text: **Will U.S. natural gas prices reconnect with world natural gas prices?**
  Natural gas is a premium product and a cleaner-burning fuel than coal or oil-related products, including gasoline, 
  diesel and heating oil. Despite this fact, over the past two years natural gas has received a low price in the U.S. 
  market relative to coal and oil-related products, primarily as a result of a temporary surplus of production. This 
  surplus has been principally caused by high levels of drilling activity as producers focused on holding by produc- 
  tion (HBP) leasehold in new highly productive, low cost natural gas shale plays. In essence, producers reinvented 
  U.S. supply ahead of reinventing of U.S. demand. We believe HBP-incentivized drilling on natural gas plays will 
  largely come to an end in 2012, and U.S. demand will soon also be reinvented to allow U.S. natural gas prices to 
  reconnect to price parity with world natural gas prices that have risen to more than double U.S. natural gas prices. 
  This surge in world natural gas prices has been in response to $100+ oil prices and surging global liquefied 
  natural gas (LNG) demand. In our view, the arbitrage in value between competing fuels is simply too wide. Capital 
  and ideas will flow toward projects that make the most of this price disparity. Chesapeake and other companies are 
  working to create the ability to export natural gas from the U.S. Gulf Coast and other regions in the form of LNG to 
  premium Pacific Rim, European and South American markets, perhaps as soon as 2015. This initiative will also be 
  aided by the widening of the Panama Canal to accommodate large LNG vessels. Furthermore, we believe that the 
  current price disparity between natural gas and oil will increasingly lead to greater use of natural gas in the U.S. transportation system. Whether it 
  be compressed natural gas (CNG) for medium and light-duty vehicles, LNG for heavy-duty vehicles or the commercialization of gas-to-liquids (GTL) 
  natural gas refineries that supplement the U.S. liquid fuel supply stream, we believe that the marketplace will increasingly utilize and embrace natural 
  gas. Chesapeake is working with industry, public policymakers and potential partners on each of these demand reinvention opportunities. Natural 
  gas is clean, affordable, abundant and American. Why*shouldn’t*it trade at a BTU premium in the years ahead? 
  
  Jeff Mobley 
  Senior Vice President – 
  Investor Relations and Research 