Chesapeake Energy 1999 Annual Report Download - page 25

Company's total production. During 1999, the Company invested approximately $27 million to drill 12 gross (7.5
net) wells, install various pipelines and compressors, and to perform capital workovers in Canada. The Company
anticipates spending approximately 10% of its total budget for exploration and development activities in Canada
during 2000, and expects production of 12 Bcfe in Canada, or 9% of the Company's estimated total production for
2000.
Other Operating Areas
In addition to the primary operating areas described above which are focused on natural gas properties, the
Company maintains operations in the Permian Basin in New Mexico, and the Williston Basin in North Dakota;
Montana; and Saskatchewan, Canada which are focused on developing oil properties. In 1999, these areas
contributed 7 Bcfe, or 5% of the Company's total production. In 2000, production levels should increase to
approximately 11 Bcfe as a result of the Company allocating approximately 10% of its total budget for exploration
and development activities in these areas.
Oil and Gas Reserves
The tables below set forth information as of December 31, 1999 with respect to the Company's estimated proved
reserves, the estimated future net revenue therefrom and the present value thereof at such date. Williamson
Petroleum Consultants, Inc. evaluated 50% and Ryder Scott Company L.P. evaluated 16% of the Company's
combined discounted future net revenues from the Company's estimated proved reserves at December 31, 1999.
The remaining properties were evaluated intemally by the Company's engineers. All estimates were prepared based
upon a review of production histories and other geologic, economic, ownership and engineering data developed by
the Company. 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 owned by the Company.
Estimated Proved Reserves Oil Gas Total
as of December 31, 1999 (MBbI) (MMcf) (MMcfe)
-15-
Estimated Future
Net Revenue Proved Proved Total
as of December 31, 1999(a) Developed Undeveloped Proved
(S in thousands)
Estimated future net revenue $1,470,297 $ 420,878 $1,891,175
Present value of future net revenue $ 867,985 $ 221,511 $1,089,496
(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 in effect at December 31, 1999. 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
$24.72 per barrel of oil and $2.25 per Mcfof gas.
The future net revenue attributable to the Company's estimated proved undeveloped reserves of $420.9 million at
December 31, 1999, and the $221.5 million present value thereof, have been calculated assuming that the Company
will expend approximately $212.5 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.
No estimates of proved reserves comparable to those included herein have been included in reports to any federal
agency other than the Securities and Exchange Commission.
The Company's ownership interest used in calculating proved reserves and the estimated future net revenue
therefrom was determined after giving effect to the assumed maximum participation by other parties to the
Company's farmout and participation agreements. The prices used in calculating the estimated future net revenue
Proved developed 17,750 763,323 869,823
Proved undeveloped 7.045 293,503 335.772
Total proved 24 795 1.056,826 1,205.595