Chesapeake Energy 2009 Annual Report Download

Download and view the complete annual report

Please find the complete 2009 Chesapeake Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 48

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48

2009 ANNUAL REPORT CHESAPEAKE ENERGY CORPORATION
NATURAL GAS:
FUELING AMERICA’S FUTURE

Table of contents

  • Page 1
    NATURAL GAS: FUELING AMERICA'S FUTURE 2009 ANNUAL REPORT Â' CHESAPEAKE ENERGY CORPORATION

  • Page 2
    ... new wells in the U.S. Headquartered in Oklahoma 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, Fayetteville, Haynesville, Marcellus and Bossier natural gas shale...

  • Page 3
    ... Natural Resources Company, Quicksilver Resources, Inc., Range Resources Corporation, Southwestern Energy Company, St. Mary Land & Exploration Company and XTO Energy, Inc. The change in peer group composition was made in order to show the returns of Chesapeake vs. other North American gas-focused...

  • Page 4
    ... Operating and Financial Data Proved reserves in natural gas equivalents (bcfe) Future net natural gas and oil revenues discounted at 10% ** Natural gas price used in reserve report (per mcf) Oil price used in reserve report (per bbl) Natural gas production (bcf) Oil production (mmbbl) Production...

  • Page 5
    ...9 75 107 236 442 (173) 11 (18) (7) (14) (187) - (4) (183) - - $ (183) (183) - 1996 $ 111 35 $ 146 6 2 5 33 54 - 100 46 4 (14) - (10) 36 - 13 23 - - $ 23 - 1995 $ 57 9 $ 66 3 1 4 8 27 - 43 23 2 (7) - (5) 18 - 6 12 ... 2.43 $ 18.71 3 0.3 4 $ 2.68 $ 0.67 - $ 0.84 $ 1.09 150 - $ 1.18 FINANCIAL REVIEW 2

  • Page 6
    ... drilling. At the time, my business partner Tom Ward and I were two self-employed landmen working together to develop prospects for other companies to drill. These prospects were located in southern Oklahoma and in South Texas where we assembled large land positions that were underlain by fractured...

  • Page 7
    ...-tech drilling rigs and gas-laden shale provide a formula for success. Employees of Nomac Drilling, a Chesapeake subsidiary, operate the largest rig fleet in the exploration and production industry as they drill for natural gas in America's Big 6 shale plays. Discovered in the 1990s, the Barnett...

  • Page 8
    ...will revitalize the region. HAYNESVILLE SHALE Chesapeake's discovery of the Haynesville makes the play's success even sweeter. The Haynesville Shale in Northwest Louisiana and East Texas is the shale GRANITE WASH BARNETT SHALE FAYETTEVILLE SHALE MARCELLUS SHALE 6 CHESAPEAKE ENERGY CORPORATION

  • Page 9
    ... OIL PLAYS BARNETT SHALE - North-Central Texas • Largest natural gas producing field in the U.S. • Chesapeake is the second-largest producer, most active driller and largest leasehold owner in the Core and Tier 1 sweet spots of Tarrant and Johnson counties • 2009 total net production of...

  • Page 10
    ... in the company's Reservoir Technology Center study core samples to unlock the secrets of shale gas. We first became aware of the Marcellus in 2005 when we were negotiating our $2.2 billion acquisition of Appalachia's second-largest natural gas producer, Columbia Natural Resources, LLC (CNR...

  • Page 11
    ... leases are HBP (held by production) by Haynesville drilling, we will begin developing the Bossier Shale more aggressively in 2013. In the Bossier play, we own 180,000 net acres on which we estimate we could drill up to 2,250 net wells in the years ahead. EAGLE FORD SHALE prices more than 3.5 times...

  • Page 12
    ..., training, motivating, rewarding and retaining great people. From our beginning 20 years ago with 10 employees in Oklahoma to employing 8,600 people in 16 states today, Chesapeake has always focused on ANGA: A NEW NATIONAL VOICE FOR NATURAL GAS In March 2009, Chesapeake joined with a group of...

  • Page 13
    ... one of the FORTUNE 100 From our beginning 20 years ago with 10 employees in Oklahoma to employing 8,600 people in 16 states today, Chesapeake has always focused on building a first class human resource team within a distinctive corporate culture. Best Companies to Work For ® (3). In addition, we...

  • Page 14
    ..., or fractures. These fractures are propped open by sand to allow natural gas to ï¬,ow into the wellbore. Chesapeake's fracturing ï¬,uids are more than 99% water and sand, along with a small amount of special purpose additives. The same additives can be found in a number of household products such...

  • Page 15
    ... 100 Best Companies to Work For® listed in the magazine's February 8, 2010 issue. REDUCED FOOTPRINT REDUCED FOOTPRINT Two drilling rigs on one superpad help minimize the footprint of operations in the Haynesville Shale. TRAINING Trainees Vincent Sandoval, Jayson Pihajlic and Mark O'Byrne learn...

  • Page 16
    ... passenger cars to natural gas (in the form of compressed natural gas, or "CNG"). This conversion process would save American consumers billions of dollars because natural gas is 70% cheaper than oil. Americans also would GRANITE WASH WELL Roberts County, Texas 14 CHESAPEAKE ENERGY CORPORATION

  • Page 17
    ... gas. And the best news is that it would be relatively easy to shut down the dirtiest 33% of America's coal plants (better known at Chesapeake as the "Filthy 100") and replace their electrical output with natural gas-fired electricity. That is because coal plants generally run about 75% of the time...

  • Page 18
    ...nation's largest natural gas resource base with high-quality U.S. shale assets within the Big 6 shale plays: the Barnett, Fayetteville, Haynesville, Marcellus, Bossier and Eagle Ford. Our unique position in these six shale plays, as well as the liquids-rich Granite Wash plays of western Oklahoma and...

  • Page 19
    Skilled crews keep Chesapeake rigs turning to the right every day. Pictured here are Michael Smith and Brandon Winsett, Roughnecks on Nomac rig 12 in the Northern Mid-Continent District. OPERATING AREAS 19

  • Page 20
    ...of 13 operated rigs in 2010 to further develop our Granite Wash leasehold. Granite Wash 2009 Total Production: 70 bcfe, +40%*, 8%** 12/31/09 Proved Reserves: 1,090 bcfe, +419%*, 8%** 12/31/09 Net Leasehold Acres: 190,000, +217%*, 1%** 2 Barnett Shale The Barnett Shale in North Texas is currently...

  • Page 21
    ... to utilize an average of 35 operated rigs in 2010 to further develop our 520,000 net leasehold acres of Haynesville/Bossier Shale. Chesapeake and its 20% joint venture partner, Plains Exploration & Production Company (NYSE:PXP), are producing from more than 200 net wells in the Haynesville play and...

  • Page 22
    ... the Eagle Ford Shale in South Texas, the Niobrara and Frontier plays in Wyoming, the 20 CHESAPEAKE ENERGY CORPORATION Texas Panhandle and Colony Granite Washes, the Cleveland, Tonkawa and Mississippian plays in western Oklahoma and the Bone Spring and Avalon shale plays in the Permian Basin. In...

  • Page 23
    ... of noncore assets that did not compete well for capital in our overall investment program. We plan to pursue similar asset sales in the years ahead, possibly including a joint venture in the Eagle Ford Shale, additional volumetric production payments and partial monetization of our midstream...

  • Page 24
    ... and team building. H.E.L.P. INITIATIVE Blue-shirted H.E.L.P. volunteers take a break after renovating a West Virginia playground. H.E.L.P. INITIATIVE Arkansas DISCOVERING TOMORROW'S LEADERS Texas CORPORATE CHALLENGE Oklahoma H.E.L.P. INITIATIVE West Virginia 22 CHESAPEAKE ENERGY CORPORATION

  • Page 25
    ... Engineer Brian Bounds mentors a student at Horace Mann Elementary in Oklahoma City. REBUILDING TOGETHER Applications Developer/ Analyst Diane Cloud carries her share of the load in the annual event that repairs homes for the needy. H.E.L.P. INITIATIVE Nick Sentell, Field Technician, helps...

  • Page 26
    ... OF CHARITABLE GIVING IN 2009 21% 59% 12% 8% Community Development Education Health and Medical Social Services Painting pumpkins at Fall Fest on the Chesapeake campus in Oklahoma City are Associate Help Desk Specialist Branden Killingsworth and his daughter Bryelle. The event, which was open to...

  • Page 27
    ... employees to use four hours of company time to complete this task. From renovating playgrounds in West Virginia to building a Habitat for Humanity house in Texas, employees responded in full force. In just five weeks, Chesapeake employees exceeded the company's goal by 30%, donating 26,134 hours...

  • Page 28
    ... Protection Agency's (EPA) Natural Gas Star Program, the company has hosted a number of events at its Oklahoma City headquarters, including most recently a Producers Technology Transfer Workshop. In addition, we work closely with a number of nonprofit and government organizations such as the...

  • Page 29
    ...in the Fitness Center's award-winning Live Better Forever Program with Chesapeake Trainer Landon Dean. The Chesapeake Health Center, also located on our Oklahoma City campus, provides employees and their families with primary and urgent care and chronic disease management. The company also partners...

  • Page 30
    ... Bonita Springs, Florida Chairman of the Board and Chief Executive Officer Chesapeake Energy Corporation Oklahoma City, Oklahoma Chairman, President and CEO National Oilwell Varco, Inc. Houston, Texas Former U.S. Senator, Oklahoma Founder and President The Nickles Group Washington, D.C. SEATED...

  • Page 31
    ... January 2010) MARTHA A. BURGER JEFFREY A. FISHER JENNIFER M. GRIGSBY HENRY J. HOOD Senior Vice President - Human and Corporate Resources Senior Vice President - Production Senior Vice President, Treasurer and Corporate Secretary Senior Vice President - Land and Legal and General Counsel...

  • Page 32
    ... they are the best team in the industry, we want Chesapeake to be the best employer in the industry, with a corporate culture that rewards their efforts and inspires their future. In 2009, Chesapeake was honored to be included as #34 in the FORTUNE 100 Best Companies to Work For ® list, our third...

  • Page 33
    ... Butler Juan Calbillo Mike Campbell Christopher Cantrell Randy Cantwell Keeping score, corporate staff employees celebrate 26,134 hours of service donated to organizations in more than 70 communities throughout the company's operating areas as part of its 20th anniversary festivities. Larry Carter...

  • Page 34
    ...Anji VonTungeln Aaron Vrbenec Fred Wanker Bryce Ward Kyle Welcher Patrick Whitman Amanda Whitmire Tom Wible Jackie Wicks Andy Widmer Leon Wildman Chase Williams Randy Williams Antoine Wilson Kelly Wilson Dave Winchester Jeff Wolf Jerry Womack Dana Woo Carla Wood Harold Wooley Landon Worth Jill Wray...

  • Page 35
    ... Lorie Barton FATHER/DAUGHTER DANCE Oklahoma Ken Thompson, Manager - Barnett Shale field, and his daughters enjoy an evening of dinner, dancing and horse carriage rides around campus at this very special annual event. Robyn Belew Paige Benedict Cheryl Bennett Garrett Benton John Bergman Sharon...

  • Page 36
    ...Oklahoma Mark Lester, Executive Vice President - Exploration, gives a pat on the back to Mark Orgren, the company's first H.E.L.P. Champion, for exemplifying Chesapeake's commitment as a good neighbor. Orgren organized volunteers to renovate the auditorium of Harding Charter Preparatory High School...

  • Page 37
    ...Amin Jeff Amos FORTUNE PARTY Oklahoma Employees enjoy a party with a live band and dinner to celebrate Chesapeake's third consecutive inclusion in the FORTUNE 100 Best Companies to Work For ® list. Chad Wilson Julie Wilson Steve Wilson Trista Wilson Warren Wilson Jim Wimmler Franklin Windham Amos...

  • Page 38
    ...Matthew Callahan James Calloway SCREEN ON THE GREEN Oklahoma Employees and their families roll out the picnic blankets and unfold the lawn chairs to enjoy an outdoor movie, carnival and dinner on the company's athletic field at its headquarters in Oklahoma City. Stacey Baty Laura Bauer Benjamin Bax...

  • Page 39
    ... Tom Pearson Ty Peck John Peek Sr. Brandon Peffer Scott Pegg Michael Penner Nick Penner Kellie Pennington Nathan Peppers Fernando Perez Hugo Perez Najera Richard Perkins Gene Perry Melissa Petty Philip Pfister Lisa Phelps James Phillips Joseph Pilcher Jonathan Piper Brad Pipins Clay Pitts Brian...

  • Page 40
    ... Cameron Thompson Charlie Thompson Harold Thompson Ken Thompson Matt B. Thompson RIG TOUR Oklahoma Office employees learn from field employees how the company explores for and produces natural gas through drilling location tours. Travis Stankorb Todd Starkey Charles Steaveson Greg Steele Michael...

  • Page 41
    ... Jones Dustin Jones Grant Jones Jenny Jones Jody Jones Johnny Jones HOLIDAY LIGHTS Oklahoma Beautifully lit trees on and around the Chesapeake campus create a holiday landmark each year in Oklahoma City. Braxton Imke Brian Ingalls Marcus Ingram Neil Ingram Steven Ireland Liesl Irwin Ryan Irwin...

  • Page 42
    ...Michael Madar BIKING FOR A CAUSE Oklahoma Martha Burger, Senior Vice President - Human and Corporate Resources, cheers for Bobby Bolton, Chesapeake Land Manager - Anadarko District, who rode more than 130 miles to help buy new uniforms and equipment for the Erick-Sweetwater Public Schools. Rafael...

  • Page 43
    ...Brian Shadwick Charles Shadwick Bindu Shah Jerry Shamblin Todd Shamblin Michael Shanbour Aaron Shannon Neil Shannon Jacob Sharp Kevin Shaw Lisa Shelden Jennifer...Ballinger 20TH ANNIVERSARY PARTY Louisiana Across all its operating areas, Chesapeake employees celebrated the company's 20th anniversary ...

  • Page 44
    ... Briley HALLOWEEN UNITED WAY FUNDRAISER Oklahoma Bringing out the fun-loving aspect of our people, a costume party drew more than 3,000 Chesapeake Oklahoma City corporate staff employees with lunch and prizes for costumes and skits - while raising funds for United Way. Justin Billings Brian Bilyk...

  • Page 45
    ... Nomac rig 7 employees rig up their safety gear as they do their part to maintain a safe work environment. Terry Neitzler Johnathon Nelson Lisa Nelson Sky Nelson Luke Nettrouer Matthew Neubert Benjamin Nevill Colin Newhouse Marcus Newman Cheyenne Newsome O'Ryan Newton Jessica Nguyen Chris Nichols...

  • Page 46
    A REVVING GOOD PARTNERSHIP Oklahoma The drilling crew of Nomac rig 42 poses with Paul Teutul, Sr., founder of Orange County Choppers and star of the television series "American Chopper," with whom Chesapeake collaborated to develop the world's first natural gas-powered chopper. Knut Philippi Daniel...

  • Page 47
    ... 1850 Tulsa, OK 74136 (918) 524-1200 STOCK TRANSFER AGENT AND REGISTRAR Communication concerning the transfer of shares, lost certificates, duplicate mailings or change of address notifications should be directed to our transfer agent: Computershare Trust Company, N.A. 250 Royall Street Canton, MA...

  • Page 48
    CHESAPEAKE ENERGY CORPORATION Â' 2009 ANNUAL REPORT 6100 NORTH WESTERN AVENUE OKLAHOMA CITY, OK 73118 WWW.CHK.COM