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

The following table presents Chesapeake’s December 31, 2012 estimated 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 December 31, 2012. Additional information regarding the SEC case can be found on page 14.

         

Pricing Method
 

Natural Gas Price

($/mcf)
 

 

Oil Price

($/bbl)
  Proved

Reserves

(tcfe)
 

PV-10

(billions)
  Proved

Developed

Percentage
Trailing 12-month avg (SEC) (a) $2.76 $94.84 15.7 $17.8 57%
12/31/12 avg NYMEX strip (b) $4.85 $87.90 19.6 $27.9 55%
 

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 December 31, 2012. This pricing assumption yields estimated proved reserves for SEC reporting purposes.

b) Natural gas and oil volumes estimated under the 10-year average NYMEX strip reflect an alternative pricing scenario that illustrates the sensitivity of proved reserves to a different pricing assumption. Futures prices represent an unbiased consensus estimate by market participants about the likely prices to be received for future production. Management believes that 10-year average NYMEX strip prices provide a better indicator of the likely economic producibility of the company’s proved reserves than the historical 12-month average price.
 

Operational Update; Eagle Ford Production Grows 266% Year Over Year and 20% Sequentially

Since 2000, Chesapeake has built a leading position in 10 of what it believes are the Top 15 unconventional plays in the U.S. – the Eagle Ford Shale in South Texas; the Marcellus Shale in Pennsylvania and West Virginia; the Utica Shale in Ohio, West Virginia and Pennsylvania; the Granite Wash, Cleveland, Tonkawa and Mississippi Lime plays in the Anadarko Basin in Oklahoma and the Texas Panhandle; the Haynesville/Bossier shales in western Louisiana and East Texas; the Barnett Shale in North Texas; and the Niobrara Shale in the Powder River Basin in Wyoming. These 10 plays represent Chesapeake’s core assets and are the nearly exclusive focus of the company’s planned future drilling efforts.

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