Chesapeake Energy 2009 Annual Report Download - page 15

LETTER TO SHAREHOLDERS 13
natural gas shale plays now more fully understood,
it should become increasingly clear that the U.S. has a
huge competitive advantage in the world.
On the economic front, U.S. natural gas prices are
among the lowest in the industrialized world and are
likely to remain so for an extended period because of
the discovery of the Big 6 shale natural gas resources.
On the environmental front, the U.S. can regain its
leadership in environmental best practices by burn-
ing more clean natural gas and less dirty coal to make
our electricity. And finally, natural gas can enable the
U.S. to transition its transportation system away from
dangerous and expensive foreign oil to cheaper and
cleaner American natural gas.
To capture the important advantages the Big 6
shale plays can provide, U.S. leaders must recog-
nize the “Age of Natural Gas” has arrived and that it
will remain with us for decades to come. A better,
brighter and more prosperous future awaits us if we
pursue the full potential of natural gas for Fueling
America’s Future.
FUELING AMERICA’S CLEAN ENERGY
FUTURE
Because of a series of insights into the future, fol-
lowed by good decisions and hard work, Chesapeake
has grown from a small startup company 20 years
ago into an industry leader today. Along the way, we
have built the industry’s highest quality asset base in
the Big 6 natural gas shale plays. These shale plays
have dramatically changed how we can solve our
nation’s most important energy and environmental
challenges in the years ahead, while also creating
millions of truly green jobs that pay well and do not
need taxpayer or ratepayer subsidies. They also can
improve America’s national security by reducing our
dependence on foreign oil.
There has never really been any debate about
whether natural gas is a good fuel — its carbon-light
molecular structure guarantees that. The issue has al-
ways been whether there is enough of it to begin mov-
ing our electrical generation system more aggressively
away from dirty coal and whether it is the right time
to begin moving our transportation system away from
expensive foreign oil. With the enormity of the Big 6
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 to work
safely, efficiently and with
respect for the environment
at the Nomac Drilling training
facility in Searcy, Arkansas.
WATER RECYCLING
One facet of Chesapeake’s
innovative AquaRenew™ pro-
gram recycles produced water
into clean water vapor.
LOW EMISSIONS
Seth Unruh, EHS Field Repre-
sentative, inspects a valve
to decrease venting, reduce
emissions and increase gas
volumes.
LOW EMISSIONS
WATER RECYCLING
TRAINING
Best regards,
Aubrey K. McClendon
Chairman and Chief Executive Officer
March 31, 2010
(1)
Reserve replacement is calculated
by dividing net reserve additions
from all sources by actual production
for the corresponding period. We
calculate drilling and net acquisition
cost per mcfe by dividing total
drilling and net proved property
acquisition costs incurred during
the year (excludes certain costs
primarily related to net unproved
property acquisitions, geological and
geophysical costs and deferred taxes
related to corporate acquisitions)
by total proved reserve additions
excluding price-related revisions.
(2)
A non-GAAP financial measure, as
defined below. Please refer to the
Investors section of our website at
www.chk.com for reconciliations
of non-GAAP financial measures
to comparable financial measures
calculated in accordance with gener-
ally accepted accounting principles.
• Adjusted ebitda is net income
(loss) before interest expense,
income tax expense (benefit),
and depreciation, depletion and
amortization expense, as adjusted
to remove the effects of certain
items that management believes
affect the comparability of operat-
ing results.
• Operating cash flow is cash
provided by operating activities
before changes in assets and
liabilities.
• Adjusted earnings per fully diluted
share is net income (loss) per
share available to Chesapeake
common stockholders, assuming
dilution, as adjusted to remove
the effects of certain items that
management believes affect the
comparability of operating results.
(3)
FORTUNE 100 Best Companies to
Work For
®
listed in the magazine’s
February 8, 2010 issue.
REDUCED FOOTPRINT