(Flashback) BREAKING NEWS: Notes from Chesapeake's Conference Call

Chesapeake Conference Call July 2, 2008 9:00am
Chairman/CEO Aubrey McClendon (Summarized)
• Win-win partnerships between Chesapeake and PXP - Great news for Chesapeake shareholders
• Haynesville 4th largest gas field in the world
• Chesapeake has invested $2.5B in Haynesville
• Play just underway, data suggest 250TCS
• Barnett had 50TCS, which is only 20% of Haynesville –
• Our country should realize how blessed we are as a nation, especially during this time of record high gas prices – can be very helpful in converting to hybrids
• We are so confident because 3.5 M acres defined as core area
• These wells are in a class of their own – calling them “triple X monsters” – likely to get better over time – 8th well, 2 days ago brought on the best so far: 4.5-8.5 BCSE
- claimed that the reason for withholding info was to prevent other companies from receiving a blueprint to their technical practices
- 4 corners work from all the companies that have outlined the shale from their drilling.
- Haynesville Shale will move quickly.
- PXP retains the ability to sell their interest in the HS
- Do not forsee selling hshale--wanted to buy more
- Chesapeake retains first right of refusal
- Ches - 4,000 landmen in the HShale - 1,000 in Barnett, scouring the field.
- Dollars per acre was set by Ches.....$30,000 per acre....paid that price because Ches is going to agressively work HShale to increase the rate of return, deploying PXP capital smartly was the goal.
- Mix of Shale and Sands? Looking for 100% shale...looking for great black shale with the right porosity and organic composition. When you hear the flow rates their will be skepticism but it goes back to the high rates of pressure. The consistency and simplicity is the reason for the dynamic production.
- Flow rates - what are the infrastructure restraints? On top of the game large structure that handles other plays so will be moving fast. We are east so we are closer to the markets...so better pricing. Do the math and HShale could do [better? He kinda trailed off here] because we are closer to the eastern markets.
- Great opportunity for the US to retrofit gas stations and use natural gas instead of foriegn oil.
- Potentially liberating event.
- Here in the HShale we may have 10 years of production.
- 60 rigs operating by 2010
- Play could not be in a better spot.
- Regulatory structure that is favorable
- Great pipeline structure...past many bottlenecks will help this happen much more quickly. Do have to extend supply lines...this helps drive down costs.
- Working through Twin Cities in Shreveport..has put togther an impressive organization..has a network set up..tough sledding to go door to door to buy leases.


• PXP partner – deep LA roots helpful as they develop Haynesville in the decades to come – if you snooze, you lose and Ches is not snoozing - Haynesville will develop similarly to Barnett but also differently – it will be easier than Barnett in some ways

Tags: Chesapeake, Haynesville, Shale

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Permalink Reply by Natch N3 on July 2, 2008 at 7:48
Hmmmm i'm wondering how far east-north east this will go? the east, north east parameters can't be defined yet, would you think?
Permalink Reply by James on July 2, 2008 at 8:20
Take a look at the "Good Map of Performing Wells" under the HHale Presntations...

could you provide a link, I don't have a clue as to where to start looking for this...thanks
Permalink Reply by pilgrim on July 2, 2008 at 8:26
I would like a link also.
Permalink Reply by Keith Mauck (Site Publisher) on July 2, 2008 at 9:29
homepage
Permalink Reply by Keith Mauck (Site Publisher) on July 2, 2008 at 9:29
homepage
Permalink Reply by Keith Mauck (Site Publisher) on July 2, 2008 at 9:34
home page but based on Les B's input it won't show you the four corners...Chk CEO Mclendon stated that other companies and their performing wells determine the 4 corners....of course he has every reason to deflect the question
Permalink Reply by Les Bamburg on July 2, 2008 at 9:16
Haynesville, recognize they had established the 4 corners based on 70 HS well penetrations within the core plus 100+ penetrations outside of the core. This was probably done well in advance of recent drilling or testing. They used the results of their eight horizontals to confirm the initial analysis.
Permalink Reply by Keith Mauck (Site Publisher) on July 2, 2008 at 9:29
thanks...
Permalink Reply by Natch N3 on July 2, 2008 at 9:34
Thanks Les, but is there a way someone like myself can have a layman's interpretation of what those four corners might be? and If so, is their 4 corners the end of the play....I do know there is still seismic work being done east and north of the areas presently famous

Thank you
Permalink Reply by Les Bamburg on July 2, 2008 at 17:42
Natch, I finally had a chance to listen to the webcast and Chesapeake made reference to their wells in Caddo, Petrohawk in Bossier, EnCana in Red River, Shell (in Sabine?) and the PVA well in Texas as giving some idea of the four corners. I don't think this means they are the edge of the core but that it gives a rough idea. 3.5 million acres would be 74 miles by 74 miles if perfectly square. This leads me to believe it could extend as far south as the city of Natchitoches but drilling will confirm. In addition he did comment that the shale grades out to the north and northwest into a limey sandstone and this is not the quality rock Chesapeake is seeking.
Permalink Reply by Sue on July 3, 2008 at 9:30
DOES THAT MEAN THAT SECTION 21 T19N R13W IS OUT OF THE SHALE?
Permalink Reply by Snake Stewart on July 3, 2008 at 10:38
Hello Ms VSP , No it certainly does not mean that. When they refer to the four corners , they are talking about what they currently feel is the core area. I feel that there are some wider boundaries that have been set but as for Northeasterly and Eastern boundaries I believe are still undetermined.This is way early in the play to count out areas that are in close proximity to drilled boundaries. I for one do not feel that the corners are as exact as they are trying to represent in their meetings.As some have stated on this site , the drill bit will do the proveing.

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