Chesapeake Claims #1 Natural Gas Producer in USA in 2008

NEW YORK (Associated Press) - Chesapeake Energy Corp. is poised to soon become the largest producer of U.S. natural gas, the company's chairman and chief executive officer said Friday.

Speaking at the company's annual shareholders meeting, Aubrey McClendon said he expects the company's gas production to surpass that of the top two producers, BP PLC and Anadarko Petroleum Corp., within the next two months.

McClendon said Chesapeake's daily gas production during the first quarter of this year was only 86 million cubic feet, or MMcf, behind that of BP PLC. Chesapeake's average daily production in 2007 was 1,957 MMcf per day, a 23 percent increase over the previous year.

McClendon said the company has its largest-ever backlog of drilling opportunities at about 33,700, which he said is an inventory of 10 years. Last year, the company's production rose for the 18th straight year.

Chesapeake's primary focus on natural gas exploration and drilling should position the company well within the industry during coming years, he said, noting that natural gas produces fewer carbon emissions than other fossil fuels. He predicted that as oil was considered the fuel of the 20th century, that natural gas will receive that title in this millennium.

"In the debate about who are the good guys and who are the bad guys in the energy world today, as that extends over time, we think that increasingly Chesapeake will be seen as one of the good guys," he said.

"We're here trying to produce more clean-burning, American-produced natural gas to meet America's demand for a fuel that can allow us to import less oil from unfriendly places around the world, hopefully burn a little less coal, have a better environment and at the same time, create jobs and wealth right here in the U.S."

Chesapeake's story long has been one of steady and sometimes spectacular growth. McClendon noted that if someone invested $1,000 with the company during its initial public offering in 1993, than that person would have more than $50,000 now. That is one of the best returns among energy companies, he said.

The company now employs about 6,500 people, with about 2,500 of those in Oklahoma City. It has operations in 20 states.

McClendon also gave an update on what he called the company's "significant" discovery of natural gas in the Haynesville Shale, located in northwestern Louisiana and eastern Texas. In the last month, Chesapeake _ which already had four horizontal wells in the area _ has completed two more, with two more to be finished by the end of the month.

Chesapeake is using five operated rigs to further develop its Haynesville Shale leasehold and anticipates operating at least 12 rigs by the end of this year and at least 30 rigs by the end of next year.

McClendon declined to reveal how much natural gas company officials project might be produced from the field, but he said it "will end up being the most significant play in the company's history."

In company business, McClendon and former U.S. Sen. Don Nickles of Oklahoma were overwhelming re-elected to serve three-year terms on Chesapeake's board of directors. Top of page