During the 2010 second quarter, Chesapeake’s average daily net production of 260 mmcfe (43 thousand barrels of oil equivalent (mboe)) in the Greater Granite Wash play increased approximately 5% over the 2010 first quarter and 80% over the 2009 second quarter.  Chesapeake anticipates operating an average of approximately 12 rigs in the Granite Wash in 2010 to drill approximately 75 net wells.  Due in large part to the play’s high oil and natural gas liquids content, the Granite Wash is currently Chesapeake’s highest rate-of-return play and serves as an example of how the company is implementing a transition to increased drilling activity and production to liquids-rich plays.  Chesapeake increased its drilling activity in the Granite Wash from an average of eight operated rigs in 2009 to 14 operated rigs currently and an average of 16 operated rigs projected for 2011. 

Three notable recent wells completed by Chesapeake in the Colony Granite Wash are as follows:

• The James 1-33H in Washita County, OK achieved a peak 24-hour rate of 10.0 mmcf and 2,490 bbls per day, or 24.9 mmcfe per day;
• The Huls USA 1-13H in Washita County, OK achieved a peak 24-hour rate of 13.3 mmcf and 1,780 bbls per day, or 24.0 mmcfe per day; and
• The Gwendolyn 2-22H in Washita County, OK achieved a peak 24-hour rate of 8.0 mmcf and 1,980 bbls per day, or 19.9 mmcfe per day.

Three notable recent wells completed by Chesapeake in the Texas Panhandle Granite Wash are as follows:

• The Ruby Lee 104H in Wheeler County, TX achieved a peak 24-hour rate of 25.3 mmcf and 2,920 bbls per day, or 42.8 mmcfe per day;
• The Dowell 1-31H in Roger Mills County, OK achieved a peak 24-hour rate of 16.2 mmcf and 2,440 bbls per day, or 30.6 mmcfe per day; and
• The Zybach 2010H in Wheeler County, TX achieved a peak 24-hour rate of 8.0 mmcf and 1,270 bbls per day, or 15.6 mmcfe per day.

July 2011 Update - Granite Wash, discovered by Chesapeake in 2007. Current gross operated production is 420 million cubic feet of gas per day, the most by far in the play.

As announced in the news release this morning, we also added 96,000 acres to our position in the Bivins Ranch area. Our initial exploratory results in the emerging Wittenburg Basin play had been very encouraging, with 3D 30-day production ranging from 107 barrels of oil and 42 Mcf of natural gas per day to more than 1,000 barrels of oil and 800 Mcf of gas per day. We completed a 240 square mile 3D shoot on the property during 2011, which we're using to further de-risk in the 5 future drilling locations. Our breadth and scale across these plays allows us to generate efficiencies to increase the value of our position. In the Granite Wash alone, we've been able to reduce costs $500,000 per well by optimizing our casing design, reducing pump volumes and changing profit type. Across the region, we've implemented a fracture database to allow us to reduce frac size and reduce costs by more than 25%. We will continue to pursue these kinds of improvements as we simulate Cordillera assets into Apache.

Update - With the recently completed acquisition of Cordillera Energy Partners III, Apache more than doubled its position in the Anadarko wash play to nearly 550,000 acres. The company has increased its exposure to the horizontal Granite Wash, Tonkawa, Cleveland and Marmaton gas condensate and oil plays. Rig count has increased from six at the beginning of the year to the current total of 22 of which 21 are horizontal.