8 | LETTER TO SHAREHOLDERS Growing Demand for U.S. Natural Gas Will Drive  Improved Prices in the Years Ahead Growing momentum for CNG passenger and LNG long-haul  truck vehicles  Growing industrial demand  Continuing and accelerating shift from coal to natural gas for  U.S. electrical power generation Conversion of U.S. LNG import facilities to LNG export  facilities  Construction of U.S. gas-to-liquids (GTL) plants  U.S. natural gas producers are rapidly moving to a  more liquids-rich production base Several factors are emerging in the U.S. that will drive increased  demand for natural gas, which in turn could improve out year  natural gas prices: Enormous cost savings are available to consumers and business-  es that chose to use natural gas as an alternative transportation  fuel ($1.39 per gallon for CNG in Oklahoma, for example, compared  to $3.75–$4.00 per gallon for gasoline and diesel).  With recent low prices for domestic natural gas, U.S. industries  that utilize natural gas as a feedstock in their manufacturing pro-  cesses have a significant cost advantage compared with inter-  national peers whose feedstock is indexed either to oil or global  natural gas prices. To clean our environment, dozens of aging coal-powered elec-  tricity plants will be retired in the next decade and replaced  with the cleaner alternative of natural gas. A combination of  shifting power sources and higher utilization within existing  gas-fired power plants will likely increase natural gas demand by  10–15 bcf per day over the next decade. With increasing demand for natural gas around the  world and the abundance of U.S. natural gas reserves,  producers will be able to tap into higher-margin markets  in Europe, South America and Asia once export capa-  bilities are available potentially beginning in 2015.  Converting natural gas to a room temperature liquid  would allow U.S. natural gas producers to sell products  based on world oil prices instead of domestic natural gas  prices. Technological advancements continue to gain  traction and may make GTL a realistic possibility by 2016.  Due to the premium margins realized in the U.S. when  producing liquids as compared to natural gas, there is  a meaningful shift of producers targeting liquids-rich  drilling prospects. This shift will ultimately help bring  U.S. natural gas markets back into balance by reducing the rigs  and capital available for natural gas drilling. One producing and one on the way: the Texas Panhandle Granite  Wash offers high volumes of natural gas accompanied by highly  valued liquids production as well. Bossier Shale  — This shale  overlies about one-third  of our Haynesville acre- age and is the first of our  two “sleeper” natural gas  shale plays. The reason is  that in Louisiana, leases  often restrict the lessee  (i.e., the producer) to only  holding  future  drilling  rights down through the  deepest formation drilled.  Because the Bossier lies  above  the  Haynesville,  nearly 1.6 bcfe per day.  The Haynesville Shale is now the nation’s largest producing  natural gas shale play, having just recently passed the Barnett  Shale in production (in last year’s letter, I incorrectly estimated  it would take until 2014 for the Haynesville to reach this achieve- ment, a testament to the play’s enormous productive poten- tial). Ultimate recoveries from the Haynesville could exceed 250  tcfe, likely making it one of the five largest natural gas fields  in the world. Today, we are producing from more than 260 net  wells in the Haynesville on our 530,000 net leasehold acres,  are currently drilling with 35 rigs and estimate we could drill  up to 6,300 additional net wells in the years ahead. Our gross  operated production in the Haynesville recently set a record of  Haynesville Shale  — The Haynesville Shale in Northwest Louisi- ana and East Texas is the shale play of which we are most proud  (to date) because it was discovered by Chesapeake’s own geo- scientists and engineers. We conducted our geoscientific inves- tigation of the Haynesville in 2005–06 and tested our theories  through drilling in 2007. In 2008 we formed an innovative joint  venture agreement with our well-respected industry partner,  Houston-based Plains Exploration & Production Company, to  which we sold 20% of our Haynesville (and Bossier) assets for  approximately $3.2 billion in cash and drilling carries.  $2.25 billion in cash and drilling carries for its 25% stake in the  Barnett, and we are extremely proud to have Total as one of our  premier joint venture partners. 