Businessweek

Chesapeake Energy Corporation engages in the exploration, development, and acquisition of properties for the production of natural gas, oil and natural gas liquids (NGL) from underground reservoirs. The company also provides substantial marketing, drilling and other oilfield services. Its operations are located onshore and in the continental United States. Divisions Southern Division The Southern division primarily includes the Haynesville/Bossier Shales in northwestern Louisiana and east Texas and the Barnett Shale in the Fort Worth Basin of north-central Texas. Northern Division The Mid-Continent region consist principally the Anadarko Basin in northwestern Oklahoma, the Texas Panhandle and southern Kansas, including the Mississippi Lime, Cleveland and Tonkawa tight sands and Granite Wash plays. Eastern Division Primarily includes the Marcellus Shale in the northern Appalachian Basin of West Virginia and Pennsylvania and the Utica Shale in Ohio and Pennsylvania. Western Division Primarily includes the Eagle Ford Shale in south Texas, and the Niobrara Shale in the Powder River Basin in Wyoming. Well Data As of December 31, 2012, the company had interests in approximately 45,400 gross (21,200 net) productive wells, including properties in which it held an overriding royalty interest, of which 37,300 gross (18,500 net) were classified as primarily natural gas productive wells and 8,100 gross (2,700 net) were classified as primarily oil productive wells. The company operates approximately 27,200 of its 45,400 productive wells. During 2012, the company drilled 1,642 gross (1,111 net) wells and participated in another 959 gross (161 net) wells operated by other companies. Reserves As of December 31, 2012, the company estimated proved reserves were 15.690 trillion cubic feet of natural gas equivalent. Business Strategy Key elements of the company’s business strategy include grow production and proved reserves organically through the drillbit in areas with large unconventional accumulations of natural gas and liquids; increase liquids production; control substantial land and drilling location inventories; focuses its operations in the core of the core of its leasehold; and maintain an entrepreneurial culture. Marketing, Gathering and Compression Marketing The company’s wholly owned subsidiary, Chesapeake Energy Marketing, Inc. (CEMI), provides natural gas, oil and NGL marketing services, including commodity price structuring, contract administration and nomination services for it, its joint working interest owners and other producers. The company’s oil and NGL production is generally sold under market sensitive short-term or spot price contracts. Compression Operations The company, through its wholly owned subsidiary, MidCon Compression, L.L.C. (MidCon), operates wellhead and system compressors, with approximately 1.0 million horsepower of compression, to facilitate the transportation of natural gas primarily produced from Chesapeake-operated wells. Oilfield Services The company formed COS Holdings, L.L.C. (COS) that owns and operates its oilfield services assets. COS is a diversified oilfield services company that provides a range of well site services, primarily to the company and its working interest partners. The company’s services include contract drilling, hydraulic fracturing, oilfield rentals, rig relocation, fluid transportation and disposal and manufacturing of natural gas compressor packages. Contract Drilling As of December 31, 2012, the company acquired 119 drilling rigs. Its drilling rigs are operating in Louisiana, Montana, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, West Virginia and Wyoming. As of December 31, 2012, the company had a fleet of 119 land drilling rigs. Hydraulic Fracturing As of December 31, 2012, the company owned 7 hydraulic fracturing fleets with an aggregate of 270,000 horsepower that provide hydraulic fracturing and other well stimulation services. Oilfield Rentals The company’s oilfield rentals business provides premium rental tools for land-based natural gas and oil drilling, completion and workover activities under the name Great Plains Oilfield Rental, L.L.C. It offers a line of rental tools, including drill pipe, drill collars, tubing, blowout preventers, frac tanks and mud tanks and mud systems. The company also provides air drilling and flowback services and services associated with the transfer of fresh water to the wellsite. Oilfield Trucking The company owns two privately owned oilfield trucking service companies, Hodges Trucking Company, L.L.C. and Oilfield Trucking Solutions, L.L.C. The company’s trucks move drilling rigs, produced water, crude oil, other fluids and construction materials to and from the wellsite. As of December 31, 2012, it owned a fleet of 278 rig relocation trucks, 66 cranes and forklifts and 250 fluid service trucks. Other Operations The company’s other operations consist primarily of its natural gas compressor manufacturing business that operates under the name of Compass Manufacturing, L.L.C. in which it designs, engineers, fabricates, installs, and sells natural gas compression units, accessories and equipment used in the production, treatment and processing of natural gas and oil. Environmental, Health and Safety Matters The company’s operations are subject to the federal Clean Air Act and comparable state laws and regulations. Dispositions In 2012, the company sold the majority of its midstream business to Access Midstream Partners, L.P. History Chesapeake Energy Corporation was founded in 1989.