1. Chesapeake Energy Shale Operations Overview

2. Chesapeake Energy Overview
Founded in 1989
Headquartered in Oklahoma City, OK
Offices regionally located in Charleston, WV, Jane Lew, WV, Mt. Morris, PA, Canonsburg, PA, Harrisburg, PA, and Towanda, PA
Exclusive U.S. onshore focus
One of the nation’s largest natural gas producers
1Q ‘10 natural gas production of 2.328bcf/d
Nation’s most active explorer
Nation’s most active horizontal driller
Exceptional drilling success rate – 98%

3. Chesapeake Energy Overview
Most active driller in U.S
133 operated rigs currently
26 rigs currently drilling in the Marcellus Shale area
CHK responsible for 1 of 8 new gas wells being drilled in U.S.
Consistent production growth
20th consecutive year of sequential production growth
Unparalleled inventory of U.S. onshore leasehold and 3-D seismic
Lower risk of suboptimal return on capital
Higher production rates

4. Chesapeake Energy Overview
Only producer with #1 or #2 position in “Big-4” U.S. shale plays
#1 in Marcellus Shale; 1,550,000 net acres
#1 in Haynesville Shale; 530,000 net acres
#2 in Fayetteville Shale; 465,000 net acres
#2 in Barnett Shale; ,000 net acres
Advantageous joint venture arrangements
StatoilHydro, Total, BP, Plains Exploration and Production Company

5. Chesapeake’s Key Operating Areas

6. Characteristics of Shale Formations
Found in organic-rich sedimentary rocks (shales) that were originally deposited as muds within tidal flats and deep water basins
Shale formations can be found 1 mile or more underground
Dense rock with low permeability
Typically requires a combination of horizontal drilling and hydraulic fracturing for the natural resources to be recovered in economic quantities

7. The Production Process
Five basic steps:
1. Site selection and well pad preparation
2. Drilling the well
3. Completing the well
4. Marketing the resources
5. Reclaiming the site

8. Site Selection
A number of factors are considered in selecting a drilling site:
Favorable geology
Topography
Access Roads
Routes for pipelines and utilities
Proximity to schools or residential areas
Environmental factors such as wetlands and sensitive wildlife habitat
Available water source(s)

9. Well Pad Preparation Well pads can be located in rural or urban areas
Pad preparation requires approximately 4-6 weeks
Typical horizontal well pad requires 3-5 acres to construct

10. Advanced Drilling Technologies Reduce Surface Footprint
Vertical drilling patterns required:
Up to 16 well pads needed to recover the natural resources from 640 acres
Multiple roads with pipelines and utilities required to access the wells
Total surface disturbance was ~45 acres

11. Extraordinary Technology Advances Extract Natural Gas More Effectively
Horizontal drilling substantially reduces surface footprint
6-8 horizontal wells anticipated drilled from each 3-5 acre pad
Only one road with pipeline and utilities to well pad
Approximately 85% less surface
disturbance than from
with vertical wells

12. Drilling the Well Using Today’s New Technology
Wells are drilled and constructed to recover the natural resources while protecting the environment and providing for the safety of workers and area residents
Drilling is a 24/7 operation
Reduces rig time on location
The drilling phase is a temporary operation, typically lasting 3-4 weeks per wellbore
Chesapeake Energy utilizes a “closed-loop” drilling system
All drilling materials are contained
No materials collected in earthen pits

13. Drilling the Well-Groundwater Protection
4 or more layers of protection are installed in the well to isolate the well from the surrounding strata and protect groundwater supplies and the environment
Multiple layers of steel casing and cement are utilized
Casing set in place below freshwater aquifer zone

14. Using Horizontal Wells
Computer-driven, state-of-the-art technology allows for horizontal drilling
Horizontal drilling allows for access to a greater volume of the shale resource reservoir
Access to a greater volume of the reservoir makes shale resource development economical

15. Well Completion
After the drilling rig is removed, hydraulic fracturing (“fracing”) begins
Fracing is a process to stimulate natural resource production from the hard shale
Impoundments, if necessary, hold freshwater only
Water is mixed with proppant (such as sand) and pumped into the shale
reservoir under pressure
99.5% of fracturing fluid is made up of water and sand
Generally takes several days per wellbore
For more information on hydraulic fracturing, please visit AskChesapeake.com

16. Aqua Renew Program Process
Currently recycling/reusing nearly 100% of water used during the production process
Benefits
Reduces or eliminates need for water to be sent offsite for disposal
Reduces required water supplies
Reduces truck traffic, lowers impact on roads, noise, and air
Reduces the cost of operations
For more information on the Aqua Renew program please visit AskChesapeake.com

17. Marketing /Reclaiming the Site
Gas and liquids are separated by the “separator”
Pipeline carries natural resources to market
Produced water is retained on location
in tanks until removed via truck
Site is reclaimed and landscaped
Site is reduced to approximately 1 acre
Small access road will be retained
Company returns regularly
Maintain equipment/monitor production rate

18. Who Shares In The Revenue?
Mineral Owners
Bonuses and royalties
Local Workers
Wages and benefits
Local Business
Subcontractors and service companies
Counties, Cities, School Districts
Ad valorem and other taxes
Other Stakeholders
Charitable organizations
Chesapeake shareholders

19. Why Lease With Chesapeake Energy?
Most experience shale operator in the U.S.
21-year track record of production increases
Best management practices utilized throughout drilling and completion process
Financial strength through joint ventures in multiple operating areas
Total, StatoilHydro, BP, Plains Exploration and Production Company
Advanced technological capabilities translate into higher production rates and reserve recoveries
Unparalleled inventory of onshore U.S. 3-D seismic data
In-house geology core lab

20. Questions. For more information: Mike D. Muller michael. muller@chk
Questions? For more information: Mike D. Muller
Information provided is subject to change based on multiple factors.