Chesapeake Energy Corp. added another 68 Bcfe proved oil and gas reserves and 39 Bcfe of probable and possible reserves in the Midcontinent, Permian Basin and Texas Gulf Coast regions Tuesday through four purchases totaling $100 million.

Chesapeake said the purchase price works out to about $1.24/Mcfe for the proved reserves and $1.39/Mcfe for the total reserves. Including the acquisitions, Chesapeake’s expects its proved oil and natural gas reserves to reach 3.6 Tcfe.

The purchases will add about 15 MMcfe/d of daily production, all of which is hedged at $33.11/bbl of oil and $5.78/Mcf of gas. The company has increased its 2004 production forecast from 891 MMcfe/d to 910 MMcfe/d, with about half of the increase attributed to the new purchases and the other half to better than expected recent drilling results. Its 2004 production is expected to be 89% natural gas and 11% oil and natural gas liquids.

Chesapeake has 66% of its gas production hedged for 2004 at about $5.32 and 27% hedged in 2005 at $5.03. About 80% of its oil production in 2004 is hedged at $29.22 while 9% of its 2005 oil production is hedged at $31.56.

“We have locked-in accretive returns from today’s acquisitions by hedging virtually 100% of the anticipated oil and natural gas production volumes for April 2004 through December 2005 at prices well above the price decks we used to evaluate the acquired properties,” said CEO Aubrey K. McClendon. “In this time of strong oil and natural gas markets, we believe unusually attractive returns to Chesapeake’s shareholders can be generated from focused acquisitions and by hedging the acquired production volumes.

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