Professional Documents
Culture Documents
Forward-Looking Statements
● This presentation 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 future natural gas and oil reserves, expected natural gas and oil production and future
expenses, assumptions regarding future natural gas and oil prices, planned asset sales, budgeted capital expenditures for
drilling and acquisitions of leasehold and producing property, and other anticipated cash outflows, as well as statements
concerning anticipated cash flow and liquidity, business strategy and other plans and objectives for future
operations. Disclosures concerning the fair value of derivative contracts and their estimated contribution to our future results of
operations are based upon market information as of a specific date. These market prices are subject to significant volatility.
● Factors that could cause actual results to differ materially from expected results are described under “Risk Factors” in our 2008
Form 10-K and our 2009 second quarter Form 10-Q filed with the U.S. Securities and Exchange Commission on March 2, 2009
and August 10,200, respectively. These risk factors include the volatility of natural gas and oil prices; the limitations our level of
indebtedness may have on our financial flexibility; unanticipated adverse effects the current financial crisis may have on our
business and financial condition; declines in the values of our natural gas and oil properties resulting in ceiling test write-downs;
the availability of capital on an economic basis, including through planned asset monetization transactions, to fund reserve
replacement costs; our ability to replace reserves and sustain production; uncertainties inherent in estimating quantities of
natural gas and oil reserves and projecting future rates of production and the amount and timing of development expenditures;
exploration and development drilling that does not result in commercially productive reserves; expiration of natural gas and oil
leases that are not held by production; hedging activities resulting in lower prices realized on natural gas and oil sales and the
need to secure hedging liabilities; uncertainties in evaluating natural gas and oil reserves of acquired properties and potential
liabilities; the negative impact lower natural gas and oil prices could have on our ability to borrow; drilling and operating risks,
including potential environmental liabilities; transportation capacity constraints and interruptions that could adversely affect
our cash flow; potential increased operating costs resulting from legislative and regulatory changes such as those proposed
with respect to commodity derivatives trading, natural gas and oil tax incentives and deductions, hydraulic fracturing and
climate change; and losses possible from pending or future litigation. Our production forecasts are dependent upon many
assumptions, including estimates of production decline rates from existing wells and the outcome of future drilling activity.
Although we believe the expectations and forecasts reflected in these and other forward
forward-looking
looking statements are reasonable,
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 caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this
presentation, and we undertake no obligation to update this information.
i
2009 Investor and Analyst Meeting
● Our production forecasts are dependent upon many assumptions, including estimates of production
decline rates from existing wells and the outcome of future drilling activity. Also, our estimates of
reserves, particularly those in our recent acquisitions where we may have limited review of data or
experience with the properties, may be subject to revision and may be different from those estimates at
year end. Although we believe the expectations, estimates 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 and data or by known or unknown risks and
uncertainties.
ii
2009 Investor and Analyst Meeting
Meeting Agenda
8:15 am Registration and Breakfast
9:00 am Welcome: Jeff Mobley, SVP − Investor Relations and Research
Opening Remarks: Aubrey McClendon, CEO
9:10 am Operational Overview: Steve Dixon, EVP and COO;
Jeff Fisher, SVP – Production
9:45 am Haynesville Shale: John Sharp, Geoscience Manager − Louisiana
10:30 am Marcellus Shale: Tom Layman, VP Geoscience − Eastern Division
11:15 am Fayetteville Shale: Scott Sachs, VP Geoscience − Northern Division
12:00 pm Lunch
Financial Overview: Marc Rowland, EVP and CFO
Natural Gas Market Perspectives: Aubrey McClendon, CEO
1:30 pm Midstream Overview: Mike Stice, SVP – Natural Gas Projects and CEO of CMP
2:00 pm Barnett Shale: Allen Middleman, Geoscience Manager − Barnett Shale
2:30 pm Anadarko Basin Washes: Scott Sachs, VP Geoscience − Northern Division
3:00 pm Other Plays: Mark Lester
Lester, EVP − Exploration;
Larry Lunardi, VP Geophysics
3:30 pm Reservoir Engineering: Steve Dixon, EVP and COO
4:00 pm Closing Remarks: Aubrey McClendon, CEO
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2009 Investor and Analyst Meeting
CHK’s powerful assets are well positioned to deliver strong returns for years to come
iiii
Operational Overview
Steve Dixon, EVP – Operations and COO
Jeff Fisher, SVP – Production
2009 Investor and Analyst Meeting
CHK Overview
● One of the largest producers of U.S. natural gas
– 2Q’09 natural gas production of 2.245 bcf/day
● Most active driller in U.S. – CHK is responsible for 1 of 7 gas wells being drilled in the U.S.
– 101 operated rigs currently, down from 158 in 8/08 (~35%); ~70 non-operated rigs & ~15 info
only rigs; collector of ~20% of all daily drilling information generated in the U.S. (~25% in our
areas of interest); ~93% of our operated rigs are in the Big 4 shale and Granite Wash plays
– It’s a great time to drill! Costs are down 30-50% from 2008 highs, plus JV carries go further in
this low cost environment
● Consistent production growth – 19 consecutive years of sequential production growth
– Increased production by 18% in ’08 to 2.30 bcfe/day and projecting increases of 6% in 2009,
9% in 2010, and 13% in 2011 to ~2.44, ~2.65, and ~3.0 bcfe/day, respectively (after
curtailments and asset sales)
● Best assets in the industry
– 12.5 tcfe of proved reserves at 6/09(1), targeting 20-22 tcfe in 4-5 years(2)
– 62 tcfe of risked unproved reserve potential; >10
>10-year
year inventory of ~36
36,000
000 net drilling
locations
● Unparalleled inventory of U.S. onshore leasehold and 3D seismic
– 14.3 mm net acres of U.S. onshore leasehold and ~22.7 mm acres of 3D seismic data
● Unique
q operational
p skill sets delivering
g improved
p
performance
3
2009 Investor and Analyst Meeting
• As of 6/30/09
• Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
(1) The Big 4 consists of the Haynesville, Marcellus, Barnett and Fayetteville shale plays
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2009 Investor and Analyst Meeting
Colony Wash 60,000 160 15% 300 5.70 316 1,100 1,416 1,250 100 5
Texas Panhandle Granite Wash 40,000 80 25% 200 4.75 464 400 864 700 80 3
Other Top 3 11,490,000 Various 20,100 Various 6,686 13,600 20,286 59,650 1,100 7
Total 14,300,000 35,750 12,525 61,600 74,125 172,400 2,430 101
• Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
(1) As of 6/30/09
(2) As of 9/30/09
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2009 Investor and Analyst Meeting
Marcellus Shale
C l
Colony /G
Granite
it WWash
h 2010 28 rigs
2010: i & 325
325+ wells
ll
2010: 11 rigs & 80+ wells
Barnett Shale
2010: 18 rigs & 300+ wells Fayetteville Shale
2010: 12 rigs & 170+ wells
Haynesville Shale
2010: 39 rigs & 275+ wells
Note: Analysis assumes current well cost and expected reserve recoveries assuming $7.00/mcf & $70/bbl NYMEX pricing. Results
calculated for shift in portfolio mix by play type
For example, 2004 represents a current investment using a percent capital split representative of the drilling portfolio CHK had in 2004 7
2009 Investor and Analyst Meeting
nt
130
130
Op Rig Coun
● Option value on existing HBP acreage and 120
110
100
continued evaluation of new play concepts 90
80
70
● Additional option value on higher gas prices and 60
50
40
capacity to increase activity as markets improve 30
20
10
Wash rig count increased to 94 rigs and all other All Other Big 4 Shale + Washes
Production Net Daily Rate
plays decreased to 7 rigs 2,800
2 600
2,600
● Shale and Granite Wash production has increased 2,400
2,200
to over 60% of company total
MMCFEPD
2,000
1,800
All Other
All Other Big 4 Shale + Washes
Big 4 Shale + Washes
1.8
1.6
attractive finding and development
1.4
costs
1.2
10
1.0
– 1.1 bcfe/day
/ y drillingg additions from
0.8
the Big 4 Shale plays
0.6 ● Monetize 0.35 bcfe/day of net
0.4 production at premium valuations
0.2
– Capital redeployed into CHK
CHK’ss low-
low
0.0
cost drilling program
VPP &
Divest
Decline
Jan‐08
New
Dec‐09
Wells
Drill
Base
1,957 6% 661
2,000 623
23% 18%
1,585 559
1,600
315
1,200
1,398 1,679 1 9
1,779
1,270
800
98 140 145 103
400 Rigs Rigs Rigs Rigs
0
2006 2007 2008 2009 est
4,000 200
3,600 180
3,200 160
Daily Rate MMCFFE/D
Operated Rig Cou nt
2,800 140
2,400 120
2,000 100
O
Net D
1,600 80
1,200 60
800 40
400 20
‐ ‐
Jan‐04 Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12
p Playy Concept
Develop p
Capture Acreage
Manufacturing Mode
Maximize Upside
CHK has achieved great results to date...and we are just getting started
12
2009 Investor and Analyst Meeting
Chesapeake Energy
Marketing, Inc.
Chesapeake Midstream
CHK has captured more of the value-chain than any other U.S. operator
13
2009 Investor and Analyst Meeting
dicator
4000 4000
3000 3000
Performance Ind
Performance Ind
2000 2000
1000 1000
0 0
P
P
0 200 400 600 800 1000 0 200 400 600 800 1000
Performance Indicator
4000
Correlation Identified
3000 3000
2000 2000
1000 1000
0 0
0 200 400 600 800 1000 0 200 400 600 800 1000
Stimulation Design Parameter Stimulation Design Parameter
Well Count - 58 Well Count - 44
erformance Indiicator
Performance Ind
Pe
P
Performance Indicator
Performance Indicator
Correlation Identified
3200 50%
Economics
Optimized Design
Performance Indicator
Optimized Design
2400 40%
Inccremental E
1600 30%
800 20%
0 10%
0 500 1000 1500 2000 0 500 1000 1500 2000
Multi-shale play knowledge, superior data and process has allowed CHK to move
quickly and efficiently to optimize results in the Haynesville 18
2009 Investor and Analyst Meeting
$9.5
Drill, $mm Complete, $mm $6.9 mm
er Well Cost (in milliions)
$10.0
$8.9
$7.9
– Improved cost environment and leveraged
$8.0
$6.9 negotiations
$6.0 – Further reductions are achievable
$4.0
● Overall completion
p costs down
Pe
$2.0
– 22% overall cost decrease despite larger
$- stimulation designs
Q3 '08 Q4 '08 Q1 '09 Q2 '09
Haynesville Drilling Days
80 ● Lateral length
g increasing
g
64
70 59 – 15% longer laterals: from 3,800’ to 4,400’
60 53
ell Drill Days
47
50
● Drilling efficiency up
40
– 27% fewer days
y to drill
Per We
30
– Reduced average spud to rig release from
20
64 to 47 days
10
-
Q3 '08
Q Q4 '08
Q Q1 '09
Q Q2 '09
Q
12 0
12.0
Gross Production (mmcfe/d
10.0 9.7
● Well productivity is increasing
8.0 7.0
– Optimized formation targeting and completion
6.0
designs
4.0
– >100%
00% increase
c ease in average
a e age IP rate
ate
2.0
– Highest IP of 29 mmcfe/day
-
Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09
6.0
– Currently limiting proved reserve bookings to a
5.0
3.8 6.5 bcfe/well maximum until longer production
4.0 3.1 history generated
30
3.0
2.0
1.0
-
Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09
Operational Summary
● CHK is aggressively working to exploit the
nation’s #1 gas resource base
22
Haynesville Shale
John Sharp, Geoscience Manager – Haynesville Shale
2009 Investor and Analyst Meeting
● Currently
C producing ~210
210 mmcfe/day
f and anticipate
reaching ~285 mmcfe/day by year-end 2009, ~500
mmcfe/day by year-end 2010 and ~690 mmcfe/day
by year-end 2011
● 714 bcfe of proved reserves
Chesapeake
Operated Rigs
● ~18 tcfe of risked unproved reserves(1)
CHK Non-Op
Rigs
– ~30 tcfe of unrisked unproved reserves
● CHK’s targeted drilling rate of return is ~55%(2)
CHK Acreage
90 miles
1) As of 6/30/09
Over the past two years, CHK has rapidly shifted from exploration to
full-scale development and increased its rig count from 1 rig to 35 rigs
and is on its way to 40 rigs 3
2009 Investor and Analyst Meeting
5
2009 Investor and Analyst Meeting
A’
A A’
A’
A A’
Haynesville Shale –
Reservoir Characterization
● CHK’s comprehensive reservoir characterization drives the Haynesville
development
– Maximize value by increasing recovery factor at lower costs
● Industry leading subsurface technical team has transferred focus from
identification to development optimization
– Vertical placement of lateral
– Stimulation techniques
– Well spacing
– D illi efficiencies
Drilling ffi i i
● Leverage CHK’s corporate know-how
– Reservoir Technology Center (RTC)
¾ Onsite core lab and shale experts
– Corporate drilling and completion technology staff
– Shared information, technological breakthroughs and operating
efficiencies across Big 4 shale plays
● CHK has integrated over 70% of all data acquired by the industry in
the Haynesville into a detailed subsurface understanding that will
enhance the value of the Haynesville/Bossier development for years
to come
– CHK has drilled ~35% of all wells in the play, has a non-op interest in an
additional ~15% and has obtained data for an additional 20%, giving CHK
information on ~70% of all wells drilled to date in the play
Unparalleled access to data and industry leading experience help CHK more quickly
achieve optimal drilling results 11
2009 Investor and Analyst Meeting
Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
Haynesville Shale –
Emphasis on Superpads
● Superpads
– Reduced surface impact
– Fewer rig moves
– 8 wells per superpad
– 16 wells per superpad in
Haynesville/Bossier stacked fairway
– 1 superpad per section
● Wells
W ll
– 80-acre spacing (8 per section)
¾ 660’ nominal wellbore spacing
– Single 4,500’ lateral
– Oriented north-south
● No current plans to drill multi-lateral
stacked horizontals due to too much
operational risk
● Gathering systems east-west along
section lines between superpads
$6 9
$6.9
$8
$6.0 - 6.5
– From 3Q ‘08 to 2Q ‘09 CHK reduced both
$6 drilling costs and drilling time by ~27%
$4 – Superior rig fleet and personnel through Nomac
$2 – Reduced trouble time through improved well
P
$0 design
Q308 Q408 Q109 Q209 Goal – Haynesville specific bit and motor design
Haynesville Drilling Days improvements
70
64
59 – Reduced vendor costs
60
53 – Improved stimulation cycle time
50 47
Well Drill Days
40
40-45
● How much better can we get?
30
– Reduce lateral drilling time through
improvements in directional tools
Per W
20
10
– Continued optimization of drilling parameters
-
Q3 '08 Q4 '08 Q1 '09 Q2 '09 Goal
14
2009 Investor and Analyst Meeting
Haynesville Shale –
Targeted Well Profile
12.0 6.00
6.5 bcfe EUR Type Curve Daily Rate
IP Rate: 14.1 mmcfe/day
First month average: 10.6 mmcfe/day
Finding cost: $1.44/mcfe Cumulative Production
10.0 Well cost: $7.0 mm 5.00
8.0 4.00
e/day)
6.0 3.00
40
4.0 2 00
2.00
2.0 1.00
Annual Decline Rate: 0.0 85% 38% 25% 19% 15% 12% 11% 9% 8% 7% 0.00
0 1 2 3 4 5 6 7 8 9 10
End of Year
15
2009 Investor and Analyst Meeting
Well Count
Well Count
Current Type Curve
6.0 75
Previous Type Curve
Normalized Production History ( ≥10 Stage Frac Job )
4.0 50
Prod
2.0 25
0.0 0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35
16
2009 Investor and Analyst Meeting
$6.00
$5.50
$5.00
1 yr ago
NYMEX ($/mcf)
$4.66
$4.50
Current
$4.44 CAPEX (M$)
Target
$4.00 $8,000
$4.00
$7,500
$7,000
$3.50 $6,500
$6,000
$3.00
$2.50
4.5 BCF 5.5 BCF 6.5 BCF 7.5 BCF 8.5 BCF
EUR
17
2009 Investor and Analyst Meeting
Haynesville Shale –
Rate of Return Profile
500%
4.5 bcfe
450%
6.5 bcfe
400% 8.5 bcfe
350%
OR
300%
Pre-Tax RO
250%
200%
150%
100%
50%
0%
$5.00 $6.00 $7.00 $8.00 $9.00
NYMEX Gas Price ($/mcf)
18
2009 Investor and Analyst Meeting
ay)
Net Producttion (mmcfe/da
Operated Rigss
30 750
20 500
Voluntary
Curtailments
10 250
0 0
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
CHK was not only early to the Marcellus but also early to shift from
vertical to horizontal development 4
2009 Investor and Analyst Meeting
5
2009 Investor and Analyst Meeting
6
2009 Investor and Analyst Meeting
7
2009 Investor and Analyst Meeting
67.5% 50%
32 5%
32.5% 50%
CHK is far and away the largest leaseholder in the Marcellus play
8
2009 Investor and Analyst Meeting
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2009 Investor and Analyst Meeting
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2009 Investor and Analyst Meeting
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2009 Investor and Analyst Meeting
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2009 Investor and Analyst Meeting
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2009 Investor and Analyst Meeting
Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
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2009 Investor and Analyst Meeting
Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
Marcellus Shale –
Targeted Horizontal Well Profile
4.00 2.50
4.2 bcfe EUR Type Curve
IP Rate: 4.0 mmcfe/day Daily Rate
First month average: 3.5 mmcfe/day
3.50 Finding Cost: 1.28 ($/mcfe) Cumulative Prod
Well Cost: $4.5
$4 5 mm
2.00
3.00
mcfe/day)
2.00
1.00
1.50
P
Cum
1.00
0.50
0.50
Annual
Decline Rate: 70% 33% 22% 17% 13% 11% 9% 8% 7% 6%
0.00 0.00
0 1 2 3 4 5 6 7 8 9 10
End of Year
16
2009 Investor and Analyst Meeting
$7.00
R 10% ROR ($/M
$6.00
NYMEX PRICEE REQUIRED FOR
$5.00
1 yr ago
$4 00
$4.00
$3.87
Current CAPEX (M$)
$ 3.71
$5,500
Target $5,000
$3.00
$3.13 $4,500
$4 000
$4,000
$3.500
$2.00
2.2 BCF 3.2 BCF 4.2 BCF 5.2 BCF 6.2 BCF
EUR
17
2009 Investor and Analyst Meeting
Marcellus Shale –
Rate of Return Profile
250%
3.2 bcfe
225%
42b
4.2 bcfe
f
200%
5.2 bcfe
175%
150%
Pre-tax ROR
R
125%
100%
75%
50%
25%
0%
$5.00 $6.00 $7.00 $8.00 $9.00
NYMEX Gas Price ($/mcf)
duction (mmccfe/day)
40 400
30 300
ed Rigs
Net Prod
Operate
20 200
10 100
0 0
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
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2009 Investor and Analyst Meeting
Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
20
Fayetteville Shale Overview
Scott Sachs, Vice President Geoscience– Northern Division
2009 Investor and Analyst Meeting
3
2009 Investor and Analyst Meeting
4
2009 Investor and Analyst Meeting
ARKANSAS
5
2009 Investor and Analyst Meeting
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2009 Investor and Analyst Meeting
Fayetteville Shale –
Chesapeake Pilot Tests
● TVD depths to top of lower Fayetteville range
● Fayetteville pilot areas assigned mainly to test from 1,200’ to 7,500’ across the current
various log characteristics, thicknesses and depths
– Helps to delineate extent of the play productive area
– Helps
H l tot better
b tt understand
d t d valuel ini areas and
d ● Typical depths across Core area range from
guide leasing program
● Moorefield secondary shale target underlying 3,000’ to 5,500’ TVD
Fayetteville ● Typical perforated lateral length is ~4,000’
● Secondary conventional targets
– Orr and Hale formations
– BBatesville,
ill B
Boone, H
Hunton
CHK Pilot Areas
Conventional Production
Lower Fayetteville Structure
CI: 1,000’
110 miles
7
2009 Investor and Analyst Meeting
Fayetteville Shale –
Approaching 2,100 Wells to Date
110 miles
40 miles
s
As of 10/1/09
Fayetteville Wells Drilled to Date
SOUTHWESTERN 1,119
C S
CHESAPEAKE 505
PETROHAWK 223
XTO 152
OTHER OPERATORS 63
The top four operators control ~97% of the play
8
2009 Investor and Analyst Meeting
•Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
9
2009 Investor and Analyst Meeting
•Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
10
2009 Investor and Analyst Meeting
– 4,000
4 000’ average perforated
lateral Upper Fayetteville
shale
11
2009 Investor and Analyst Meeting
T
V
D
12
2009 Investor and Analyst Meeting
Fayetteville Shale –
Increasing Drilling Efficiencies
Days vs. Depth Dollars vs. Depth
0 0
2006 2006
1,000 1,000
2007
2,000 2007 2,000
2008
3,000 2008 3,000
2009 1H
4,000 2009 1H 4,000
Depth
Depth
5,000 41% faster 5,000
to same 22% lower cost
6,000 6,000
depth
7 000
7,000 7 000
7,000
8,000 8,000
9,000 9,000
31% faster
10,000 rig release
10,000
10 000
0 10 20 30 +850’40deeper
$0.00 $1.00 $2.00 $3.00
Days from Spud to Rig Release Drilled & Cased Cost ($mm)
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2009 Investor and Analyst Meeting
Fayetteville Shale –
Operational Excellence
● CHK has been and remains a leader in Fayetteville operations
– CHK was the first operator to determine better economics were
associated with:
¾ Longer laterals
¾ Slick water fracs
¾ Improved geologic targeting
– Completion optimization
¾ Increased pounds of sand per foot of perforated lateral and
treatment rate
¾ Decreased the stage spacing, cluster spacing and stage size
¾ Optimized proppant size,
size frac fluids composition and
perforation charge size
¾ Scale advantage, currently perform >200 fracs/month
Number of Fracture Stimulations
Months
Year 1 2 3 4 5 6 7 8 9 10 11 12 Total
2006 2 4 3 2 4 13 8 5 5 15 61
2007 19 11 17 15 24 39 50 48 50 50 59 63 445
2008 99 61 66 71 92 83 105 154 177 193 160 178 1,439
*2009 194 229 218 178 173 242 244 206 210 210 200 200 2,504
*Projected Through Q4 '09
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2009 Investor and Analyst Meeting
Fayetteville Shale –
Targeted Well Profile
2.00 2.00
2.4 Bcfe Fayetteville Type Curve
1.80 IP Rate: 2.1 mmcfe/day(1) Daily Rate 1.80
First Month Average: 1.9
1 9 mmcfe/day
EUR: 2.40 bcfe Fayetteville Cumulative Production
1.60 1.60
Finding Cost: $1.52/mcfe)
Well Cost: $3.0 mm
1.40 1.40
1 20
1.20 1 20
1.20
1.00 1.00
0.80 0.80
Cumu
0.60 0.60
0.40 0.40
0 20
0.20 0 20
0.20
Annual
Decline Rate: 68% 33% 22% 16% 13% 11% 9% 8% 7% 7%
0.00 0.00
0 1 2 3 4 5 6 7 8 9 10
End of Year
15
2009 Investor and Analyst Meeting
400
Well Count
Well Count
1,200
Current Type Curve
300
Previous Type Curve
800
Normalized Production History
y
Produ
200
400
100
0 0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35
16
2009 Investor and Analyst Meeting
$8.00
quired for 10% Prre-tax ROR ($/mccf)
$7.00
$6 00
$6.00
$
$3,500
$4.34 Goal
$4.00 $3,000
$2,500
$2,000
$3.00
$2.00
1.6 BCF 2.0 BCF 2.4 BCF 2.8 BCF 3.2 BCF
EUR
17
2009 Investor and Analyst Meeting
70%
Pre-tax RO
60%
50%
40%
30%
20%
10%
0%
$5.00 $6.00 $7.00 $8.00 $9.00
18
2009 Investor and Analyst Meeting
duction (mmcfe/day)
15
400
Operated Rigs
300
10
Net Prod
O
* 200
5
100
0 0
19
2009 Investor and Analyst Meeting
•Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
20
Financial Overview
Marc Rowland, EVP & CFO
2009 Investor and Analyst Meeting
Financial Highlights
● ~$33 billion enterprise value
– ~$18.1 billion equity value, ~$12.2 billion net long-term debt and ~$2.2 billion working capital
deficit
● Strongg p
profitabilityy
– 2009E: ebitda $4.0 billion, operating cash flow $3.7 billion, adj. net income to common $1.3 billion
– 2010E: ebitda $5.1 billion, operating cash flow $4.7 billion, adj. net income to common $1.8 billion
– 2011E: ebitda $5.1 billion, operating cash flow $4.7 billion, adj. net income to common $1.7 billion
● Attractive hedging position
– 79% of 3Q & 4Q’09, 22% of 2010 production hedged at average prices of $7.33 and $9.39
● Innovative
I ti joint
j i t venture
t arrangements
t
– CHK/PXP in Haynesville Shale: $3.3 billion for 20% interest
– CHK/BP in Fayetteville Shale: $1.9 billion for 25% interest
– CHK/STO in Marcellus Shale: $3.4 billion for 32.5% interest
● Improving balance sheet
– B
Balanced
l d fi
financing
i g mix
i off equity
it and
d llong-term
gt debt
d bt with
ith long-dated
l g d t d fixed
fi d maturities
t iti
– Strong asset and cash flow coverage of debt
– Substantial asset growth, cash generation and earnings set to meaningfully deleverage CHK over
the next several years
● Anticipating further improvement to debt metrics
– Proved reserves expected to grow by ~60%
60% over the next 4-5 years without the need for additional
financing
– Superior assets and JV carries result in F&D costs of $1.00 to $1.50 per mcfe
$5.00
$4.50 2Q’09 net cash
$4.00 margin: $3.58
$3.50
$3.00
$2.50 Preferred dividends: $0.03
$2.00 Interest expense: $0.97
$1.50
G&A: $0.25
$1.00 Production tax: $0.11
$0.50 Production expense: $0.95
$
$0.00
Sr. Unsecured 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1Q'09 2Q'09
Rating B3/B B2/B B1/B+ B1/B+ Ba3/BB- Ba3/BB- Ba2/BB Ba2/BB Ba3/BB Ba3/BB Ba3/BB Ba3/BB
(1) Includes capitalized interest and excludes unrealized gains/losses on interest rate derivatives
(2) Excludes non-cash stock based compensation
3
2009 Investor and Analyst Meeting
● Budgeted
B d d cash
h build
b ild(1)
– 2010: $275 million to $950 million
– 2011: $475 million to $1.2 billion
4
2009 Investor and Analyst Meeting
(1)
Cash Resource Plan ’09 - ’11
Net Cash Resources ($ in millions) 2009E 2010E 2011E Total
(1)(2)
Operating cash flow $3,700 - 3,750 $4,350 - 5,050 $4,750 - 5,450 $12,800 - 14,250
Leasehold and producing properties transactions
Sales $1,900 - 2,000 $1,500 - 2,000 $1,250 - 1,750 $4,750 - 5,650
Acquisitions ($1,000) - (1,250) ($500) - (650) ($350) - (500) ($2,100) - (2,150)
Net leasehold and producing properties transactio $750 - 900 $1 000
$1,000 - 1 350
1,350 $900 - 1 250
1,250 $2 650 - 3,500
$2,650 3 500
Midstream equity financings or system sales $600 - 800 $250 - 300 $300 - 500 $1,150 - 1,600
Midstream credit facility draws (repayments) ($200) - (300) $150 - 200 - ($50) - (100)
Proceeds from investments and other $450 - $200 - $250 $650 - 700
Total: $5,300 - 5,600 $5,750 - 6,900 $6,150 - 7,450 $17,200 - 19,950
Net Cash Change ($75) - 325 $275 - 950 $475 - 1,200 $1,075 - 2,075
(3 )
Proved reserves (tcfe) 13.0 16.0 18.0
Proved reserves per fully diluted share (mcfe) 20.1 24.7 27.8
YOY % change in proved reserves per FD share 2% 23% 13%
Long-term debt, net of cash on hand ($ in millions) $12,500 $11,900 $11,100
Long-term debt per mcfe of proved reserves $0.96 $0.74 $0.62
(1) From Outlook issued 10/13/09 and assumes NYMEX natural gas and oil prices of $5.00-$6.00/mcf and $57.75/bbl in 2009; $6.50-$7.50/mcf
and $80/bbl in 2010; and $7.00-$8.00/mcf and $80/bbl in 2011
(2) Before changes in assets and liabilities
(3) Under existing SEC proved reserve definitions
6
2009 Investor and Analyst Meeting
($ in millions; oil at $57.75 NYMEX) $4.00 $5.00 $6.00 $7.00 $8.00 $9.00
(1)
O/G revenue (unhedged) @ 890 bcfe $3,050 $3,160 $3,250 $3,360 $3,460 $3,560
(2)
Hedging effect 2,410 2,310 2,220 2,120 2,020 1,910
Marketing and other (@ $0.16/mcfe)
$ 140 140 140 140 140 140
Production taxes 5% (150) (160) (160) (170) (170) (180)
LOE (@ $1.15/mcfe) (1,020) (1,020) (1,020) (1,020) (1,020) (1,020)
(3)
G&A (@ $0.46/mcfe) (410) (410) (410) (410) (410) (410)
Ebitda 4,020
, 4,020
, 4,020
, 4,020
, 4,020
, 4,000
,
Interest (@ $0.33/mcfe) (290) (290) (290) (290) (290) (290)
(2 )(3 )(4 )
Operating cash flow 3,730 3,730 3,730 3,730 3,730 3,710
Oil and gas depreciation (@ $1.60/mcfe) (1,420) (1,420) (1,420) (1,420) (1,420) (1,420)
Depreciation of other assets (@ $0.28/mcfe) (240) (240) (240) (240) (240) (240)
I
Income taxes
t (37.5%
(37 5% rate)
t ) (780) (780) (780) (780) (780) (770)
(1)
Net income to common $1,290 $1,290 $1,290 $1,290 $1,290 $1,280
Net income to common per fully diluted shares $2.06 $2.06 $2.06 $2.06 $2.06 $2.04
(5)
Net debt/ebitda 3.0 3.0 3.0 3.0 3.0 3.1
Debt to book capitalization ratio 48% 48% 48% 48% 48% 48%
(6)
Ebitda/fixed charges (including pfd. dividends) 5.6 5.6 5.6 5.6 5.6 5.6
(7 )
MEV/operating cash flow 4.9x 4.9x 4.9x 4.9x 4.9x 4.9x
(8)
EV/ebitda 8.1x 8.1x 8.1x 8.1x 8.1x 8.1x
(9 )
PE ratio 13.6x 13.6x 13.6x 13.6x 13.6x 13.7x
($ in millions; oil at $80.00 NYMEX) $4.00 $5.00 $6.00 $7.00 $8.00 $9.00
(1)
O/G revenue (unhedged) @ 967 bcfe $3,770 $4,480 $5,200 $5,910 $6,620 $7,340
(2)
Hedging effect 780 710 710 750 620 430
Marketing and other (@ $0.13/mcfe) 130 130 130 130 130 130
Production taxes 5% (190) (220) (260) (300) (330) (370)
LOE (@ $1.00/mcfe) (970) (970) (970) (970) (970) (970)
(3)
G&A (@ $0.46/mcfe) (440) (440) (440) (440) (440) (440)
Ebitda 3,080 3,690 4,370 5,080 5,630 6,120
Interest (@ $0.38/mcfe) (360) (360) (360) (360) (360) (360)
(2 )(3)(4 )
Operating cash flow 2,720 3,330 4,010 4,720 5,270 5,760
Oil and gas depreciation (@ $1.60/mcfe) (1,550) (1,550) (1,550) (1,550) (1,550) (1,550)
Depreciation of other assets (@ $0.23/mcfe) (220) (220) (220) (220) (220) (220)
Income taxes (39% rate) (370) (610) (870) (1,150) (1,370) (1,560)
(1 )
Net income to common $580 $950 $1,370 $1,800 $2,130 $2,430
Net income to common per fully diluted shares $0.90 $1.48 $2.13 $2.80 $3.32 $3.78
(5)
Net debt/ebitda 4.0 3.3 2.8 2.4 2.2 2.0
Debt to book capitalization ratio 46% 45% 45% 44% 43% 43%
(6)
Ebitda/fixed charges (including pfd. Dividends) 4.3 5.1 6.1 7.1 7.8 8.5
(7 )
MEV/operating cash flow 6.7x 5.4x 4.5x 3.8x 3.4x 3.1x
(8 )
EV/ebitda 10.5x 8.8x 7.4x 6.4x 5.8x 5.3x
(9 )
PE ratio 31.1x 18.9x 13.1x 10.0x 8.4x 7.4x
($ in millions; oil at $80.00 NYMEX) $4.00 $5.00 $6.00 $7.00 $8.00 $9.00
(1)
O/G revenue (unhedged) @ 1,095 bcfe $4,210 $5,020 $5,830 $6,650 $7,460 $8,270
(2)
Hedging
g g effect 180 210 230 230 220 220
Marketing and other (@ $0.13/mcfe) 140 140 140 140 140 140
Production taxes 5% (210) (250) (290) (330) (370) (410)
LOE (@ $1.00/mcfe) (1,100) (1,100) (1,100) (1,100) (1,100) (1,100)
(3)
G&A (@ $0.46/mcfe) (500) (500) (500) (500) (500) (500)
Ebitda 2 720
2,720 3 520
3,520 4 310
4,310 5 090
5,090 5 850
5,850 6 620
6,620
Interest (@ $0.38/mcfe) (360) (360) (360) (360) (360) (360)
(2)(3)(4 )
Operating cash flow 2,360 3,160 3,950 4,730 5,490 6,260
Oil and gas depreciation (@ $1.60/mcfe) (1,750) (1,750) (1,750) (1,750) (1,750) (1,750)
Depreciation of other assets (@ $0.23/mcfe) (250) (250) (250) (250) (250) (250)
Income taxes (39% rate) (140) (450) (760) (1 060)
(1,060) (1 360)
(1,360) (1 660)
(1,660)
(1 )
Net income to common $220 $710 $1,190 $1,670 $2,130 $2,600
Net income to common per fully diluted shares $0.34 $1.10 $1.84 $2.58 $3.29 $4.02
(5)
Net debt/ebitda 4.5 3.5 2.8 2.4 2.1 1.8
Debt to book capitalization ratio 42% 41% 40% 40% 39% 38%
(6)
Ebitda/fixed charges (including pfd. Dividends) 3.8 4.9 6.0 7.1 8.1 9.2
(7)
MEV/operating cash flow 7.7x 5.7x 4.6x 3.8x 3.3x 2.9x
(8)
EV/ebitda 11.9x 9.2x 7.5x 6.4x 5.6x 4.9x
(9 )
PE ratio 82.4x 25.5x 15.2x 10.9x 8.5x 7.0x
$2,800
$2,476(2)
$2,400 $2,163(2)
$ in MM
M
$2,000
$1,600
$1,270
$1 200
$1,200
$864
$800 $3.5 billion bank
$600 $500
credit facility matures
$400 November 2012
$0
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Rate: 7.5% 7.5% 2.75% 6.625% 2.5% 2.25% 6.875%
7.625% 7.0% 9.5% 6.875% 6.25% 7.25%
(1) As of 6/30/09, pro forma for subsequent debt for equity exchanges 6.375% 6.5% 6.25%
(2) Recognizes earliest investor put option as maturity
Staggered long term debt maturity structure with no senior notes due for
five years; cash flow of ~$20-25 billion likely before first payment 10
2009 Investor and Analyst Meeting
• The issuance of the shares of Common Stock in the transactions above are exempt from registration under the Securities
Act of 1933 pursuant to Section 3(a)(9) under the Securities Act
• This is not a solicitation to exchange or issue any securities
11
2009 Investor and Analyst Meeting
Oil Gas
3Q - 4Q 2009 $ 69.93 $ 4.10
2010 $ 75.20 $ 6.27
2011 $ 78.76 $ 6.90
2012 $ 80.94 $ 7.04
2013 $ 82.95 $ 7.12
(1) NYMEX gas price changes and NYMEX oil price held constant at $57.75 per bbl
(2) 61.6 tcfe of unproved reserves valued from $0.05 - $0.50/mcfe 2014 $ 84.94 $ 7.23
(3) Per Outlook issued on 10/13/09 5-Year Average
(4) Buildings, drilling rigs, midstream gas assets at net book value and investments at market value pro forma for Midstream JV $ 80.56 $ 6.91
(2010 – 2014)
(5) Reduced for early payment of PXP carry
(6) Based on common stock price of $28.00 per share
12
CHK Hedging Strategy
2009 Investor and Analyst Meeting
$10 00
$10.00
$/mmbtu
90%
Band
$8.00
$6 00
$6.00 NYMEX Natural Gas Futures Curve
$10.00
$9.00
$4.00 $8.00
$7.00
$ /mmbtu
$6.00
$2.00
$ $5.00
$4.00
10/8/2009
/ / 10/8/2008
/ /
10/8/2007 10/8/2006
$3.00
$0.00 $2.00
200
$ in millions
(200)
(400)
(600)
• Virtually all of CHK’s kick out natural gas swaps for 2009 were restructured shortly after our
2008 Investor and Analyst Meeting
• CHK realized $1.1 billion in hedging gains in 1H’09 and will also have substantial gains in 2H’09 16
2009 Investor and Analyst Meeting
3Q-4Q 2009 Total 188.6 45% $7.07 3Q-4Q 2009 Total 154.8 37% $7.12 $8.80
Volume NYMEX
Oil (5) Hedged (mbbl) % Hedged Avg. Price
Q Q 2009 Total
3Q-4Q 2.1 35% $87.05 NYMEX Strip Prices @ 10/08/2009
Oil
Oil Gas
1Q 1.2 $90.25
2Q 1.2 $90.25 3Q - 4Q 2009 $ 69.93 $ 4.10
2010 $ 75.20 $ 6.27
3Q 1.2 $90.25
2011 $ 78.76 $ 6.90
4Q 1.2 $90.25 $ 7.04
2012 $ 80.94
2010 Total 4.8 38% $90.25 2013 $ 82.95 $ 7.12
2014 $ 84.94
84 94 $ 7.23
7 23
2011 Total 1.1 8% $104.75
17
Natural Gas Market Perspectives
Aubrey McClendon, CEO
Key Natural Gas Market Factors
● While U.S. natural gas prices are soft today, there are strong indications that market forces
will create a strong natural gas price recovery in 2010 and 2011
● The laws of supply and demand remain intact
– Dramatically reduced rig counts and accelerating decline curves (the “dark side” of technology)
will lead to sharply lower supply in 2010 and 1H2011
¾ First year U.S. decline rates are >25%, i.e. >15 bcf/day
¾ The gas-directed rig count has plunged by ~55% from the 2008 peak and has held steady most of the
summer and fall at ~700
700 rigs
¾ Following a natural lag from completion and well connection work, U.S. natural gas production is likely to
decline by 2-3 bcf/day YOY, or ~4%, by year-end 2009 and rapidly fall to by 5-6 bcf/day YOY, or ~10% by
early summer 2010
● Normalized weather and a rebound in the economy will likely lead to increases in demand
● Higher LNG imports and fuel-switching (reversing some 2009 gains) will partially offset
tightening market balances
● Storage may be near spring 2009 levels by spring 2010, but on a trajectory to fall short of
adequate
q levels byy the fall of 2010
● Only higher prices will adequately refill storage for 2010/2011 winter
– Using price, the market will have to incentivize increased U.S. drilling
Rig count declines ensure a much tighter 2010 and 2011 natural gas market
2
U.S. Natural Gas Production Outlook
Rig Count Scenarios
1,800 62
1,700 60
1 600
1,600 58
1,500 56
900 44
800 42
700 40
Daily Marke
600 38
500 Production Accelerated Scenario
(1) 36
400 Production Moderate Scenario (2) 34
YOY change in
YOY
bcf/d
change in bcf/day
300 Base Future Rig 32
Rig Count Accelerated Scenario Count Cap 12/09 12/10 12/11
200 M d t Scenario
Moderate S
((2))
i (1) 816 (3.2)
(3 2) (2
(2.3)
3) (0
(0.1)
1) 30
Rig Count Moderate Scenario Accelerated Scenario 916 (2.9) (1.6) 1.3
100 Historical Rig Count
28
0 26
(1) CHK projected industry shale rig count and all other rig count caped at 500 rigs
(2) CHK projected industry shale rig count and all other rig count caped at 400 rigs
3
The Industry’s Cost Curve is Shifting
Rapidly – Very Important to Understand
● Up until five years ago, most E&P companies in the U.S. owned an asset base that was
more or less the same as everyone else’s – not true anymore and significant implications!
● “Shale haves” will have very low risk F&D costs <$2.00/mcfe for decades to come (and
decreasing over time as efficiencies increase and shale gas reservoir knowledge
improves) while “shale have-nots” will have F&D costs >$3.00/mcfe and increasing over
time as most drilling
g will be increased-density,
y, rate-acceleration wells in existing
g fields
rather than new discoveries
Pre-shale F&D Cost Post-shale F&D Cost In the Future…
Curve Continuum Curve Continuum
$3 00
$3.00 $3 00
$3.00 $4 00
$4.00
F&D/mcfe
F&D/mcfe
F&D/mcfe
$3.00
$2.00 $2.00
$2.00
$1.00 $1.00
$1.00
25% 50% 75% 100% 25% 50% 75% 100% 25% 50% 75% 100%
Industry Quartile Industry Quartile Industry Quartile
Those that missed the “Big 4” shale land rush of 2004–2008 will pay
the price for years, if not decades, to come…
4
What is the Marginal Cost of Supply?
● Natural gas prices not likely to stay
permanently low because of the great $3.00
success of the “Big 4” Shale plays
– Onlyy 10-15 companies
p have captured
p
(1) Size of bubble corresponds to relative size of CHK proved and risked unproved reserves in each play
5
U.S. Natural Gas Production Profile
2000 - 2008
70 70
CHK All Other Producers
duction (Bcf//day)
duction (Bcf//day)
Top 20 Independents (less CHK) Majors
60 60
50 50
40 40
arketed Prod
20 20
U.S. Ma
10 10
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008
6
U.S. Natural Gas Supply Profile
2000 - 2008
80 80
CHK
LNG + Canadian Imports - Mexican Exports
All Other Producers
70 Top 20 Independents (less CHK) 70
Majors
60 60
50 50
40 40
30 30
20 20
10 10
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008
7
YOY Natural Gas Production
Profile Change
3.0 CHK 1,000
Top 20 Independents (less CHK)
2.5 All Other Producers 900
day)
Majors
CHK Rig Count
duction (Bcf/d
1.0 600
YOY Change in Daily Prod
0.5 500
- 400
Yearly A
(0.5) 300
(1.0) 200
Y
(1 5)
(1.5) 100
(2.0) 0
2001 2002 2003 2004 2005 2006 2007 2008 YTD
2009
8
Natural Gas Independents
vs. Majors: Natural Gas Growth Profile
20
CHK EOG APC ECA DVN XTO
18 COP CVX RDS BP XOM CHK
16 EOG
Daily Production (bcf/day)
APC
14
ECA
12
DVN
10
XTO
8
COP
6
CVX
4 RDS
2 BP
XOM
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
9
Natural Gas Independents
vs. Majors: Natural Gas Growth Profile
4.0 4.0
XOM RDS CVX COP
CHK XTO DVN ECA
3.5 APC EOG BP 3.5
BP
Bcf/day)
Bcf/day)
3.0 3.0
XOM CVX
2.5 2.5
Production (B
Production (B
COP CHK
2.0 APC 2.0
DVN
RDS
ECA
1.5 1.5
XTO
Daily P
Daily P
EOG
1.0 1.0
0.5 0.5
0.0 0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008
10
Midstream Overview
J. Mike Stice, SVP of Natural Gas Projects and
CEO of Chesapeake Midstream Partners
2009 Investor and Analyst Meeting
2
2009 Investor and Analyst Meeting
3
2009 Investor and Analyst Meeting
2,000
1,611
1,500
1,167
1,108 1,060
985
1,000 847
758
598
475
500
273 223
0
CMD/ WPZ XTEX CPNO CMP MWE DPM WES RGNC APL CMD EROC NGLS HLND KGS
CMP
4
2009 Investor and Analyst Meeting
CMD
CMP
Pipeline
Marcellus
Shale
Barnett
Mid- Shale
Continent
Fayetteville
Shale
Haynesville
Shale
5
2009 Investor and Analyst Meeting
● CMP comprised of substantially all of CHK’s midstream assets in the Barnett Shale,
Arkoma, Anadarko, Delaware and Permian Basins
● CHK received $588 million in cash from GIP, retained a 50% interest in CMP and
retained operating control of the partnership
6
2009 Investor and Analyst Meeting
Chesapeake Midstream
$500 mm Revolving Bank
Partners, L.L.C. (CMP)
Credit Facility
7
2009 Investor and Analyst Meeting
Note: Well connect estimates are CHK connections only to CMD assets
9
2009 Investor and Analyst Meeting
Note: Well connect estimates are CHK connections only to CMP assets
10
2009 Investor and Analyst Meeting
11
2009 Investor and Analyst Meeting
● Move CMP from a cost center to a profit center customer service model
12
Barnett Shale
Allen Middleman, Geoscience Manager – Barnett Shale
2009 Investor and Analyst Meeting
Tier 1 ● CHK has drilled three of the best four wells ever
Outline
drilled in the Barnett
– The Donna Ray 1H and 3H averaged 9 9.66 and 8.8
88
mmcfe/day, respectively, during their first 30 days of
production
– The Day Kimball Hill A 1H recently brought online at
Chesapeake
Operated Rigs
more than 16 mmcfe/day
CHK Non-op
Rigs
● 3.2
3 2 tcfe of proved reserves
CHK Acreage ● ~4.7 tcfe of risked unproved reserves and ~6.3 tcfe of
unrisked unproved reserves(1)
~67 miles
● CHK’s targeted drilling rate of return is ~36%(2)
3
2009 Investor and Analyst Meeting
Core &
Tier 1 per quarter
Outline
● Limited competition for new acreage in
targeted areas of Tarrant county given CHK’s
current scale, surface control, existing pads
Chesapeake
and midstream infrastructure position
Operated Rigs
CHK Non-op
Rigs
CHK Acreage
~67 miles
4
2009 Investor and Analyst Meeting
5
2009 Investor and Analyst Meeting
6
2009 Investor and Analyst Meeting
Top Barnett
ett Shale
Barne
Target
From Montgomery, et al. (2005)
Base Barnett
Barnett Shale –
County Rig Counts by Operator
25
CARRIZO RANGE
QUICKSILVER DEVON
EOG XTO Barnett Shale Well Activity
20
CHESAPEAKE 300
2009 Wells
250 272
2010 Wells
200 217
Operated Riggs
15
150 164
100
100
50
10
0
Tarrant Johnson
0
TARRANT JOHNSON DENTON ELLIS PARKER WISE MONTAGUE
County Source: RigData - 9/25/09
8
2009 Investor and Analyst Meeting
1,000
500
0
0 80 160 240 320 400 480 560 640 720
Producing Days
CHK always believed Tarrant and Johnson County would be the best
9
2009 Investor and Analyst Meeting
Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
10
2009 Investor and Analyst Meeting
Barnett Shale –
Drilling Improvements
Barnett Shale Average Total Measured Depth
12,000 11,594
11,420 11,434
11 500
11,500
otal Measured Depth
h
11,039
11,000 10,784
10,535 10,636 10,600
10,500 10,110 10,142 ● Depth per well increasing
10,000
with longer laterals
9 500
9,500
To
9,000
1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09 2Q'09
● Drilling days decreasing,
despite longer laterals
Barnett Shale Drill Days
30
24
25 21 22 21 20 19 20 20 20
18
20
Days
15
Drill D
10
0
1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09 2Q'09
Barnett Shale –
Targeted Horizontal Well Profile
2.5 2.5
2.65 bcfe type curve Daily Rate
IP rate: 2.5 mmcfe/day
First month average: 2.2 mmcfe/day Cumulative Production
Finding cost: $1.31
$1 31 / mcfe
2.0 2.0
Well cost: $2.6 million
1.5 1.5
Producttion Rate (mm
1.0 1.0
Cumu
0.5 0.5
Annual
Decline Rate: 0.0 70% 33% 22% 17% 13% 11% 10% 8% 7% 7% 0.0
0 1 2 3 4 5 6 7 8 9 10
End of Year
12
2009 Investor and Analyst Meeting
Well Count
1.5 1500
Well Count
Current Type Curve
0.5 500
0.0 0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35
(1) Peak 24-hour rate Month
13
2009 Investor and Analyst Meeting
$6.00
Required 10% Pre-Tax ROR ($/mcf)
$5.50
1 yr ago
$ 5.14
Current
$4.96 CAPEX (M$)
$5.00
T g t
Target $3 000
$3,000
NYMEX Price R
$4.79
$2,800
$4.50 $2,600
$2,400
$2,200
$4.00
2.2 2.35 2.5 2.65 2.8 2.95 3.1
EUR (BCF)
14
2009 Investor and Analyst Meeting
2.65 BCF
100%
3 BCF
ROR
75%
Pre--tax R
50%
25%
0%
$5.00 $6.00 $7.00 $8.00 $9.00
NYMEX Gas Price ($/mcf)
15
2009 Investor and Analyst Meeting
duction (mmccfe/day)
40 800
Operated Rigss
30 600
Net Prod
O
20 400
10 200
0 0
16
2009 Investor and Analyst Meeting
Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
17
Anadarko Basin Granite Washes
Scott Sachs, Vice President Geoscience – Northern Division
2009 Investor and Analyst Meeting
OK CHK Op Rigs
TX Industry Rigs
CHK Acreage
~70miles
~160 miles
Texas Panhandle Granite Wash Colony Granite Wash
● Located in Hemphill, Wheeler, Roberts counties, ● Located in Custer and Washita counties, OK
TX and Roger Mills, OK ● CHK is the largest
g leasehold owner with ~60,000
,
● CHK is one of the largest leasehold owners in the net acres and is the most active driller
play with ~40,000 net acres ● Colony Granite Wash is currently CHK’s
● Targeted drilling ROR is ~128%(1) in this play highest targeted drilling ROR play at ~141%(1)
● Averaged 46 net mmcfe/day in 3Q’09 ● Averaged 110 net mmcfe/day in 3Q’09
1) Assuming flat NYMEX natural gas prices of $7.00 per mcf and oil prices of $70.00 per bbl
CHK is the largest leasehold owner in the Greater Granite Wash Play with
~360,000 net acres
2
2009 Investor and Analyst Meeting
Anadarko Shelf
Granite Wash
Deep Anadarko
ANADARKO BASIN
300 miles 4
2009 Investor and Analyst Meeting
Proven Hz
Des Moines D
CHK Proven Hz
Des Moines E
13500
Des Moines F
Colony GW ‘B’
14000
0
Cherokee A
Potential Hz CHK Proven Hz
Cherokee B
14500
Colony GW ‘C’
CHK Proven Hz
Atoka A
Industry Proven Hz
Atoka B
15000
Atoka C Potential Hz
5
2009 Investor and Analyst Meeting
Granite Wash –
Geophysical Development
~160 miles
OK
3D Seismic
CHK Acreage
TX
0miles
● ~3,300 square miles of 3D
data
d t covering
i g the
th Greater
G t
~70
Granite Wash Play
6
2009 Investor and Analyst Meeting
3Q'08 90 50
0
4Q'08 120 60
1Q'09 115 60
2Q'09 170 75 * Voluntary Curtailment
3Q'09 215 110
1) Assuming flat NYMEX natural gas prices of $7.00 per mcf and oil prices of $70.00 per bbl
8
2009 Investor and Analyst Meeting
$7 0
$7.0 $6 1
$6.1 d illi time
drilling i b
by 2% since
i Q3 ’08
Per Well Cost (in millio
$6.0
$6.0
$5.0 ● How much better can we get?
$4.0
$3.0 – Two Nomac rigs averaged $4.0mm drilling cost
$2.0 over the last 4 wells
P
$1 0
$1.0
– CHK Balzar 2-7H cost $3.6mm to rig release in
$0.0
Q3 '08 Q4 '08 Q1 '09 Q2 '09 Goal
40 days with IP of 23 mmcfe/day
● How was this achieved?
Drilling Days
70 – Extensive Wash horizontal drilling expertise
60 56
59 – Cost effective application of drilling technology
50
49 48 47 – Expert geo-steering to avoid hazards
Well Drill Days
20
10
-
Q3 '08 Q4 '08 Q1 '09 Q2 '09 Goal
5.0
on (bcfe)
2.50
Production Rate (mm
4.0
Cumullative Productio
2.00
3.0
1.50
2.0
1.00
1.0 0.50
Annual Decline
Rate:
0.0 74% 33% 21% 16% 13% 11% 9% 8% 7% 6% 0.00
0 1 2 3 4 5 6 7 8 9 10
End of Year
10
2009 Investor and Analyst Meeting
Well Count
Current Type Curve
4.0 100
Normalized Production History
Produ
2.0 50
0.0 0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35
11
2009 Investor and Analyst Meeting
$6.00
equired for 10% Prre-tax ROR ($/mcf)
$5.00
$4.00
$3.00
NYMEX Price Re
3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50
EUR (bcfe)
12
2009 Investor and Analyst Meeting
400%
300%
200%
100%
0%
$5.00 $6.00 $7.00 $8.00 $9.00
NYMEX Gas Price ($/mcf)
13
2009 Investor and Analyst Meeting
Flowers-Anderson E1095H
IP: 4.2 mmcf/day + 116 bo/day
TTexas P
Panhandle
h dl Granite
G it Wash
W h
● Located in Hemphill, Wheeler,
Tolbert 305H
Roberts counties, TX and Roger IP: 2.3 mmcf/day + 482 bo/day
Mills county, OK
● CHK is one of the largest
Zybach 15 -2H
leasehold owners in the play IP: 4.3 mmcf/day + 177 bo/day
with ~40,000 net acres
● Averaged 46 net mmcfe/day in Reed T 8H
IP: 8.2 mmcf/day + 418 bo/day
3Q’09
● CHK’s targeted drilling ROR is
~128%(1) in this play CHK Op Rigs
CHK Non
Non-Op
Op Rigs Miller 26 -6H
6H
Industry Rigs
IP: 4.1 mmcf/day + 434 bo/day
CHK Acreage
1) Assuming flat NYMEX natural gas prices of $7.00 per mcf and oil prices of $70.00 per bbl
14
2009 Investor and Analyst Meeting
● ROR: ~128%(1) 30
20
1) Assuming flat NYMEX natural gas prices of $7.00 per mcf and oil prices of $70.00 per bbl
15
2009 Investor and Analyst Meeting
10
200
8
150
6
100
4
2 50
0 0
16
2009 Investor and Analyst Meeting
● CHK is the most active driller in the Colony Wash and Texas
Panhandle Wash with 8 operated rigs currently drilling and an
average of ~11 operated in 2010
● CHK
CHK’ss current net production of 290 mmcfe/day
17
Other Plays
Mark Lester, EVP – Exploration
2009 Investor and Analyst Meeting
3
2009 Investor and Analyst Meeting
6 miles
WELLS DRILLED
CHK Operated wells (37 total, 35 producing)
CHK Non-Operated wells (67 total, 64 producing)
5
2009 Investor and Analyst Meeting
16000000
GAS 17.0 bcf
1600
● Current daily production from 35
14000000 1400
CHK wells of 2,400 bo and 25
OIL 1350 mbo mmcf
12000000 1200
Gas (Mcf)
OIL (MBO)
10000000 1000
2000000 200
● 120+ additional operated
0 0
locations
6
2009 Investor and Analyst Meeting
WOODS
WELLS DRILLED
CHK Operated wells chat (9 total, 8 producing)
CHK Operated wells limestone (5 total, 4 producing)
7
2009 Investor and Analyst Meeting
700
GAS 0.7 bcf
700
mmcf
600 600 ● Average economics: 170 mbo and
GAS (mmcf)
500 500
0.7 bcf for $2.75 mm well cost
OIL (mbo)
400 400
8
2009 Investor and Analyst Meeting
Ongoing Plays
● Anadarko Basin Deep Morrow/Springer – Western Oklahoma
– Currently 2 operated and 2 non-operated rigs
– Current net production of ~125 mmcfe/day
– R
Recentt di
discovery producing
d i g >10
10 mmcfe/day
f /d
– Going to 4 operated rigs by Q1 ‘10
● Sahara – Northwest Oklahoma
– Currently 1 operated and 2 non-operated rigs
– Current
C net production
d i off ~185
185 mmcfe/day
f /d
– Recent stepout and horizontal drilling has been successful
● Deep Haley – West Texas
– Currently 1 operated and 2 non-operated (APC) rigs
– Current net production of ~65 mmcfe/day
● WEHLU (West Edmond Hunton Lime Unit) – Central Oklahoma
– No rigs currently drilling (acreage mostly HBP)
– Current net production ~1,155 bo/day + 9 mmcfe/day
● Southern Oklahoma/Arkoma Basin
– No rigs currently drilling (acreage mostly HBP)
– Plan to bring in a rig in Q4 ‘09
– Current net production of ~185 mmcfe/day
9
2009 Investor and Analyst Meeting
New/Emerging Plays
10,000 6,000
4,000
5 000
5,000
2,000
- -
11
3D Seismic
S i i Summary
S
Larry Lunardi, VP Geophysics
2009 Investor and Analyst Meeting
In-Progress:
2,000 Sq Mi
In-House:
35,500 Sq Mi
2010 / 2011:
,
3,500 Sq
q Mi
13
2009 Investor and Analyst Meeting
In-house
Permitting
Planned
Licensed Acquired
Shooting Permitting
Best
quality
reservoir
SMCK
A
SALT
A’
BSMN
18
2009 Investor and Analyst Meeting
Marcellus North
3D Survey Outlines
Spec surveys deliver
significant cost savings to
operators
Average net cost per square
mile: $30,000 (<$50/acre)
NE Pennsylvania 3D
Extracted Line Thru Marcellus Section
MARCELLUS
SALT
A’
21
Contour Interval : 20’
2009 Investor and Analyst Meeting
Tully
Marcellus
Onondaga
~30’ of throw
Oriskany Salina
OKLAHOMA
TEXAS
23,000’ Wildcat
Discovery 1
Upper Cunningham
23,000’ Wildcat
Probable Discovery 2 Lower Cunningham
(WOC)
Bessie 3D Survey
Depth Corrected PSTM
Lower Pay Zone in Seismic reflection from the
Rose 1-30 Pilot Hole lower Colony Wash ‘B’ pay zone
3D seismic being used for targeting and mapping of multiple Granite Wash pay zones
25
2009 Investor and Analyst Meeting
Upper
Transition Porosity
Lower Zone West East
Porosity
Tcfe
8
3.4
– Variance report: production vs. forecast 6
9.0
– Finding cost report 4
6.9
8.1
5.6
– Type curve – compare all recent wells in 2
every play to type curve expectations 0
● Quarterly YE06 YE07 YE08 YE09(1)
1) Excluding price revisions and adoption of the new SEC reserve reporting rules
2
2009 Investor and Analyst Meeting
Forecasting Reserves:
yp
Hyperbolic Decline
● Reserves defined by decline curve analysis
have four inputs:
– The initial production – IP
– The initial decline rate – De
– The hyperbolic exponent or b factor
– The terminal exponential decline - Dmin
● B factors >1
>1.0
0 have been observed in
numerous low permeability – multiple layer
reservoirs
● Dmin <5% routinely observed in low
permeability reservoirs
● Pivey, Frantz, Williamson and Sawyer (2001
SPE 71038) indicated b values >2.0 in dual
porosity systems and 1.5 in CBM wells
when
h pressures were hi higher
h than
th the
th
desorption pressure, both of which are
attributes to shale gas systems
Year 1 b = 1.0
10
4
2009 Investor and Analyst Meeting
Forecasting Reserves:
Low Perm Reservoirs
D = 2.1% Formation = Lower Huron Shale
Appalachian Formation Age = Devonian
Huron K = .01 - 4.5md
Depth = ~2,000’-4,000’
Field Average
b = 1.9
19
169 Wells > 30
yrs prod history
Year 1 Year 25
D =1.9%
=1 9% Formation = Chester/Mississippi/Hunton
Sahara Formation Age = Mississippian
Field Average K = .05 - .5md
Depth = ~7,500’
b = 1.9
319 Wells > 10
yrs prod history
Year 1 Year 25
b=1
1.5
5
326 Wells > 10
yrs prod history
Year 1 Year 25
5
2009 Investor and Analyst Meeting
Forecasting Reserves:
Low Perm Reservoirs
Formation Name = Lance/ Mesaverde
Jonah Field D = 3.7%
Formation Age = Cretaceous
Average K = .01 - 1md
Depth = ~10,000’
b = 2.1
142 Wells >10
yrs prod history
Year 1 Year 12
D =3.1%
=3 1% Formation = Barnett
Barnett Formation Age = Mississippian
Vertical K = 100 – 500nd
Depth = ~6,500-8,000’
Field Average
b = 2.5
371 Wells >9
yrs prod history
Year 1 Year 10
Formation = Barnett
D =6.2%
Barnett Formation Age = Mississippian
Horizontal K = 100 – 500nd
Depth = ~6,500-8,000’
Field Average
b = 2.1
21
350 Wells >5 yrs
prod history
Year 1 Year 6
6
2009 Investor and Analyst Meeting
400
300
bcfe
200
100
-100
Per FAS 69 – Disclosure of Proved Oil and Gas Reserve Quantities: “Revisions represent changes in previous estimates of proved
reserves, either upward or downward, resulting from new information…”
7
2009 Investor and Analyst Meeting
•Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package
8
2009 Investor and Analyst Meeting
9
2009 Investor and Analyst Meeting
Over time, CHK will likely be the largest beneficiary of the new SEC rules
10
2009 Investor and Analyst Meeting
17,900
(96.2%) 16,100
((99.2%))
•Risk disclosure regarding unproved reserve estimates appears on page ii of the meeting presentation package