Company Profile
Company Overview
Who we are
Formed in 1989 with only 10 employees and $50,000 in capital, we’ve grown into the second-largest producer of natural gas, a Top 15 producer of oil and natural gas liquids and the most active driller of new wells in the U.S. Headquartered in Oklahoma City, the company's operations are focused on discovering and developing unconventional natural gas and oil fields onshore in the U.S. Chesapeake owns leading positions in the Barnett, Haynesville, Bossier, Marcellus and Pearsall natural gas shale plays and in the Granite Wash, Cleveland, Tonkawa, Mississippi Lime, Bone Spring, Avalon, Wolfcamp, Wolfberry, Eagle Ford, Niobrara, Three Forks/Bakken and Utica unconventional liquids plays. The company has also vertically integrated its operations and owns substantial midstream, compression, drilling, trucking, pressure pumping and other oilfield service assets. Take a look at our roots.
What we do
Our goal is simple – generate industry-leading shareholder returns by developing and executing on a distinctive business strategy that is focused exclusively on exploring for and producing unconventional natural gas and oil onshore in the U.S. Natural gas is clean, affordable, abundant and American. We believe natural gas will continue to gain market share in the U.S and around the world for years to come because of its affordability and cleanliness. In recognition of the value gap between oil and natural gas prices, during the past two years, we have directed a significant portion of our technological and leasehold acquisition expertise to identify, secure and commercialize new unconventional liquids-rich plays. Chesapeake intends to continue leading the industry in developing even greater supplies of U.S. natural gas, natural gas liquids and oil in the years ahead. Let us show you how.
How we do it
People, land and science – these are the key elements to success in our industry and we have invested more aggressively in these than any other company. From the fields where we drill, to the labs where we study petrophysics, to the offices where we make the final decisions, the enthusiasm and commitment of our employees resonates in every aspect of our business. Take a look at the way we operate as well as some of the people whose leadership makes this happen.
Company History
1989 – 93: The Beginning
Chesapeake was founded in 1989 by our CEO, Aubrey K. McClendon, and our former President and COO, Tom L. Ward, with only a $50,000 initial investment and an objective to build a sizable natural gas exploration and production company through the application of new technologies, primarily horizontal drilling. McClendon and Ward had worked together since 1983 in a private partnership, after graduating from college in 1981 at the height of the oil boom.
Focusing on this strategy of drilling horizontal natural gas wells in unconventional reservoirs, we built sizable leasehold positions in the Golden Trend and Sholem Alechem fields of south-central Oklahoma and in the Giddings field of southeast Texas. Our initial success helped grow our reserves and production rapidly and in February 1993, we completed an IPO to help fund our growth at a split-adjusted price of $1.33 per share.
1994 – 96: Continued Success
In 1994, we made a major natural gas discovery in the Deep Giddings portion of the technologically challenging Austin Chalk trend that launched a major growth phase for the company.
Through extensive use of horizontal drilling technology and an innovative geological assessment, we had outstanding success from this high-pressured, high-production-rate formation. In fact, from 1994 to 1996, we delivered the highest growth rate in our industry and the best stock price performance in the U.S among more than 8,000 publicly listed companies.
1997 – 99: Operational Disappointments and Commodity Price Collapse
In the mid-1990s, we attempted to extend the Austin Chalk play from southeast Texas into western and central Louisiana. This strategy ultimately failed as the play eventually was found to be less prolific and consistent in Louisiana than in Texas due to unanticipated geological and engineering challenges in addition to high drilling costs. Concurrently, natural gas and oil prices collapsed to their lowest levels in 20 years and added to our financial and operational challenges.
2000 – 02: Corporate Reinvention
As a result of our challenges in the late 1990s, we substantially modified our strategy from being solely a drillbit-oriented, short reserve life Austin Chalk-focused natural gas producer and returned to our roots in Oklahoma.
Our revised strategy not only focused on using the newest technologies to find new reserves of natural gas, but also targeted a more diversified, longer reserve life and lower risk asset base and, for the first time, incorporated acquisitions into our business plan.
2003 – 07: Executing the Land Rush Plan
Through consistent execution of our simple and highly focused and revamped strategy, we rapidly grew through a relatively equal balance of acquisitions and drilling. In addition, we were one of the first companies to recognize and capitalize on tightening supply/demand fundamentals and the permanent upward shift in U.S. natural gas prices that began in 2000 and accelerated through 2007.
In addition, we were among the first to recognize that the combination of higher natural gas prices and improvements in horizontal drilling and completion technologies would enable the industry to develop vast new supplies of natural gas from unconventional reservoirs such as fractured carbonates, tight sandstone and shales such as the Barnett Shale and Fayetteville Shale.
During this time, we rapidly increased our acreage positions in these unconventional plays as we won what has been called the “Great 21st Century Land Rush.” We believed that by winning this land rush, we could establish Chesapeake as the premier U.S. natural gas producer for years and perhaps decades to come.
2008 – Third Quarter 2011: The Modern Chesapeake
These years mark a further evolution of the company’s strategy as we have become one of the nation’s largest natural gas producers and have led a complete reinvention of our industry. Gone are the days when flamboyant “wildcatters” drilled deep and expensive wells in the increasingly elusive search for undiscovered conventional natural gas reserves.
Instead, Chesapeake today leads the new natural gas industry that focuses on discovering massive new reserves of unconventional natural gas. Having cracked the technological code in plays such as the Marcellus, Haynesville, Barnett, Fayetteville and Bossier shales, we now have turned our attention to the manufacturing-like process of drilling tens of thousands of wells in these areas to develop some of the largest natural gas fields in the world. In doing so, Chesapeake believes natural gas can become the primary solution to many of our country’s and our world’s most challenging environmental and energy issues.
We announced earlier this year that we are extending our strategy to apply the geoscientific and horizontal drilling expertise we have gained in our unconventional natural gas shale plays to unconventional liquids-rich reservoirs. Our goal is to reach a balanced mix of natural gas and liquids revenue as quickly as possible through organic drilling. In 2010, we invested approximately $4.7 billion, net of divestitures, primarily in liquids-rich acreage to provide the foundation for this shift towards more profitable plays. This transition is already apparent in the mix of wells we are drilling. In 2010, approximately 30% of our drilling and completion capital expenditures were allocated to liquids-rich plays, compared to 10% in 2009 and a projected 50% in 2011 and 75% in 2012. Our production of oil and natural gas liquids was approximately 94,000 barrels (bbls) per day during the third quarter of 2011, a 91% increase over the third quarter of 2010, as a result of the increased development of our unconventional liquids-rich plays. As of September 30, 2011, the company held approximately 6.2 million net leasehold acres in unconventional liquids-rich plays.
Benefits
Chesapeake offers our employees the opportunity to achieve great success both personally and professionally. Our management team has confidence in our employees and empowers them to think on their feet, make decisions and deliver results that help us remain at the forefront of the industry.
Our employees take pride in knowing they are part of America’s energy solution as we work to produce clean-burning natural gas. With more than a 100-year supply located in the U.S., natural gas can help end the nation’s dependency on foreign oil, while creating jobs and revenue to fuel local economies. It also provides an environmentally friendly source of power and a viable transportation solution. This dedication to fueling America’s future is the same commitment we feel toward creating an environment employees are proud to be a part of. Chesapeake takes:
A team approach to projects, and providing the opportunity to continue to learn while working with the industry's best professionals
Pride in being recognized as an industry leader
A dynamic leadership approach with few layers between employees and senior management
The initiative to learn and grow in a fast-paced and changing industry
A commitment to career growth based on ability rather than longevity