CHK Overview. December 2005 Presentation

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2 CHK Overview 2 nd largest independent producer of U.S. natural gas: trail only DVN, #5 overall includes majors, utilities and pipelines #1 driller in U.S.: 79 operated rigs, 61 non-operated rigs, collector of 10% of all daily drilling info generated in the U.S. Active consolidator in focused areas: $10.1 billion since 98, $2.1 billion in 04, $4.8 billion to date in 05 Increasing production profile: 1,270 mmcfe/day projected 05 production - 28% YOY increase; 1,543 mmcfe/day projected 06 production - 22% YOY increase; 1,655 mmcfe/day projected 07 production 7% YOY increase Large proved reserve base: 7.3 tcfe of proved reserves at 9/30/05, 92% natural gas, 64% proved developed, 13.9 year R/P #1 gas resource play: 7.0 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 approximately 25,000 drillsites Industry leading leasehold and seismic position: 8.0 mm net acres of U.S. onshore leasehold plus 11.7 mm acres of 3-D seismic $18.9 billion EV: $13.4 billion equity value, $5.5 billion long-term debt 2006 estimates: ebitda $3.7 billion; operating cash flow $3.4 billion; net income to common $1.4 billion CHK offers great value to investors: 3.9x operating cash flow, 5.1x ebitda, 9.9x 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 Data above incorporates: CHK s Outlook as of 12/06/05; Pro forma adjustments for the acquisition of Columbia Natural Resources, LLC CNR; An assumed common stock price of $31.00, NYMEX prices of $8.00/mcf and $50.00/bbl for 2006 and excludes effects of FAS 133 unrealized hedging gain or loss and charges incurred in connection with stock based compensation; and Pro forma adjustments for the debt and equity financings of the CNR acquisition 2

3 December 2005 Presentation Recent Financings Implemented first stage of permanent financing for the acquisition of Columbia Natural Resources and affiliates CNR on November 2, 2005 Sold $500 million of 6.875% senior unsecured notes due 2020 Sold $690 million of 2.75% senior unsecured contingent convertible notes due 2035 Conversion price of $39.07 per common share up 30% from CHK closing price of $30.05 per share Net share settle conversion feature Sold $575 million of 5.0% cumulative convertible preferred stock Conversion price of $39.07 per common share up 30% from CHK closing price of $30.05 per share Perpetual term Mandatory conversion after 5 years if common stock exceeds 130% of conversion price Sold $724 million of common stock on December 8 th as the second stage of permanent financing for the acquisition of CNR CHK s acquisition financing strategy remains consistent: use all cash flow in excess of drilling cap-ex first, then finance all further acquisitions with a 50/50 combination of long-term debt and equity 3

4 Review of CNR Acquisition Acquired CNR for $2.2 billion in cash and $0.9 billion in liabilities assumed at closing, valued as follows: Proved reserves: 1.1 tcfe for $2.4 billion = $2.23/mcfe Probable/possible reserves and leasehold: 1.4 tcfe and 4.1 mm net acres 3.5 mm net acres onshore U.S. for $500 mm Midstream: 6,500 miles of gathering pipeline and infrastructure for $175 mm All-in cost to develop 2.5 tcfe of 3P reserves = $2.80/mcfe 99% natural gas; 70% proved developed reserves; 125 mmcfe current daily production rate; 23-year R/P ratio 16 years on proved developed; operate 93% of wells with a 94% average working interest Hedged approximately 100 bcf of gas at an average price of $10.76 per mmbtu, equalling two years of anticipated production from the CNR properties Price decks used to value CNR were much lower than the price decks on the forward curve This opportunity has significantly expanded over the last four years CHK first began studying CNR in 2002; wanted big gas and big acreage next to very best U.S. gas markets 4

5 CNR Acquisition Highlights Immediate critical mass and scale in a proven gas basin CHK becomes fourth largest gas producer in Appalachian Basin behind Equitable, Consolidated and Dominion Over 46 tcf of cumulative gas production in Appalachia with 9 tcf of proved and 68 tcf of unproved gas remaining 1 Premium gas price realizations: High btu gas 1,140 btu/mcf; positive basis differentials of $0.25 to $0.50/mmbtu over NYMEX vs. $2.00 to $4.00/mmbtu discounts to NYMEX in various southwestern and western basins Multiple value creation opportunities: Fragmented basin that is ripe for consolidation Drilling acceleration to enhance PV of inventory Plan to triple capex to over $200 mm in 2006 Future reserve upside CHK has identified 1,300 PUDs and 8,100 unproved drillsites and initially recognized 2.5 tcfe of 3P reserves vs. 1,600 PUDs and 14,000 unproved locations and 3.9 tcfe of 3P reserves determined by seller s third-party engineers Deeper drilling potential that plays to CHK s expertise in largely under-explored basin <1% of 400,000 wells drilled below 7,500 ; <15 wells drilled below 15,000 Improved application of science and transfer of technology from other basins To date, no coring, no 3-D, many wells not ever logged Over 3,000 wells with workover potential at >50% rates of return CHK believes the Appalachian Basin is the last frontier for American onshore gas exploration and consolidation 5 1 Source: National Petroleum Council - September 2003

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9 CHK s Focused Portfolio of Long-Lived Gas Proved Reserves bcfe Proved Reserves % Production mmcfe/d Production % R/P years Mid-Continent 3,816 52% % 12.8 Appalachia 1,065 15% 125 8% 23.3 Ark-La-Tex & Barnett Shale 1,054 14% % 16.8 Permian % 129 9% 14.6 S. Texas & Gulf Coast 609 8% % 9.0 Other 47 1% 8 1% 16.1 Totals 7, % 1, % 13.9 Data above incorporates: Internal proved reserve estimates as of 9/30/05 Pro forma adjustments for the acquisition of CNR Other includes the Piceance Basin of Colorado and the Williston Basin of North Dakota and Montana. 9

10 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 mm net acres, 25,000 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 10

11 Strategy Has Produced Industry-Leading Results Oil Gas 151x growth in 14 years 53% CAGR Production 1 Bcfe % CAGR E 2006E 2007E 604 9,000 8,400 Oil 7,900 8,000 7,300 Gas 7,000 6,000 5,000 4,000 3,000 2,000 1, Proved Reserves 2 Bcfe 61x growth in 14 years 36% CAGR 1,206 1,355 1,780 2,205 3,169 31% CAGR 4, E 2006E 2007E Estimated Estimated production production is is 92% 92% gas gas production production is is forecast forecast to to be be up up 28% 28% over over levels levels production production is is forecast forecast to to be be up up 22% 22% over over levels levels production production is is forecast forecast to to be be up up 7% 7% over over levels levels 1 Based on the mid-point of guidance as of 12/6/05. Estimates of future production are based on current production rates adjusted for expected decline rates, anticipated results from new drilling and expected results from completed acquisitions 2 Projections of future reserves are based on our internally estimated proved reserves at 9/30/05, adjusted by estimates of future production, anticipated results from new drilling based on current capital expenditure plans and cost expectations and include the acquisition of CNR 11

12 CHK s Business Strategy Growth through acquisitions Acquire, exploit, extend and explore Growth through the drillbit Onshore domestic U.S. Regional consolidation PIMBY not NIMBY Gas, gas, gas Onshore, in the U.S.A., lots of it 12

13 Keys To Being A Successful Acquirer Focus Experience Drillbit Expertise Operational Skill Know what you want to buy, where you want to buy it and how you want to buy it 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 Must be able to accurately assess, accelerate and deliver upside from PUDs, probables, possibles and exploration opportunities Must be able to operate acquired properties more efficiently than sellers. Significant operating scale and attention to detail are the keys to achieving efficiencies CHK CHK has has executed executed more more acquisition acquisition transactions transactions in in the the past past seven seven years years than than any any other other E&P E&P company company experience experience helps helps prevent prevent mistakes! mistakes! 13

14 Acquisition Margins Best Ever $12.00 $11.00 $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $2.30 $1.12 Average yearly gas price Acquisition cost per mcfe Gross margin between cost and gas price $2.27 $1.56 $3.88 $3.05 $4.26 $3.00 $1.18 $0.71 $0.83 $1.26 $3.22 $1.79 $5.38 $3.78 $6.13 $4.37 $1.43 $1.60 $1.76 $8.62 $6.35 $2.27 $11.65 $ CNR to date $ / year CAGR 26.1% 34.4% 13.1% Oil and gas price increases have far outpaced acquisition cost increases Margins matter, not per mcfe sticker price NYMEX strip as of 12/5/05

15 CHK s Business Strategy Growth through acquisitions Acquire, exploit, extend and explore Growth through the drillbit Onshore domestic U.S. Regional consolidation PIMBY not NIMBY Gas, gas, gas Onshore, in the U.S.A., lots of it 15

16 December 2005 Presentation Why is CHK the #1 Driller in the U.S.? Most active driller in U.S. by a wide margin 79 operated rigs currently drilling plus 61 non-operated rigs drilling CHK gathers 10% of all the daily drilling information generated in America This is a distinctive 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 % 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 $2.8 billion to build the industry s largest inventories of U.S. leasehold 8.0 mm net acres and 3-D seismic 11.7 mm acres 1 First mover in acquiring the land, people and seismic to support future growth Amassed a 10-year inventory of approximately 25,000 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 16 1 Includes the acquisition of CNR

17 Balanced Production Growth 1,400 1,300 1,200 1,100 1, mmcfe/day Total production has increased 989 mmcfe/day in 19 quarters, or 34% CAGR 1,308 mmcfe/day 22% CAGR through the drillbit 2005 Q3 Average Production 467 mmcfe/day acquisition production growth 47% of growth 522 mmcfe/day drillbit production growth 53% of growth % initial decline rate 149 mmcfe/day drillbit production maintenance % current decline rate 170 mmcfe/day base production 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 Base as of 4Q'00 Drillbit Production Growth Drillbit Production Maintenance Acquisition Growth 1Q'01 to 3Q'05 CHK s CHK s operating operating performance performance since since January January has has been been one one of of the the two two best best performances performances among among the the largest largest E&P E&P companies companies During During this this time, time, our our production production has has more more than than quadrupled, quadrupled, with with over over half half of of this this growth growth coming coming from from the the drillbit drillbit Through Through the the drillbit drillbit only, only, CHK CHK has has created created a a top top U.S. U.S. gas gas producer producer from from scratch scratch in in past past 5 5 years years 17

18 CHK: The #1 U.S. Gas Resource Base Net Acreage Ten-year identified inventory of 8.0 million acres approximately 25,000 drillsites to develop 2.6 tcfe of proved undeveloped reserves and tcfe of non-proved reserves 3.5 Drillsites 24,900 gross wells 9,400 2,300 Conventional Unconventional gas resource Emerging gas resource Appalachia ,200 12,000 Continue to actively expand all play types with 500,000 acres acquired in 3Q05 through aggressive land acquisition program utilizing >600 land brokers in the field Most recently, CNR acquisition opens up multiple unconventional shale, tight sand and CBM plays in Appalachia Proved Undeveloped Reserves 2.6 tcfe Non-Proved Reserves 7.0 tcfe During the past 7 years, CHK has amassed the #1 gas resource base in the industry. We are in every important gas resource play in the U.S. east of the Rockies 18

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22 CHK s Business Strategy Growth through acquisitions Acquire, exploit, extend and explore Growth through the drillbit Onshore domestic U.S. Regional consolidation PIMBY not NIMBY Gas, gas, gas Onshore, in the U.S.A., lots of it 22

23 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 now 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 CHK s operating operating areas areas are are still still very very fragmented fragmented and and in in the the years years ahead ahead likely likely to to produce produce further further consolidation consolidation opportunities opportunities 23

24 CHK s Business Strategy Growth through acquisitions Acquire, exploit, extend and explore Growth through the drillbit Onshore domestic U.S. Regional consolidation PIMBY not NIMBY Gas, gas, gas Onshore, in the U.S.A., lots of it 24

25 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? 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 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 25

26 BP Chevron ExxonMobil Devon 1 Chesapeake 2 ConocoPhillips EnCana 3 Anadarko 4 XTO 5 Burlington 6 RoyalDutchShell Kerr-McGee 7 Dominion EOG 8 Williams Apache 9 Occidental Marathon El Paso Newfield 10 Total After CNR, CHK is the 5 th Largest U.S. Gas Producer Daily U.S. Natural Gas Production A,B CompanyC 3Q 05 3Q 04 2,456 1,676 1,614 1,485 BP CVX XOM DVN CHK COP ECA APC XTO BR RD KMG D EOG WMB APA OXY MRO EP NFX 1,183/1,308 1,218 1,099 1,098 1, ,820 F 2,685 1,813 1,918 1, , , , , ,678 2Q 05 2,727 1,621 1,809 1,501 1,111 1,195 1,061 1,147 1, ,357 1, ,747 3Q 05 vs. 3Q 04 % Change 8.5 % % 3Q 05 vs. 2Q 05 % Change 9.9 % % Ticker D D US Rigs at 12/2/ E The The top top gas gas producers producers with with their their royalty royalty owners 20% 20% account account for for 50-55% 50-55% of of U.S. U.S. gas gas production, production, but but only only 38% 38% of of drilling drilling activity activity 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 3Q 05 gas production E Source: Smith International Survey operated rig count F CHK s reported gas production in 3Q 05 was 1,183 mmcf per day - production of 1,308 mmcf per day is pro forma for the acquisition of Columbia Natural Resources 26

27 Financial Information 27

28 $ in MM $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 Rate: Senior Note Maturity 9/30/05 1 Total Senior Notes: $5.5 billion Average Rate: 6.3% Average Maturity: 10.6 years $ Thousands 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,000 Book Capitalization LT debt Preferred stock Common stock LT debt / book capitalization 12/99 12/00 12/01 12/02 12/03 12/04 9/05 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 ' % 7.5% 6.375% 6.625% 7.5% 7.0% 7.75% 6.875% 6.5% 6.25% 6.875% $364 $600 $1,590 2 $1,270 $600 $600 $ EBITDA estimated at $25-30 billion at current gas price strip and production levels escalated at 5%/year 28 1 Pro forma for effects of $500 mm senior notes issuance, $690 mm of new convertible notes, $575 of new convertible preferred stock and redemption of 2008 senior notes 2 recognizes earliest investor put option as maturity

29 2006 Various Gas Prices as of 12/6/05 $ in millions; gas price at various NYMEX prices; oil at O/G revenue 563 bcfe 1 Hedging effect 2 Marketing and other Production 6.5% $0.80/mcfe $0.11/mcfe Ebitda Interest Operating cash flow 3 Oil and gas $2.18/mcfe Depreciation of other $0.11/mcfe Income taxes 36.5% rate, 95% deferred Net income to common 12 Net income per fully diluted share Net debt/ebitda 4 Ebitda/fixed charges including pfd. dividends 5 MEV/operating cash flow 6 EV/ebitda 7 PE ratio 8 $ 3, , ,254 1, $ 1,248 $ x 8.2x 4.1x 5.4x 10.8x $ 3, , ,340 1, $ 1,303 $ x 8.4x 4.0x 5.3x 10.3x $ 4, , ,426 1, $ 1,358 $ x 8.7x 3.9x 5.1x 9.9x $ 4, , ,512 1, $ 1,412 $ x 8.9x 3.8x 5.0x 9.5x $4, , ,596 1, $ 1,466 $ x 9.0x 3.7x 4.9x 9.1x $4, , ,682 1, $ 1,520 $ x 9.3x 3.6x 4.8x 8.8x 1 Before effects of FAS 133 unrealized hedging gain or loss and charges incurred in connection with issuances of restricted stock 2 Excludes the non-cash effect of CNR hedges 3 Before changes in assets and liabilities 4 Net debt = long-term debt less cash 5 Fixed charges $427 mm = Pro forma interest of $349 million plus preferred dividends of $78 million 6 MEV Market Equity Value = $13.4 billion $31.00/share x 433 mm fully diluted shares pro forma for the equity financing of the CNR acquisition 7 EV Enterprise Value = $18.9 billion Market Equity Value, plus $5.5 billion in long-term debt 8 Assuming a common stock price of $31.00/share 29

30 2007 Various Gas Prices as of 12/6/05 $ in millions; gas price at various NYMEX prices; oil at O/G revenue 604 bcfe 1 Hedging effect 2 Marketing and other Production 6.5% $0.85/mcfe $0.12/mcfe Ebitda Interest Operating cash flow 3 Oil and gas $2.28/mcfe Depreciation of other $0.12/mcfe Income taxes 36.5% rate, 95% deferred Net income to common 12 Net income per fully diluted share Net debt/ebitda 4 Ebitda/fixed charges including pfd. dividends 5 MEV/operating cash flow 6 EV/ebitda 7 PE ratio 8 $ 3, ,299 $ 4, , , ,218 1,375 1, $ 994 $ x 7.7x 4.5x 5.7x 13.5x $ 1,125 $ x 8.2x 4.2x 5.4x 11.9x $ 4, , ,425 1, $ 1,257 $ x 8.7x 3.9x 5.1x 10.7x $ 4, , ,631 1, $ 1,387 $ x 9.2x 3.7x 4.8x 9.6x $4, , ,836 1, $ 1,518 $ x 9.7x 3.5x 4.6x 8.8x $5, , ,043 1, $ 1,649 $ x 10.1x 3.3x 4.4x 8.1x 1 Before effects of FAS 133 unrealized hedging gain or loss and charges incurred in connection with issuances of restricted stock 2 Excludes the non-cash effect of CNR hedges 3 Before changes in assets and liabilities 4 Net debt = long-term debt less cash 5 Fixed charges $427 mm = Pro forma interest of $349 million plus preferred dividends of $78 million 6 MEV Market Equity Value = $13.4 billion $31.00/share x 433 mm fully diluted shares pro forma for the equity financing of the CNR acquisition 7 EV Enterprise Value = $18.9 billion Market Equity Value, plus $5.5 billion in long-term debt 8 Assuming a common stock price of $31.00/share 30

31 Hedging Reduces Risk, Locks in Value CHK s open oil and gas hedge positions for 2005, 2006, 2007 and 2008 are detailed below 1 : Q4 05 gas Q1 06 gas Q2 06 gas Q3 06 gas Q4 06 gas 2006 % Hedged 77% 69% 52% 50% 41% 53% NYMEX Average Price $ 8.33 $ $ 8.46 $ 8.46 $ 8.68 $ 9.09 as of 12/6/05 Out Year Gas Hedging 2007 = $ = $8.56 Out Year Oil Hedging 2007 = $ Q4 05 oil Q1 06 oil Q2 06 oil Q3 06 oil Q4 06 oil % 54% 53% 50% 47% 51% 1 Excludes minor amounts of collars, call options and CNR derivative liabilities assumed and includes locked positions $54.97 $59.71 $59.60 $59.83 $59.45 $59.65 NYMEX Strip 12/5/05 4Q avg. Oil $61.13 $62.04 $62.49 $61.03 $58.55 $57.47 $60.32 Gas $12.97 $11.65 $10.17 $8.94 $7.96 $7.21 $9.19 Since 2001, CHK s hedging program has greatly reduced acquisition and financial risks and made investing in the future easier 31

32 December 2005 Presentation CHK Has Also Hedged Service Costs HOW? Negotiating power through large operating scale #1 customer of most onshore drilling service providers We demand best pricing, best equipment, best people Direct rig ownership: Building wholly-owned Nomac Drilling subsidiary to 40 rigs from 17 currently running; estimated current value $100 mm over CHK cost of $100 mm Creates acquisition ramp-up advantages Less turnover and loyalty to operator, not contractor Provides operational flexibility Rig investments: Own 17% interest in Pioneer Drilling Company AMEX: PDC which has 50 rigs and has 7 more on order; $100 mm unrealized gain to date Recent $15 mm investment for a 45% interest in privately-held DHS Drilling Company that has 8 rigs operating and is expanding to 11 rigs Recent $25 mm investment for a 49% interest in privately-held Mountain Drilling Company that is building 5 specialty rigs Third-party rigs: Sponsored the construction of 20 rigs through various drilling contracts with third party rig builders and operators; rates 10%-15% below current market levels CHK s $170 mm of rig investments have appreciated $200 mm and have or will increase the U.S. rig fleet by 60 rigs, or 4%, from 2004 to 2006 Note: On the other hand, no one can increase U.S. gas production capacity by 4% in 2 years, or ever 32

33 Summary 33

34 CHK s NAV Exceeds Current Stock Price As of September 30, 2005 various gas prices 1 $ in millions, except per share data Proved reserves 2 Unproved reserves 3 Value of CHK hedges Value of CNR hedges Other assets 4 Less: long-term debt 5 Less: preferred stock when not dilutive Less: net working capital 6 Shareholder value Fully diluted common shares 7 NAV per share Potential % upside 8 PV PV PV PV PV PV $ 16,980 $ 18,361 $ 19,743 $ 21,129 $ 22,512 $ 23,895 5,600 6,300 7,000 7,700 8,400 9, ,533 5,533 5,533 5,533 5,533 5, $ 17,611 $ 19,824 $ 21,694 $ 23,567 $ 25,437 $ 27, $ $ $ $ $ $ % 48% 62% 76% 90% 103% So, So, even even though though stock stock is is up up 80%+ 80%+ YTD, YTD, we we believe believe it it still still has has more more room room to to run run 1 NYMEX gas price changes and NYMEX oil price held constant at $66.38 per bbl tcfe pro forma for the acquisition of CNR tcfe of unproved reserves valued from $ $1.30/mcfe 4 Buildings, drilling rigs, midstream gas assets and investments at market value pro forma for the acquisition of CNR 5 Pro forma for debt financing related to the acquisition of CNR 6 Pro forma for working capital associated with the acquisition of CNR 7 Pro forma for estimated equity financing related to the acquisition of CNR 8 Based on common stock price of $31.00 per share NYMEX Strip 12/5/05 4Q avg. Oil $61.13 $62.04 $62.49 $61.03 $58.55 $57.47 $60.32 Gas $12.97 $11.65 $10.17 $8.94 $7.96 $7.21 $

35 Creating More NAV Everyday In addition to potential acquisitions in 06, CHK expects to: Invest $2.8 billion in exploration and development drilling, land and seismic; Find an estimated 1.25 $2.25/mcfe through the drillbit; Produce an estimated 563 bcfe; Replace 563 bcfe of proved reserves and add 687 bcfe of proved reserves newly drilled reserves could be monetized for at $3.33/mcfe $2.3 billion of value; and Generate approx. $450 mm of excess operating cash flow after $150 mm of common and preferred dividend payments and misc. capex In summary, CHK should create at least $2.7 billion of NAV in 2006, or over $6.00 per diluted common share, through the everyday execution of our business model this represents 20-25% NAV growth in just one year and without any help from 1 accretive acquisitions, 2 additional hedging opportunities or, 3 equity multiple expansion through ongoing de-leveraging Note: These expectations for 2006 assume the successful completion of the company s current business plan and current market conditions. None of these assumptions is assured. Actual results will be dependent on our drilling and acquisition success, oil and gas markets and the accuracy of production and reserves estimates. 35

36 Why Own CHK? Performance: #2 large cap stock price performer since 1999 and since 1993 Gas: Purest play in U.S. natural gas all onshore Focus: Uniquely focused business strategy provides less risk, better returns Growth: 17 consecutive quarters of organic production growth vs. industry s multi-year decline; 35% production growth in 04, 28% in 05, at least 22% in 06 and 7% in 07 Sustainability: over 14 tcfe of proved and non-proved reserves; 10-year drilling backlog of 25,000 drillsites Balance Sheet: Steadily improving, low borrowing costs and long-term maturities Value: Trade at a discount to NAV and discount to closest peers Income: Pay a $0.20 annual common stock dividend Hedging: Successful hedging track record during past 5 years Commitment Two co-founders own 12% of common stock and equivalents, have been active open market acquirers CHK = Value, Growth, Performance, Upside 36

37 Corporate Information Chesapeake Headquarters 6100 N. Western Avenue Oklahoma City, OK Web site: Common Stock NYSE: CHK Other Publicly Traded Securities CUSIP Ticker 6.0% Convertible Preferred Stock # CHKPrA 5.0% Convertible Preferred Stock 2003 Series # CHKPrB 4.125% Convertible Preferred Stock # n/a 5.0% Convertible Preferred Stock 2005 Series # pending 4.5% Convertible Preferred Stock # CHK PrD 5.0% Convertible Preferred Stock 2005 B Series # n/a 7.5% Senior Notes Due 2013 #165167BC0 CHK13 7.5% Senior Notes Due 2014 #165167BF3 CHK14 7.0% Senior Notes Due 2014 #165167BJ5 CHKA % Senior Notes Due 2015 #165167BA4 CHK % Senior Notes Due 2016 #165167BE6 CHK % Senior Notes Due 2015 #165167BL0 CHKJ % Senior Notes Due 2016 #165167BN6 CHKJ % Senior Notes Due 2017 #165167BR7 pending 6.25% Senior Notes Due 2018 #165167BQ9 CHK % Senior Notes Due 2020 #165167BT3 n/a 2.75% Contingent Convertible Senior Notes Due 2035 #165167BV8 n/a Contacts: Jeffrey L. Mobley, CFA Vice President Investor Relations and Research jmobley@chkenergy.com Marcus C. Rowland Executive Vice President and Chief Financial Officer mrowland@chkenergy.com 37

38 Certain Reserve & Production Information 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. 38

39 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 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, 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. 39