• Fourth Quarter 2007 Production of 2.2 Bcfe per Day Increases 10% Sequentially and 34% Year-Over-Year; Full-Year Production of 2.0 Bcfe per Day Increases 23% Year-Over-Year
• Proved Reserves Reach Record Level of 10.9 Tcfe and Increase 21% Year-Over-Year; Company Delivers Full-Year Reserve Replacement Rate of 369% from 1.9 Tcfe of Additions at a Drilling and Acquisition Cost of $2.08 per Mcfe
• Risked Unproved Reserves Reach 33 Tcfe and Unrisked Unproved Reserves Reach 100 Tcfe; Leasehold and 3-D Seismic Inventories Increase to 13 Million Net Acres and 19 Million Acres, Respectively
Chesapeake Energy Corporation has reported production and proved reserves for the 2007 fourth quarter and full year. Daily production for the 2007 fourth quarter averaged 2.219 billion cubic feet of natural gas equivalent (bcfe), an increase of 193 million cubic feet of natural gas equivalent (mmcfe), or 10%, over the 2.026 bcfe produced per day in the 2007 third quarter and an increase of 566 mmcfe, or 34%, over the 1.653 bcfe of daily production in the 2006 fourth quarter.
Chesapeake's 2007 fourth quarter production of 204.2 bcfe was comprised of 187.8 billion cubic feet of natural gas (bcf) (92% on a natural gas equivalent basis) and 2.74 million barrels of oil and natural gas liquids (mmbbls) (8% on a natural gas equivalent basis). Chesapeake's average daily production for the quarter of 2.219 bcfe consisted of 2.041 bcf of natural gas and 29,728 barrels of oil and natural gas liquids (bbls).
The company's sequential and year-over-year growth rates for its 2007 fourth quarter natural gas production were 10% and 35%, respectively, while the company's sequential and year-over-year growth rates for its oil production were 2% and 23%, respectively. The 2007 fourth quarter was Chesapeake's 26th consecutive quarter of sequential U.S. production growth. Over these 26 quarters, Chesapeake's U.S. production has increased 467%, for an average compound quarterly growth rate of 7% and an average compound annual growth rate of 30%. Chesapeake's daily production for the 2007 full year averaged 1.957 bcfe, an increase of 372 mmcfe, or 23%, over the 1.585 bcfe of daily production for the 2006 full year.
Chesapeake's 2007 full-year production of 714.3 bcfe was comprised of 655.0 bcf (92% on a natural gas equivalent basis) and 9.882 mmbbls (8% on a natural gas equivalent basis). Chesapeake's average daily production for the 2007 full year of 1.957 bcfe consisted of 1.794 bcf and 27,074 bbls. The company's growth rate for its 2007 full-year natural gas production was 24% and its growth rate for 2007 full-year oil production was 14%. The 2007 full year was Chesapeake's 18th consecutive year of sequential production growth.
Oil and Natural Gas Proved Reserves Reach Record Level of 10.9 Tcfe; Drilling and Acquisition Costs for 2007 Full-Year Average $2.08 per Mcfe; Company Adds 1.9 Tcfe for a Reserve Replacement Rate of 369%
Chesapeake began 2007 with estimated proved reserves of 8.956 trillion cubic feet of natural gas equivalent (tcfe) and ended the year with 10.879 tcfe, an increase of 1.923 tcfe, or 21%. During the year, Chesapeake replaced its 714 bcfe of production with an estimated 2.637 tcfe of new proved reserves for a reserve replacement rate of 369%. Reserve replacement through the drillbit was 2.468 tcfe, or 346% of production (including 1.248 tcfe of positive performance revisions and 97 bcfe of positive revisions resulting from oil and natural gas price increases between December 31, 2006 and December 31, 2007) and 94% of the total increase. Reserve replacement through the acquisition of proved reserves completed during the year was 377 bcfe, or 53% of production and 14% of the total increase. Proved reserves divestments during the year totaled 208 bcfe for proceeds of $1.1 billion at a sales price of $5.49 per mcfe.
On a per thousand cubic feet of natural gas equivalent (mcfe) basis, the company's total drilling and acquisition costs for the year were $2.08 per mcfe (excluding costs of $343 million for seismic, $1.1 billion for acquisition of unproved properties, $1.1 billion to acquire new leasehold, $254 million for capitalized interest on leasehold and unproved property and $159 million relating to tax basis step-up and asset retirement obligations, as well as positive revisions of proved reserves from higher oil and natural gas prices). Excluding these same items, Chesapeake's exploration and development costs through the drillbit were $2.13 per mcfe during the year while reserve replacement costs through acquisitions of proved reserves were $1.78 per mcfe.
