Choices and Challenges

Tom McKeownFranklin Hamilton, LLC

Who and Where they AreWho and Where they Are http://library.corporate-ir.net/library/10/104/104617/items/313639/chkNov%

2021%20IR%20pres.pdf One of the largest independent natural gas companies in the U.S., with

proven reserves of over 10.6 trillion cubic feet equivalent[1], over 90% of which is natural gas.

Chesapeake has expanded by concentrating its capital in just a few geographic regions, allowing the company to gain an in-depth knowledge of the surrounding geology that has kept drilling success rates at 97% for the past 17 years[2].

Actively acquires new reserves that it thinks could yield in the future. This combined strategy of drilling and purchasing contributed to revenue growth rates of over 50% since 2005.

Current Direction Though much of the company's previous growth was financed through

debt, Chesapeake has decided to sell assets that do not fit its long-term goals, a plan that will allow the company to spend on exploration and drilling without borrowing money.

Unique and Successful Drilling Program-RIDING HIGH!! See Page 8

Unique and Successful Drilling Program-RIDING HIGH!! See Page 8

Land Leasing/ credit based Development-As gas prices rose and new technology unlocked vast new reserves of oil and gas, companies leased millions of acres of land, often at sky-high prices, and counted on being able to borrow money and sell shares to get the money to drill it.

Debt Financing to Drill Chesapeake was especially aggressive, at one point planning to spend $18 billion in 2008, more than three times its operating cash flow. Last spring, the company raised more than $3 billion in debt and equity despite promising the previous fall not to tap the capital markets "for the foreseeable future.“

NYSE HIGH-Chesapeake's shares hit a high of $69.40 on July 2, up 77% from the start of the year.

Natural Gas Price High-natural-gas prices that leaped to a high of $13.577 per million British thermal units in July

Leader in Natural Gas Leader in Natural Gas Gas Advantage -Natural gas has been touted as the next big fuel, however, as it burns

cleaner, more efficiently, and cheaper than oil, and is increasingly more abundant

- a transition away from the black gold and towards natural gas would make Chesapeake very rich in comparison to more oil dependent competitors like Devon Energy.

Strong Growth- Daily production for the 2008 third quarter averaged 2.321 bcfe, a decrease of 7 mmcfe, or 0.3%, over the 2.328 bcfe produced per day in the 2008 second quarter and an increase of 295 mmcfe, or 15%, over the 2.026 bcfe produced per day in the 2007 third quarter.

- Adjusted for the company's year-end 2007, second quarter 2008 and third quarter.-2008 VPP sales of 55, 47 and 47 mmcfe per day, respectively, and the company's sale of Woodford Shale and Fayetteville Shale properties of 47 and 45 mmcfe per day, respectively.

-Chesapeake's sequential and year-over-year production growth rates were 3% and 23%, respectively.

Chesapeke’s Gas Reserves Chesapeke’s Gas Reserves

12.1 TCFE as of 9/30/08 Targeting 12.5 TCFE by 12/08 Targeting 12.9 TCFE by 12/09

Recent Finances P-19Recent Finances P-19

10 Q for third Quarter of 08--- Gains in hedges- an unrealized noncash after-tax mark-to-market

(MTM) gain of$2.846 billion from future period natural gas, oil andinterest rate hedges primarily resulting from lower naturalgas and oil prices as of September 30, 2008 compared to June30, 2008;

-- Re-Financing on notes- an after-tax loss of $19.0 million on the early redemption ofthe company's $300 million 7.75% Senior Notes due 2015;

--Taxes- an after-tax consent fee of $6.3 million paid to amend certainprovisions contained in five of the company's senior noteindentures; and

-- Reducing Dividend Payments-a reduction of net income available to common shareholders of $24.5 million resulting from exchanges of the company'spreferred stock for common stock that reduced future preferredstock dividend payment requirements.

Behind the Financial StrategyBehind the Financial Strategy ACQUISITION BINGE 2004-07 Chesapeake went on an acquisition binge. The company snatched up land at favorable prices during a

time when natural gas prices were falling. CHK funded a significant amount of this land expansion with the use of debt and preferred instruments that eventually convert into equity. This has resulted in the share count doubling over the past five years. Since then, net income has increased five-fold, yet EPS has only doubled.

Investor Frustration-The dilution has caused frustration for some investors. However, share dilution is not always negative. As long as the capital raised from the dilution creates more value than the amount of value diluted, then it's a positive move. For example, if EPS is $1, but a share issuance doubles share count and reduces EPS to .50, then value will be enhanced when the proceeds generate new $1 EPS, increasing total EPS to $1.50. Dilution caused the outstanding shares to double, yet investors are better off because EPS increased 50%.

Off-Setting Losses to bring about gains Sell offs-Chesapeake has completed its land acquisition phase and is now focusing on development of

those reserves. Production will increase, and in a pro-rata basis, capital needs should be reduced. Increased production will generate higher levels of cash flow further reducing needs for external capital. CHK has also announced its intentions of using asset sales as a source of funds, and not accessing the public capital markets. Not only will this drastically slow the rising pace of the share count, but enhance value though the asset dispositions.

Cutting their losses-Reserves that have little or no future upside for CHK can be sold at almost 2x the level as implied by CHK's share price. Going forward, CHK will capitalize on the assets that came at the expense of diluting the equity and produce returns justifying those actions. This should quell apprehension among investors and remove any overhang in the stock price that may have arisen from it

Sell-offs to Permit GrowthSell-offs to Permit Growth Daily production for the 2008 third quarter averaged 2.321 bcfe This is a Decrease of 7 mmcfe, or 0.3%, over the 2.328 bcfe produced per day in the 2008

second quarter and an increase of 295 mmcfe, or 15%, over the2.026 bcfe produced per day in the 2007 third quarter.

Adjusted for the company's year-end 2007, second quarter 2008 and third quarter 2008 VPP sales of 55, 47 and 47 mmcfe per day, respectively, and the company's sale of Woodford Shale and Fayetteville Shale properties of 47 and 45 mmcfe per day, respectively, Chesapeake's sequential and year-over-year production growth rates were 3% and 23%, respectively.

SELL-OFF to BP AMERICA Chesapeake Energy Corporation (NYSE:CHK) and BP America (NYSE:BP) today

announced the execution of a Letter of Intent for a joint venture whereby BP will acquire a 25% interest in Chesapeake's Fayetteville Shale assets in Arkansas for $1.9 billion. The assets have current daily net production of approximately 180 million cubic feet of natural gas equivalent and include approximately 540,000 net acres of leasehold which the companies believe could support the drilling of up to 6,700 future horizontal wells. As a result of the transaction, BP will own approximately 135,000 net acres of this leasehold and Chesapeake will own approximately 405,000 net acres

Sell-Offs ContinuedSell-Offs Continued Sell-Off to PXP Chesapeake Energy Corporation (NYSE:CHK) and Plains Exploration & Production Company

(NYSE:PXP) (PXP) today announced they have entered into a Haynesville Shale joint venture (the JV) in North Louisiana and East Texas. PXP has agreed to acquire a 20% interest in Chesapeake's Haynesville Shale leasehold as of June 30, 2008 for $1.65 billion in cash. In addition, PXP has agreed to fund 50% of Chesapeake's 80% share of drilling and completion costs for future Haynesville Shale JV wells over a several year period until an additional $1.65 billion has been paid.

Sell-Off to Statoil-Hydro Chesapeake Energy Corporation Announces Marcellus Shale Joint Venture and International

Unconventional Natural Gas Exploration Alliance with StatoilHydro

TOUGH TIMES COME UPON THEMTOUGH TIMES COME UPON THEMhttp://online.wsj.com/article/SB122359301189021003.html?mod=googlenews_wsj

GAS PRICE DROP- Natural gas settled at $6.825 Thursday on the New York Mercantile Exchange

RUSHING TO SELL in a Buyer’s Market- They face the difficulty of trying to sell some of its gas-producing properties in South Texas in what has become a buyers' market. The sale is on top of other asset sales and spending cuts Chesapeake announced in September

RUNNING OUT OF CASH- The company had no cash at the end of the second quarter. Aubrey McClendon said his company expects to end the year with $5 billion to $6 billion in cash -- enough to keep growing without tapping the capital markets.

NYSE TANK- Its shares closed at $17.97 Thursday on the New York Stock Exchange.

FEARS OF OVERDRILLING- OVER SUPPLY-The extensive drilling by Chesapeake and its peers led to fears in recent months of an oversupply of natural gas, sending prices tumbling. Land is only valuable if companies have the money to drill it -- and a growing number of analysts are skeptical that Chesapeake and some of its peers will be able to find enough money to drill all the land before the leases expire.

TOUGH TIMES COME UPON THEMTOUGH TIMES COME UPON THEM Massive Spending Cuts-cut its capital budget by $3.2 billion, or 17%, through

2010. The company also said it planned to sell $1.75 billion worth of assets on top of the nearly $7 billion of assets the company has already sold this year.

Massive Lay-offs-the company is slowing its acquisition of new land and plans to cut about a quarter of its 4,000 land men, private contractors hired to lease land on behalf of the company

Multiple Operations Ceased- In Louisiana, where Chesapeake helped create a leasing frenzy earlier this year, the company's leasing has all but stopped, according to attorneys representing landowners there. The company has scaled back even further in Pennsylvania, where Tom Murphy with the Penn State Cooperative Extension says Chesapeake has canceled some leases before they have been finalized. Mr. McClendon said Chesapeake has delayed lease agreements, but denies canceling any signed deals.

"There are a lot of disgruntled individuals who thought they had a deal on the table and didn't realize the company had an out," Mr. Murphy said.

Negative Forces Affecting Chesapeke Negative Forces Affecting Chesapeke 1) Seasonal Natural Gas Price Declines Sometimes Lead the Company to Shut

Down Production In September of 2006, Chesapeake announced it would temporarily shut down some of its gas production, in order to hedge against a decline in gas prices. Gas prices fell to around $5.50 per 1000 cubic feet, from around $8 in June [15], possibly due to unseasonably warm weather reducing demand for heating gas. Chesapeake was forced to do the same thing a year ago: in September of 2006, Chesapeake announced it would temporarily shut-in 6% of its gas production, or about 100 MMCfe per day [16]. In order to shut-in production, Chesapeake must give up the use of some of the rigs it has been contracting.

Reducing production helps margins when prices are low, but at the cost of losing out on greater profits when prices rise.

2) Petroleum Dissilusionment- Whether it's because of the desire for energy 2)independence, the rising price of oil, or fears of climate change, people are becoming more and more disillusioned with petroleum. Environmentalists have been calling for a shift to renewable energy for years, and though the river of change is running slow, it is running deep. Internationally, the Kyoto Protocol has started a shift toward cleaner sources of energy, and though the U.S. isn't partaking Kyoto's changes, the recently passed Energy Independence and Security Act of 2007 is the first step towards a grander series of changes. By forcing automakers to achieve 35 mpg by 2020 and setting a Renewable Fuel Standard of 36 billion gallons of biofuels in 2022 [20], the Act could greatly reduce the growth of the petroleum industry

Chesapeke’s Strategy for GrowthChesapeke’s Strategy for Growth

1) Drilling and Exploration 2) Acquisitions 3) Regional Scale 4) Internal Growth 5) Monetization Plan

Drilling and ExplorationDrilling and Exploration In 2006, Chesapeake claimed to be the nation's

leading driller, with 1,243 net wells drilled for itself, 203 net wells drilled for other companies; drilling for Chesapeake's reserves were 98 rigs operated by Chesapeake employees, and 79 rigs operated by employees from oilfield services companies[4].

AcquisitionsAcquisitions In 2006, the company acquired 6.5 trillion cubic feet equivalent worth of reserves at a

total cost of about $14.3 billion [5]. More recently, the company acquired the Kerr-McGee Tower from Anadarko Petroleum, and then sold it to SandRidge Energy after determining it wasn't worth the energy to develop. Acquisitions allow the company to focus capital resources on exploration in its own areas of interest.

1) Chesapeake Energy Corporation Announces Marcellus Shale Joint Venture and International Unconventional Natural Gas Exploration Alliance with StatoilHydro OKLAHOMA CITY--(BUSINESS WIRE)--Nov. 11, 2008

2) Chesapeake and PXP Announce Haynesville Shale Joint Venture OKLAHOMA CITY & HOUSTON, Jul 01, 2008

3) Chesapeake Energy Corporation (NYSE:CHK) and BP America (NYSE:BP) OKLAHOMA CITY, Okla., Oct 16, 2008

Regional ScaleRegional Scale Narrow Focus- Most of Chesapeake's holdings are concentrated within

Oklahoma, Arkansas, Kansas, and Texas, yet the company is one of the largest independent gas companies. Its regional focus allows it to build expertise in the geological characteristics of its operating areas, resulting in an inordinately high drilling success rate of 97% over the last 17 years[6].

Economies of Scale- Furthermore, by concentrating its equipment in just a few regions, Chesapeake can take advantage of economies of scale - equipment can be moved from site to site much more easily, allowing the company to cut costs and put employees and equipment where they are most needed

Internal Growth via MonetizationInternal Growth via Monetization Liquidation-Chesapeake's sale of the Kerr-McGee property in July

2007 highlights a major part of its new growth strategy. The company is selling off some of its properties and rigs; the resulting cash could help the company grow without increasing its debt.

VPP- By the end of 2009, Chesapeake wants to sell about $4 billion worth of assets (for cash); it has commenced its plan, selling 37 rigs in the third quarter for $235 million [9] , as well as a volumetric production payment for some Appalachian holdings in early January to Deutsche Bank AG (DB) and UBS AG (UBS) affiliates for $1.1 billion[

Monetization PlanMonetization Plan The firm monetized a portion of its proved reserves and production in certain

Chesapeake-operated producing assets in Kentucky and West Virginia. The company has sold a volumetric production payment (VPP) to affiliates of UBS AG and DB Energy Trading LLC (a subsidiary of Deutsche Bank AG) for proceeds of $1.1 billion. The VPP entitles the purchaser to receive scheduled quantities of natural gas from Chesapeake's interests in over 4,000 producing wells, free of all production costs and production taxes over a 15-year period. The transaction, which closed on December 31, 2007, includes approximately 210 bcfe of proved reserves and 55 mmcfe per day of current net production, or approximately 2% of the company's current proved reserves and net production

Aubrey K. McClendon, Chesapeake's Chief Executive Officer, commented: "We are pleased to successfully implement another component of our 2007-2009 enhanced

financial plan. The production from these assets was monetized at a discount rate of 6.3% and the proceeds will be redeployed into our low-risk drilling program at

anticipated rates of return in excess of 30%. Our first VPP transaction generated a high level of interest from financial investors and we look forward to further success

in monetizing similar packages of mature properties in 2008 and 2009 for further proceeds of at least $2 billion."

Barnett Shale- Future P 14-17 Barnett Shale- Future P 14-17

With the company's production in the resource at over 400 MMCfe net per day, the Texas Barnett Shale

is already one of Chesapeake's main unconventional production centers. Oil shales, like Barnett Shale

, are more expensive to produce because the oil has been absorbed into sedimentary rock, and must be released through a complex heating process. In a high-price market, the Barnett Shale' growth has been phenomenal, as Chesapeake's June 2007 production in the region was only around 230

MMCfe[14]

; production has nearly doubled, and with 20% of its capital to be concentrated in the area, the company expects growth to continue.

The company expects to utlilize the gains in the Barnett when prices come back.