Record Reserves for Chesapeake Reach 10.9 Tcfe

Chesapeake Energy 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 and 94% of the total increase (including 1.248 tcfe of positive performance revisions, of which 1.207 tcfe relate to infill drilling and increased density locations, and 97 bcfe of positive revisions resulting from oil and natural gas price increases between December 31, 2006 and December 31, 2007). 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. Divestments of proved reserves during the year totaled 208 bcfe for proceeds of $1.1 billion at a sales price of $5.49 per mcfe.

Chesapeake'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. A complete reconciliation of finding and acquisition costs and a roll-forward of proved reserves are presented on page 16 of this release.

During 2007, Chesapeake continued the industry's most active drilling program and drilled 1,992 gross (1,695 net) operated wells and participated in another 1,679 gross (224 net) wells operated by other companies. The company's drilling success rate was 99% for company-operated wells and 97% for non-operated wells. Also during the year, Chesapeake invested $4.3 billion in operated wells (using an average of 140 operated rigs) and $0.7 billion in non-operated wells (using an average of 105 non-operated rigs).

As of December 31, 2007, Chesapeake's estimated future net cash flows from proved reserves, discounted at an annual rate of 10% before income taxes (PV-10), and after income taxes (standardized measure) were $20.6 billion and $15.0 billion, respectively, using field differential adjusted prices of $6.19 mcf (based on a NYMEX year-end price of $6.80 per mcf) and $90.58 per bbl (based on a NYMEX year-end price of $96.00 per bbl). Chesapeake's current PV-10 changes by approximately $390 million for every $0.10 per mcf change in natural gas prices and approximately $56 million for every $1.00 per bbl change in oil prices.

By comparison, the December 31, 2006 PV-10 and standardized measure of the company's proved reserves were $13.6 billion and $10.0 billion, respectively, using field differential adjusted prices of $5.41 per mcf (based on a NYMEX year-end price of $5.64 per mcf) and $56.25 per bbl (based on a NYMEX year-end price of $61.15 per bbl). A reconciliation of PV-10 and standardized measure is presented on page 22 of this release.

In addition to the PV-10 value of its proved reserves, the net book value of the company's other assets (including gathering systems, compressors, land and buildings, investments, long-term derivative instruments and other non-current assets) was $3.2 billion as of December 31, 2007 and $2.8 billion as of December 31, 2006.