Page 4

Financial Review ($ In thousands, except per share data)

Financial and Operating Data Revenues Oil and natural gas sales Oil and natural gas marketing sales and service operations Total revenues Operating Costs Production expenses Production taxes General and administrative expenses Oil and natural gas marketing and service operation expenses Depreciation, depletion and amortization Impairments and other Total operating costs Income (loss) from operations Interest and other income Interest expense Miscellaneous gains (losses) Total other income (expense) Income (loss) before income taxes and cumulative effect of accounting change Income tax expense (benefit): Current Deferred Net income (loss) before cumulative effect of accounting change, net of tax Cumulative effect of accounting change, net of tax Net income (loss) Preferred stock dividends Gain (loss) on redemption of preferred stock Net income (loss) to common shareholders Earnings per common share – basic: Income (loss) before cumulative effect of accounting change Cumulative effect of accounting change EPS – basic Earnings per common share – assuming dilution: Income (loss) before cumulative effect of accounting change Cumulative effect of accounting change EPS – assuming dilution Cash provided by (used in) operating activities (GAAP) Operating cash flow (non-GAAP)*

Years Ended December 31

2006

2005

2004

2003

2002

2001

$ 5,618,894 1,706,701 $ 7,325,595

$ 3,272,585 1,392,705 $ 4,665,290

$ 1,936,176 773,092 $ 2,709,268

$ 1,296,822 420,610 $ 1,717,432

$ 568,187 170,315 $ 738,502

$ 820,318 148,733 $ 969,051

489,499 176,440 139,152 1,589,770 1,462,759 54,753 3,912,373 3,413,222 25,463 (300,722) 117,396 (157,863)

316,956 207,898 64,272 1,358,003 945,001 – 2,892,130 1,773,160 10,452 (219,800) (70,419) (279,767)

204,821 103,931 37,045 755,314 611,322 4,500 1,716,933 992,335 4,476 (167,328) (24,557) (187,409)

137,583 77,893 23,753 410,288 386,258 6,402 1,042,177 675,255 2,827 (154,356) (22,774) (174,303)

98,191 30,101 17,618 165,736 235,198 – 546,844 191,658 7,340 (112,031) (19,827) (124,518)

75,374 33,010 14,449 144,373 181,565 – 448,771 520,280 2,877 (98,321) (63,138) (158,582)

3,255,359

1,493,393

804,926

500,952

67,140

361,698

5,000 1,247,036

– 545,091

– 289,771

5,000 185,360

(1,822) 28,676

3,565 140,727

2,003,323 – $ 2,003,323 (88,645) (10,556) $ 1,904,122

948,302 – $ 948,302 (41,813) (26,874) $ 879,615

515,155 – $ 515,155 (39,506) (36,678) $ 438,971

310,592 2,389 $ 312,981 (22,469) – $ 290,512

40,286 – $ 40,286 (10,117) – $ 30,169

217,406 – $ 217,406 (2,050) – $ 215,356

$ 4.78 – $ 4.78

$ 2.73 – $ 2.73

$ 1.73 – $ 1.73

$ 1.36 0.02 $ 1.38

$ 0.18 – $ 0.18

$ 1.33 – $ 1.33

$ 4.35 – $ 4.35 $ 4,843,474 $ 4,045,109

$ 2.51 – $ 2.51 $ 2,406,888 $ 2,425,727

$ 1.53 – $ 1.53 $ 1,432,274 $ 1,402,522

$ 1.20 0.01 $ 1.21 $ 938,907 $ 897,234

$ 0.17 – $ 0.17 $ 428,797 $ 408,783

$ 1.25 – $ 1.25 $ 478,098 $ 442,924

Balance Sheet Data (at end of period): Total assets Long-term debt, net of current maturities Stockholders’ equity (deficit)

$ 24,417,167 7,375,548 $ 11,251,471

$ 16,118,462 5,489,742 $ 6,174,323

$ 8,244,509 3,075,109 $ 3,162,883

$ 4,572,291 2,057,713 $ 1,732,810

$ 2,875,608 1,651,198 $ 907,875

$ 2,286,768 1,329,453 $ 767,407

Other Operating and Financial Data Proved reserves in natural gas equivalents (mmcfe) Future net oil and natural gas revenues discounted at 10%** Natural gas price used in reserve report (per mcf) Oil price used in reserve report (per bbl) Natural gas production (mmcf) Oil production (mbbls) Production (mmcfe) Sales price per mcfe*** Production expense per mcfe Production taxes per mcfe General and administrative expense per mcfe Depreciation, depletion and amortization expense per mcfe Number of employees (full-time at end of period) Cash dividends declared per common share Stock price (at end of period – split adjusted)

8,955,614 $ 13,647,141 $ 5.41 $ 56.25 526,459 8,654 578,383 $ 8.86 $ 0.85 $ 0.31 $ 0.24 $ 2.53 4,883 $ 0.23 $ 29.05

7,520,690 $ 22,933,594 $ 8.76 $ 56.41 422,389 7,698 468,577 $ 6.90 $ 0.68 $ 0.44 $ 0.14 $ 2.02 2,885 $ 0.195 $ 31.73

4,901,751 $ 10,504,390 $ 5.65 $ 39.91 322,009 6,764 362,593 $ 5.23 $ 0.56 $ 0.29 $ 0.10 $ 1.69 1,718 $ 0.17 $ 16.50

3,168,575 $ 7,333,142 $ 5.68 $ 30.22 240,366 4,665 268,356 $ 4.79 $ 0.51 $ 0.29 $ 0.09 $ 1.44 1,192 $ 0.135 $ 13.58

2,205,125 $ 3,717,645 $ 4.28 $ 30.18 160,682 3,466 181,478 $ 3.61 $ 0.54 $ 0.17 $ 0.10 $ 1.30 866 $ 0.06 $ 7.74

1,779,946 $ 1,646,667 $ 2.51 $ 18.82 144,171 2,880 161,451 $ 4.56 $ 0.47 $ 0.20 $ 0.09 $ 1.12 677 – $ 6.61

* See page 15 for definition of this non-GAAP measure. ** PV-10 is the present value (10% discount rate) of estimated future gross revenue to be generated from the production of proved reserves, net of production and future development costs, using assumed prices and costs. Please see page 8 of our Form 10-K for information on the standardized measure of future net cash flow pursuant to SFAS 69. *** Excludes unrealized gains (losses) on oil and natural gas hedging.

CHK 2006 Fact 4

CHK 2006 Fact 5

We replaced 348% of our production with a drillbit finding and development cost of only $1.93 per mcfe

We were the most active driller of new wells in the U.S., drilling 1,488 gross operated wells and participating in another 1,534 gross wells drilled by others

Profile for Chesapeake Energy

Annual Report 2006  

Annual Report 2006