OKLAHOMA CITY, Aug. 3 /PRNewswire-FirstCall/ -- Chesapeake Energy
Corporation (NYSE: CHK) today announced that it has been preliminarily
approved as the highest and best bidder by the Dallas/Fort Worth
International Airport Board and the cities of Dallas and Fort Worth to
lease 18,000 net acres of Barnett Shale leasehold for $181 million in cash
and a 25% royalty. Final approval is anticipated from the city councils of
both cities by August 16, 2006.
On the acreage that underlies the Dallas/Fort Worth International
Airport (DFW), Chesapeake has identified approximately 250 potential
drillsites that will be developed from approximately 20 well pad sites on
DFW land. Including an estimated $750 million of capital needed to fully
develop an estimated 470 billon cubic feet of unproved natural gas
reserves, Chesapeake's all-in acquisition cost to develop the DFW leasehold
will be an attractive $1.98 per thousand cubic feet of natural gas.
Pursuant to the terms of the bid requirements, approximately 20% of the
lease will be owned by various Minority and Women Businesses (M/WBE) that
will participate with Chesapeake in the development of the lease.
The addition of the DFW leasehold will increase Chesapeake's total
leasehold in the Fort Worth Barnett Shale to approximately 180,000 net
acres, located primarily in Johnson, Tarrant and Dallas counties. The
company has current net production from the Fort Worth Barnett Shale of 130
million cubic feet per day and believes it can drill an additional 2,450
net Barnett Shale wells to potentially develop an estimated 4.4 trillion
cubic feet of proved and unproved natural gas reserves. To develop this
significant inventory of value, Chesapeake plans to increase its current
Fort Worth Barnett Shale drilling rig count from 15 to 30 by the first
quarter of 2007. At that higher rig count, Chesapeake believes that it can
drill at least 400 gross Barnett Shale wells per year.
Management Comments
Aubrey K. McClendon, Chesapeake's Chief Executive Officer, commented,
"We are excited to announce such a unique opportunity to develop this
large, contiguous and valuable acreage position underlying one of the
nation's busiest airports. We also look forward to building an even larger
presence in the Dallas and Fort Worth communities, of which our
participation in the Airport's M/WBE program will be an important part.
This transaction with the DFW Airport helps ensure that the Barnett Shale
will continue to be a key driver in Chesapeake's growth plans for years to
come."
This press release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements give our
current expectations or forecasts of future events. They include estimates
of Barnett Shale oil and natural gas reserves and our planned development
of these reserves. Factors that could cause actual results to differ
materially from expected results include uncertainties inherent in
estimating quantities of oil and natural gas reserves and projecting future
rates of production and the amount and timing of development expenditures
generally; uncertainties in evaluating oil and natural gas reserves of the
DFW lease and associated potential liabilities specifically; our ability to
conduct an effective exploration and development drilling program on the
DFW lease; and drilling and operating risks. Our internal estimates of
reserves, particularly those in properties recently acquired or proposed to
be acquired where we may have limited review of data or experience with the
reserves, may be subject to revision and may be different from estimates by
our external reservoir engineers at year-end. Although we believe the
expectations and forecasts reflected in these and other forward-looking
statements are reasonable, we can give no assurance they will prove to have
been correct. They can be affected by inaccurate assumptions or by known or
unknown risks and uncertainties. We refer you to "Risk Factors" in the
Prospectus dated June 27, 2006 for our offering of 7.625% Senior Notes due
2013 filed with the Securities and Exchange Commission on June 29, 2006 for
factors that may affect the company's future performance generally. We
caution you not to place undue reliance on our forward-looking statements,
which speak only as of the date of this press release, and we undertake no
obligation to update this information.
The SEC has generally permitted oil and natural gas companies, in
filings made with the SEC, to disclose only proved reserves that a company
has demonstrated by actual production or conclusive formation tests to be
economically and legally producible under existing economic and operating
conditions. We use the terms "probable", "possible" or "unproved" to
describe volumes of reserves potentially recoverable through additional
drilling or recovery techniques that the SEC's guidelines may prohibit us
from including in filings with the SEC. These estimates are by their nature
more speculative than estimates of proved reserves and accordingly are
subject to substantially greater risk of being actually realized by the
company. While we believe our calculations of unproved drillsites and
estimation of unproved reserves have been appropriately risked and are
reasonable, such calculations and estimates have not been reviewed by third
party engineers or appraisers.
Chesapeake Energy Corporation is the third largest independent producer
of natural gas in the U.S. Headquartered in Oklahoma City, the company's
operations are focused on exploratory and developmental drilling and
corporate and property acquisitions in the Mid-Continent, Permian Basin,
South Texas, Texas Gulf Coast, Barnett Shale, Ark-La-Tex and Appalachian
Basin regions of the United States. The company's Internet address is
http://www.chkenergy.com.
SOURCE Chesapeake Energy Corporation
 back to top
Related links:
http://www.chkenergy.com
CONTACT:
Investors, Jeffrey L. Mobley, CFA, Senior
Vice President - Investor Relations and Research,
+1-405-767-4763, jmobley@chkenergy.com, or Media, Thomas S.
Price, Jr., Senior Vice President - Corporate Development,
+1-405-879-9257, tprice@chkenergy.com, both of Chesapeake Energy
Corporation
|
