Following up my March 12th post on natural gas producer Chesapeake Energy (CHK) (More on Chesapeake Energy), on Monday the company announced major new discoveries and boosted its production growth forecast for the next two years.

Thanks to a huge find in the Haynesville Shale in Louisiana, in addition to seven other new finds, Chesapeake now expects 2008 production to grow by 21% (vs 20% a month ago) and another 16% in 2009 (vs 12% a month ago). An additional $950 million in capital expenditures will be required between now and year-end 2009 to fund these projects, which will result in CHK tapping the financial markets for capital.

While capital raises were not in CHK's prior plans, the company has already started to increase its hedges (thanks to the recent run-up in natural gas prices), in order ensure that shareholder returns on these new projects are substantial. Chesapeake has now hedged 71% of its 2008 production at $8.77 per mcf, 40% of 2009 production at $9.13 per mcf, and 12% of 2010 production at $9.34 per mcf.

To give you some perspective, CHK averaged $8.14 per mcf of gas in 2007 and $8.76 in 2006. So, CHK's averaged realized price should be around 2006 levels this year, but production will be about 50% higher than it was two years ago. I bring this up because Chesapeake earned $3.61 per share in 2006 and the current 2008 estimate is only $3.54 per share. It appears CHK will earn more than the current consensus estimate in 2008. Analysts' 2009 projection of $3.46 also appears too conservative.

Full Disclosure: Long shares of CHK at the time of writing