6 5 - RR DONNELLEY FINANCIAL - External Home Login

More documents

Recommendations

Info

2010 ANNUAL REPORT | 7 Developing America’s fuel in the backyard of America’s team: a Chesapeake rig drills deep in the Barnett Shale near Cowboys Stadium in Arlington, Texas.
8 | LETTER TO SHAREHOLDERS Growing Demand for U.S. Natural Gas Will Drive Improved Prices in the Years Ahead Several factors are emerging in the U.S. that will drive increased demand for natural gas, which in turn could improve out year natural gas prices: Growing momentum for CNG passenger and LNG long-haul truck vehicles Enormous cost savings are available to consumers and businesses that chose to use natural gas as an alternative transportation fuel ($1.39 per gallon for CNG in Oklahoma, for example, compared to $3.75–$4.00 per gallon for gasoline and diesel). Growing industrial demand With recent low prices for domestic natural gas, U.S. industries that utilize natural gas as a feedstock in their manufacturing processes have a significant cost advantage compared with international peers whose feedstock is indexed either to oil or global natural gas prices. Continuing and accelerating shift from coal to natural gas for U.S. electrical power generation To clean our environment, dozens of aging coal-powered electricity plants will be retired in the next decade and replaced with the cleaner alternative of natural gas. A combination of shifting power sources and higher utilization within existing gas-fired power plants will likely increase natural gas demand by 10–15 bcf per day over the next decade. Conversion of U.S. LNG import facilities to LNG export facilities With increasing demand for natural gas around the world and the abundance of U.S. natural gas reserves, producers will be able to tap into higher-margin markets in Europe, South America and Asia once export capabilities are available potentially beginning in 2015. Construction of U.S. gas-to-liquids (GTL) plants Converting natural gas to a room temperature liquid would allow U.S. natural gas producers to sell products based on world oil prices instead of domestic natural gas prices. Technological advancements continue to gain traction and may make GTL a realistic possibility by 2016. U.S. natural gas producers are rapidly moving to a more liquids-rich production base Due to the premium margins realized in the U.S. when producing liquids as compared to natural gas, there is a meaningful shift of producers targeting liquids-rich drilling prospects. This shift will ultimately help bring U.S. natural gas markets back into balance by reducing the rigs and capital available for natural gas drilling. $2.25 billion in cash and drilling carries for its 25% stake in the Barnett, and we are extremely proud to have Total as one of our premier joint venture partners. Haynesville Shale — The Haynesville Shale in Northwest Louisiana and East Texas is the shale play of which we are most proud (to date) because it was discovered by Chesapeake’s own geoscientists and engineers. We conducted our geoscientific investigation of the Haynesville in 2005–06 and tested our theories through drilling in 2007. In 2008 we formed an innovative joint venture agreement with our well-respected industry partner, Houston-based Plains Exploration & Production Company, to which we sold 20% of our Haynesville (and Bossier) assets for approximately $3.2 billion in cash and drilling carries. The Haynesville Shale is now the nation’s largest producing natural gas shale play, having just recently passed the Barnett Shale in production (in last year’s letter, I incorrectly estimated it would take until 2014 for the Haynesville to reach this achievement, a testament to the play’s enormous productive potential). Ultimate recoveries from the Haynesville could exceed 250 tcfe, likely making it one of the five largest natural gas fields in the world. Today, we are producing from more than 260 net wells in the Haynesville on our 530,000 net leasehold acres, are currently drilling with 35 rigs and estimate we could drill up to 6,300 additional net wells in the years ahead. Our gross operated production in the Haynesville recently set a record of nearly 1.6 bcfe per day. Bossier Shale — This shale overlies about one-third of our Haynesville acreage and is the first of our two “sleeper” natural gas shale plays. The reason is that in Louisiana, leases often restrict the lessee (i.e., the producer) to only holding future drilling rights down through the deepest formation drilled. Because the Bossier lies above the Haynesville, One producing and one on the way: the Texas Panhandle Granite Wash offers high volumes of natural gas accompanied by highly valued liquids production as well.
Page 1 and 2: 2010: A YEAR OF TRANSITION AND ACHI
Page 3 and 4: 1 | FINANCIAL REVIEW 2010 ANNUAL RE
Page 5 and 6: 4 | LETTER TO SHAREHOLDERS DEAR FEL
Page 7: 6 | LETTER TO SHAREHOLDERS vs. an a
Page 11 and 12: 10 | LETTER TO SHAREHOLDERS with th
Page 13 and 14: 12 | LETTER TO SHAREHOLDERS wet nat
Page 15 and 16: 14 | LETTER TO SHAREHOLDERS Rig lig
Page 17 and 18: 16 | OPERATING AREAS AMERICA’S PR
Page 19 and 20: 2010 ANNUAL REPORT | 19 Unconcerned
Page 21 and 22: What advantages does CHK’s unique
Page 23 and 24: 2010 ANNUAL REPORT | 23 Employees l
Page 25 and 26: to selected students pursuing caree
Page 27 and 28: process is saving the company an av
Page 29 and 30: OFFICERS » Aubrey K. McClendon Cha
Page 31 and 32: George Bradley Kim Brady David Bran
Page 33 and 34: Daniel Alford Kenny Alford Jamie Al
Page 35 and 36: Danny Games Felipe Garcia Melissa G
Page 37 and 38: Jeff C. Glenn Jeannie Harris Larry
Page 39 and 40: Allison Earl Shannon Earley Jeremy
Page 41 and 42: Michael Bowling Jesse Bowman Matthe
Page 43 and 44: Terrydon Maroney Maria Marquez Ken
Page 45 and 46: UNITED STATES SECURITIES AND EXCHAN
Page 47 and 48: ITEM 1. Business Our Business Part
Page 49 and 50: Information About Us Our principal
Page 51 and 52: Build Operating Focus and Scale. We
Page 53 and 54: Eagle Ford Shale. Chesapeake’s Ea
Page 55 and 56: Production, Sales, Prices and Expen
Page 57 and 58: are based on prices, costs and disc
Page 59 and 60:
The table below compares our estima
Page 61 and 62:
Exploration and Development, Acquis
Page 63 and 64:
Our marketing activities, along wit
Page 65 and 66:
govern our operations carry substan
Page 67 and 68:
Title to Properties Our title to pr
Page 69 and 70:
Present Value or PV-10. When used w
Page 71 and 72:
ITEM 1A. Risk Factors Natural gas a
Page 73 and 74:
eserves will require significant ca
Page 75 and 76:
least 1.65 times. Under certain cir
Page 77 and 78:
Our operations may be adversely aff
Page 79 and 80:
Part II ITEM 5. Market for Registra
Page 81 and 82:
Years Ended December 31, 2010 2009
Page 83 and 84:
(c) Includes the effects of realize
Page 85 and 86:
Our goal of a 25% reduction in debt
Page 87 and 88:
customary conditions, including fil
Page 89 and 90:
In 2010, we received cash distribut
Page 91 and 92:
Corporate Credit Facility. Our $4.0
Page 93 and 94:
optional repurchase dates, the comm
Page 95 and 96:
The estimated fair values of our na
Page 97 and 98:
For 2010, we realized an average pr
Page 99 and 100:
The following table shows our produ
Page 101 and 102:
Interest Expense. Interest expense
Page 103 and 104:
The selection and application of ac
Page 105 and 106:
Under accounting guidance for incom
Page 107 and 108:
Although we believe the expectation
Page 109 and 110:
As of December 31, 2010, we had the
Page 111 and 112:
We have determined the fair value o
Page 113 and 114:
(a) Month LIBOR has been abbreviate
Page 115 and 116:
MANAGEMENT’S REPORT ON INTERNAL C
Page 117 and 118:
CHESAPEAKE ENERGY CORPORATION AND S
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Compressor Leases CHESAPEAKE ENERGY
Page 139 and 140:
5. Income Taxes CHESAPEAKE ENERGY C
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
11. Divestitures CHESAPEAKE ENERGY
Page 163 and 164:
Page 165 and 166:
13. Restructuring Costs CHESAPEAKE
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Schedule II Description CHESAPEAKE
Page 183 and 184:
PART III ITEM 10. Directors, Execut
Page 185 and 186:
Exhibit Number Exhibit Description
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
CORPORATE INFORMATION Corporate Hea
show all

6 5 - RR DONNELLEY FINANCIAL - External Home Login

Create successful ePaper yourself

Delete template?

Save as template?