Chesapeake Energy Corporation is the largest independent and third-largest overall producer of natural gas in the U.S. with an enterprise value of $37 billion. Headquartered in Oklahoma City, the company’s operations are focused on exploratory and developmental drilling and corporate and property acquisitions in the Fort Worth Barnett Shale, Fayetteville Shale, Haynesville Shale, Mid-Continent, Appalachian Basin, Permian Basin, Delaware Basin, South Texas, Texas Gulf Coast and Ark-La-Tex regions of the United States. Chesapeake has more than 6,500 employees and in 2008 was named #61 on FORTUNE’s 100 Best Companies to Work For® list.

We believe the following six characteristics highlight our most important company strengths, distinguish us from other independent natural gas producers and help explain our very strong track record of delivering value to shareholders since our IPO in 1993:

• HIGH-QUALITY ASSET BASE
  Our producing properties are characterized by long-lived reserves, established production profiles and an emphasis on natural gas. Based upon current production and proved reserve levels, our proved reserves-to-production ratio, or reserve life, is approximately 11 years. In each of our operating areas, the company's properties are concentrated in locations that enable us to establish substantial economies of scale in drilling and production operations and facilitate the application of more effective reservoir management practices. We intend to continue building our asset base in each of our primary and secondary operating areas through a balance of acquisitions, exploitation, and exploration.
  
  
  
• LOW-COST PRODUCER
  Our high-quality asset base, the work ethic of our employees, our hands-on management style and our location in Oklahoma City have enabled us to achieve a low operating and administrative cost structure. During the 2003 full year, our cash operating costs per unit of production were $0.89 per mcfe, which consisted of general and administrative expenses of $0.09 per mcfe (including $0.01 per mcfe of stock-based compensation), production expenses of $0.51 per mcfe and production taxes of $0.29 per mcfe. We believe this is one of the lowest cost structures among mid- to large-cap independent oil and natural gas producers. We seek to control operations of the properties in which we own an interest. Currently we operate wells that provide approximately 80% of the value of our estimated proved reserves. This large percentage of operational control provides us with a high degree of operating flexibility and cost control.
  
  
  
• SUCCESSFUL ACQUISITION PROGRAM
  Our experienced asset acquisition team focuses on enhancing and expanding our existing assets in our primary and secondary operating areas. These areas are characterized by long-lived natural gas reserves, low lifting costs, multiple geological targets, favorable basis differentials to benchmark commodity prices, well-developed oil and gas transportation infrastructures and considerable potential for further consolidation of assets. Since January 1998, and including our recently completed acquisitions in 2004, we have acquired 3.9 tcfe of proved reserves at an average cost of $1.18 per mcfe. We are well-positioned to continue making attractive small and medium-sized acquisitions as a result of our extensive track record of identifying, completing and integrating multiple successful acquisitions, our large operating scale and our knowledge and expertise in the regions in which we operate.
  
  
  
• LARGE INVENTORY OF DRILLING PROJECTS
  During the 15 years since our inception, Chesapeake has been among the ten most active drillers of new wells in the United States and is today the most active driller of new wells in the United States and in the Mid-Continent. In addition, we have developed an industry-leading expertise in drilling deep vertical and horizontal wells in search of large natural gas accumulations in challenging reservoir conditions. We pursue deep drilling targets because of our view that most undiscovered gas reserves in the U.S. will be found at depths below 15,000 feet. In addition, our large 8.6 million acre 3-D seismic inventory, much of which is proprietary to Chesapeake, provides the company with significant advantages over our competitors, who largely prefer to drill shallower development wells. As a result of our aggressive land and seismic acquisition strategies, we have been able to accumulate an onshore leasehold position of approximately 3.1 million net acres. On this very large acreage position, our technical teams have identified over 3,000 exploratory and developmental drillsites, representing a backlog of five years of future drilling opportunities.
  
  
  
• HEDGING PROGRAM
  We have used and intend to continue using hedging programs to reduce the risks inherent in producing oil and natural gas, commodities that are characterized by significant price volatility. We believe this price volatility is likely to continue and may even increase in the years ahead, but that a producer can use this volatility to its benefit by taking advantage of prices when they reach levels management believes lock in exceptional rates of return on the company's invested capital. Between January 1, 2001 and March 31, 2004, we have increased our oil and gas revenues by over $210 million through our successful hedging programs.
  
  
  
• ENTREPRENUERIAL MANAGEMENT
  Our management team formed the company in 1989 with an initial capitalization of $50,000. Throughout the following years, our management team has guided the company through various operational and industry challenges and extremes of oil and gas prices to create one of the six largest independent producers of natural gas in the U.S. with an enterprise value of approximately $6.7 billion. Our co-founders, Aubrey K. McClendon and Tom L. Ward, have been partners in the oil and gas industry for 21 years and beneficially own, as of March 31, 2004, approximately 16.0 million and 17.6 million of the company's 241 million common shares, respectively. In addition, according to Thomson Financial Corporation, our co-founders demonstrated their ongoing confidence in the continued success of the company by making open market purchases of the fourth largest amount (by value) of insider common stock among all publicly traded U.S. companies in 2003.

Chesapeake Energy Corporation, an Oklahoma City-based company, is one of the six largest U.S. independent natural gas producers and the second most active driller of new wells in the U.S. Chesapeake offers numerous career opportunities for talented professionals within our dynamic and growing organization.

Chesapeake offers excellent compensation and benefit packages including a very generous equity compensation plan.

Equal Employment Opportunity is our commitment and goal. All qualified candidates will receive consideration for employment without regard to race, national origin, gender, age, religion, disability, sexual orientation, veteran status, marital status or any other protected status designated by federal, state or local law. Applicants are encouraged to confidentially self-identify when applying. Employment is contingent upon successful completion of a background investigation. Chesapeake supports a drug-free work environment.

Chesapeake is looking for people who are self-motivated, team players and possess excellent interpersonal skills. A high degree of analytical ability and excellent oral and written communication skills are necessary for success in our fast-paced and rewarding environment.

New technology boosts drilling
By Jeff Cloud
“Energy companies digging deep” and “Drilling helps rural economies” (business features, March 21) made excellent points about the investment that Oklahoma’s natural gas and oil exploration companies are making in our state.

I recently had the chance to view the investment that Chesapeake Energy Corp. has made in 3-D seismic visualization. I came away thoroughly
impressed with this relatively new innovation. It allows geophysicists, geologists, engineers and landmen to more accurately identify sands that
might house natural gas reserves at extreme
depths—often 15,000 feet or more.

By having a more informed idea of where the state’s undiscovered reserves might be, Chesapeake is able to drill more deep wells at less risk and with a greater productivity rate. This ultimately strengthens the Oklahoma economy in the form of gross production revenues, royalty payments and high-quality jobs in urban and rural Oklahoma.

Although many shallow reserves have been thoroughly explored over the years, today’s 3-D seismic technology and this state-of-the art visualization
process can provide Oklahoma’s energy producers
with even greater tools. They can focus on deep gas drilling in areas with the potential for huge recovery.

The timing for innovative technology couldn’t be better. Drilling permits in Oklahoma during 2003 were at a 15-year high and rig counts also hit a 15-year high last month. Oil and natural gas prices are at levels not seen in recent times.

The Oklahoma Corporation Commission recognizes the contribution to our state being made by the energy sector. Our dedicated employees are working hard to expedite review of permits and applicable regulations to allow producers to take advantage of high prices for two of Oklahoma’s most precious commodities — natural gas and oil.

Many producers have significantly increased their drilling budgets in 2004; Chesapeake alone plans to spend about $600 million on drilling in Oklahoma this year. On top of that are more than $100 million of expenditures for leasehold acquisition and seismic shooting and processing.

With Chesapeake’s Oklahoma-focused drilling program, this activity level is expected to result in many more millions of dollars generated in gross production revenue and royalty payments, further strengthening the state’s economy.

Oklahomans have endured many ups and downs in the energy sector and survived. However, we have not prospered unless our oil and gas industry was also prospering. We must not take for granted the commitment to Oklahoma by companies such as Chesapeake, Devon and Kerr-McGee and by many smaller independents. They are putting their capital at risk in a volatile industry.

Many Oklahomans owe their jobs, farms, schools, museums and churches to the petroleum industry and the many philanthropists who were dedicated to the continued development of our state. My hat is off to those at Chesapeake and to all the other Oklahoma energy producers.