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Chesapeake Energy Corporation Reports Financial And Operational Results For The 2012 Third Quarter

Stocks in this article: CHK

During 2012 First Three Quarters, Company Adds New Net Proved Reserves of 3.9 Tcfe through the Drillbit; Total Proved Reserves Decrease 14% to 16.2 Tcfe, or 2.7 Bboe, Due to Downward Price-Related Revisions and Net Divestitures

The company's September 30, 2012, proved reserves were 16.2 trillion cubic feet of natural gas equivalent (tcfe), or 2.7 billion barrels of oil equivalent (bboe), a 14% decrease from year-end 2011. Chesapeake added 3.9 tcfe, or 650 million barrels of oil equivalent (mmboe), of new proved reserves (net of 596 bcfe of non-price related revisions) through the drillbit at a drilling and completion cost of $1.92 per mcfe, or $11.52 per barrel of oil equivalent (boe) during the first three quarters of 2012. Primarily as a result of lower U.S. natural gas prices, the company also recorded downward revisions of 4.9 tcfe, or 810 mmboe, during the first three quarters of 2012, largely associated with the removal of proved undeveloped reserves (PUDs) in the company’s Barnett and Haynesville Shale plays. Additionally, during this period, Chesapeake recorded net divestitures of 507 bcfe, or 85 mmboe.

The following table presents Chesapeake’s September 30, 2012 proved reserves, estimated future net cash flows from proved reserves (discounted at an annual rate of 10% before income taxes (PV-10)) and proved developed percentage, each calculated based on the trailing 12-month average price required under SEC rules and the 10-year average NYMEX strip prices as of September 30, 2012. Additional information regarding the SEC case can be found on page 16.

Pricing Method  

Natural Gas Price




Oil Price











Trailing 12-month avg (SEC) (a)   $2.83     $95.05     16.2     $18.5     59%
9/30/12 10-year avg NYMEX strip (b) $4.80 $88.58 22.2 $29.5 52%

a) Reserve volumes estimated using SEC reserve recognition standards and pricing assumptions based on the trailing 12-month average first-day-of-the-month prices as of September 30, 2012. This pricing yields estimated proved reserves for SEC reporting purposes.

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