Chesapeake Energy 2008 Annual Report Download - page 16

our natural gas shale expertise from the U.S.
to other parts of the world through this joint
venture with StatoilHydro.
2008 Joint Ventures
In total, during 2008 we sold assets with a
cost basis of $1.2 billion for $8.6 billion in cash
and drilling carries in our three joint ventures.
This would be a remarkable achievement in
any economy, but we believe it was par ticularly
impressive in an economy that steadily wors-
ened throughout the second half of 2008. We
have announced that we would like to enter
into a Barnett joint venture in 2009, and we
also have a few other large attractive plays
in which we may consider bringing in joint
venture partners.
The three 2008 joint ventures, along with
our extremely valuable natural gas hedges
and low-cost, high-quality asset base, will
enable Chesapeake to continue drilling ag-
gressively in an environment very conducive
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 during some of the most chal-
lenging times our industry has seen in the
past 30 years – just the right time for Chesa-
peake to take full advantage of our significant
competitive strengths.
Natural Gas
Chesapeake’s final Powerful Asset to high-
light is natural gas. The Big 4 shale plays have
quite simply changed the game of how to solve
our nation’s energy and environmental chal-
lenges in the years ahead. There has never
really been any debate about whether natural
gas is a good fuel – its carbon-light molecu-
lar structure guarantees that. The issue has
been whether there is enough of it to begin
moving our electrical generation system more
aggressively away from carbon-heavy fuels
such as coal and oil to carbon-light natural
gas and whether it is the right time to begin
moving our transportation system away from
carbon-heavy oil, much of which we import
from unstable or unfriendly areas.
With the enormity of the Big 4 shale plays
now more fully understood, it should become
increasingly clear that the U.S. has a huge com-
petitive advantage when it comes to addressing
economic, environmental and energy issues.
On the economic side, U.S. natural gas prices
are the lowest in the industrialized world. They
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From silent desert landscapes to bustling
cities, Chesapeake rigs work in a multitude
of environments.
Chesapeake Energy Corporation Annual Report 2008
IN TOTAL, DURING 2008
WE SOLD ASSETS WITH
A COST BASIS OF $1.2
BILLION FOR $8.6 BILLION
IN CASH AND DRILLING
CARRIES IN OUR THREE
JOINT VENTURES
The company’s unique world-class Reservoir Technology Center helps crack the code in
finding and developing natural gas from shale formations.