Elm Grove

• 10 rig program now (up from 8 last quarter); 2 horizontal and 8 vertical
• The horizontal Taylor Sand program continues to wow. 3 IPs this quarter:7.8, 9.8, and 11 MMcfepd.

Terryville

• 3D expansion to the west being shot dor 4Q delivery…it’ll be interesting to see if they mention the Gray sand with regard to that.
• Added some nice CV and Bossier Sand wells during the quarter with average IP’s of 5.6 MMcfepd.

WEHLU- West Edmond Hunton Lime- Horizontal oil recovery play out in the middle Oklahoma

•  increasing rigs here to 3
• nothing else new

Conference Call: Wednesday, 10 EST.

Conference Call Notes:

Net debt to cap of 30%
borrowing line remains undrawn

Fayetteville Shale
44% increase in wells drilled count 1 Q to 2Q
27% seq growth in production, non op well count incr 36 to 59 in 2Q
operating wells : state tests show 2.3 MMcfepd, vs 1.7 mmcfepd in 1Q in same region.

North region - this is cheaper area - saw 3.2 mmcfepd with cemented line with 6 stage frac (first cemented liner in the northern part of play (shallower makes cheaper).

Elm Grove update
those Taylor wells - avg 9.5 mm/d for those 3 wells.
Hosston recompletions: 11 mmcfepd gross/7.5 mm/d net aggregate. Nice low $ adds.

Sawyer Field - Sutton County - excellent results so far. They finalize their JV with EOG.

Haynesville update on the way…

Haynesville:
10 rigs by 2008 YE and 20 for 2009. Rigs have been secured.

140 operated in 2009 and more in later years.

Drill at least 1 well per section in the 3 year lease area which is about 150,000 acres.

The H.S. works in a wide variety of gas price environments.

See the coming wells here as better as dictated by learning curve and experience.

CHK moving on these comments.

regional estimate for takeaway capacity: current takeaway is - didn’t say.

several new projects underway will add 2 to 3 Bcfgpd in between 2009 to 2011. That should settle the gas market a bit as that is not glut style growth.

Rigs secured for 2009. Are they newbuild? 7 or 8 are newbuilds coming in late 2008/early 2009.

E Texas - Haynesville …when do you move west and test? Scheduled wells in Harrison down to Shelby in 2008, will have results by year end. Wow, that’s PVA / QMXR country.

170 Bcf per section. They are not saying that gas in place factor covers all their area. They have joined the sharing of core data groups to get the well costs down. Recall others have been saying 45 to 55 and 30% recovery factor. He thinks they do better, at least in this area that its early to say, trying to stay conservative. Undertaking a very extensive reservoir modeling study.

HK saying they are still trying more techniques in the Fayetteville shale and they will spend $ to try cemented liners and more stages to optimize. They are watching what SWN is doing. In the quarter they were in a greater number of non-operated wells than operated so they are learning from the “larger players” in the play.