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Chesapeake-CS080214City of Coppell February 14, 2008 (PA Chesapeake ENERGY , Altm h) I on t0i t C h e s a p e a Ic e lilligglig III (0, Chesapeake E ENERGY •'• #1 natural gas driller in the nation and in Texas •'• Exceptional drilling success rate — 98% ❖ The largest independent producer of natural gas ❖ Exclusively onshore and domestic •'• Exclusively focused on natural gas ❖ Growth through drill bit and acquisitions ❖ Founded in 1989 -- NYSE:CHK ❖ " "Best- Managed Energy Company" Forbes, January 2007 4 r. r i Chesapeake • Active in Texas since 1990 �• Barnett Shale HQ in downtown Fort Worth ❖ Field offices in Cleburne, Joshua, DFW, Arc Park ❖ More than 3,000 employees, agents and contractors ❖ Currently operate in 140+ Texas counties ❖ 114,537 net acres under lease in Tarrant County* ❖ Over 220 producing wells in Tarrant County •:� Acquired leasehold of Dale Resources (2006), Four Sevens (2006 & 2007) and Western production (2007) �:• Leader in natural gas drilling in urban areas (OV Chesapeake as of February 2008 ENERGY 1,4,w ivant to know iv --t at.w:ttt 1-hou Bm nett State but a rp. n't owt suor, htr to tut,." X -4 Ask Cho-sapew-Ae. U%I, y-.. .,. a .1 vim *—,19. %.1. P-tiki. IN- kmr.j Wi. —15,4.* k—U Eh W.*, 11— Its, A" F—z t;,LA .— I" us ate. K-L T-fik. %r ,K; �k-A %i Aw 7,)-Zrmu OM ALL WN cr xll Ask(Irsape! Cf- H11FR4 It, 03 1 N, - 1 t, 6 "We want to know abow the advanragoi of naturat g;)N aild how it ZA ff((Cj-1 fILI r A j I V 1 N-11 I [I I V I I j- Ask UvsaPeake. 0 Ask(lxsao�'-' Bamem Shalt -,. Natural Gas Frequenrh, Axkc4 Qmm-ms Exploratiffli $4:0 :.rmv.t 'I, 9-r, --dxa 011p" 4M—i IrCP p7,--. ChesapCake , NERGY ".gc.,Lec'T.9trn lkaad' fix sr:-r.QU�tC CM3b.SftkFoh,'aR"* 'Fa(�4as *s]baly e.RnaM,'c: l.fada. tte# aMire� ga�d.:vr�al� 77 :rm 4 7 A M CSR i £ R &I J e, ham. h geka iZkB� "s` �`.f 4 of ra"fwuia vFa ti I I pp i' :. EFFX6y, C^beieb«�.Y sABtsamfor2ix Cv *t)AY C, <a axe »pyg: ig�xva%; •ate xet� �u iE Y Chesapeake ENERGY od h bass" !° x4'?`J.!a:Z !'n, °3a•. ix. t; fr f aSi z Cw Ste aYb@8' Msk,Le94 4'Si -� 7 A M CSR i £ R &I J e, ham. h geka iZkB� "s` �`.f 4 of ra"fwuia vFa ti I I pp i' :. EFFX6y, C^beieb«�.Y sABtsamfor2ix Cv *t)AY C, <a axe »pyg: ig�xva%; •ate xet� �u iE Y Chesapeake ENERGY od fr x i�afpi¢sW arw°' ypgtw �� wnYSP+ +3Vaf'axf` i ° YWMYws �i� ,g[ sr� tawr s= y.,., #i94 �ypxcP sn�AdkM+M? 7 A M CSR i £ R &I J e, ham. h geka iZkB� "s` �`.f 4 of ra"fwuia vFa ti I I pp i' :. EFFX6y, C^beieb«�.Y sABtsamfor2ix Cv *t)AY C, <a axe »pyg: ig�xva%; •ate xet� �u iE Y Chesapeake ENERGY Cleanest burning fossil fuel (43% cleaner than coal and 28% cleaner than oil) 24% of total U.S. energy consumption is natural gas Petroleum 39 %; coal 23 %, nuclear 8 %, renewable 6% Reduced dependence on foreign energy Clean natural gals fuels electricity plants �a® Clean natural gars provides residential services /consumer benefits Heating 36 %, lighting 19 %, cooling 12 %, water heating 8% (PAI, Chesapeake ENERGY I q P -c% (11 Rorm-11 Pi" AnmUAcy IMMIN J *nuin kiRaarz *as of July 2007 �clsitic APP.ala ,,Mani r. 40 0 0 A Il Chesaake , ENERGY + 330 million years old ❖ 150 — 500 feet thick ❖ 1.5 miles below surface ❖ 5,000 sq miles ❖ Approx. 21 counties ❖ Vertical drilling in 1982; horizontal drilling in 200; ❖ Sweet spot is under Tarr and Johnson counties 10 ces Chesapeake ENERGY 0';'41 Barnett Shale Community Benefits: New jobs, businesses,, growth Tax revenues provide other benefits to all Municipal and school royalties benefit all taxpayers Corporate contributions improve communities •:> Benefits of an average producing well: Produces over 2 billion cubic feet of clean- burning natural gas Directly supports over 40 jobs = $1.75 million dollars wages per year Directly supports more than 7 local businesses; indirectly many more Provides $4,375,000 dollars in local royalties* Generates half a million dollars in property taxes *Estimate based on production for a 2.5 bcf well 1 selling at $7.00 /mcf with a 25% royalty 0 Chesapeake ENERGY Aboulit Coppell 12 (� �Al Chesa,-'ke , ENERGY �ronospri cnnnp-ii c 16 Chesapeake ENERGY As of 1 -22 -2008 17 �Pronnsed Tra nsnertatinn Rc (I Chesapeake ENERGY Chesapeake NERGY I Chesapeake 18 ENERGY *:""Basically five steps involved: Site Construction Drilling Completion Pipeline Installation Production & Maintenance w Chesapeake ENERGY ❖ Drill sites require 2 --5 acres ❖ May have multiple wells on each site ❖ Road construction ❖ Pad preparation ❖ Approximately one week to prepare 20 �' 6.Ir (OA Chesapeake NERGY • �y O O _O Q Z3 E a) -O > .- m � U � � V N O Q� 4--J L I O M I f� . L (B O E O O L I Q �y O O _O Q Z3 E a) -O > .- m � r} U N � I O M I . L (B O E O O L I Q .. � r} U N I'llim i3an urmine "NO TU� i3an urmine "NO 31c;ll Par- M ❖ Northwest / Southeast orientation is best for maximum production ❖ Average depth is 1.5 miles below surface ❖ Can reach beneath homes and schools Computer- driven, state - of- the -art technology ❖ No sinkholes possible 01 Chesapeake ENERGY \� � � �� . — \ \\�«/ � � � / � ��: e . : . . 2. \ 2 : �« \ ) }� � � . . � . ( r � � � ? ( : ^ ) 1 _ , .. , . . . � � � � � ; 2� m » ©° � :»� � � � � � : : � � � � � » . < £ � � � � � � .\ k�� � � � � = ®�� � — <. ...... .. .. ..� . , :. �� .� > .� ee/ 0 a Jim f a A 4 f r m a � y M 1 »m' Rig Lighting •11111 ❖ Production equipment installed ❖ Tank battery stores salt water — not oil and gas ® Meters, pumps, safety equipment ❖ Approximately one week to complete 33 • Gillis •1111111UN19 ❖ Telemetry ❖ Fencing ❖ Signage zd i 1q E„ f If S �_ a sat tt �6; . ��� s a �,� �, ❖ After rig leaves, "frac" begins • :® Process to stimulate natural gas from the shale ❖ Water mixed with sand pumped under high pressure ❖ "Fractures" the rock to release gas ❖ Several days to complete 416 0, � k I I A ❖Site is restored *:• Excess pad is removed; permanent fencing installed *:• Grass is replanted; landscaping is added 39 0 Chesapeake ENERGY mm 9051 154 :f. 01]11191 «two 42 ❖ Process to take natural gas from the well site to market ❖ Gathering system — pipelines installed ❖ Time varies based on transmission lines ❖ Similar to gas lines that currently bring natural gas to your homes and offices (OA Chesapeake ENERGY Chesa Pwake 43 1C NERGV 44 ❖ Well is checked regularly Maintain equipment Remove water from storage tanks Monitor production rate ❖ Maintenance performed as appropriate (P,v Chesapeake ❖ Present operations plan to Marcie Diamond &Jim Witt — February 14tH �:• Make presentation at Council work session — February 26tH ❖ Present operations plan &receive approval from Coppell City Council —March 11tH ❖ Set on drill schedule -mid April ❖ Spud deadline —early May 2008 aR OA Chesapeake ENERGY Questions? Chesapeake Energy 301 Commerce #600 Fort Worth, TX 76102 817 - 870 -1250 www.chkenergy.com NYSE:CHK 46 Ask,Chesap-'e-'",:ft�`k,e.com NERGY Craig Overcash Public Affairs Coordinator Barnett Shale craig.overcash @chk.com OPAI Chesapeake ENERGY