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Chesapeake paid $252 million in Barnett royalties through first 11 months of 2010

Despite weak natural gas prices, Chesapeake Energy plans to drill 350 to 380 Barnett Shale gas wells in North Texas in 2011 and keep about 20 drilling rigs active throughout the year, the company's top executive in its Fort Worth regional operation said Tuesday.

Chesapeake will have drilled 411 Barnett wells in 2010 by year's end, Julie Wilson, vice president for urban development, said in an interview with the Star-Telegram.

Chesapeake has paid $252 million in royalties to owners of Barnett Shale mineral rights through the first 11 months of 2010 and has paid "just over a billion dollars" in royalties from its North Texas production since establishing operations here, Wilson said.

The company's gross production in the Barnett is more than 1 billion cubic feet of natural gas per day, she said. That includes the share of production held by French oil giant Total, which paid $2.25 billion for a 25 percent stake in Chesapeake's Barnett holdings under an agreement announced in January.

Wilson said Chesapeake has 1,898 producing gas wells in the Barnett Shale. Its biggest production is in Tarrant and Johnson counties.

In 2011, Wilson said, Chesapeake plans to maintain, or possibly increase slightly, its North Texas work force of about 1,000 employees. About 250 employees work at the regional headquarters, the 20-story Chesapeake Plaza on the northwest edge of downtown Fort Worth. Chesapeake occupies about half the building, which it bought from Pier 1 Imports in 2008.

Chesapeake also has substantial operations in east Fort Worth and Cleburne.

Wilson said Chesapeake has the five biggest producing wells in the Barnett Shale, based on average production for a month.

The top producer is the White South 1-H well in southwest Arlington. In September it averaged more than 17.8 million cubic feet of gas per day, or more than 534.7 million cubic feet for the month. That's enough gas to supply 8,150 homes for a year, based on American Gas Association residential usage data.

Chesapeake "has a lot of production here, and we intend to remain very strong here," Wilson said.

Chesapeake's corporate headquarters is in Oklahoma City. In a presentation posted on its website this month, the company said it is the nation's No. 2 natural gas producer, ranking only behind Irving-based Exxon Mobil Corp., which boosted its domestic gas output with the acquisition of Fort Worth-based XTO Energy in June.

Online: www.chk.com

Jack Z. Smith, 817-390-7724

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