Business Editors/Energy Writers
OKLAHOMA CITY--(BUSINESS WIRE)--October 30, 2007--Chesapeake Energy Corporation (NYSE:CHK) today announced that it has recently initiated production of approximately 30 million cubic feet of natural gas equivalent (mmcfe) from the first 11 wells on its 18,000-acre Dallas/Fort Worth (DFW) International Airport lease. Acquired approximately one year ago for $185 million, the airport lease represents a significant value creation opportunity for Chesapeake, its minority- and women-owned business enterprise (M/WBE) partners and DFW International Airport. Based on the results of the company’ s proprietary 3-D seismic analysis acquired earlier this year and the drilling, completion and production results to date, the company plans to drill approximately 300 - 325 wells on the airport lease.
Assuming an estimated average recovery of approximately 2.5 - 3.0 billion cubic feet of natural gas equivalent (bcfe) gross reserves per well, the company believes that up to one trillion cubic feet of natural gas equivalent (tcfe) reserves can be produced from under the airport at an all-in finding and development cost of approximately $2.00 per thousand cubic feet of natural gas equivalent (mcfe).
Since commencing 3-D seismic operations in December 2006 and drilling operations in May 2007, Chesapeake has employed five drilling rigs on a continuous basis at the airport and anticipates maintaining that level of activity through 2011, at which time the company should have completed drilling its planned 300 - 325 wells. To date, Chesapeake has initiated drilling activities on 33 wells, has started completion activities on 18 wells and is selling natural gas from 11 wells. Chesapeake hopes to reach a peak production level from the airport lease of approximately 250 mmcfe per day by year-end 2011 and expects production to continue for at least the next 50 years.
DFW International Airport Management Comment
Jeffrey P. Fegan, Chief Executive Officer of DFW International Airport, said, “We have been fortunate to partner with Chesapeake in this venture and are delighted that together, we have exceeded every goal and met every deadline. Of course, the ultimate benefactor will be our passengers, who will see enhanced facilities and amenities as we use natural gas revenues to upgrade DFW and assure we remain one of the finest airports in the world. We look forward to continuing a long and mutually rewarding relationship with Chesapeake.”
M/WBE Partner Comment
Adelfa and Bill Callejo, managers of M/WBE investor Callejo Energy, LLC, commented, “We have looked forward to this day for a long time. As soon as we heard that Chesapeake was bidding on the airport lease, we wanted to be a part of it. The DFW International Airport has long been considered the largest economic engine in the Metroplex and we now know that the Barnett Shale will be an important new economic driver at the airport. We have greatly appreciated being a partner with Chesapeake and are delighted that preliminary results are so positive.”
Al Zapanta, Chairman of M/WBE investor PAZ Energy, said, “We're excited to hear the great news and continue to have high expectations for the DFW International Airport lease project with our great friend and partner, Chesapeake. We especially want to acknowledge Chesapeake's exceptional work in its drilling and field operations to reach our milestone of first production well ahead of schedule.”
Chesapeake Management Comment
Aubrey K. McClendon, Chesapeake’ s Chief Executive Officer, commented, “Today’ s announcement confirms what we had hoped for all along - that underlying the DFW International Airport would be a treasure of natural gas that could be worth billions of dollars if properly developed by a company with the vision and skills that Chesapeake brings to the Barnett Shale. I am very proud of the dozens of Chesapeake employees in the field and in the office who have worked so hard in the past year to bring this project to fruition. I also compliment the DFW International Airport management team and our partners, all of whom have been helpful along the way. We are pleased to have been able to lead this unique and successful partnership to where we are today - on the cusp of generating billions of dollars of value for our shareholders and our partners.
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