Chesapeake Energy Corporation′s Buffalo Creek Well in Western Oklahoma Reaches Rare 60 bcf Production Milestone

18.07.2011  |  Business Wire

Chesapeake Energy Corporation (NYSE:CHK) today announced its Buffalo
Creek 1-17 well located in Beckham County, Oklahoma, recently surpassed
cumulative gross production of more than 60 billion cubic feet of
natural gas (bcf). Chesapeake operates the well with an 82.6% working
interest and a 65.8% net revenue interest.

Chesapeake originally spud the well in May 2002 and reached a total
depth of approximately 21,000 feet in the Cunningham Sand of the Deep
Springer formation with first sales commencing in December 2002. The
well averaged approximately 41 million cubic feet of natural gas (mmcf)
per day for the first two years of production and is still producing
approximately 8 mmcf per day.

Total gross capital expenditures to drill and complete the well were
$8.5 million and subsequent operating expenses have been $1.4 million,
or $0.024 per thousand cubic feet of natural gas equivalent (mcfe).
Total gross revenue has been approximately $320 million, which includes
approximately $65 million paid to royalty owners and approximately $15
million paid in severance tax to the state of Oklahoma. Total net cash
flow from the well to the working interest owners has been approximately
$230 million, or a multiple of 27 times the original cost of drilling
and completing the well, and the realized price per mcfe has averaged
$5.35.

Aubrey K. McClendon, Chesapeake′s Chief Executive Officer, commented,
'The Buffalo Creek 1-17 has certainly been a special well in the history
of Chesapeake. As early pioneers drilling deep conventional wells using
3-D seismic in the Anadarko Basin, the success of the Buffalo Creek 1-17
well initiated a process almost 10 years ago that has now led to
Chesapeake owning the largest leasehold position in the Anadarko Basin.
This industry-leading leasehold position has proved to be exceedingly
valuable as unconventional plays such as the Granite Wash, Cleveland and
Tonkawa plays have emerged in areas in and around our traditional
strongholds of conventional Anadarko Basin production. We believe that
this is only the sixth well in Oklahoma history to reach this remarkable
milestone of 60 bcf of cumulative production and Chesapeake now operates
four of the six most prolific natural gas wells ever drilled in
Oklahoma. I offer my congratulations to the entire Chesapeake Anadarko
Basin team for being part of this historic well.?

McClendon added, 'As a result of this well′s success and the many other
successful Deep Springer wells we have drilled in the Anadarko Basin
over the years that followed the drilling of the Buffalo Creek 1-17, we
continue to pursue ultra-deep 3-D based Deep Springer drilling in the
Anadarko Basin and we are currently operating three rigs in the play,
where we believe at least another 185 wells can be drilled in the years
ahead on our approximate 75,000 net acres of Deep Springer leasehold.?

Chesapeake Energy Corporation is the second-largest producer of
natural gas, a Top 15 producer of oil and natural gas liquids and the
most active driller of new wells in the U.S.Headquartered
in Oklahoma City, the company's operations are focused on discovering
and developing unconventional natural gas and oil fields onshore in the
U.S.Chesapeake owns leading positions in the Barnett,
Haynesville, Bossier, Marcellus and Pearsall natural gas shale plays and
in the Granite Wash, Cleveland, Tonkawa, Mississippian, Bone Spring,
Avalon, Wolfcamp, Wolfberry, Eagle Ford, Niobrara, Three Forks/Bakken
and Utica unconventional liquids plays.The company has
also vertically integrated its operations and owns substantial
midstream, compression, drilling and oilfield service assets.Chesapeake′s
stock is listed on the New York Stock Exchange under the symbol CHK.Further information is available at www.chk.com
where Chesapeake routinely posts announcements, updates, events,
investor information, presentations and press releases.