings Field. These wells have produced an average of 369 BOD and 5.1
MMCFD, have returned an average of 127% of their cost, and paid out in an
average of six months. The strength of these wells has enabled Chesapeake to lead
its peer group in per-well productivity, an important contributor to meeting our
profitability goals.
Even more impressive are the 13 Giddings wells we have drilled in the Navasota River
area, which was introduced in last year's annual report as one of Chesapeake's "New
Areas". Our first well in Navasota River began producing in February 1994, and since
that time these 13 Navasota River wells have averaged 600 BOD and 10.7 MMCFD
and paid out in less than three months. We believe these Navasota River wells are
among the best wells drilled in the onshore U. S. by any company in 1994.
PRIMARY OPERATING AREAS
For the third consecutive year and for the foreseeable future, Chesapeake will focus
its drilling activities on the Giddings Field of southern Texas arid the Golden Trend
Field of southern Oklahoma. in these fields, the company has developed a
competitive advantage through its proprietary land tnd geophysical assets and its
expertise in advanced drilling techniques. By utilizing sophisticated drilling and
CHESAPEAKE CAPITAL
EXPENDITURES AND AN
INCREASED FOCUS IN
GIDDINGS
in rnillic
GiddiN
U Totol
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93
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94 95 (E(
GREATER OPERATING
EFFICIENCY
(Production expenses and
G&A/MCFE produced)
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4APEAKE ENERGY CORPORATON
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