reading it a different way, page-7

This guy is switched on. imo. if you have a minute have a read of the 25 question-answers from a journo link below! this is question 6, I like the answer? Aubrey McClendon of Chesapeake Energy
Dr

http://www.chk.com/News/Articles/Pages/news_2011101003_Forbes.aspx

Q-6. You started as a landman and still seem to be a landman at heart. Likewise, Chesapeake’s trajectory has been characterized by rampant acquisition of acreage whenever and wherever a promising new play emerges. Your army of landmen is feared and respected. Competitors curse your willingness to step in and pay top dollar for leases. How does Chesapeake, time and again, year after year, stay on top of the land game?

Your question indicates that there is something wrong with buying leases, or at least what some observers would say are “too many,” but I look at the situation quite a bit differently. First of all, I learned early on in my career that it didn’t matter how good of a geological and engineering idea someone possessed, if you didn’t own the leases underlying the idea, the idea was worthless. Secondly, I learned along the way that most of my fellow E&P CEOs were not landman, they were geologists and engineers. And when the game changed in the past five to seven years, and land acquisition became the key to capturing the greatest values from the unconventional plays, I felt like I had a natural advantage over most of them because I understood how to put together a very formidable Chesapeake land machine to “capture the flag” in big plays. The final thought to share on this topic is one should remember that a lease situated in the heart of any shale play is essentially a very cheap call option on the right to develop oil and natural gas at a very low cost. Take the Eagle Ford shale for example. Under each acre of land we have acquired there, we believe there is roughly 5,000 barrels of recoverable oil equivalent. When we put our land position together in that play, we spent roughly $1.2 billion to buy about 600,000 acres of land, giving us an average cost basis of about $2,000 per acre, or roughly $0.40 per barrel of oil equivalent. I ask you, could you go to Wall Street and buy an option to develop 3 billion barrels of oil equivalent at a cost of $10-$15 per barrel for a call option cost of only $0.40 a barrel? Of course not, there’s no way you could do that in the financial markets. But yet, we do it in the reality of the oil and gas world all the time. Too many analysts and investors fail to appreciate that leasehold is simply a very cheap call option on the right to develop resources in some of the best plays the world has to offer. We understood this financial reality perhaps better than anyone and so today we believe that we have put together the best inventory of future upside the industry that exists today. Results over the next 10 years will let us know if we are correct or not in our assessment, but today, we believe we have achieved something quite distinctive in our industry – commanding positions in the very best plays and tens of billions of dollars of latent value that will be developed in the years ahead and realized in rapid stock price appreciation.