Oct. 30--Chesapeake Energy said Thursday that its Barnett Shale production has reached a record 685 million cubic feet of natural gas a day and that it expects moderate annual increases in output through 2011.

Oklahoma City-based Chesapeake, which has a large regional office in Fort Worth and employs about 850 people in North Texas, said it expects to operate an average of about 18 drilling rigs in the Barnett in 2010 and drill about 300 net wells.

Chesapeake, which was operating 17 rigs in the Barnett on Thursday, said in a statement that its area production will reach the equivalent of 700 million cubic feet a day by year's end, 725 million by year-end 2010 and 760 million by year-end 2011.

Chesapeake said that if it "is successful in finding a joint venture partner for some or all" of its extensive Barnett Shale lease holdings of 305,000 net acres, it "plans to significantly increase Barnett drilling activity and production in 2010 and beyond."

The company recently announced that a huge well in Arlington achieved a peak production rate of 16.4 million cubic feet a day and is expected to produce more than 13 million cubic feet per day for a one-month period.

Chesapeake estimated it would have a pretax return of 36 percent from a Barnett well that produced 2.65 billion cubic feet over its lifetime at an average price of $7 per 1,000 cubic feet. Gas prices soared to more than $13 in July 2008 but plummeted below $2.50 this year. In futures trading Thursday on the New York Mercantile Exchange, gas closed at $5.06.

Chesapeake is the most active driller in the Barnett and the No. 2 producer, behind longtime leader Devon Energy. The Barnett Shale is "currently the largest natural gas-producing field in the U.S." and accounts for 50 to 60 percent of the nation's shale gas production, Chesapeake said Thursday.

Like other natural-gas-oriented energy producers, Chesapeake's revenues have been badly crimped this year by low prices for the power plant, industrial and heating fuel. Chesapeake will announce its third-quarter financial results Monday.

Chesapeake released its Barnett production data in a report on third-quarter operational results that CEO Aubrey McClendon termed "strong."

Chesapeake said its third-quarter production companywide averaged the equivalent of 2.48 billion cubic feet of gas a day, up 1 percent above the second quarter but a 7 percent increase from the third quarter of 2008.

Chesapeake said it expects full-year production growth of 5 to 6 percent in 2009, 8 to 10 percent in 2010 and 12 to 14 percent in 2011, net of property divestitures.

JACK Z. SMITH, 817-390-7724

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