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Chesapeake Energy Corporation Reports Financial And Operational Results For The 2012 Fourth Quarter And Full Year

For the 2012 full year, the company’s year-over-year growth rate of natural gas production was 12%, or approximately 333 bcf per day, and its year-over-year growth rate of liquids production was 54%, or approximately 46,770 bbls per day. Chesapeake’s year-over-year liquids production growth consisted of oil production growth of 84%, or approximately 38,950 bbls per day, and NGL production growth of 19%, or approximately 7,820 bbls per day.

As a result of completed and planned asset sales and the continued shift in focus in its drilling program from dry gas plays to liquids-rich plays, Chesapeake is projecting its natural gas production to decline approximately 7% in 2013 and is projecting its liquids production to increase approximately 27% in 2013.

During 2012, Company Adds New Net Proved Reserves of 5.0 Tcfe, or 840 Mmboe, through the Drillbit; Total Proved Reserves Decrease 17% to 15.7 Tcfe, or 2.6 Bboe, Primarily Due to Downward Price-Related Revisions and Net Divestitures

The company's December 31, 2012 estimated proved reserves were 15.690 tcfe, or 2.6 billion barrels of oil equivalent (bboe), a 17% decrease from year-end 2011. Chesapeake added 5.042 tcfe, or 840 million barrels of oil equivalent (mmboe), of new proved reserves (net of 1.349 tcfe, or 225 mmboe of nonprice-related revisions) through the drillbit at a drilling and completion cost of $1.82 per thousand cubic feet of natural gas equivalent (mcfe), or $10.92 per barrel of oil equivalent (boe), during 2012.

Primarily as a result of lower natural gas prices, the company recorded downward price-related revisions of 5.414 tcfe, or 902 mmboe, during 2012. These price revisions were seen primarily with the removal of proved undeveloped reserves (PUDs) in the company’s Barnett and Haynesville shale plays. The majority of the downward nonprice-related revisions of 1.349 tcfe resulted from the continued execution of the company’s strategy to shift its drilling focus from natural gas to liquids-rich areas and to drill in the “core of the core” of its acreage positions. As rigs were reallocated, PUDs were removed from various non-core areas resulting in downward revisions. Additionally, during 2012, Chesapeake recorded net divestitures of 1.305 tcfe, or 218 mmboe.

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