presence in western Canada and expects to increase its natural gas assets in western Canada in 1998. A summary of the Company's Canadian transactions to date are summarized below:

Primary Area of Operation

Estimated Proved Reserves as of December 31, 1997 (in Bcfe)

Estimated Proved Reserves Acquisition Cost (in millions)

Seller

Date Announced

Status

Pan East Petroleum Corp.

November 1997

Closed December 1997

Western Alberta, Northeastern British Columbia

N one; purchased 19.9% of Pan East's common stock and entered into a two year, 50/50 drilling and acquisitions participation agreement

NIA

Ranger Oil Limited

January 1998

Closed January 1998

Northeastern British Columbia

54

$ 28( I)

Sunoma Energy Corporation

March 1998

Pending; scheduled to close April 1998

Northeastern British Columbia

42

$ 33

Totals

96 Bcfe

$ 61

(1) Excludes $20 million related to unevaluated leasehold and other assets. Other Operating Areas

Tuscaloosa Trend. In 1997 Chesapeake initiated two large 3-D seismic projects to evaluate approximately 90,000 acres of leasehold in the Tuscaloosa Trend portion of Louisiana. The Tuscaloosa is one of the most prolific deep gas reservoirs located along the Gulf Coast and 3-D seismic has proven effective in reducing the risk associated with the exploration for deep gas reserves in the Tuscaloosa. The Company anticipates initiating its drilling program for the Tuscaloosa formation during 1998 and has budgeted $25 million to drill 4 wells. Permian Basin. In 1995 the Company initiated drilling activity in the Permian Basin in the Lovington area of Lea County, New Mexico. In this project, the Company is utilizing 3-D seismic technology to search for algal reef buildups that management believes have been overlooked in this portion of the Permian Basin because of inconclusive results provided by traditional 2-D seismic technology. During the Transition Period, the Company initiated 10 wells in the Lovington area, six of which were successfully completed, one was unsuccessful and three were drilling. The Company has budgeted approximately $17 million to drill 15 gross (10.0 net) wells and conduct seismic in this area during 1998. Wharton County, Texas. During fiscal 1997, the Company acquired approximately 25,000 net acres at a cost of approximately $29 million in Wharton County, Texas. This exploration project is seeking gas production from the shallower Frio and Yegua sands and from the Deep Wilcox at depths of up to 19,000 feet. The Company intends to participate with a 55% interest in an 85,000 acre 3-D seismic program with Coastal Oil & Gas Corporation, Seagull Energy Corporation and other industry partners during 1998 to delineate potential future drill sites in the vicinity of Coastal's Zeidman Trustee wells. Williston Basin. During fiscal 1996, Chesapeake began acquiring leasehold in the Williston Basin, located in eastern Montana and western North Dakota, and as of December 31, 1997 owned approximately 1.0 million gross (0.6 million net) acres. During the Transition Period, the Company drilled and successfully completed six wells targeting the Red River formation on the northern portion of its leasehold. The Company has budgeted $2 million to drill 2 gross (1.4 net) wells during 1998 in the Williston Basin. Recent and Pending Acquisitions In October 1997, Chesapeake agreed to acquire by merger the Mid-Continent operations of DLB Oil & Gas, Inc. ("DLB"). In its Mid-Continent division, DLB owns approximately 110 Bcfe of proved reserves, 6