Chesapeake Energy Corp. (CHK) said Thursday that its second-quarter production increased by 5% versus the same quarter last year, and reported a major boost to its hydrocarbons reserves.

In an operational update, the Oklahoma City-based company said that its second-quarter output averaged 2.453 billion cubic feet equivalent per day, up from 2.328 billion cubic feet last year and a 4% improvement from the first quarter of 2009. Proven oil and gas reserves grew to 12.5 trillion cubic feet equivalent, a 700 billion cubic feet increase. The company expects to close 2009 with 14 trillion cubic feet equivalent of reserves.

"We believe this is likely the best reserve growth performance in the industry during the 2009 first half," said Chief Executive Aubrey McClendon in a statement.

Chesapeake, the largest independent producer of natural gas in the U.S., said it held back some production during the second quarter but it is currently not curtailing output. It may resume curtailments later this summer or fall, depending on market conditions. Natural gas companies have held back on production due to weak demand for the commodity. The drop in demand, a result of the economic recession, has coincided with an unexpected boost in supply from natural gas shale.

Chesapeake expects drilling and net acquisition costs for the second quarter to be at an average of less than $1 per thousand cubic feet equivalent.

-By Angel Gonzalez, Dow Jones Newswires;713-547-9214;angel.gonzalez@dowjones.com

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