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1Gas Well Deliquification WorkshopDenver, COFebruary 27, 2006
Gas Well Deliquification WorkshopDenver, COFebruary 27, 2006
Gas Well Deliquification Workshop – 2-27-2006
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Conversation Outline
• CHK: Past and Present
• Current Gas Market Thoughts
• Where to From Here?
• Q & A
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CHK Overview 2nd largest independent producer of U.S. natural gas: (trail only DVN), #6 overall (including
majors, utilities and pipelines)
#1 driller in U.S.: 76 operated rigs, 84 non-operated rigs, collector of ≈10% of all dailydrilling info generated in the U.S.
Active consolidator in focused areas: $11.0 billion since ’98, $2.1 billion in ’04, $4.9 billion in ’05 and $0.7 billion YTD in ‘06
Increasing production profile: 1,284 mmcfe/day ’05 production - 29% YOY increase;1,593 mmcfe/day projected ’06 production - 24% YOY increase; 1,709 mmcfe/day projected ’07 production – 7% YOY increase
Large proved reserve base: 7.8 tcfe of proved reserves at 12/31/05, 92% natural gas, 65% proved developed, 13.9 year R/P
#1 gas resource play: 8.8 tcfe of non-proved reserve potential in: i) conventional gas resource,ii) unconventional gas resource, iii) emerging gas resource and iv) Appalachian gas resource plays;>10-year drilling inventory of nearly 28,000 drillsites
Industry leading leasehold and seismic position: 8.4 mm net acres of U.S. onshore leasehold plus11.6 mm acres of 3-D seismic
$19.8 billion EV: $13.6 billion equity value, $6.2 billion long-term debt
2006 estimates: ebitda $4.1 billion; operating cash flow $3.7 billion; net income to common $1.5 billion
CHK offers great value to investors: 3.6x operating cash flow, 4.9x ebitda, 9.1x P/E ratio
Top stock price performance: CHK up 23x in 12 years as a public company, #2 performer among large-cap E&P companies during that period; #1 since 1/1/1999
Data above incorporates:• CHK’s Outlook as of 2/23/06;• Pro forma adjustments for acquisitions announced on 1/17/06• An assumed common stock price of $31.00, NYMEX prices of $8.00/mcf and $50.00/bbl for 2006 and excludes
effects ofFAS 133 (unrealized hedging gain or loss) and charges incurred in connection with stock based compensation; and
• Reconciliations of ebita and operating cash flow (before changes in assets and liabilities) to GAAP measures appear in slide 31
• Pro forma adjustments for the debt financing of the acquisitions announced on 1/17/06 and the sale of PDC shares on 2/7/06
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CHK: Strategically Builtfor Today’s Environment
Over the last 7 years, CHK has been among the earliest to correctly recognize and quickly respond to opportunities and challenges in the E&P industry
Our proactive approach and strategic choices have enabled us to rapidly and profitably build one of the largest and lowest-risk U.S. gas resource bases
Industry Opportunity/Challenge CHK’s Response(1)
• Expanded our gas-focused proved reserve base over seven-fold to7.8 tcfe through acquisitions and the drillbit
Tightening gas supply/demand fundamentals and permanent upward shift in gas prices
• Built the industry’s largest inventories of U.S. leasehold (8.4 net million acres) and 3-D seismic data (11.6 million acres)
• Amassed > 10-year inventory of nearly 28,000 drillsites• Entered every major U.S. gas resource play outside of the
Rockies
Declining industry prospectivity
• Selectively built a very large and focused U.S. onshoreasset base
Rising risk/cost of offshore and international assets
Limited availability of experienced industry personnel
• Expanded employee base seven-fold to over 3,300 today• Early to hire young people from colleges/other industries
Rising service costs and limited rig availability
• Invested in three rig companies for financial hedge; made ≈$200 mm
• Created wholly-owned subsidiary, NOMAC Drilling; now have 32 rigs on the way to 57 rigs by year-end 2006
Increasing oil & gas price volatility
• Consistently locked in near-term acquisition margins and captured high operating margins through opportunistic hedging
• Designed multiple hedging facilities that accommodate hedging ~1.5 tcfe of gas with minimal capital commitments
Since 1/1/99, CHK’s stock price performance is #1 in the industry (up 33-fold) and we are differentially positioned for strong, sustainable growth for years to come(1) Pro forma for the acquisitions announced on 1/17/06
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Tennessee
Kentucky
Maryland
PennsylvaniaOhio
New York
West Virginia
Virginia
CHK: Biggest Gas Resource Play in the U.S.
AnadarkoBasin
BarnettShale
SouthTexas
Texas Gulf Coast
Ark-La-Tex
CHK/CNR field officesCHK OKC headquarters
CHK operated rigs (76) CHK non-operated rigs (84)
Counties with CHK leasehold
Counties with CHK leasehold through CNR acquisition
Pro forma for the acquisition of CNR
Scale: 1 inch = 115 miles
Scale: 1 inch = 200 miles
Appalachian Basin
CNR Charleston headquarters
Black Shale
PermianBasin
ArkomaBasin
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CHK’s Successful Business Strategy
Following operational failures and oil/gas price collapse in the late 1990s, CHK revamped its business strategy and for the past 7 years has executed a simple and highly effective business strategy:
– Balanced growth through acquisitions and the drillbit•Focus on long-lived, low-decline, onshore US gas reserves that have become much more valuable over time
•Rediscover the lost art of deep gas exploration through new investments in people, land and seismic in the right areas
– Regional consolidation to generate operating scale, maintain low operating and administrative costs and deliver high returns
•CHK’s scale in its core areas is a real competitive advantage and has created negotiating power, informational advantages and attracted top industry talent
– Concentration on gas•One of the first companies to recognize and capitalize on tightening supply/demand fundamentals and permanent upward shift in gas prices that began in ’99
•Today the #1 gas resource play in America: 8.4 mm net acres, nearly 28,000 drillsites, most active drilling program in the U.S.
CHK has benefited from substantial first mover advantages and has built the #1 U.S. natural gas resource base
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CHK’s Business Strategy Growth through acquisitions
• Acquire, exploit, extend and explore
Growth through the drillbit• Onshore domestic U.S.
Regional consolidation• Prefer “PIMBY” areas to “NIMBY”
areas
Gas, gas, gas• Onshore, in the U.S.A., lots of it
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Keys To Being A Successful Acquirer
Focus Know what you want to buy, where you want to buy it and how you want to buy it
Experience Inexperienced or occasional buyers generally do not succeed. CHK has a consistent approach to acquiring and assimilating acquisitions. CHK is always in the market and has ≈ 50 people working full-time on acquisition integration
Operational Skill Must be able to operate acquired properties more efficiently than sellers. Significant operating scale and attention to detail are the keys to achieving efficiencies
Drillbit Expertise Must be able to accurately assess, accelerate and deliver upside from PUDs, probables, possibles and exploration opportunities
CHK has executed more acquisition transactions in the past seven years than any other E&P company – experience helps prevent mistakes!
CHK has executed more acquisition transactions in the past seven years than any other E&P company – experience helps prevent mistakes!
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$8.78
$2.30$2.27
$3.88$4.26
$3.22
$5.38
$6.13
$8.64
$2.64
$1.18 $0.71 $0.83$1.26
$1.43 $1.60 $1.76
$2.48
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
1998 1999 2000 2001 2002 2003 2004 2005 2006
Acquisition Margins Best Ever
Oil and gas price increases have far outpaced acquisition cost increases Margins matter, not per mcfe sticker price
Net margin between cost and gas price
$4.37
$3.00
$1.12$1.79
$3.05
$1.56
$3.78
7-yearCAGR
12.2%
27.5%
21.1%Acquisition cost – per mcfe
Average yearly gas price
$6.14$6.16
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Why is CHK the #1 Driller in the U.S.?
Most active driller in U.S. by a wide margin
�̶ 76 operated rigs currently drilling (plus 84 non-operated rigs drilling)�̶ CHK gathers ≈10% of all the daily drilling information generated in America
This is a distinct competitive advantage
1/4 of rigs drilling to targets > 15,000’; 1/2 between 10-15,000’; 1/4 < than 10,000’
�̶ Drill more deep onshore wells than anyone in the industry�̶ Also one of the leading horizontal drillers in the industry
If properly executed, good drilling easily generates the highest returns on capital: 100%+ vs. 20-25% acquisitions
However, creating value through the drillbit today is difficult�̶ You had to start getting ready 5 years ago�̶ Quality land, people and seismic are scarce resources
Over the past 7 years, CHK has invested over $3 billion to build the industry’s largest inventories of U.S. leasehold (8.4 mm net acres) and 3-D seismic (11.6 mm acres)(1)
�̶ First mover in acquiring the land, people and seismic to support future growth�̶ Amassed > 10-year inventory of nearly 28,000 drill sites�̶ Only company in the Barnett, Woodford, Caney, Fayetteville and Devonian Shale plays in the U.S.
CHK is uniquely positioned to transfer and apply technology, information and geoscience knowledge base across all operating regions(1) Includes acquisitions announced on 1/17/06
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0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
4Q
'00
1Q
'01
2Q
'01
3Q
'01
4Q
'01
1Q
'02
2Q
'02
3Q
'02
4Q
'02
1Q
'03
2Q
'03
3Q
'03
4Q
'03
1Q
'04
2Q
'04
3Q
'04
4Q
'04
1Q
'05
2Q
'05
3Q
'05
4Q
'05
Base as of 4Q'00 Drillbit Production Maintenance
Drillbit Production Growth Acquisition Growth 1Q'01 to 4Q'05
Balanced Production Growth
570 mmcfe/day drillbitproduction growth(52% of growth)
529 mmcfe/day acquisitionproduction growth(48% of growth)
167 mmcfe/day baseproduction
2005 Q4 AverageProduction
We believe CHK’s operating performance since January 2001 has been the best among the 20 largest E&P companies
During this time, our production has more than quadrupled, with over half of this growth coming from the drillbit
Through the drillbit only, CHK has created a top 20 U.S. gas producer from scratch in past 5 years
We believe CHK’s operating performance since January 2001 has been the best among the 20 largest E&P companies
During this time, our production has more than quadrupled, with over half of this growth coming from the drillbit
Through the drillbit only, CHK has created a top 20 U.S. gas producer from scratch in past 5 years
Total production has increased 1,099
mmcfe/day in 20 quarters, or 35% CAGR
152 mmcfe/day drillbitproduction maintenance20% initial base decline rate 10% current base decline
rate
23% CAGR through the drillbit
319 mmcfe/day
1,418 mmcfe/day
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Large and Growing Gas Reserve Base
(1) As of 12/31/05 and pro forma for acquisitions announced on 1/17/06
870 951 1,269 1,627 2,3523,218
4,996
336 404 511578
817
1,684
2,762
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1999 2000 2001 2002 2003 2004 2005
1,206 1,3551,780 2,205
3,169
CHK’s deep inventory of projects helps assure repeatable, low risk value creation
4,000
8,902
Non-proved reserve potential
Proved undeveloped (PUD’s)
Proved developed (PD’s)
# Total proved and non-proved reserves (3P)(1)
Bcfe
16,558
8,800
8,800unproved
7,758proved
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CHK: The #1 U.S. Gas Resource Play
Conventional gas resourceUnconventional gas resourceEmerging gas resourceAppalachian gas resource
Positioned for strong sustainable growth
Over ten-year inventory of nearly 28,000 drillsites to develop 2.8 tcfe of proved undeveloped reserves and 8.8 tcfe ofnon-proved reserves
3.3
1.2
2.8
1.1
0.4
0.11.0
1.3
Net Acreage(8.4 million acres)
Drillsites(27,900 gross wells)
Proved UndevelopedReserves(2.8 tcfe)
Non-ProvedReserves(8.8 tcfe)
Continue to actively expand all play types with ≈ 500,000 acres acquired in 4Q05 through aggressive land acquisition program utilizing >900 contract land brokers in the field
Most recently, CNR acquisition opens up multiple unconventional shale, tight sand and CBM plays in Appalachia
During the past 7 years, CHK has amassed the #1 U.S. gas resource play in the industry. We are in every important gas resource play in the U.S. east of the Rockies
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Why Regionally Consolidate? Most E&P companies asset bases are too diversified, too spread out
Result is often operational mediocrity – sometimes incoherent corporate strategy and resulting investor unease about the future
CHK believes top-tier business success can only be achieved by being better at one thing than everyone else – for CHK, that’s onshore in the southwest U.S. and in the Appalachian Basin
Scale brings many benefits:
– Negotiating power: CHK demands and receives best prices and best services from service industry
– Information advantages: CHK receives > 50% of all drilling information generated in the Mid-Continent. There is tremendous value in this unique and sustainable competitive advantage
– Attracting talent: The best geologists, engineers, and landmen want to work where the action is
Our strategy is clear, concise and consistent. What we do has worked, is working and should keep working for the foreseeable future
CHK’s operating areas are still very fragmented and in the years ahead likely to produce further consolidation opportunities
CHK’s operating areas are still very fragmented and in the years ahead likely to produce further consolidation opportunities
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Why Has CHK Focused on Gas Since 1998?
Our operating strategy failure in the mid-90’s taught us that:– Significant new reserves of U.S. natural gas would be more difficult to find– Finding costs would accelerate over time– Depletion rates would accelerate over time– Boom in gas fired power plants would cause a train wreck over time
We thought that supply/demand fundamentals would steadily improve– Demand trendline would be up 1-3% per year, supply trendline would be down
0-2% per year– In pricing: higher highs, higher lows – the trend would be our friend
Volatility is high and likely to increase. We love gas price volatility – why?
– Weather has played a key role in remarkable recent volatility– Volatility creates opportunity to hedge unusually high prices that generate
unusually high returns– Volatility reduces investment in the industry, which dampens supply– Volatility helps unlock the option value embedded in long-life reserves– This option value is a key “x” factor enhancing the value of long-lived assets
and it comes free with acquisitions
LNG is a risk to be monitored– But, our view is that U.S. gas prices will need to approximate BTU parity with
world oil prices to attract LNG imports in the 2009 and beyond time frame– Worldwide liquefaction capacity rather than U.S. regas capacity will be the
bottleneck
U.S. natural gas production curve today is similar to U.S. oil production curve in the 1970’s: a peak, then a steady decline regardless of price increases and technology improvements
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(A) Based on company reports(B) In mmcf per day(C) Independents in green, majors in black, pipelines in red(D) CHK’s change calculated on reported 4Q ’05 gas production(E) Source: Smith International Survey (operated rig count)(F) Pro forma for the acquisition of Burlington(G) CHK’s reported gas production in 4Q ’05 was 1,286 mmcf per day
- production of 1,399 mmcf per day is pro forma for the mid-quarter CNR acquisition and the acquisitions announced on 1/17/06(H) WMB and EP 4Q ’05 production estimated at 3Q ’05 levels
Including CNR, CHK is the6th Largest U.S. Gas Producer
The top 20 gas producers (with their royalty owners @ 20%) account for ≈50% of U.S. gas production, but only 37% of drilling activity
The top 20 gas producers (with their royalty owners @ 20%) account for ≈50% of U.S. gas production, but only 37% of drilling activity
BPConocoPhillips/BRChevronExxonMobilDevon (1)Chesapeake (2)EnCana (3)Anadarko (4)XTO (5)DominionShellKerr-McGee (6)EOG (7)WilliamsOccidentalEl PasoMarathonApache (8)Pioneer (9)Newfield (10)Total
Company 4Q ‘04
Daily U.S. Natural Gas Production (A,B)
3Q ‘05
4Q ‘05 vs. 3Q ‘05% Change
4Q ’05 vs. 4Q ‘04% Change
2,6512,1301,6181,8101,6201,0021,0071,306
9161,0131,3021,041
666560499593568637546585
22,070
2,3592,2571,6381,6201,458
1,286/1,3961,1541,1141,102
932919883749629572559549514450429
21,173
4Q ‘05(C)
BPCOPCVXXOMDVNCHKECAAPCXTO
DRD
KMGEOGWMBOXYEP
MROAPAPXDNFX
Ticker (D) (D)
US Rigsat 2/23/06
244611
946764730523214263821161213261323
575
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(F)
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10.11.12.13.14.15.16.17.18.19.20.
(H)
(H)
2,4562,1701,6761,6141,4851,1831,0991,0981,087
935948937724629564559562586460509
21,281
11.06.01.2
10.510.028.314.614.720.3
8.029.415.212.512.314.6
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Current Oil & Gas Market Thoughts
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Drivers of Future Oil and Gas Prices
Oil and natural gas is increasingly difficult and expensive to find, all across the globe – and we are consuming 31 billion bbls/year
World population growth will continue until at least 2050, increasing by approx. 50% – that’s 3 billion more energy consumers (10x current USA population)
50% of today’s population (mostly Asia) is rapidly industrializing, and rapidly expanding energy consumption
Average U.S. oil consumption per capita: 25.3 bbls/year 2003
Average Korean oil consumption per capita: 17.7 bbls/year 2003
Average Japanese oil consumption per capita: 15.6 bbls/year 2003
Average Chinese oil consumption per capita: 1.8 bbls/year 2003
Average Indian oil consumption per capita: 0.9 bbls/year 2003
When urbanized Chinese (40%) and Indians (30%) reach same per capita consumption as Japanese/Koreans average today, the worldwill consume 42% more oil than today – where will 35 million new bbls/day come from? How quickly will China and India get there?
The Great Debate: How close are we to a peak of worldwide crude production?
The Great Debate: How close are we to a peak of worldwide crude production?
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Drivers of FutureOil and Gas Prices, Part II
In addition to Asia, the U.S. and others will also continue to grow – remember, the U.S. adds the equivalent of a new Texas every 7-8 years in population and energy demand
Despite the obvious need for massive new resources of oil and natural gas, futures markets and most investors/analysts believe that lower oil and gas prices are inevitable
– although this is changing before our eyes
Why so much denial of what appear to be easily visible trends?
– Energy has not been expensive for 20 years (almost half of U.S. population has never known anything other than cheap energy)
– It’s inconvenient to think about the implications of energy prices – every thing you own and do today is predicated on cheap energy
– Policies favoring cheap energy and a pristine environment are often in conflict
– Technology will save us – maybe, but much higher prices will be needed to drive the needed increases in energy technology investment
Bush’s inaugural “Freedom from Tyranny” policy is bullish for energy prices
– If he’s right, strong demand increases will overwhelm supply increases
– If he’s wrong, supply will be at risk for a long time
Hurricanes Katrina and Rita demonstrate the folly of putting too many of our energy infrastructure eggs in one (very fragile) basketAnd finally, when will peace, love and
harmony break out in oil producing regions of the world?
And finally, when will peace, love and harmony break out in oil producing regions of the world?
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Where toFrom Here?
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Ten Questions to Ponder
Can LNG gas supply accretion (from a 2.5 bcf/day base in ‘05) overcome continuing U.S./Canada gas supply depletion (from a 70 bcf/day current base)?
Will all (or enough) spot cargoes of LNG come to the U.S. and at what price?
Will LNG importers have financial motivation to undercut U.S. gas prices at the moment of importation?
When will we build gas pipeline from McKenzie Delta Alaska? How much of the McKenzie gas gets past Canadian oil sands projects? Should Alaska gas be liquefied instead?
What happens if energy demand in India and China (40% of the world’s population) increases by 35 million bbls/day in next 15 years?
How will U.S. resolve its public policy conflicts between cheap energy vs. a pristine environment?
Will world oil production peak? When? ’06, ’10, ’15? Ever?
After an oil production peak, how much stranded gas becomes converted to liquids rather than to LNG?
How high do oil/natural gas prices have to rise to cut short economic growth?
How will Iraq and Iran play out and what happens if (or when?) House of Saud falls?
At what prices for oil and gas are you willing to change your consumption habits?
At what prices for oil and gas are you willing to change your consumption habits?
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Your Q&A
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Corporate Information
Chesapeake Headquarters6100 N. Western AvenueOklahoma City, OK 73118Web site: www.chkenergy.com
Contacts:Jim C. JohnsonPresidentChesapeake Energy Marketing, Inc.(405) 879-9163jjohnson@chkenergy.com
Jeff FisherSenior Vice PresidentProduction(405) 767-4018jfisher@chkenergy.com
Human Resourceshr@chkenergy.comwww.chkenergy.com
Common Stock – NYSE: CHKOther Publicly Traded Securities CUSIP Ticker6.0% Convertible Preferred Stock #165167701 CHKPrA5.0% Convertible Preferred Stock (2003 Series) #165167800 CHKPrB4.125% Convertible Preferred Stock #165167875 n/a5.0% Convertible Preferred Stock (2005 Series) #165167859 n/a4.5% Convertible Preferred Stock #165167842 CHK PrD5.0% Convertible Preferred Stock (2005 B Series) #165167834 n/a7.5% Senior Notes Due 2013 #165167BC0 CHK137.5% Senior Notes Due 2014 #165167BF3 CHK147.0% Senior Notes Due 2014 #165167BJ5 CHKA147.75% Senior Notes Due 2015 #165167BA4 CHK156.875% Senior Notes Due 2016 #165167BE6 CHK166.375% Senior Notes Due 2015 #165167BL0 CHKJ156.625% Senior Notes Due 2016 #165167BN6 CHKJ166.50% Senior Notes Due 2017 #165167BR7 n/a6.25% Senior Notes Due 2018 #165167BQ9 CHK186.875% Senior Notes Due 2020 #165167BT3 n/a2.75% Contingent Convertible Senior Notes Due 2035 #165167BV8 n/a
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The Securities and Exchange Commission has generally permitted oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use the terms “probable,” “possible” and “non-proved” reserves, reserve “potential” or “upside” or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC’s guidelines may prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the company.
Our production forecasts are dependent upon many assumptions, including estimates of production decline rates from existing wells and the outcome of future drilling activity. Also, our internal estimates of reserves, particularly those in our recent acquisitions where we may have limited review of data or experience with the properties, may be subject to revision and may be different from those estimates by our external reservoir engineers at year-end. Although we believe the expectations, estimates and forecasts reflected in these and other forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions and data or by known or unknown risks and uncertainties.
Certain Reserve & Production Information
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Forward-Looking Statements
This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our current expectations or forecasts of future events. They include estimates of oil and gas reserves, expected oil and gas production and future expenses, projections of future oil and gas prices, planned capital expenditures for drilling, leasehold acquisitions and seismic data, and statements concerning anticipated cash flow and liquidity, our business strategy and other plans and objectives for future operations, including our planned common stock offering. In addition, statements concerning the fair value of derivative contracts and their estimated contribution to our future results of operations are based upon market information as of a specific date. These market prices are subject to significant volatility.
Although we believe the expectations and forecasts reflected in these and other forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Factors that could cause actual results to differ materially from expected results are described under “Risk Factors” beginning on page S-12 of the Prospectus Supplement dated December 8, 2005 we filed with the Securities and Exchange Commission on December 8, 2005. They include the volatility of oil and gas prices, adverse effects our substantial indebtedness and preferred stock obligations could have on our operations and future growth and on our ability to make debt service and preferred stock dividend payments as they become due, our ability to compete effectively against strong independent oil and gas companies and majors, the availability of capital on an economic basis to fund reserve replacement costs, uncertainties inherent in estimating quantities of oil and gas reserves and projecting future rates of production and the timing of development expenditures, our ability to replace reserves and sustain production, uncertainties in evaluating oil and gas reserves of acquired properties and associated potential liabilities, unsuccessful exploration and development drilling, declines in the values of our oil and gas properties resulting in ceiling test write-downs, lower prices realized on oil and gas sales and collateral required to secure hedging liabilities resulting from our commodity price risk management activities, drilling and operating risks, and the loss of key personnel.
We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation, and we undertake no obligation to update this information. We urge you to carefully review and consider the disclosures made in this presentation and our filings with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.