Chesapeake Energy 2008 Annual Report Download

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• • •
Haynesville Shale Marcellus Shale
Fayetteville Shale
Barnett Shale
CHESAPEAKE ENERGY CORPORATION
2008 ANNUAL REPORT
POWERFUL ASSETS

Table of contents

  • Page 1
    CHESAPEAKE ENERGY CORPORATION 2008 ANNUAL REPORT Barnett Shale Fayetteville Shale Haynesville Shale Marcellus Shale POWERFUL ASSETS

  • Page 2
    ... in Oklahoma City, the company's operations are focused on exploratory and developmental drilling in the Barnett Shale, Fayetteville Shale, Haynesville Shale, Marcellus Shale, Anadarko Basin, Arkoma Basin, Appalachian Basin, Permian Basin, Delaware Basin, South Texas, Texas Gulf Coast and East Texas...

  • Page 3
    ...Chesapeake Energy Corporation Annual Report 2008 Financial Review 2 Financial Review ($ in millions, except per share data) Years Ended December 31 Six Months Ended December 31 Years Ended June 30 Financial and Operating Data Revenues Natural gas and oil sales Natural gas and oil marketing sales...

  • Page 4
    ... The 2008 peer group is comprised of Anadarko Petroleum Corporation, Apache Corporation, Cabot Oil & Gas Corporation, Devon Energy Corporation, EOG Resources, Inc., Forest Oil Corporation, Newfield Exploration Company, Noble Energy, Inc., Occidental Petroleum Corporation, Pioneer Natural Resources...

  • Page 5
    ...built the industry's best U.S. natural gas asset base. Aubrey K. McClendon, Chairman of the Board and Chief Executive Officer Our People Without great people, value cannot be created in this industry. From our beginning 20 years ago with 10 employees in Oklahoma, Chesapeake today employs more than...

  • Page 6
    6 Chesapeake Energy Corporation Annual Report 2008 POWERFUL ASSETS: Barnett Shale to share insights, events and processes that instill strong, ethical business values. I hope someday you will visit our headquarters in Oklahoma City. We would be happy to show you around and expect you would leave ...

  • Page 7
    ... Chesapeake's gross operated production in the Barnett is now approximately 1.0 bcfe per day, or about 1.6% of our nation's natural gas supply A Chesapeake-operated rig drills near downtown Fort Worth. The best Barnett Shale in the entire play lies beneath urban and suburban Tarrant County, home...

  • Page 8
    8 Chesapeake Energy Corporation Annual Report 2008 POWERFUL ASSETS: Fay Fayetteville Shale peake acquired its first asset in the Barnett we own more than 180,000 leases encomin 2001, but we did not really begin to ap- passing almost 150,000 net acres in Tarrant preciate the potential significance...

  • Page 9
    ...'s 10 largest natural gas fields of any type â- Chesapeake entered the Fayetteville Shale in 2005 and now owns the industry's second-largest acreage position â- Chesapeake owns approximately 420,000 net acres of leasehold in the core area of the Fayetteville â- During the 2008 third quarter...

  • Page 10
    10 Chesapeake Energy Corporation Annual Report 2008 Pulling together, floorhands keep rigs turning to the right in the Barnett Shale. drilling activities in the Barnett, from 43 rigs by Southwestern Energy Company. Chesain August 2008 to around 20 today. We in- peake had already developed a ...

  • Page 11
    ... by drilling in 2007, began to acquire acreage in earnest in 2007 and 2008 and in July 2008, formed an innovative joint venture with our well-respected industry partner, Plains Exploration & Production Company. Mapping the way to success, corporate headquarters staff in Oklahoma City supports field...

  • Page 12
    12 POWERFUL ASSETS: Haynesville Shale the high-water mark for natural gas prices In 2007, we aggressively accelerated our ($13.58 per mcf) and Chesapeake's stock Marcellus leasehold acquisition activity in Pennprice ($74.00 per share) in 2008. Clearly, this sylvania, West Virginia and New York and...

  • Page 13
    ... Hayneville Shale, a reservoir that likely will become the nation's largest natural gas producer by 2015 and perhaps one of the five largest natural gas fields in the world over time Chesapeake is the largest leasehold owner and most active driller of new wells in the Haynesville Chesapeake owns...

  • Page 14
    ... a 32.5% interest in our est U.S. natural gas field and one of the five Marcellus assets, was completed in November largest in the world. 2008. StatoilHydro had been seeking an entry Today, Chesapeake is drilling with 10 rigs point into a big U.S. shale play in the Marcellus. We plan to end and had...

  • Page 15
    ... Marcellus Shale play in 2005 through its acquisition of Columbia Natural Resources, LLC and later expanded its leasing activities â- Chesapeake is the largest leasehold owner in the Marcellus Shale play that spans from West Virginia across much of Pennsylvania into southern New York â- Chesapeake...

  • Page 16
    16 Chesapeake Energy Corporation Annual Report 2008 to value creation through the drillbit in 2009 and 2010. This will occur because drilling costs should decline by at least 25% during 2009, allowing Chesapeake to extend the value of its drilling carries and find new reserves of natural gas ...

  • Page 17
    ... Shareholders 17 NATURAL GAS WILL ALLOW THE U.S. TO bEGIN TRANSITIONING ITS TRANSPORTATION SYSTEm AWAY FROm CARbON-heavy gasolIne and dIesel toWards Carbon-lIght, amerICan natural gas Citizens of Fort Worth, Texas, can breathe easier with the city's natural gas-powered mass transportation system...

  • Page 18
    ... Energy Corporation Annual Report 2008 Operating Areas Chesapeake is the largest independent producer of U.S. natural gas and has built the nation's largest natural gas resource base including a #1 or #2 position in each of the Big 4 shale plays: the Barnett, Fayetteville, Haynesville and Marcellus...

  • Page 19
    ... five largest natural gas fields in the world over time. We are the largest leasehold owner and most active driller of new wells in the play, which is located in Northwest Louisiana and East Texas. We anticipate drilling more than 3,400 net future wells on our Haynesville acreage and plan to utilize...

  • Page 20
    ... Areas 21 22 Chesapeake Energy Corporation Annual Report 2008 Investor Q&A What differentiates CHK from its competitors? Punctuating the blue sky of West Virginia, a Chesapeake-operated Yost drilling rig drills 24/7 as the company ramps up development of the Marcellus Shale. On January 1, 2009...

  • Page 21
    ... few companies have similarly data in order to identify new opportunities mitigated risks and are as well positioned as and improve the execution of our drilling and Chesapeake to not only survive, but also thrive production programs. during a tough economic year in 2009. Today, Chesapeake employs...

  • Page 22
    ... drive home the message to our employees, visitors, vendors and our fellow citizens that at Chesapeake we care about the details of our work and want to con- Martha A. Burger, Senior Vice President - Human and Corporate Resources duct our business in a first-class manner. Why does CHK sell assets...

  • Page 23
    ... the new, E&P indusour balance sheet and grow our business well try-founded American Natural Gas Alliance, beyond what we are able to finance from in- the Chesapeake-founded American Clean ternal cash flow or by occasionally accessing Skies Foundation and other environmenthe public capital markets...

  • Page 24
    ... Energy Corporation Annual Report 2008 Champion of the community. Wes Welker, Oklahoma City native and Super Bowl champion with the New England Patriots, scores big with kids at Chesapeake's Catch A Cause event. Setting the standard. The Twin Woman 1-32, drilled in 1977 by another company...

  • Page 25
    ... town where we operate and take pride in improving the places they call home. Lending a hand. Chris Nartey, Senior System Administrator, helps paint a brighter future at the Oklahoma City Rebuilding Together Project. College bound. Recipients of the Chesapeake Scholarship Fund in the Barnett Shale...

  • Page 26
    28 Chesapeake Energy Corporation Annual Report 2008 Community Relations Our goal is for Chesapeake to serve as a Powerful Asset to the people and communities that live and prosper above the natural gas resources we develop. Play ball. Chesapeake Restaurant employees in Fort Worth serve hot dogs ...

  • Page 27
    ...'s rich natural gas resources, Chesapeake will continue to lead the way as a responsible corporate citizen and a dedicated community advocate. Opening up the future. Leah King, Director - Community Relations, and kids in Forest Hill, Texas, unpack 10 new computers for the community's public library...

  • Page 28
    30 Chesapeake Energy Corporation Annual Report 2008 Health, Safety and Environment At Chesapeake we take care of our Powerful Assets, whether human or in the field, as we explore for and produce one of America's most important resources - clean-burning natural gas. Natural gas is not only a ...

  • Page 29
    ...equipped fitness center in our Fort Worth regional headquarters office. Field office employees receive reimbursement for fitness center costs in cities where they work and live. Chesapeake partnered with St. Anthony's Hospital to open an on-site Health Center at the Oklahoma City campus. Open Monday...

  • Page 30
    32 Chesapeake Energy Corporation Annual Report 2008 Board of Directors Frederick B. Whittemore Advisory Director Morgan Stanley New York, New York (2,3) Don Nickles Former U.S. Senator, Oklahoma Founder and President The Nickles Group Washington, D.C. (3) Merrill A. "Pete" Miller, Jr. Chairman,...

  • Page 31
    ... Operating Officer Douglas J. Jacobson Executive Vice President - Acquisitions and Divestitures J. Mark Lester Executive Vice President - Exploration Martha A. Burger Senior Vice President - Human and Corporate Resources Jeffrey A. Fisher Senior Vice President - Production Jennifer M. Grigsby...

  • Page 32
    ... one of the 100 Best Companies to Work For® by Fortune Magazine. In February 2009, Chesapeake was again included in the prestigious list. We continue to receive more than 10,000 new job applications per month, so we know we have built a very employee-friendly corporate culture. 1989 (4) Mark Lester...

  • Page 33
    ... Superintendent Lindsay, Oklahoma "After 15 years with Chesapeake, there's one thing that has never changed - the ever-present drive to outwork and outperform our competition." Brenda Knight Brett Knight Jennifer Knight Josh Komarek Matt Kopf Pam Koscinski John Kucewicz Jr. James Lardner Kelsey...

  • Page 34
    ... Quigley Shelly Quimby Rickey Rackley Cary Ragsdale Loren Raley Brad Ralstin Juan Ramirez Jeff Ramsdell Jamie Carter Advisor - Well Interest Oklahoma City, Oklahoma "I joined the company in 1996 when there were less than 100 employees. I'm proud to have been around during the early days and am now...

  • Page 35
    ... Webb Lisa Webb Johnson Shae Weddle Jeff Weides Keith Wells Lee Wescott Krista Whiddon Kyle White Larry White Mallorie White Dan Whitmarsh Valerie Wible Charles Wilburn Clay Wilcox Dale Wildman Brooke Wiley Mark Wiley II Lisa Wilkinson Dallas Williams David S. Williams Nancy Williams Terry Williams...

  • Page 36
    38 Chesapeake Energy Corporation Annual Report 2008 Clifton Bullard Blair Bunch Niki Burch Jay Burford Roger Burford Darrel Burghardt John Burkhouse Jr. Jake Burnett Jim Burnett Aaron Burns Burton Burns Charles Burnsworth Richard Burrhus Phil Burrow Joseph Burton Dustin Bushnell Jerrod Byford Eric...

  • Page 37
    ... Ashleigh Pottmeyer Field Engineer Charleston, West Virginia "It's been exciting to come into this industry and join such an energetic and growing company. I value the well-rounded training I'm receiving throughout every department and look forward to growing my career with Chesapeake." Keith...

  • Page 38
    ... Pratt Manager - Public Affairs Shreveport, Louisiana "After joining Chesapeake in August of 2008, I quickly discovered that I had moved into a fast-paced business and love being a part of a winning team. It's truly a great place to work." Joe Whiteside Jason Whitt Annette Wilborne Kyle Wiley James...

  • Page 39
    ...Hicks William Higginbotham Hillary Higgins Shawn Hignite Barclay Hill Lindsey Hill ...James Olson Mike Olson Clint Oltmann Brian Oney Winfred Orr David Ortega Michael Ortego David Orth ISMAEL Ortiz Vicki Otey Craig Overcash Aaron Overturf Jeff Owens Michael Painter Victor Palacios Patrick Parish Grant...

  • Page 40
    42 Chesapeake Energy Corporation Annual Report 2008 Matthew Parsons Chip Patton III Mark Patton Carissa Patzkowsky Ally Payne James Peace Danny Peach Seth Pearrow Tom Pearson Ty Peck John Peek Sr. Brandon Peffer Scott Pegg Chris Pennel Michael Penner Nick Penner Kellie Pennington Nathan ...

  • Page 41
    ... Clinton Erwin Linda Hoang Executive Assistant Oklahoma City, Oklahoma "It means a lot to me to work for a company that has a high commitment to the community. I'm able to spend an hour each week mentoring a kindergarten student on company time. You don't see that everywhere." Dave Escue Williams...

  • Page 42
    ... Kelvin Gage William Gage Dennis Alder Midstream EH&S Field Coordinator Fort Worth, Texas "I'm proud to work for a company that takes safety so seriously, making sure that our employees have the tools and information they need to perform their jobs up to Chesapeake's superior safety standards...

  • Page 43
    ...Nichols Derek Nichols Rome Nichols Susan Nichols...Place Norval Place Jr. Jeff Plangman William...Jim Reed Jerry Reeves Kent Regens Andy Rehm Jason Reid Andy Reinert Mark Reinhardt Carl Renfrow Danny Reno James Retherford Jonathan Reyes Juan Reyes Brian...Manuel Rosas Patrick Rose Teresa Rose Jack Rosenberg ...

  • Page 44
    ... Patricia Otero Community Relations Specialist Oklahoma City, Oklahoma "In my department, I see firsthand what a great corporate citizen Chesapeake is. The company's contributions change lives and make our communities stronger. I'm proud to tell people I work for Chesapeake." Heather Schevetto...

  • Page 45
    ...the 2008 annual certification of its chief executive officer confirming that the company has complied with the NYSE corporate governance listing standards. Forward-looking Statements This report includes "forward-looking statements" that give our current expectations or forecasts of future events...

  • Page 46
    Chesapeake Energy Corporation • 6100 North Western Avenue • Oklahoma City, OK 73118 • www.chk.com