Chesapeake Energy Corporation provided an update on its operational activities. For the 2010 second quarter, daily production averaged 2.789 billion cubic feet of natural gas equivalent (bcfe), an increase of 203 million cubic feet of natural gas equivalent (mmcfe), or 8%, above the 2.586 bcfe produced per day in the 2010 first quarter and an increase of 336 mmcfe, or 14%, over the 2.453 bcfe produced per day in the 2009 second quarter.

Chesapeake's average daily production of 2.789 bcfe for the 2010 second quarter consisted of 2.497 billion cubic feet of natural gas (bcf) and 48,670 barrels of oil and natural gas liquids (NGLs) (bbls). The company's 2010 second quarter production of 253.8 bcfe was comprised of 227.2 bcf (90% on a natural gas equivalent basis) and 4.4 million barrels of oil and NGLs (mmbbls) (10% on a natural gas equivalent basis). The company's year-over-year growth rate of natural gas production was 11% and its year-over-year growth rate of oil and NGLs (liquids) production was 41%. The company's percentage of revenue from liquids in the 2010 second quarter was 17% of realized production revenue compared to 14% in the 2009 second quarter.

Chesapeake is projecting full-year production growth of approximately 13% in 2010 and 18% in 2011, including production growth from liquids of approximately 60% in 2010 and 80% in 2011. Of Chesapeake's projected 13% and 18% growth rates in 2010 and 2011, approximately 37% and 50%, respectively, of the growth is projected to come from increased liquids production.

Chesapeake's proved natural gas and oil reserves increased by 8% in the 2010 first half to 15.5 Tcfe. The company reported 2010 first half drilling and completion costs of $0.87 per Mcfe.

During the 2010 first half, Chesapeake continued the industry's most active drilling program, drilling 687 gross operated wells (440 net wells with an average working interest of 64%) and participating in another 562 gross wells operated by other companies (73 net wells with an average working interest of 13%). The company's drilling success rate was 99% for both company-operated wells and non-operated wells.

2011 Drilling and Completion Capital Expenditures Projected to Remain Flat Compared to 2010 Drilling and Completion Capital Expenditures; 2011 Drilling and Completion Capital Expenditures Reduced by $400 Million on Natural Gas Plays and Increased by $400 Million on Liquids-Rich Plays Compared to 2010

In recognition of the significant and persistent value gap that has developed between natural gas and oil prices, Chesapeake has accelerated its transition to a more liquids-rich asset base. The company has redirected a significant portion of its technological, geoscientific, leasehold acquisition and drilling expertise to identifying, securing and commercializing unconventional liquids-rich plays. To date, Chesapeake has built leasehold positions and established production in 12 disclosed and several undisclosed liquids-rich plays. The company now owns approximately 2.4 million net acres of leasehold in liquids-rich plays with approximately 3.0 billion barrels of oil equivalent (bboe) (18 tcfe) of risked unproved resources and approximately 8.2 bboe (49 tcfe) of unrisked unproved resources.

Additionally, compared to 2010, Chesapeake is reducing its projected 2011 drilling and completion capital expenditures on natural gas plays by approximately $400 million and increasing its drilling and completion capital expenditures on liquids-rich plays by approximately $400 million. On a net basis, after joint venture carries, Chesapeake is projecting 2011 drilling and completion capital expenditures will remain flat compared to 2010 drilling and completion capital expenditures of approximately $4.5 - $4.6 billion.

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