Chesapeake Energy Corporation Reports Record Results for the Fourth Quarter and Full-Year 2005
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Thursday February 23, 5:03 pm ET
Company Reports 2005 Fourth Quarter Net Income Available to Common Shareholders of $432 Million on Revenue of $1.751 Billion and Production of 130 Bcfe
Company Reports Full-Year 2005 Net Income Available to Common Shareholders of $880 Million on Revenue of $4.665 Billion and Production of 469 Bcfe
Proved Reserves Reach 7.5 Tcfe from Proved Reserve Adds of 2.6 Tcfe; Reserve Replacement Equals 659% at the Attractive Drilling and Acquisition Cost of $1.74 Per Mcfe
Oil and Gas Production Increases 27% Quarter-Over-Quarter, 29% Year-over-Year, and 8% Sequential Quarter-Over-Quarter; Organic Growth in 2005 Reaches 12%
OKLAHOMA CITY, Feb. 23 /PRNewswire-FirstCall/ -- Chesapeake Energy Corporation (NYSE: CHK - News) today reported financial and operating results for the fourth quarter of 2005 and for the full-year 2005. For the quarter, Chesapeake generated net income available to common shareholders of $432 million ($1.11 per fully diluted common share), operating cash flow of $833 million (defined as cash flow from operating activities before changes in assets and liabilities) and ebitda of $1.066 billion (defined as income before income taxes, interest expense, and depreciation, depletion and amortization expense) on revenue of $1.751 billion and production of 130 billion cubic feet of natural gas equivalent (bcfe).
For the full-year 2005, Chesapeake generated net income available to common shareholders of $880 million ($2.51 per fully diluted common share), operating cash flow of $2.426 billion and ebitda of $2.658 billion on revenue of $4.665 billion and production of 469 bcfe.
The company's fourth quarter and full-year 2005 net income available to common shareholders and ebitda include various items that are typically not included in published estimates of the company's financial results by certain securities analysts. Such items and their after-tax effects on fourth quarter and full-year reported results are described as follows:
* an unrealized mark-to-market gain of $113.0 million for the fourth
quarter and a $27.1 million gain for the full year resulting from the
company's oil and natural gas and interest rate hedging programs;
* a $0.2 million loss for the fourth quarter and a $44.7 million loss
for the full year resulting from the early extinguishment of certain
Chesapeake debt securities; and
* a reduction of net income available to common shareholders of
$4.4 million for the fourth quarter and $26.9 million for the full
year resulting from various exchanges of preferred stock for common
stock.
Adjusted for the above-mentioned gains and losses and giving effect to common shares issued for preferred shares during the period, Chesapeake's net income to common shareholders in the fourth quarter of 2005 would have been $324 million ($0.84 per fully diluted common share) and ebitda would have been $888 million. Similarly adjusted, Chesapeake's net income to common shareholders for the full year 2005 would have been $924 million ($2.57 per fully diluted common share) and ebitda would have been $2.687 billion. The foregoing items do not affect the calculation of operating cash flow. A reconciliation of operating cash flow, ebitda, adjusted ebitda and adjusted net income to comparable financial measures calculated in accordance with generally accepted accounting principles is presented on pages 16-19 of this release.
Oil and Natural Gas Production Again Sets Record; Fourth Quarter 2005
Production Up 27% Over Fourth Quarter 2004; Full-Year 2005 Production
29% Higher than Full-Year 2004 Production; Sequential Organic
Growth Rate 4% in Fourth Quarter 2005 and 12% for 2005
Production for the 2005 fourth quarter was 130.4 bcfe, an increase of 27.5 bcfe, or 27%, over the 102.9 bcfe produced in the 2004 fourth quarter and an increase of 10.0 bcfe, or 8%, over the 120.4 bcfe produced in the 2005 third quarter. The 27.5 bcfe increase in 2005's fourth quarter production over 2004's fourth quarter production consisted of 12.0 bcfe (44%) generated from organic drillbit growth and 15.5 bcfe (56%) generated from acquisitions, making the company's 2005 organic growth rate 12%. The 10.0 bcfe increase in sequential quarterly production consisted of 3.9 bcfe (39%) generated from organic drillbit growth and 6.1 bcfe (61%) generated from acquisitions, making the company's quarterly organic growth rate 4%. Production for the full-year 2005 was 468.6 bcfe, an increase of 106.0 bcfe, or 29%, over the 362.6 bcfe produced in 2004 and an increase of 200.2 bcfe, or 75%, over the 268.4 bcfe produced in 2003.
Chesapeake's 2005 organic growth of 12% follows organic growth of 20% in 2004, 18% in 2003, 6% in 2002 and 9% in 2001. During these five years, Chesapeake's organic growth rate has been 78% and its average annual organic growth rate has been 12%. The company's total U.S. production growth was 29% in 2005, 35% in 2004, 48% in 2003, 12% in 2002 and 20% in 2001. Chesapeake is anticipating a total production growth rate of 24% in 2006 and organic growth rates of at least 10% in 2006 and 7% in 2007.
Chesapeake's 2005 fourth quarter production of 130.4 bcfe was comprised of 118.3 billion cubic feet of natural gas (bcf) (91% on a natural gas equivalent basis) and 2.01 million barrels of oil and natural gas liquids (mmbbls) (9% on a natural gas equivalent basis). Chesapeake's average daily production rate for the quarter was 1.418 bcfe, consisting of 1.286 bcf of gas and 21,891 barrels (bbls) of oil. The 2005 fourth quarter was Chesapeake's 18th consecutive quarter of sequential production growth. During these 18 quarters, Chesapeake's U.S. production has increased 262%, for an average compound quarterly growth rate of 7.4% and an average compound annual growth rate of 32.8%.
Production for the full-year 2005 of 468.6 bcfe was comprised of 422.4 bcf (90% on a natural gas equivalent basis) and 7.70 mmbbls (10% on a natural gas equivalent basis). Chesapeake's average daily production rate for the year was 1.284 bcfe, consisting of 1.157 bcf of gas and 21,090 bbls of oil and natural gas liquids. The full-year 2005 was Chesapeake's 16th consecutive year of sequential production growth. During these 16 years, Chesapeake's production has increased at an average compound annual growth rate of 65%.
Oil and Natural Gas Proved Reserves Reach Record Level of 7.5 Tcfe;
Drilling and Acquisition Costs Are $1.74 per Mcfe as Company
Adds 2.6 Tcfe for a Reserve Replacement Rate of 659%
Chesapeake began 2005 with estimated proved reserves of 4.902 trillion cubic feet of natural gas equivalent (tcfe) and ended the year with 7.521 tcfe, an increase of 2.619 tcfe, or 53%. Including 237 bcfe of internally estimated proved reserves acquired or to be acquired in previously announced transactions subsequent to December 31, 2005, the company's pro forma proved reserves as of year-end were 7.758 tcfe.
During 2005, Chesapeake replaced its 469 bcfe of production with an estimated 3.088 tcfe of new proved reserves, for a reserve replacement rate of 659% at a drilling and acquisition cost of $1.74 per thousand cubic feet of natural gas equivalent (mcfe). Reserve replacement through the drillbit was 1.047 tcfe, or 223% of production (including 17 bcfe from performance revisions and 24 bcfe from oil and natural gas price revisions), or 34% of the total increase, at a cost of $1.74 per mcfe. Reserve replacement through acquisitions of proved reserves (reduced for 1 bcfe sold during the year) was 2.041 tcfe, or 436% of production and 66% of the total increase, also at a cost of $1.74 per mcfe.
Total costs incurred, including drilling, completion, acquisition, seismic, leasehold, capitalized internal costs, non-cash tax basis step-up from corporate acquisitions ($252 million in 2005, or $0.08 per mcfe, frequently booked as goodwill in the industry), asset retirement obligations and all other miscellaneous costs capitalized to oil and natural gas properties, were $2.40 per mcfe. These costs exclude future development costs of proved undeveloped reserves. A complete reconciliation of finding and acquisition cost information and a roll forward of proved reserves is presented on page 14 of this release.
Of the company's estimated proved reserves at year-end 2005, 92% were natural gas. Additionally, 65% were proved developed at year-end 2005 compared to 66% in 2004, 74% in 2003, 74% in 2002 and 71% in 2001. By volume, third-party reservoir engineers evaluated 78% of 2005's estimated proved reserves compared to 75% in 2004, 74% in 2003, 73% in 2002 and 71% in 2001. Given that Chesapeake owns an interest in more than 30,000 wells in the U.S., it would be cost prohibitive for third-party reservoir engineers to evaluate 100% of Chesapeake's properties.
As of December 31, 2005, Chesapeake's estimated future net cash flows discounted at 10% before income taxes (PV-10) and after income taxes (standardized measure) from its proved reserves were $22.9 billion and $16.0 billion, respectively, using field differential adjusted prices of $56.41 per bbl (based on a NYMEX year-end price of $61.11 per bbl) and $8.76 per thousand cubic feet ("mcf") (based on a NYMEX year-end price of $10.08 per mcf). In addition to the PV-10 value of its proved reserves, the book value of the company's other assets (including drilling rigs, land and buildings, investments in securities and other non-current assets) was $1.3 billion. The 2004 PV-10 and standardized measure of the company's proved reserves were $10.5 billion and $7.6 billion, respectively, using field differential adjusted prices of $39.91 per bbl (based on a NYMEX year-end price of $43.39 per bbl) and $5.65 per mcf (based on a NYMEX year-end price of $6.18 per mcf). A reconciliation of PV-10 to the standardized measure, which is calculated in accordance with SFAS 69, is presented on page 18 of this release.
Chesapeake's PV-10 changes by approximately $315 million for every $0.10 per mcf change in gas prices and approximately $50 million for every $1.00 per bbl change in oil prices. The decline rate of the company's proved developed producing reserves is projected to be 24% in the first year (calculated by comparing 2007 estimated production to 2006 estimated production), 16% in year two, 13% in year three, 11% in year four and 10% in year five for an average annual decline rate of 15% over the next five years.
Average Prices Realized and Hedging Results and Hedging Positions Detailed
Average prices realized during the 2005 fourth quarter (including realized gains or losses from oil and gas derivatives, but excluding unrealized gains or losses on such derivatives) were $52.65 per bbl and $8.08 per mcf, for a realized gas equivalent price of $8.14 per mcfe. Chesapeake's average realized pricing differentials to NYMEX during the fourth quarter were a negative $4.59 per bbl and a negative $2.86 per mcf. Realized losses from oil and natural gas hedging activities during the quarter generated a $2.72 loss per bbl and a $2.28 loss per mcf, for a 2005 fourth quarter realized hedging loss of $275.1 million, or $2.11 per mcfe.
Average prices realized during the full-year 2005 (including realized gains or losses from oil and gas derivatives, but excluding unrealized gains or losses on such derivatives) were $47.77 per bbl and $6.78 per mcf, for a realized gas equivalent price of $6.90 per mcfe. Chesapeake's average realized pricing differentials to NYMEX during 2005 were a negative $4.29 per bbl and a negative $1.26 per mcf. Realized losses from oil and natural gas hedging activities during the year generated a $4.43 loss per bbl and a $0.87 loss per mcf, for a full-year 2005 realized hedging loss of $401.7 million, or $0.86 per mcfe. This compares to oil and gas hedging gains of $29.1 million realized from 2001-04 and a current mark-to-market gain of approximately $440 million for the company's oil and gas hedging positions for 2006-09. Chesapeake's first quarter 2006 realized hedging gain is expected to exceed $215 million based on NYMEX prices as of February 17, 2006.
For investors' convenience, the following tables compare Chesapeake's hedged production volumes (through swaps) as of February 23, 2006 to those as of January 17, 2006.
Swap Positions as of February 23, 2006
Natural Gas Oil
Quarter or Year % Hedged $ NYMEX % Hedged $ NYMEX
2006 1Q 74% $10.72 58% $60.03
2006 2Q 73% $8.82 67% $61.13
2006 3Q 74% $8.87 64% $61.50
2006 4Q 64% $9.36 62% $61.33
2006 Total 71% $9.43 63% $61.02
2007 36% $9.85 22% $62.42
2008 22% $9.10 14% $65.48
Swap Positions as of January 17, 2006
Natural Gas Oil
Quarter or Year % Hedged $ NYMEX % Hedged $ NYMEX
2006 1Q 74% $10.72 58% $60.03
2006 2Q 57% $8.71 60% $60.27
2006 3Q 56% $8.72 57% $60.56
2006 4Q 46% $9.01 55% $60.30
2006 Total 58% $9.38 57% $60.29
2007 23% $9.72 15% $59.79
2008 13% $8.82 7% $63.94
Depending on changes in oil and natural gas futures markets and management's view of underlying oil and natural gas supply and demand trends, Chesapeake may either increase or decrease its hedging positions at any time in the future without notice.
The company's updated first quarter 2006 and full-year 2006 and 2007 forecasts are attached to this release in an Outlook dated February 23, 2006 labeled as Schedule "A". This Outlook has been changed from the Outlook dated January 17, 2006 (attached as Schedule "B" for investors' convenience) to reflect various updated information.
Key Operational and Financial Statistics Summarized Below for
2005 Fourth Quarter and Full-Year 2005
The table below summarizes Chesapeake's key results during the 2005 fourth quarter and compares them to the 2005 third quarter and the 2004 fourth quarter:
Three Months Ended:
12/31/05 9/30/05 12/31/04
Average daily production (in mmcfe) 1,418 1,308 1,119
Gas as % of total production 91 90 90
Natural gas production (in bcf) 118.3 108.8 92.2
Average realized gas price ($/mcf) (A) 8.08 6.64 5.50
Oil production (in mbbls) 2,014 1,926 1,792
Average realized oil price ($/bbl) (A) 52.65 53.30 28.70
Natural gas equivalent production (in bcfe) 130.4 120.4 102.9
Gas equivalent realized price ($/mcfe) (A) 8.14 6.85 5.42
Net marketing income ($/mcfe) .10 .07 .07
Production expenses ($/mcfe) (.72) (.67) (.55)
Production taxes ($/mcfe) (.55) (.44) (.34)
General and administrative costs ($/mcfe) (B) (.15) (.09) (.08)
Stock-based compensation ($/mcfe) (.04) (.04) (.02)
DD&A of oil and gas properties ($/mcfe) (2.09) (1.92) (1.67)
D&A of other assets ($/mcfe) (.12) (.11) (.09)
Interest expense ($/mcfe) (A) (.49) (.48) (.43)
Operating cash flow ($ in millions) © 832.8 634.6 407.6
Operating cash flow ($/mcfe) 6.39 5.27 3.96
Adjusted ebitda ($ in millions) (D) 887.7 686.2 464.7
Adjusted ebitda ($/mcfe) 6.81 5.70 4.51
Net income to common shareholders
($ in millions) 431.8 149.1 163.2
(A) includes the effects of realized gains or (losses) from hedging, but
does not include the effects of unrealized gains or (losses) from
hedging
(B) excludes expenses associated with non-cash stock-based compensation
© defined as cash flow provided by operating activities before changes
in assets and liabilities
(D) defined as income before income taxes, interest expense, and
depreciation, depletion and amortization expense, as adjusted to
remove the effects of certain items detailed on page 19.
The table below summarizes Chesapeake's key statistics during 2005 and compares them to the prior two years' results:
Year Ended:
12/31/05 12/31/04 12/31/03
Average daily production (in mmcfe) 1,284 991 735
Gas as % of total production 90 89 90
Natural gas production (in bcf) 422.4 322.0 240.4
Average realized gas price ($/mcf) (A) 6.78 5.29 4.85
Oil production (in mbbls) 7,698 6,764 4,665
Average realized oil price ($/bbl) (A) 47.77 28.33 25.85
Natural gas equivalent production (in bcfe) 468.6 362.6 268.4
Gas equivalent realized price ($/mcfe) (A) 6.90 5.23 4.79
Net marketing income ($/mcfe) .07 .05 .04
Production expenses ($/mcfe) (.68) (.56) (.51)
Production taxes ($/mcfe) (.44) (.29) (.29)
General and administrative costs ($/mcfe) (B) (.10) (.09) (.08)
Stock-based compensation ($/mcfe) (.03) (.01) (.00)
DD&A of oil and gas properties ($/mcfe) (1.91) (1.61) (1.38)
D&A of other assets ($/mcfe) (.11) (.08) (.06)
Interest expense ($/mcfe) (A) (.47) (.45) (.55)
Operating cash flow ($ in millions) © 2,425.7 1,402.5 897.2
Operating cash flow ($/mcfe) 5.18 3.87 3.34
Adjusted ebitda ($ in millions) (D) 2,687.5 1,571.7 1,058.2
Adjusted ebitda ($/mcfe) 5.74 4.33 3.94
Net income to common shareholders
($ in millions) 879.6 439.0 290.5
(A) includes the effects of realized gains or (losses) from hedging, but
does not include the effects of unrealized gains or (losses) from
hedging
(B) excludes expenses associated with non-cash stock based compensation
© defined as cash flow provided by operating activities before changes
in assets and liabilities
(D) defined as income before income taxes and cumulative effect of
accounting change, interest expense, and depreciation, depletion and
amortization expense, as adjusted to remove the effects of certain
items detailed on page 19.
Company's Leasehold and 3-D Seismic Inventories Now at 8.4 Million Net Acres
and 11.6 Million Acres, Respectively; Identified Unproved Reserves in
Company's Inventory Now 8.8 Tcfe
Chesapeake's exploratory and development drilling programs and production enhancement operations on its existing and acquired properties continue to produce operational results that exceed the company's forecasts and distinguish the company among its peers. During 2005, Chesapeake drilled 902 gross (686 net) operated wells and participated in another 1,066 gross (130 net) wells operated by other companies. The company's drilling success rate was 98% for company-operated wells and 95% for non-operated wells. During the year, Chesapeake invested $1.511 billion in operated wells (using an average of 73 operated rigs), $309 million in non-operated wells (using an average of 66 non-operated rigs) and $362 million in acquiring new 3-D seismic data and leases (exclusive of leases acquired through acquisitions).
Chesapeake attributes its strong organic growth rates during 2005 and in the past five years to management's early recognition that oil and gas prices were undergoing structural change and its subsequent decision to invest aggressively in the building blocks of value creation in the E&P industry -- people, land and seismic. During the past five years, Chesapeake has invested more than $3.0 billion in new leasehold and 3-D seismic acquisitions and now owns what it believes to be the largest inventories of onshore leasehold (8.4 million net acres) and 3-D seismic (11.6 million acres) in the U.S. On this leasehold, the company has identified more than a 10-year drilling inventory of approximately 28,000 drilling locations on which it believes it can develop approximately 2.8 tcfe of proved undeveloped reserves and approximately 8.8 tcfe of unproved reserves.
In addition, Chesapeake has significantly strengthened its technical capabilities during the past five years by increasing its land, geoscience and engineering staff by 400% to over 600 employees. Today, the company has more than 3,300 employees, of which approximately 70% work in the company's E&P operations and 30% work in the company's oilfield service operations.
Chesapeake characterizes its drilling activity by one of four play types: conventional gas resource, unconventional gas resource, emerging gas resource and Appalachian Basin gas resource. The company's leasehold and proved undeveloped and unproved reserve totals by play type are set forth below:
* 2.8 million net acres in its traditional conventional areas (i.e.,
much of the Mid-Continent, Permian, Gulf Coast, South Texas and other
areas) on which it has identified approximately 2,700 drillsites, 1.0
tcfe of proved undeveloped reserves and approximately 1.0 tcfe of
unproved reserves;
* 1.1 million net acres in its unconventional gas resource areas (i.e.,
Sahara, Granite/Cherokee/Atoka Washes, Hartshorne CBM, Barnett Shale
and Ark-La-Tex tight sands) on which it has identified approximately
14,000 drillsites, 1.3 tcfe of proved undeveloped reserves and
approximately 4.2 tcfe of unproved reserves;
* 1.2 million net acres in its emerging gas resource areas (i.e.,
Fayetteville Shale, Caney/Woodford Shales, Deep Haley, Deep Bossier
and others) on which it has identified approximately 2,000 drillsites,
0.1 tcfe of proved undeveloped reserves and approximately 1.9 tcfe of
unproved reserves; and
* 3.3 million net acres in the Appalachian Basin, where play types range
from conventional to unconventional to emerging gas resource. On its
significant Appalachian Basin acreage base acquired from CNR in
November 2005, Chesapeake has identified approximately 9,200
drillsites, 0.4 tcfe of proved undeveloped reserves and more than 1.7
tcfe of unproved reserves.
Chesapeake continues to actively acquire more acreage throughout its operating areas with more than 1.4 million acres acquired in 2005, of which almost 500,000 acres was acquired in the 2005 fourth quarter through an aggressive land acquisition program that is currently utilizing more than 900 contract landmen in the field.
Chesapeake's most significant land acquisition activities during the quarter took place in the Arkansas Fayetteville Shale and Deep Bossier plays in which today the company owns 1,000,000 net acres and 125,000 net acres, respectively. To date, Chesapeake has drilled four vertical wells in the Fayetteville Shale and is preparing to complete its first horizontal well. The company has two rigs dedicated to exploring its Fayetteville Shale acreage position, and if results are encouraging, the company plans to increase its drilling activity during 2006. Chesapeake will drill its first Deep Bossier well in East Texas later this year.
Balance Sheet Continues to Strengthen in 2005
As of December 31, 2005, Chesapeake's long-term debt was $5.490 billion and its stockholders' equity was $6.174 billion, for a debt-to-total capitalization ratio of 47%, compared to a debt-to-total capitalization ratio of 49% at year-end 2004. At year-end 2005, the company's estimated proved reserves were 7.5 tcfe, for long-term debt per mcfe of proved reserves of $0.73, compared to $0.63 per mcfe at year-end 2004 and $0.65 per mcfe at year- end 2003. We believe the growth in operating margins and cash flows per mcfe we have experienced from 2003 to 2005 more than compensate for the modest increase in debt per mcfe. Operating income per mcfe during this three-year period has increased from $2.52 per mcfe in 2003 to $2.74 per mcfe in 2004 and $3.78 per mcfe in 2005. Given Chesapeake's strong reserve replacement record through the drillbit and through acquisitions, low operating costs and high returns on invested capital, the company believes that it can continue to strengthen its balance sheet in the years ahead.
In February 2006, Chesapeake increased its financial flexibility by amending its secured revolving bank credit facility to increase the aggregate commitments under the facility from $1.25 billion to $2.0 billion and to extend the maturity to February 2011.
Chesapeake's Timely Drilling Rig Investments Deliver Operational,
Acquisition and Financial Rewards
In anticipation of today's tight drilling rig market, Chesapeake began making a series of investments in drilling rigs in 2001. In that year, Chesapeake formed its 100% owned drilling rig subsidiary, Nomac Drilling Corporation, with an investment of $26 million to build and refurbish five drilling rigs. Chesapeake has invested a total of $123 million in Nomac's 19 operating rigs, invested another $26 million in 25 rigs that Nomac is currently building, and budgeted an additional $191 million for completion of these rigs.
In addition to Nomac, Chesapeake has also made four other major drilling rig investments. The first of these was its ownership of approximately 17% of the common stock of Pioneer Drilling Corporation (Amex: PDC - News), which it began acquiring in 2003. The company recently sold its PDC stock, realizing proceeds of $159 million and a pre-tax profit of $116 million that it will recognize in the 2006 first quarter. Chesapeake then re-invested the PDC proceeds to acquire 13 rigs from privately held Martex Drilling Company, L.L.P. for $150 million. The company believes it was able to acquire the Martex rigs at an approximate 33% discount to the stock market valuation of PDC's rigs.
Chesapeake has invested $43 million in two private drilling rig contractors, DHS Drilling Company and Mountain Drilling Company, in which Chesapeake owns 45% and 49%, respectively. DHS owns ten rigs and has five more rigs on order. Mountain owns one rig and has ordered another nine rigs for delivery in 2006 and 2007. Chesapeake's rig investments have served as a partial hedge to rising service costs and have also provided competitive advantages in making acquisitions and in developing its own leasehold on a more timely basis.
Management Comments
Aubrey K. McClendon, Chesapeake's Chief Executive Officer, commented, "Today's announcement of very strong operational and financial results for the fourth quarter and full-year 2005 provides compelling evidence that Chesapeake's business strategy continues to create substantial growth and investor value while also significantly mitigating risk through our proactive commodity price and service cost hedging initiatives.
"The year 2005 marks our most successful year to date. In addition to achieving a record level of proved reserves, production, net income to common shareholders, cash flow and ebitda, Chesapeake's 12% organic growth rate and 659% reserve replacement at an attractive drilling and acquisition cost of $1.74 per mcfe were among the very best of all large-cap public E&P companies.
"In addition, we made a series of value-added acquisitions during 2005, capped off by our $3 billion acquisition of Columbia Natural Resources, a dominant producer and leasehold owner in the Appalachian Basin. We have nearly completed the integration of CNR's operations and are preparing to significantly increase our Appalachian drilling activity. Furthermore, we anticipate continuing to take advantage of our attractively priced oil and natural gas hedges and our deep backlog of drilling projects by increasing our drilling rig count during the year from its current level of 76 to 100 or more, with exact levels of future activity determined by natural gas prices, service costs and other factors.
"The company's business strategy has worked very well for investors. Since our IPO on February 4, 1993, we have delivered an approximate 2,300% increase in our common stock price during the past 13 years. Our business strategy features delivering growth through a balance of acquisitions and organic drilling, focusing on natural gas to take advantage of strong long- term natural gas supply/demand fundamentals, building dominant regional scale to achieve low operating costs and high returns on capital and successfully mitigating risk through the opportunistic hedging of commodity prices and service costs. We believe Chesapeake's management team can continue the successful execution of the company's distinctive business strategy and continue to deliver significant investor value for years to come."
Conference Call Information
A conference call has been scheduled for Friday morning, February 24, 2006 at 9:00 a.m. EST to discuss this release. The telephone number to access the conference call is 913.981.5543 and the confirmation code is 3471819. For those unable to participate in the conference call, a replay will be available from 12:00 p.m. EST, February 24, 2006 through midnight EST on March 9, 2006. The number to access the conference call replay is 719.457.0820 and the passcode for the replay is 3471819. The conference call will also be simulcast live on the Internet and can be accessed at chkenergy.com by selecting "Conference Calls" under the "Investor Relations" section. The webcast of the conference call will be available on the website for one year. |
