OKLAHOMA CITY, Aug. 3, 2017 /PRNewswire/ -- Chesapeake
Energy Corporation (NYSE:CHK) today reported financial and
operational results for the 2017 second quarter plus other recent
developments. Highlights include:
- Average 2017 second quarter production of 527,600 boe per
day, flat sequentially
- Average 2017 second quarter oil production of 88,400
barrels per day, up 6% sequentially
- Total production averaged approximately 548,300 boe
per day, including a peak rate of 90,400 barrels of oil, in
July; goal of reaching 100,000 barrels of oil per day by year-end
on track
- Actively managing capital expenditures program for
remainder of 2017, dropping to 14 rigs by year-end 2017 from 18
rigs today
- Approximately $360 million
of expected asset sales closed or under signed purchase and sale
agreements year to date
- Marcellus Shale well achieves record rate of more than
61,000 mcf per day
Doug Lawler, Chesapeake's Chief
Executive Officer, commented, "Our assets continue to deliver
improving well results due to longer laterals and enhanced
completion techniques, with a new record operated well in the
Marcellus being a prime example of this. We expect our total
production to move higher throughout the year, driven by large
turn-in-line projects underway in the Eagle Ford, Utica and Powder
River Basin operating areas. This has already started, as we
averaged approximately 548,300 barrels of oil equivalent per day,
including a peak rate of 90,400 barrels of oil production, for
the month of July.
"Despite our anticipated growth, we are actively managing our
2017 capital program to the highest-return investments in our
portfolio or reducing spending in certain areas altogether. Our
planned activity levels result in a reduction of our rig count and
wells placed on production during the last six months of the year,
as our 2017 capital program has been focused on restoring our cash
flow generating capability, improving our margins and growing
value. Improving our balance sheet is our number one priority at
Chesapeake, and we will remain flexible in our capital spending
program, both for the remainder of 2017 and in 2018, as we continue
to drive toward cash flow neutrality."
2017 Second Quarter Results
For the 2017 second quarter, Chesapeake's revenues increased by
41% year over year primarily due to an increase in the average
realized commodity prices for the company's production and
unrealized hedging gains, partially offset by a decrease in
production volumes sold. Chesapeake's revenues decreased 17%
quarter over quarter due to a decrease in the average realized
commodity prices for the company's production, primarily the
seasonal decrease in natural gas prices and lower unrealized
hedging gains. Average daily production for the 2017 second
quarter of approximately 527,600 barrels of oil equivalent (boe)
increased by 2% sequentially, adjusted for asset sales, and
consisted of approximately 88,400 barrels (bbls) of oil, 2.294
billion cubic feet (bcf) of natural gas and 56,900 bbls of natural
gas liquids (NGL).
Average production expenses during the 2017 second quarter were
$2.92 per boe, while G&A expenses
(including stock-based compensation) during the 2017 second quarter
were $1.45 per boe. Combined
production and G&A expenses (including stock-based
compensation) during the 2017 second quarter were $4.37 per boe, an increase of 7% year over year
and an increase of 4% quarter over quarter driven by a decrease in
producing well count due to divestitures resulting in reduced cost
recovery in G&A. Gathering, processing and transportation
expenses during the 2017 second quarter were $7.44 per boe, a decrease of 7% year over year
and a nominal decrease quarter over quarter.
Chesapeake reported net income available to common stockholders
of $470 million, or $0.47 per diluted share, while the company's
EBITDA for the 2017 second quarter was $812
million. Adjusting for unrealized gains on commodity
derivatives, impairments related to the reduction of transportation
commitments on the Gulf Crossing pipeline, the gain on repurchase
of debt and other items that are typically excluded by securities
analysts, the 2017 second quarter adjusted net income attributable
to Chesapeake was $146 million, or
$0.18 per diluted share, while the
company's adjusted EBITDA was $461
million. Reconciliations of financial measures calculated in
accordance with GAAP to non-GAAP measures are provided on pages 12
– 18 of this release.
Capital Spending Overview
Chesapeake's total capital investments were approximately
$667 million during the 2017 second
quarter, compared to approximately $576
million in the 2017 first quarter and $456 million in the 2016 second quarter. A
summary of the company's guidance for 2017 is provided under
"Management's Outlook as of August 3,
2017," beginning on page 20.
|
2017
|
2017
|
2016
|
Operated activity
comparison
|
Q2
|
Q1
|
Q2
|
Average rig
count
|
19
|
16
|
9
|
Gross wells
spud
|
102
|
87
|
49
|
Gross wells
completed
|
107
|
99
|
131
|
Gross wells
connected
|
94
|
76
|
141
|
|
|
|
|
Type of cost ($ in
millions)
|
|
|
|
Drilling and
completion costs
|
$
|
596
|
|
$
|
506
|
|
$
|
337
|
|
Exploration costs,
leasehold and additions to other PP&E
|
24
|
|
19
|
|
56
|
|
Subtotal capital
expenditures
|
$
|
620
|
|
$
|
525
|
|
$
|
393
|
|
Capitalized
interest
|
47
|
|
51
|
|
63
|
|
Total capital
expenditures
|
$
|
667
|
|
$
|
576
|
|
$
|
456
|
|
Balance Sheet and Liquidity
As of June 30, 2017, Chesapeake's
principal debt balance was approximately $9.7 billion with $13
million in cash on hand, compared to $10.0 billion with $882
million in cash on hand as of December 31, 2016. The
company's total liquidity as of June 30,
2017 was approximately $3.1
billion, which included cash on hand and a borrowing
capacity of approximately $3.1
billion under the company's senior secured revolving credit
facility. At June 30, 2017, the
company had $575 million of
outstanding borrowings under the revolving credit facility and had
used $100 million of the revolving
credit facility for various letters of credit. The company's
borrowing base under the senior secured revolving credit facility
was reaffirmed by the lenders at $3.785
billion on June 15, 2017.
Asset Divestitures Update
Year to date, Chesapeake has sold or agreed to sell multiple
producing properties for approximately $360
million to various private buyers, excluding the proceeds
from the company's Haynesville Shale divestitures announced in
December 2016 that closed in 2017. As
of June 30, 2017, Chesapeake has
closed $95 million in asset sales
with approximately $265 million
pending and expected to close by the end of the 2017 third quarter,
subject to certain customary post-closing adjustments.
Operations Update
Chesapeake's average daily production for the 2017 second
quarter was approximately 527,600 boe and is further detailed in
the table below. Chesapeake's projected production volumes and
capital expenditure program are subject to capital allocation
decisions throughout the year and may be adjusted based on
prevailing market conditions.
|
2017
|
2017
|
2016
|
Operating area net
production (mboe/day)
|
Q2
|
Q1
|
Q2
|
Eagle Ford
|
100
|
96
|
92
|
Haynesville
|
121
|
121
|
126
|
Marcellus
|
135
|
146
|
134
|
Utica
|
97
|
96
|
137
|
Mid-Continent
|
59
|
57
|
78
|
Powder River
Basin
|
16
|
12
|
16
|
Barnett
|
—
|
—
|
65
|
Other
|
—
|
—
|
9
|
Total
production
|
528
|
528
|
657
|
Chesapeake is currently utilizing 18 drilling rigs (below the
2017 second quarter average of 19) across its operating areas,
seven of which are located in the Eagle Ford Shale, four in the
Mid-Continent area, three in the Haynesville Shale, two in the
Powder River Basin (PRB) and two in Northeast Appalachia.
Chesapeake plans to exit 2017 utilizing 14 rigs and intends to
place on production approximately 20 fewer gross operated wells in
2017.
In the Eagle Ford Shale, Chesapeake placed its first Upper Eagle
Ford Shale well, the Blakeway 3D DIM 2H, on production in
June 2017 at a peak rate of 1,759 boe
per day (86% oil). Chesapeake expects to place on production up to
100 wells in South Texas in the
second half of 2017, compared to 61 wells in the first half of
2017.
In the PRB, Chesapeake's first well targeting the Mowry
formation, the Combs 17-33-70 USA
B MW 40H, was drilled with a 4,200-foot lateral and placed on
production in July 2017. This well
was drilled in the gas window to test productivity, permeability
and pressure and near current pipe infrastructure to minimize cycle
time. This well has reached a peak rate of 6,629 thousand cubic
feet (mcf) of natural gas per day and is expected to climb as it
unloads fracture stimulation fluid. Chesapeake's next Mowry tests
are planned to be drilled in 2018 in the wet gas window with longer
laterals.
The company's second Turner well, the Rankin 5-33-68 A TR 1H, was placed on
production in May 2017 and reached a
peak rate of 2,886 boe per day (51% oil). Chesapeake plans to place
on production up to four additional wells in the Turner formation
by year-end 2017. The company also expects to place up to 14 new
wells targeting the Sussex formation by year-end 2017. Currently,
Chesapeake plans to add a third rig in the PRB operating area in
October 2017 and expects to place on
production up to 19 wells in the second half of 2017, compared to
nine wells in the first half of 2017.
In the Marcellus Shale, the company placed the McGavin E WYO 6H
well on production with a 10,429-foot lateral and enhanced
completion. This well has reached a peak rate of 61,759 mcf of gas
per day after six days of production, making it the highest-rate
operated well in the Marcellus Shale in the company's history.
Chesapeake has approximately 2.2 bcf of gas per day of gross
productive capacity and expects to maintain its gross production at
or around its total capacity through the remainder of 2017,
depending on gas prices. Chesapeake expects to place on production
up to 40 wells in the Marcellus Shale in the second half of 2017,
compared to 11 wells in the first half of 2017.
In the Haynesville Shale, the Hunter 20&17-12-12 1H ALT well located in DeSoto Parish was placed on production in
July 2017 with a 7,495-foot lateral.
This well reached a peak rate of 38,840 mcf of gas per day,
resulting in one of the highest rates per lateral foot in the
company's history from the area. Chesapeake expects to place on
production up to 23 wells in the Haynesville Shale in the second
half of 2017, compared to 17 wells in the first half of 2017.
Chesapeake re-completed its first Haynesville well utilizing a
new production liner in July 2017.
After installing the new liner, Chesapeake re-stimulated the well
and returned it to production at a peak rate of approximately 9,043
mcf of gas per day, compared to producing 65 mcf of gas per day
before the re-stimulation treatment. This recompletion was
performed on one of the first wells Chesapeake drilled in the
Haynesville. Drilled in 2008, the well had an initial peak
production of 4,705 mcf of gas per day producing from a 2,990-foot
lateral in 2008.
Key Financial and
Operational Results
|
|
The table below
summarizes Chesapeake's key financial and operational results
during the 2017 second quarter compared to results in prior
periods.
|
|
|
|
Three Months
Ended
|
|
|
06/30/17
|
|
03/31/17
|
|
06/30/16
|
Oil equivalent
production (in mmboe)
|
|
48
|
|
|
48
|
|
|
60
|
|
Oil production (in
mmbbls)
|
|
8
|
|
|
8
|
|
|
8
|
|
Average realized oil
price ($/bbl)(a)
|
|
51.65
|
|
|
51.72
|
|
|
44.31
|
|
Natural gas
production (in bcf)
|
|
209
|
|
|
211
|
|
|
269
|
|
Average realized
natural gas price ($/mcf)(a)
|
|
2.71
|
|
|
3.02
|
|
|
1.97
|
|
NGL production (in
mmbbls)
|
|
5
|
|
|
5
|
|
|
7
|
|
Average realized NGL
price ($/bbl)(a)
|
|
18.51
|
|
|
24.04
|
|
|
12.88
|
|
Production expenses
($/boe)
|
|
(2.92)
|
|
|
(2.84)
|
|
|
(3.05)
|
|
Gathering, processing
and transportation expenses ($/boe)
|
|
(7.44)
|
|
|
(7.47)
|
|
|
(8.04)
|
|
Oil -
($/bbl)
|
|
(3.70)
|
|
|
(3.85)
|
|
|
(3.64)
|
|
Natural Gas -
($/mcf)
|
|
(1.37)
|
|
|
(1.35)
|
|
|
(1.48)
|
|
NGL -
($/bbl)
|
|
(7.87)
|
|
|
(8.47)
|
|
|
(7.61)
|
|
Production taxes
($/boe)
|
|
(0.42)
|
|
|
(0.47)
|
|
|
(0.32)
|
|
General and
administrative expenses ($/boe)(b)
|
|
(1.20)
|
|
|
(1.18)
|
|
|
(0.86)
|
|
Stock-based
compensation ($/boe)
|
|
(0.25)
|
|
|
(0.17)
|
|
|
(0.16)
|
|
DD&A of oil and
natural gas properties ($/boe)
|
|
(4.21)
|
|
|
(4.15)
|
|
|
(4.64)
|
|
DD&A of other
assets ($/boe)
|
|
(0.43)
|
|
|
(0.44)
|
|
|
(0.48)
|
|
Interest expense
($/boe)(a)
|
|
(1.92)
|
|
|
(1.97)
|
|
|
(1.00)
|
|
Marketing, gathering
and compression net margin ($ in millions)(c)
|
|
(25)
|
|
|
(44)
|
|
|
(25)
|
|
Net cash provided by
(used in) operating activities ($ in millions)
|
|
(157)
|
|
|
99
|
|
|
95
|
|
Net cash provided by
(used in) operating activities ($/boe)
|
|
(3.27)
|
|
|
2.06
|
|
|
1.58
|
|
Operating cash flow
($ in millions)(d)
|
|
303
|
|
|
(14)
|
|
|
176
|
|
Operating cash flow
($/boe)
|
|
6.31
|
|
|
(0.29)
|
|
|
2.94
|
|
Adjusted ebitda ($ in
millions)(e)
|
|
461
|
|
|
525
|
|
|
252
|
|
Adjusted ebitda
($/boe)
|
|
9.60
|
|
|
11.05
|
|
|
4.21
|
|
Net income (loss)
available to common stockholders ($ in millions)
|
|
470
|
|
|
75
|
|
|
(1,818)
|
|
Income (loss) per
share – diluted ($)
|
|
0.47
|
|
|
0.08
|
|
|
(2.51)
|
|
Adjusted net income
(loss) attributable to Chesapeake ($ in
millions)(f)
|
|
146
|
|
|
212
|
|
|
(115)
|
|
Adjusted income
(loss) per share - diluted ($)(g)
|
|
0.18
|
|
|
0.23
|
|
|
(0.16)
|
|
|
|
(a)
|
Includes the effects
of realized gains (losses) from hedging, but excludes the effects
of unrealized gains (losses) from hedging.
|
(b)
|
Excludes expenses
associated with stock-based compensation and restructuring and
other termination costs.
|
(c)
|
Includes revenue,
operating expenses and for the three months ended June 30,
2016, unrealized gains (losses) on supply contract derivatives, but
excludes depreciation and amortization of other assets. For the
three months ended June 30, 2016, unrealized losses on supply
contract derivatives were $37 million. No other period had such
gains (losses).
|
(d)
|
Defined as cash flow
provided by operating activities before changes in assets and
liabilities. Operating cash flow for the three months ended
June 30, 2017 includes $23 million paid to terminate future
natural gas transportation commitments.
|
(e)
|
Defined as net income
before interest expense, income taxes and depreciation, depletion
and amortization expense, as adjusted to remove the effects of
certain items detailed on page 18.
|
(f)
|
Defined as net income
(loss) attributable to Chesapeake, as adjusted to remove the
effects of certain items detailed on pages 12 - 15.
|
(g)
|
Our presentation of
diluted adjusted net income (loss) per share excludes shares
considered antidilutive when calculating diluted earnings per share
in accordance with GAAP.
|
2017 Second Quarter Financial and Operational Results
Conference Call Information
A conference call to discuss this release has been scheduled on
Thursday, August 3, 2017 at
9:00 am EDT. The telephone number to
access the conference call is 719-785-1749 or toll-free
888-855-5428. The passcode for the call is 9224968. The number to
access the conference call replay is 719-457-0820 or toll-free
888-203-1112 and the passcode for the replay is 9224968. The
conference call will be webcast and can be found at
www.chk.com in the "Investors" section of the company's
website. The webcast of the conference will be available on the
website for one year.
Headquartered in Oklahoma
City, Chesapeake Energy Corporation's (NYSE: CHK) operations
are focused on discovering and developing its large and
geographically diverse resource base of unconventional oil and
natural gas assets onshore in the United States. The company
also owns oil and natural gas marketing and natural gas compression
businesses.
This news release and the accompanying Outlook include
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are statements
other than statements of historical fact. They include statements
that give our current expectations, management's outlook guidance
or forecasts of future events, production and well connection
forecasts, estimates of operating costs, anticipated capital and
operational efficiencies, planned development drilling and expected
drilling cost reductions, general and administrative expenses,
capital expenditures, the timing of anticipated asset sales and
proceeds to be received therefrom, projected cash flow and
liquidity, our ability to enhance our cash flow and
financial flexibility, plans and objectives for future operations
(including our ability to optimize base production and execute gas
gathering, processing and transportation commitments), the ability
of our employees, portfolio strength and operational leadership to
create long-term value, and the assumptions on which such
statements are based. Although we believe the expectations and
forecasts reflected in the forward-looking statements are
reasonable, we can give no assurance they will prove to have been
correct. They can be affected by inaccurate or changed assumptions
or by known or unknown risks and uncertainties.
Factors that could cause actual results to differ materially
from expected results include those described under "Risk Factors"
in Item 1A of our annual report on Form 10-K and any updates to
those factors set forth in Chesapeake's subsequent quarterly
reports on Form 10-Q or current reports on Form 8-K (available at
http://www.chk.com/investors/sec-filings). These risk factors
include the volatility of oil, natural gas and NGL prices; the
limitations our level of indebtedness may have on our financial
flexibility; our inability to access the capital markets on
favorable terms; the availability of cash flows from operations and
other funds to finance reserve replacement costs or satisfy our
debt obligations; downgrade in our credit rating requiring us to
post more collateral under certain commercial arrangements;
write-downs of our oil and natural gas asset carrying values due to
low commodity prices; our ability to replace reserves and sustain
production; uncertainties inherent in estimating quantities of oil,
natural gas and NGL reserves and projecting future rates of
production and the amount and timing of development expenditures;
our ability to generate profits or achieve targeted results in
drilling and well operations; leasehold terms expiring before
production can be established; commodity derivative activities
resulting in lower prices realized on oil, natural gas and NGL
sales; the need to secure derivative liabilities and the inability
of counterparties to satisfy their obligations; adverse
developments or losses from pending or future litigation and
regulatory proceedings, including royalty claims; charges incurred
in response to market conditions and in connection with our ongoing
actions to reduce financial leverage and complexity; drilling and
operating risks and resulting liabilities; effects of environmental
protection laws and regulation on our business; legislative and
regulatory initiatives further regulating hydraulic fracturing; our
need to secure adequate supplies of water for our drilling
operations and to dispose of or recycle the water used; impacts of
potential legislative and regulatory actions addressing climate
change; federal and state tax proposals affecting our industry;
potential OTC derivatives regulation limiting our ability to hedge
against commodity price fluctuations; competition in the oil and
gas exploration and production industry; a deterioration in general
economic, business or industry conditions; negative public
perceptions of our industry; limited control over properties we do
not operate; pipeline and gathering system capacity constraints and
transportation interruptions; terrorist activities and
cyber-attacks adversely impacting our operations; potential
challenges by Seventy Seven Energy Inc.'s (SSE) former creditors in
connection with SSE's recently completed bankruptcy under Chapter
11 of the U.S. Bankruptcy Code; an interruption in operations at
our headquarters due to a catastrophic event; the continuation of
suspended dividend payments on our common stock; the effectiveness
of our remediation plan for a material weakness; certain
anti-takeover provisions that affect shareholder rights; and our
inability to increase or maintain our liquidity through debt
repurchases, capital exchanges, asset sales, joint ventures,
farmouts or other means.
In addition, disclosures concerning the estimated
contribution of derivative contracts to our future results of
operations are based upon market information as of a specific date.
These market prices are subject to significant volatility. Our
production forecasts are also dependent upon many assumptions,
including estimates of production decline rates from existing wells
and the outcome of future drilling activity. Expected asset
sales may not be completed in the time frame anticipated or at all.
We caution you not to place undue reliance on our forward-looking
statements, which speak only as of the date of this news release,
and we undertake no obligation to update any of the information
provided in this release or the accompanying Outlook, except as
required by applicable law. In addition, this news release contains
time-sensitive information that reflects management's best judgment
only as of the date of this news release.
|
|
INVESTOR
CONTACT:
Brad Sylvester,
CFA
(405)
935-8870
ir@chk.com
|
MEDIA
CONTACT:
Gordon
Pennoyer
(405)
935-8878
media@chk.com
|
CHESAPEAKE ENERGY
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions
except per share data)
(unaudited)
|
|
|
Three Months
Ended
June 30,
|
|
|
2017
|
|
2016
|
REVENUES:
|
|
|
|
|
Oil, natural gas and
NGL
|
|
$
|
1,279
|
|
|
$
|
440
|
|
Marketing, gathering
and compression
|
|
1,002
|
|
|
1,182
|
|
Total
Revenues
|
|
2,281
|
|
|
1,622
|
|
OPERATING
EXPENSES:
|
|
|
|
|
Oil, natural gas and
NGL production
|
|
140
|
|
|
182
|
|
Oil, natural gas and
NGL gathering, processing and transportation
|
|
357
|
|
|
481
|
|
Production
taxes
|
|
21
|
|
|
19
|
|
Marketing, gathering
and compression
|
|
1,027
|
|
|
1,207
|
|
General and
administrative
|
|
70
|
|
|
61
|
|
Restructuring and
other termination costs
|
|
—
|
|
|
3
|
|
Provision for legal
contingencies
|
|
17
|
|
|
71
|
|
Oil, natural gas and
NGL depreciation, depletion and amortization
|
|
202
|
|
|
277
|
|
Depreciation and
amortization of other assets
|
|
21
|
|
|
29
|
|
Impairment of oil and
natural gas properties
|
|
—
|
|
|
1,070
|
|
Impairments of fixed
assets and other
|
|
26
|
|
|
6
|
|
Net (gains) losses on
sales of fixed assets
|
|
1
|
|
|
(1)
|
|
Total Operating
Expenses
|
|
1,882
|
|
|
3,405
|
|
INCOME (LOSS) FROM
OPERATIONS
|
|
399
|
|
|
(1,783)
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
Interest
expense
|
|
(93)
|
|
|
(62)
|
|
Losses on
investments
|
|
—
|
|
|
(2)
|
|
Gains on purchases or
exchanges of debt
|
|
191
|
|
|
68
|
|
Other income
(expense)
|
|
(1)
|
|
|
3
|
|
Total Other
Income
|
|
97
|
|
|
7
|
|
INCOME (LOSS)
BEFORE INCOME TAXES
|
|
496
|
|
|
(1,776)
|
|
Income Tax
Expense
|
|
1
|
|
|
—
|
|
NET INCOME
(LOSS)
|
|
495
|
|
|
(1,776)
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
—
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CHESAPEAKE
|
|
494
|
|
|
(1,776)
|
|
Preferred stock
dividends
|
|
(16)
|
|
|
(42)
|
|
Earnings allocated to
participating securities
|
|
(8)
|
|
|
—
|
|
NET INCOME (LOSS)
AVAILABLE TO COMMON STOCKHOLDERS
|
|
$
|
470
|
|
|
$
|
(1,818)
|
|
EARNINGS (LOSS)
PER COMMON SHARE:
|
|
|
|
|
Basic
|
|
$
|
0.52
|
|
|
$
|
(2.51)
|
|
Diluted
|
|
$
|
0.47
|
|
|
$
|
(2.51)
|
|
WEIGHTED AVERAGE
COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING (in
millions):
|
|
|
|
|
Basic
|
|
908
|
|
|
724
|
|
Diluted
|
|
1,114
|
|
|
724
|
|
CHESAPEAKE ENERGY
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions except per share data)
(unaudited)
|
|
|
Six Months
Ended
June 30,
|
|
|
2017
|
|
2016
|
REVENUES:
|
|
|
|
|
Oil, natural gas and
NGL
|
|
$
|
2,748
|
|
|
$
|
1,433
|
|
Marketing, gathering
and compression
|
|
2,286
|
|
|
2,142
|
|
Total
Revenues
|
|
5,034
|
|
|
3,575
|
|
OPERATING
EXPENSES:
|
|
|
|
|
Oil, natural gas and
NGL production
|
|
275
|
|
|
388
|
|
Oil, natural gas and
NGL gathering, processing and transportation
|
|
712
|
|
|
963
|
|
Production
taxes
|
|
43
|
|
|
37
|
|
Marketing, gathering
and compression
|
|
2,355
|
|
|
2,149
|
|
General and
administrative
|
|
135
|
|
|
109
|
|
Restructuring and
other termination costs
|
|
—
|
|
|
3
|
|
Provision for legal
contingencies
|
|
15
|
|
|
104
|
|
Oil, natural gas and
NGL depreciation, depletion and amortization
|
|
399
|
|
|
540
|
|
Depreciation and
amortization of other assets
|
|
42
|
|
|
58
|
|
Impairment of oil and
natural gas properties
|
|
—
|
|
|
2,067
|
|
Impairments of fixed
assets and other
|
|
417
|
|
|
44
|
|
Net (gains) losses on
sales of fixed assets
|
|
1
|
|
|
(5)
|
|
Total Operating
Expenses
|
|
4,394
|
|
|
6,457
|
|
INCOME (LOSS) FROM
OPERATIONS
|
|
640
|
|
|
(2,882)
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
Interest
expense
|
|
(188)
|
|
|
(124)
|
|
Losses on
investments
|
|
—
|
|
|
(2)
|
|
Loss on sale of
investment
|
|
—
|
|
|
(10)
|
|
Gains on purchases or
exchanges of debt
|
|
184
|
|
|
168
|
|
Other
income
|
|
2
|
|
|
6
|
|
Total Other Income
(Expense)
|
|
(2)
|
|
|
38
|
|
INCOME (LOSS)
BEFORE INCOME TAXES
|
|
638
|
|
|
(2,844)
|
|
Income Tax
Expense
|
|
2
|
|
|
—
|
|
NET INCOME
(LOSS)
|
|
636
|
|
|
(2,844)
|
|
Net income
attributable to noncontrolling interests
|
|
(2)
|
|
|
—
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CHESAPEAKE
|
|
634
|
|
|
(2,844)
|
|
Preferred stock
dividends
|
|
(39)
|
|
|
(85)
|
|
Loss on exchange of
preferred stock
|
|
(41)
|
|
|
—
|
|
Earnings allocated to
participating securities
|
|
(7)
|
|
|
—
|
|
NET INCOME (LOSS)
AVAILABLE TO COMMON STOCKHOLDERS
|
|
$
|
547
|
|
|
$
|
(2,929)
|
|
EARNINGS (LOSS)
PER COMMON SHARE:
|
|
|
|
|
Basic
|
|
$
|
0.60
|
|
|
$
|
(4.21)
|
|
Diluted
|
|
$
|
0.59
|
|
|
$
|
(4.21)
|
|
WEIGHTED AVERAGE
COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING (in
millions):
|
|
|
|
|
Basic
|
|
907
|
|
|
695
|
|
Diluted
|
|
1,053
|
|
|
695
|
|
CHESAPEAKE ENERGY
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
($ in
millions)
(unaudited)
|
|
|
June 30,
2017
|
|
December 31,
2016
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
13
|
|
|
$
|
882
|
|
Other current
assets
|
|
1,234
|
|
|
1,260
|
|
Total Current
Assets
|
|
1,247
|
|
|
2,142
|
|
|
|
|
|
|
Property and
equipment, net
|
|
10,418
|
|
|
10,609
|
|
Other
assets
|
|
255
|
|
|
277
|
|
Total
Assets
|
|
$
|
11,920
|
|
|
$
|
13,028
|
|
|
|
|
|
|
Current
liabilities
|
|
$
|
2,158
|
|
|
$
|
3,648
|
|
Long-term debt,
net
|
|
9,850
|
|
|
9,938
|
|
Other long-term
liabilities
|
|
596
|
|
|
645
|
|
Total
Liabilities
|
|
12,604
|
|
|
14,231
|
|
|
|
|
|
|
Preferred
stock
|
|
1,671
|
|
|
1,771
|
|
Noncontrolling
interests
|
|
254
|
|
|
257
|
|
Common stock and
other stockholders' equity (deficit)
|
|
(2,609)
|
|
|
(3,231)
|
|
Total Equity
(Deficit)
|
|
(684)
|
|
|
(1,203)
|
|
|
|
|
|
|
Total Liabilities and
Equity
|
|
$
|
11,920
|
|
|
$
|
13,028
|
|
|
|
|
|
|
Common shares
outstanding (in millions)
|
|
908
|
|
|
896
|
|
Principal amount of
debt outstanding
|
|
$
|
9,710
|
|
|
$
|
9,989
|
|
CHESAPEAKE ENERGY
CORPORATION
SUPPLEMENTAL DATA
– OIL, NATURAL GAS AND NGL PRODUCTION, SALES AND INTEREST
EXPENSE
(unaudited)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net
Production:
|
|
|
|
|
|
|
|
|
Oil
(mmbbl)
|
|
8
|
|
|
8
|
|
|
16
|
|
|
17
|
|
Natural gas
(bcf)
|
|
209
|
|
|
269
|
|
|
420
|
|
|
546
|
|
NGL
(mmbbl)
|
|
5
|
|
|
7
|
|
|
10
|
|
|
13
|
|
Oil equivalent
(mmboe)
|
|
48
|
|
|
60
|
|
|
96
|
|
|
121
|
|
Oil, natural gas
and NGL Sales ($ in millions):
|
|
|
|
|
|
|
|
|
Oil sales
|
|
$
|
383
|
|
|
$
|
355
|
|
|
$
|
761
|
|
|
$
|
610
|
|
Oil derivatives –
realized gains (losses)(a)
|
|
33
|
|
|
11
|
|
|
44
|
|
|
84
|
|
Oil derivatives –
unrealized gains (losses)(a)
|
|
47
|
|
|
(168)
|
|
|
141
|
|
|
(240)
|
|
Total oil
sales
|
|
463
|
|
|
198
|
|
|
946
|
|
|
454
|
|
|
|
|
|
|
|
|
|
|
Natural gas
sales
|
|
601
|
|
|
440
|
|
|
1,254
|
|
|
923
|
|
Natural gas
derivatives – realized gains (losses)(a)
|
|
(36)
|
|
|
92
|
|
|
(52)
|
|
|
242
|
|
Natural gas
derivatives – unrealized gains (losses)(a)
|
|
156
|
|
|
(365)
|
|
|
387
|
|
|
(335)
|
|
Total natural gas
sales
|
|
721
|
|
|
167
|
|
|
1,589
|
|
|
830
|
|
|
|
|
|
|
|
|
|
|
NGL sales
|
|
95
|
|
|
89
|
|
|
211
|
|
|
163
|
|
NGL derivatives –
realized gains (losses)(a)
|
|
1
|
|
|
(3)
|
|
|
2
|
|
|
(3)
|
|
NGL derivatives –
unrealized gains (losses)(a)
|
|
(1)
|
|
|
(11)
|
|
|
—
|
|
|
(11)
|
|
Total NGL
sales
|
|
95
|
|
|
75
|
|
|
213
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
Total oil, natural
gas and NGL sales
|
|
$
|
1,279
|
|
|
$
|
440
|
|
|
$
|
2,748
|
|
|
$
|
1,433
|
|
Average Sales
Price
(excluding
gains (losses) on derivatives):
|
|
|
|
|
|
|
|
|
Oil ($ per
bbl)
|
|
$
|
47.51
|
|
|
$
|
43.00
|
|
|
$
|
48.83
|
|
|
$
|
35.98
|
|
Natural gas ($ per
mcf)
|
|
$
|
2.88
|
|
|
$
|
1.63
|
|
|
$
|
2.99
|
|
|
$
|
1.69
|
|
NGL ($ per
bbl)
|
|
$
|
18.36
|
|
|
$
|
13.37
|
|
|
$
|
20.99
|
|
|
$
|
12.43
|
|
Oil equivalent ($ per
boe)
|
|
$
|
22.46
|
|
|
$
|
14.76
|
|
|
$
|
23.29
|
|
|
$
|
14.01
|
|
Average Sales
Price
(including
realized gains (losses) on derivatives):
|
|
|
|
|
|
|
|
|
Oil ($ per
bbl)
|
|
$
|
51.65
|
|
|
$
|
44.31
|
|
|
$
|
51.68
|
|
|
$
|
40.93
|
|
Natural gas ($ per
mcf)
|
|
$
|
2.71
|
|
|
$
|
1.97
|
|
|
$
|
2.87
|
|
|
$
|
2.14
|
|
NGL ($ per
bbl)
|
|
$
|
18.51
|
|
|
$
|
12.88
|
|
|
$
|
21.19
|
|
|
$
|
12.17
|
|
Oil equivalent ($ per
boe)
|
|
$
|
22.42
|
|
|
$
|
16.43
|
|
|
$
|
23.23
|
|
|
$
|
16.68
|
|
Interest Expense
($ in millions):
|
|
|
|
|
|
|
|
|
Interest
expense(b)
|
|
$
|
93
|
|
|
$
|
63
|
|
|
$
|
187
|
|
|
$
|
125
|
|
Interest rate
derivatives – realized (gains) losses(c)
|
|
(1)
|
|
|
(3)
|
|
|
(2)
|
|
|
(6)
|
|
Interest rate
derivatives – unrealized (gains) losses(c)
|
|
1
|
|
|
2
|
|
|
3
|
|
|
5
|
|
Total Interest
Expense
|
|
$
|
93
|
|
|
$
|
62
|
|
|
$
|
188
|
|
|
$
|
124
|
|
|
|
(a)
|
Realized gains
(losses) include the following items: (i) settlements and accruals
for settlements of undesignated derivatives related to current
period production revenues, (ii) prior period settlements for
option premiums and for early-terminated derivatives originally
scheduled to settle against current period production revenues, and
(iii) gains and losses related to de-designated cash flow hedges
originally designated to settle against current period production
revenues. Unrealized gains (losses) include the change in fair
value of open derivatives scheduled to settle against future period
production revenues (including current period settlements for
option premiums and early terminated derivatives) offset by amounts
reclassified as realized gains and losses during the period.
Although we no longer designate our derivatives as cash flow hedges
for accounting purposes, we believe these definitions are useful to
management and investors in determining the effectiveness of our
price risk management program.
|
(b)
|
Net of amounts
capitalized.
|
(c)
|
Realized (gains)
losses include settlements related to the current period interest
accrual and the effect of (gains) losses on early termination
trades. Unrealized (gains) losses include changes in the fair value
of open interest rate derivatives offset by amounts reclassified to
realized (gains) losses during the period.
|
CHESAPEAKE ENERGY
CORPORATION
CONDENSED CONSOLIDATED CASH FLOW DATA
($ in millions)
(unaudited)
|
THREE MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
Beginning
cash
|
|
$
|
249
|
|
|
$
|
16
|
|
|
|
|
|
|
Net cash provided
by (used in) operating activities
|
|
(157)
|
|
|
95
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Drilling and
completion costs(a)
|
|
(598)
|
|
|
(344)
|
|
Acquisitions of
proved and unproved properties(b)
|
|
(67)
|
|
|
(359)
|
|
Proceeds from
divestitures of proved and unproved properties
|
|
59
|
|
|
833
|
|
Additions to other
property and equipment(c)
|
|
(4)
|
|
|
(15)
|
|
Proceeds from sales
of other property and equipment
|
|
7
|
|
|
61
|
|
Other
|
|
—
|
|
|
(2)
|
|
Net cash provided
by (used in) investing activities
|
|
(603)
|
|
|
174
|
|
|
|
|
|
|
Net cash provided
by (used in) financing activities
|
|
524
|
|
|
(281)
|
|
Change in cash and
cash equivalents
|
|
(236)
|
|
|
(12)
|
|
Ending
cash
|
|
$
|
13
|
|
|
$
|
4
|
|
|
|
(a)
|
Includes capitalized
interest of $3 million and $1 million for the three months ended
June 30, 2017 and 2016, respectively.
|
(b)
|
Includes capitalized
interest of $44 million and $60 million for the three months ended
June 30, 2017 and 2016, respectively.
|
(c)
|
Includes capitalized
interest of a nominal amount for the three months ended
June 30, 2017 and 2016, respectively.
|
CHESAPEAKE ENERGY
CORPORATION
CONDENSED CONSOLIDATED CASH FLOW DATA
($ in millions)
(unaudited)
|
SIX MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
Beginning
cash
|
|
$
|
882
|
|
|
$
|
825
|
|
|
|
|
|
|
Net cash used in
operating activities
|
|
(58)
|
|
|
(326)
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Drilling and
completion costs(a)
|
|
(1,031)
|
|
|
(609)
|
|
Acquisitions of
proved and unproved properties(b)
|
|
(162)
|
|
|
(426)
|
|
Proceeds from
divestitures of proved and unproved properties
|
|
951
|
|
|
964
|
|
Additions to other
property and equipment(c)
|
|
(7)
|
|
|
(25)
|
|
Proceeds from sales
of other property and equipment
|
|
26
|
|
|
70
|
|
Cash paid for title
defects
|
|
—
|
|
|
(69)
|
|
Other
|
|
—
|
|
|
(4)
|
|
Net cash used in
investing activities
|
|
(223)
|
|
|
(99)
|
|
|
|
|
|
|
Net cash used in
financing activities
|
|
(588)
|
|
|
(396)
|
|
Change in cash and
cash equivalents
|
|
(869)
|
|
|
(821)
|
|
Ending
cash
|
|
$
|
13
|
|
|
$
|
4
|
|
|
|
(a)
|
Includes capitalized
interest of $5 million and $3 million for the six months ended
June 30, 2017 and 2016, respectively.
|
(b)
|
Includes capitalized
interest of $93 million and $124 million for the six months ended
June 30, 2017 and 2016, respectively.
|
(c)
|
Includes capitalized
interest of a nominal amount and $1 million for the six months
ended June 30, 2017 and 2016, respectively.
|
CHESAPEAKE ENERGY
CORPORATION
RECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS
($ in millions except per share data)
(unaudited)
|
THREE MONTHS
ENDED:
|
June 30,
2017
|
|
$
|
|
$/Diluted
Share(b)(c)
|
Net income
available to common stockholders (GAAP)
|
$
|
470
|
|
|
$
|
0.47
|
|
|
|
|
|
Adjustments:
|
|
|
|
Unrealized gains on
commodity derivatives
|
(202)
|
|
|
(0.18)
|
|
Provision for legal
contingencies
|
17
|
|
|
0.02
|
|
Impairments of fixed
assets and other
|
26
|
|
|
0.02
|
|
Net loss on sales of
fixed assets
|
1
|
|
|
—
|
|
Gains on purchases or
exchanges of debt
|
(191)
|
|
|
(0.17)
|
|
Income tax expense
(benefit)(a)
|
—
|
|
|
—
|
|
Other
|
1
|
|
|
—
|
|
Adjusted net
income available to common
stockholders(b)
(Non-GAAP)
|
122
|
|
|
0.16
|
|
|
|
|
|
Preferred stock
dividends
|
16
|
|
|
0.01
|
|
Earnings allocated to
participating securities
|
8
|
|
|
0.01
|
|
Total adjusted net
income attributable to Chesapeake(b) (c)
(Non-GAAP)
|
$
|
146
|
|
|
$
|
0.18
|
|
|
|
|
(a)
|
Due to our valuation
allowance position, no income tax effect from the adjustments has
been included in determining adjusted net income.
|
(b)
|
Adjusted net income
available to common stockholders and total adjusted net income
attributable to Chesapeake, both in the aggregate and per dilutive
share, are not measures of financial performance under accounting
principles generally accepted in the United States (GAAP), and
should not be considered as an alternative to net income available
to common stockholders or earnings per share. Adjusted net
income available to common stockholders and adjusted earnings per
share exclude certain items that management believes affect the
comparability of operating results. The company believes these
adjusted financial measures are a useful adjunct to earnings
calculated in accordance with GAAP because:
|
|
(i)
|
Management uses
adjusted net income available to common stockholders to evaluate
the company's operational trends and performance relative to other
oil and natural gas producing companies.
|
|
(ii)
|
Adjusted net income
available to common stockholders is more comparable to earnings
estimates provided by securities analysts.
|
|
(iii)
|
Items excluded
generally are one-time items or items whose timing or amount cannot
be reasonably estimated. Accordingly, any guidance provided
by the company generally excludes information regarding these types
of items.
|
(c)
|
Our presentation of
diluted adjusted net income (loss) per share excludes 1 million
shares considered antidilutive when calculating diluted earnings
per share in accordance with GAAP.
|
CHESAPEAKE ENERGY
CORPORATION
RECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS
($ in millions except per share data)
(unaudited)
|
THREE MONTHS
ENDED:
|
June 30,
2016
|
|
$
|
|
$/Diluted
Share(b)(c)
|
Net loss available
to common stockholders (GAAP)
|
$
|
(1,818)
|
|
|
$
|
(2.51)
|
|
|
|
|
|
Adjustments:
|
|
|
|
Unrealized losses on
commodity derivatives
|
544
|
|
|
0.75
|
|
Unrealized losses on
supply contract derivatives
|
37
|
|
|
0.05
|
|
Restructuring and
other termination costs
|
3
|
|
|
—
|
|
Provision for legal
contingencies
|
71
|
|
|
0.10
|
|
Impairment of natural
gas properties
|
1,070
|
|
|
1.48
|
|
Impairments of fixed
assets and other
|
6
|
|
|
0.01
|
|
Net gains on sales of
fixed assets
|
(1)
|
|
|
—
|
|
Gains on purchases or
exchanges of debt
|
(68)
|
|
|
(0.09)
|
|
Income tax expense
(benefit)(a)
|
—
|
|
|
—
|
|
Other
|
(1)
|
|
|
—
|
|
Adjusted net loss
available to common stockholders(b)
(Non-GAAP)
|
(157)
|
|
|
(0.22)
|
|
|
|
|
|
Preferred stock
dividends
|
42
|
|
|
0.06
|
|
Total adjusted net
loss attributable to Chesapeake(b) (c)
(Non-GAAP)
|
$
|
(115)
|
|
|
$
|
(0.16)
|
|
|
|
|
(a)
|
Due to our valuation
allowance position, no income tax effect from the adjustments has
been included in determining adjusted net income.
|
(b)
|
Adjusted net loss
available to common stockholders and total adjusted net loss
attributable to Chesapeake, both in the aggregate and per dilutive
share, are not measures of financial performance under accounting
principles generally accepted in the United States (GAAP), and
should not be considered as an alternative to net income available
to common stockholders or earnings per share. Adjusted net
income available to common stockholders and adjusted earnings per
share exclude certain items that management believes affect the
comparability of operating results. The company believes these
adjusted financial measures are a useful adjunct to earnings
calculated in accordance with GAAP because:
|
|
(i)
|
Management uses
adjusted net income available to common stockholders to evaluate
the company's operational trends and performance relative to other
oil and natural gas producing companies.
|
|
(ii)
|
Adjusted net income
available to common stockholders is more comparable to earnings
estimates provided by securities analysts.
|
|
(iii)
|
Items excluded
generally are one-time items or items whose timing or amount cannot
be reasonably estimated. Accordingly, any guidance provided
by the company generally excludes information regarding these types
of items.
|
(c)
|
Our presentation of
diluted adjusted net income (loss) per share excludes 114 million
shares considered antidilutive when calculating diluted earnings
per share in accordance with GAAP.
|
CHESAPEAKE ENERGY
CORPORATION
RECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS
($ in millions except per share data)
(unaudited)
|
SIX MONTHS
ENDED:
|
June 30,
2017
|
|
$
|
|
$/Diluted
Share(b)(c)
|
Net income
available to common stockholders (GAAP)
|
$
|
547
|
|
|
$
|
0.59
|
|
|
|
|
|
Adjustments:
|
|
|
|
Unrealized gains on
commodity derivatives
|
(528)
|
|
|
(0.51)
|
|
Provision for legal
contingencies
|
15
|
|
|
0.01
|
|
Impairments of fixed
assets and other
|
417
|
|
|
0.40
|
|
Net loss on sales of
fixed assets
|
1
|
|
|
—
|
|
Gains on purchases or
exchanges of debt
|
(184)
|
|
|
(0.17)
|
|
Loss on exchange of
preferred stock
|
41
|
|
|
0.04
|
|
Income tax expense
(benefit)(a)
|
—
|
|
|
—
|
|
Other
|
3
|
|
|
—
|
|
Adjusted net
income available to common
stockholders(b)
(Non-GAAP)
|
312
|
|
|
0.36
|
|
|
|
|
|
Preferred stock
dividends
|
39
|
|
|
0.04
|
|
Earnings allocated to
participating securities
|
7
|
|
|
0.01
|
|
Total adjusted net
income attributable to Chesapeake(b) (c)
(Non-GAAP)
|
$
|
358
|
|
|
$
|
0.41
|
|
|
|
|
(a)
|
Due to our valuation
allowance position, no income tax effect from the adjustments has
been included in determining adjusted net income.
|
(b)
|
Adjusted net income
available to common stockholders and total adjusted net income
attributable to Chesapeake, both in the aggregate and per dilutive
share, are not measures of financial performance under accounting
principles generally accepted in the United States (GAAP), and
should not be considered as an alternative to net income available
to common stockholders or earnings per share. Adjusted net
income available to common stockholders and adjusted earnings per
share exclude certain items that management believes affect the
comparability of operating results. The company believes these
adjusted financial measures are a useful adjunct to earnings
calculated in accordance with GAAP because:
|
|
(i)
|
Management uses
adjusted net income available to common stockholders to evaluate
the company's operational trends and performance relative to other
oil and natural gas producing companies.
|
|
(ii)
|
Adjusted net income
available to common stockholders is more comparable to earnings
estimates provided by securities analysts.
|
|
(iii)
|
Items excluded
generally are one-time items or items whose timing or amount cannot
be reasonably estimated. Accordingly, any guidance provided
by the company generally excludes information regarding these types
of items.
|
(c)
|
Our presentation of
diluted adjusted net income (loss) per share excludes 62 million
shares considered antidilutive when calculating diluted earnings
per share in accordance with GAAP.
|
CHESAPEAKE ENERGY
CORPORATION
RECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS
($ in millions except per share data)
(unaudited)
|
SIX MONTHS
ENDED:
|
June 30,
2016
|
|
$
|
|
$/Diluted
Share(b)(c)
|
Net loss available
to common stockholders (GAAP)
|
$
|
(2,929)
|
|
|
(4.21)
|
|
|
|
|
|
Adjustments:
|
|
|
|
Unrealized losses on
commodity derivatives
|
586
|
|
|
0.84
|
|
Unrealized losses on
supply contract derivatives
|
17
|
|
|
0.02
|
|
Restructuring and
other termination costs
|
3
|
|
|
0.01
|
|
Provision for legal
contingencies
|
104
|
|
|
0.15
|
|
Impairment of natural
gas properties
|
2,067
|
|
|
2.97
|
|
Impairments of fixed
assets and other
|
44
|
|
|
0.06
|
|
Net gains on sales of
fixed assets
|
(5)
|
|
|
(0.01)
|
|
Loss on sale of
investment
|
10
|
|
|
0.01
|
|
Gains on purchases or
exchanges of debt
|
(168)
|
|
|
(0.24)
|
|
Income tax expense
(benefit)(a)
|
—
|
|
|
—
|
|
Other
|
3
|
|
|
0.01
|
|
Adjusted net loss
available to common stockholders(b)
(Non-GAAP)
|
(268)
|
|
|
(0.39)
|
|
|
|
|
|
Preferred stock
dividends
|
85
|
|
|
0.13
|
|
Total adjusted net
loss attributable to Chesapeake(b) (c)
(Non-GAAP)
|
$
|
(183)
|
|
|
$
|
(0.26)
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Due to our valuation
allowance position, no income tax effect from the adjustments has
been included in determining adjusted net income.
|
(b)
|
Adjusted net loss
available to common stockholders and total adjusted net loss
attributable to Chesapeake, both in the aggregate and per dilutive
share, are not measures of financial performance under accounting
principles generally accepted in the United States (GAAP), and
should not be considered as an alternative to net income available
to common stockholders or earnings per share. Adjusted net
income available to common stockholders and adjusted earnings per
share exclude certain items that management believes affect the
comparability of operating results. The company believes these
adjusted financial measures are a useful adjunct to earnings
calculated in accordance with GAAP because:
|
|
(i)
|
Management uses
adjusted net income available to common stockholders to evaluate
the company's operational trends and performance relative to other
oil and natural gas producing companies.
|
|
(ii)
|
Adjusted net income
available to common stockholders is more comparable to earnings
estimates provided by securities analysts.
|
|
(iii)
|
Items excluded
generally are one-time items or items whose timing or amount cannot
be reasonably estimated. Accordingly, any guidance provided
by the company generally excludes information regarding these types
of items.
|
(c)
|
Our presentation of
diluted adjusted net income (loss) per share excludes 113 million
shares considered antidilutive when calculating diluted earnings
per share in accordance with GAAP.
|
CHESAPEAKE ENERGY
CORPORATION
RECONCILIATION OF OPERATING CASH FLOW AND EBITDA
($ in millions)
(unaudited)
|
THREE MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES
|
|
$
|
(157)
|
|
|
$
|
95
|
|
Changes in assets and
liabilities
|
|
460
|
|
|
81
|
|
OPERATING CASH
FLOW(a)
|
|
$
|
303
|
|
|
$
|
176
|
|
|
THREE MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
NET INCOME
(LOSS)
|
|
$
|
495
|
|
|
$
|
(1,776)
|
|
Interest
expense
|
|
93
|
|
|
62
|
|
Income tax
expense
|
|
1
|
|
|
—
|
|
Depreciation and
amortization of other assets
|
|
21
|
|
|
29
|
|
Oil, natural gas and
NGL depreciation, depletion and amortization
|
|
202
|
|
|
277
|
|
EBITDA(b)
|
|
$
|
812
|
|
|
$
|
(1,408)
|
|
|
THREE MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES
|
|
$
|
(157)
|
|
|
$
|
95
|
|
Changes in assets and
liabilities
|
|
460
|
|
|
81
|
|
Interest expense, net
of unrealized gains (losses) on derivatives
|
|
92
|
|
|
60
|
|
Gains (losses) on
commodity derivatives, net
|
|
200
|
|
|
(444)
|
|
Losses on supply
contract derivatives, net
|
|
—
|
|
|
(37)
|
|
Cash (receipts)
payments on commodity and supply contract derivative settlements,
net
|
|
32
|
|
|
(119)
|
|
Stock-based
compensation
|
|
(16)
|
|
|
(13)
|
|
Restructuring and
other termination costs
|
|
—
|
|
|
(3)
|
|
Provision for legal
contingencies
|
|
(17)
|
|
|
(71)
|
|
Impairment of oil and
natural gas properties
|
|
—
|
|
|
(1,070)
|
|
Impairments of fixed
assets and other
|
|
(4)
|
|
|
(1)
|
|
Net gains (losses) on
sales of fixed assets
|
|
(1)
|
|
|
1
|
|
Investment
activity
|
|
—
|
|
|
(2)
|
|
Gains on purchases or
exchanges of debt
|
|
191
|
|
|
68
|
|
Other
items
|
|
32
|
|
|
47
|
|
EBITDA(b)
|
|
$
|
812
|
|
|
$
|
(1,408)
|
|
|
|
(a)
|
Operating cash flow
represents net cash provided by operating activities before changes
in assets and liabilities. Operating cash flow is presented because
management believes it is a useful adjunct to net cash provided by
operating activities under GAAP. Operating cash flow is
widely accepted as a financial indicator of an oil and natural gas
company's ability to generate cash that is used to internally fund
exploration and development activities and to service debt. This
measure is widely used by investors and rating agencies in the
valuation, comparison, rating and investment recommendations of
companies within the oil and natural gas exploration and production
industry. Operating cash flow is not a measure of financial
performance under GAAP and should not be considered as an
alternative to cash flows from operating activities as an indicator
of cash flows, or as a measure of liquidity. Operating cash flow
for the three months ended June 30, 2017 includes $23 million
paid to terminate future natural gas transportation
commitments.
|
|
|
(b)
|
EBITDA represents net
income before interest expense, income taxes, and depreciation,
depletion and amortization expense. EBITDA is presented as a
supplemental financial measurement in the evaluation of our
business. We believe that it provides additional information
regarding our ability to meet our future debt service, capital
expenditures and working capital requirements. This measure is
widely used by investors and rating agencies in the valuation,
comparison, rating and investment recommendations of
companies. EBITDA is also a financial measurement that, with
certain negotiated adjustments, is reported to our lenders pursuant
to our bank credit agreements and is used in the financial
covenants in our bank credit agreements. EBITDA is not a measure of
financial performance under GAAP. Accordingly, it should not be
considered as a substitute for net income, income from operations
or cash flows from operating activities prepared in accordance with
GAAP.
|
CHESAPEAKE ENERGY
CORPORATION
RECONCILIATION OF OPERATING CASH FLOW AND EBITDA
($ in millions)
(unaudited)
|
SIX MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
CASH USED IN
OPERATING ACTIVITIES
|
|
$
|
(58)
|
|
|
$
|
(326)
|
|
Changes in assets and
liabilities
|
|
347
|
|
|
765
|
|
OPERATING CASH
FLOW(a)
|
|
$
|
289
|
|
|
$
|
439
|
|
|
SIX MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
NET INCOME
(LOSS)
|
|
$
|
636
|
|
|
$
|
(2,844)
|
|
Interest
expense
|
|
188
|
|
|
124
|
|
Income tax
expense
|
|
2
|
|
|
—
|
|
Depreciation and
amortization of other assets
|
|
42
|
|
|
58
|
|
Oil, natural gas and
NGL depreciation, depletion and amortization
|
|
399
|
|
|
540
|
|
EBITDA(b)
|
|
$
|
1,267
|
|
|
$
|
(2,122)
|
|
|
SIX MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
CASH USED IN
OPERATING ACTIVITIES
|
|
$
|
(58)
|
|
|
$
|
(326)
|
|
Changes in assets and
liabilities
|
|
347
|
|
|
765
|
|
Interest expense, net
of unrealized gains (losses) on derivatives
|
|
185
|
|
|
119
|
|
Gains (losses) on
commodity derivatives, net
|
|
522
|
|
|
(263)
|
|
Losses on supply
contract derivatives, net
|
|
—
|
|
|
(17)
|
|
Cash (receipts)
payments on commodity and supply contract derivative settlements,
net
|
|
66
|
|
|
(386)
|
|
Stock-based
compensation
|
|
(27)
|
|
|
(25)
|
|
Restructuring and
other termination costs
|
|
—
|
|
|
(3)
|
|
Provision for legal
contingencies
|
|
(15)
|
|
|
(104)
|
|
Impairment of oil and
natural gas properties
|
|
—
|
|
|
(2,067)
|
|
Impairments of fixed
assets and other
|
|
(1)
|
|
|
(34)
|
|
Net gains (losses) on
sales of fixed assets
|
|
(1)
|
|
|
5
|
|
Investment
activity
|
|
—
|
|
|
(12)
|
|
Gains on purchases or
exchanges of debt
|
|
185
|
|
|
168
|
|
Other
items
|
|
64
|
|
|
58
|
|
EBITDA(b)
|
|
$
|
1,267
|
|
|
$
|
(2,122)
|
|
|
|
(a)
|
Operating cash flow
represents net cash provided by operating activities before changes
in assets and liabilities. Operating cash flow is presented because
management believes it is a useful adjunct to net cash provided by
operating activities under GAAP. Operating cash flow is
widely accepted as a financial indicator of an oil and natural gas
company's ability to generate cash that is used to internally fund
exploration and development activities and to service debt. This
measure is widely used by investors and rating agencies in the
valuation, comparison, rating and investment recommendations of
companies within the oil and natural gas exploration and production
industry. Operating cash flow is not a measure of financial
performance under GAAP and should not be considered as an
alternative to cash flows from operating activities as an indicator
of cash flows, or as a measure of liquidity. Operating cash flow
for the six months ended June 30, 2017 includes $290 million
paid to assign an oil transportation agreement to a third party and
$126 million paid to terminate future natural gas transportation
commitments.
|
|
|
(b)
|
EBITDA represents net
income before interest expense, income taxes, and depreciation,
depletion and amortization expense. EBITDA is presented as a
supplemental financial measurement in the evaluation of our
business. We believe that it provides additional information
regarding our ability to meet our future debt service, capital
expenditures and working capital requirements. This measure is
widely used by investors and rating agencies in the valuation,
comparison, rating and investment recommendations of
companies. EBITDA is also a financial measurement that, with
certain negotiated adjustments, is reported to our lenders pursuant
to our bank credit agreements and is used in the financial
covenants in our bank credit agreements. EBITDA is not a measure of
financial performance under GAAP. Accordingly, it should not be
considered as a substitute for net income, income from operations
or cash flows from operating activities prepared in accordance with
GAAP.
|
CHESAPEAKE ENERGY
CORPORATION
RECONCILIATION OF ADJUSTED EBITDA
($ in millions)
(unaudited)
|
THREE MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
EBITDA
|
|
$
|
812
|
|
|
$
|
(1,408)
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Unrealized (gains)
losses on commodity derivatives
|
|
(202)
|
|
|
544
|
|
Unrealized losses on
supply contract derivatives
|
|
—
|
|
|
37
|
|
Restructuring and
other termination costs
|
|
—
|
|
|
3
|
|
Provision for legal
contingencies
|
|
17
|
|
|
71
|
|
Impairment of oil and
natural gas properties
|
|
—
|
|
|
1,070
|
|
Impairments of fixed
assets and other
|
|
26
|
|
|
6
|
|
Net (gains) losses on
sales of fixed assets
|
|
1
|
|
|
(1)
|
|
Gains on purchases or
exchanges of debt
|
|
(191)
|
|
|
(68)
|
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
|
—
|
|
Other
|
|
(1)
|
|
|
(2)
|
|
|
|
|
|
|
Adjusted
EBITDA(a)
|
|
$
|
461
|
|
|
$
|
252
|
|
CHESAPEAKE ENERGY
CORPORATION
RECONCILIATION OF ADJUSTED EBITDA
($ in millions)
(unaudited)
|
SIX MONTHS
ENDED:
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
EBITDA
|
|
$
|
1,267
|
|
|
$
|
(2,122)
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Unrealized (gains)
losses on commodity derivatives
|
|
(528)
|
|
|
586
|
|
Unrealized losses on
supply contract derivatives
|
|
—
|
|
|
17
|
|
Restructuring and
other termination costs
|
|
—
|
|
|
3
|
|
Provision for legal
contingencies
|
|
15
|
|
|
104
|
|
Impairment of oil and
natural gas properties
|
|
—
|
|
|
2,067
|
|
Impairments of fixed
assets and other
|
|
417
|
|
|
44
|
|
Net (gains) losses on
sales of fixed assets
|
|
1
|
|
|
(5)
|
|
Loss on sale of
investment
|
|
—
|
|
|
10
|
|
Gains on purchases or
exchanges of debt
|
|
(184)
|
|
|
(168)
|
|
Net income
attributable to noncontrolling interests
|
|
(2)
|
|
|
—
|
|
Other
|
|
—
|
|
|
(2)
|
|
|
|
|
|
|
Adjusted
EBITDA(a)
|
|
$
|
986
|
|
|
$
|
534
|
|
|
|
|
(a)
|
Adjusted EBITDA
excludes certain items that management believes affect the
comparability of operating results. The company believes
these non-GAAP financial measures are a useful adjunct to EBITDA
because:
|
|
(i)
|
Management uses
adjusted EBITDA to evaluate the company's operational trends and
performance relative to other oil and natural gas producing
companies.
|
|
(ii)
|
Adjusted EBITDA is
more comparable to estimates provided by securities
analysts.
|
|
(iii)
|
Items excluded
generally are one-time items or items whose timing or amount cannot
be reasonably estimated. Accordingly, any guidance provided
by the company generally excludes information regarding these types
of items.
|
|
|
|
|
Accordingly, adjusted
EBITDA should not be considered as a substitute for net income,
income from operations or cash flow provided by operating
activities prepared in accordance with GAAP.
|
CHESAPEAKE ENERGY
CORPORATION
RECONCILIATION OF
PV-9 AND PV-10 TO STANDARDIZED MEASURE
($ in
millions)
(unaudited)
|
|
PV-9 is a non-GAAP
metric used in the determination of the value of collateral under
Chesapeake's credit facility. PV-10 is a non-GAAP metric used by
the industry, investors and analysts to estimate the present value,
discounted at 10% per annum, of estimated future cash flows of the
company's estimated proved reserves before income tax. The
following table shows the reconciliation of PV-9 and PV-10 to the
company's standardized measure of discounted future net cash flows,
the most directly comparable GAAP measure, for the year ended
December 31, 2016 and for the interim period ended June 30, 2017.
Management believes that PV-9 provides useful information to
investors regarding the company's collateral position and that
PV-10 provides useful information to investors because it is widely
used by professional analysts and sophisticated investors in
evaluating oil and natural gas companies. Because there are many
unique factors that can impact an individual company when
estimating the amount of future income taxes to be paid, management
believes the use of a pre-tax measure is valuable for evaluating
the company. Neither PV-9 nor PV-10 should be considered as an
alternative to the standardized measure of discounted future net
cash flows as computed under GAAP. With respect to PV-9 and PV-10
calculated as of an interim date, it is not practical to calculate
taxes for the related interim period because GAAP does not provide
for disclosure of standardized measure on an interim
basis.
|
|
|
|
PV-9 – June 30, 2017
@ NYMEX Strip
|
|
$
|
8,960
|
|
Less: Change in
discount factor from 9 to 10
|
|
(512)
|
|
PV-10 – June 30, 2017
@ NYMEX Strip
|
|
8,448
|
|
Less: Change in
pricing assumption from NYMEX Strip to SEC
|
|
(587)
|
|
PV-10 – June 30, 2017
@ SEC
|
|
7,861
|
|
Less: Change in PV-10
from 12/31/16 to 6/30/2017
|
|
(3,456)
|
|
PV-10 – December 31,
2016 @ SEC
|
|
4,405
|
|
Less: Present value
of future income tax discounted at 10%
|
|
(26)
|
|
Standardized measure
of discounted future cash flows – December 31, 2016
|
|
$
|
4,379
|
|
CHESAPEAKE ENERGY
CORPORATION
|
MANAGEMENT'S
OUTLOOK AS OF AUGUST 2, 2017
|
|
Chesapeake
periodically provides guidance on certain factors that affect the
company's future financial performance. New information or changes
from the company's May 3, 2017 Outlook are italicized
bold below.
|
|
|
Year Ending
12/31/2017
|
Adjusted Production
Growth(a)
|
0% to 4%
|
Absolute
Production
|
|
Liquids -
mmbbls
|
52.5 -
55.0
|
Oil -
mmbbls
|
33.5 -
35.0
|
NGL -
mmbbls
|
19.0 -
20.0
|
Natural gas -
bcf
|
870 - 900
|
Total absolute
production - mmboe
|
197.5 -
205.0
|
Absolute daily rate -
mboe
|
541 - 562
|
Estimated Realized
Hedging Effects(b) (based on 7/31/17 strip
prices):
|
|
Oil -
$/bbl
|
$2.87
|
Natural gas -
$/mcf
|
($0.01)
|
NGL -
$/bbl
|
$0.04
|
Estimated Basis to
NYMEX Prices:
|
|
Oil -
$/bbl
|
$1.05 -
$1.25
|
Natural gas -
$/mcf
|
$0.30 -
$0.40
|
NGL -
$/bbl
|
$3.75 -
$4.15
|
Operating Costs per
Boe of Projected Production:
|
|
Production
expense
|
$2.50 -
$2.70
|
Gathering, processing
and transportation expenses
|
$7.00 -
$7.50
|
Oil -
$/bbl
|
$4.00 -
$4.20
|
Natural Gas -
$/mcf
|
$1.25 -
$1.35
|
NGL -
$/bbl
|
$8.00 -
$8.40
|
Production
taxes
|
$0.40 -
$0.50
|
General and
administrative(c)
|
$1.20 -
$1.30
|
Stock-based
compensation (noncash)
|
$0.10 -
$0.20
|
DD&A of natural
gas and liquids assets
|
$4.00 -
$5.00
|
Depreciation of other
assets
|
$0.40 -
$0.50
|
Interest
expense(d)
|
$2.00 -
$2.10
|
Marketing, gathering
and compression net margin(e)
|
($80) -
($60)
|
Book Tax
Rate
|
0%
|
Capital Expenditures
($ in millions)(f)
|
$1,900 -
$2,300
|
Capitalized Interest
($ in millions)
|
$200
|
Total Capital
Expenditures ($ in millions)
|
$2,100 -
$2,500
|
|
|
(a)
|
Based on 2016
production of 529 mboe per day, adjusted for 2016 and 2017
sales.
|
(b)
|
Includes expected
settlements for commodity derivatives adjusted for option premiums.
For derivatives closed early, settlements are reflected in the
period of original contract expiration.
|
(c)
|
Excludes expenses
associated with stock-based compensation.
|
(d)
|
Excludes unrealized
gains (losses) on interest rate derivatives.
|
(e)
|
Excludes non-cash
amortization of approximately $22 million related to the buydown of
a transportation agreement.
|
(f)
|
Includes capital
expenditures for drilling and completion, leasehold, geological and
geophysical costs, rig termination payments and other property and
plant and equipment. Excludes any additional proved property
acquisitions.
|
Oil, Natural Gas and Natural Gas Liquids Hedging
Activities
Chesapeake enters into commodity derivative transactions in
order to mitigate a portion of its exposure to adverse changes in
market prices. Please see the quarterly reports on Form 10-Q
and annual reports on Form 10-K filed by Chesapeake with the SEC
for detailed information about derivative instruments the company
uses, its quarter-end derivative positions and accounting for oil,
natural gas and natural gas liquids derivatives.
As of July 31, 2017, the company
had downside protection, through open swaps, on a portion of its
remaining 2017 oil production at an average price of $50.32 per bbl. The company had downside price
protection, through open swaps and two-way collars, on a portion of
its remaining 2017 natural gas production at an average price of
$3.09 per mcf. Chesapeake also had
downside price protection, through open swaps, on a portion of its
remaining 2017 propane production at an average price of
$0.66 per gallon.
In addition, the company had downside protection, through open
swaps and two-way collars, on a portion of its 2018 natural gas
production at an average price of $3.09 per mcf. Chesapeake also had downside price
protection through open swaps on a portion of its 2018 oil
production at an average price of $51.78 per bbl and under three-way collar
arrangements based on an average bought put NYMEX price of
$47.00 per bbl and exposure below an
average sold put NYMEX price of $39.15 per bbl.
The company's crude oil hedging positions as of July 31, 2017 were as follows:
Open Crude Oil
Swaps
Gains (Losses)
from Closed Crude Oil Trades
|
|
|
Open
Swaps
(mbbls)
|
|
Avg.
NYMEX
Price
of
Open
Swaps
|
|
Gains/Losses
from
Closed Trades
($ in
millions)
|
|
|
|
|
|
|
|
Q3 2017
|
|
5,612
|
|
|
$
|
50.27
|
|
|
$
|
23
|
|
Q4 2017
|
|
5,612
|
|
|
$
|
50.36
|
|
|
23
|
|
Total 2017
|
|
11,224
|
|
|
$
|
50.32
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
Q1 2018
|
|
900
|
|
|
$
|
51.96
|
|
|
$
|
(1)
|
|
Q2 2018
|
|
910
|
|
|
$
|
51.96
|
|
|
(1)
|
|
Q3 2018
|
|
460
|
|
|
$
|
51.43
|
|
|
(1)
|
|
Q4 2018
|
|
460
|
|
|
$
|
51.43
|
|
|
(1)
|
|
Total 2018
|
|
2,730
|
|
|
$
|
51.78
|
|
|
$
|
(4)
|
|
Total 2019 –
2022
|
|
|
|
|
|
|
|
|
$
|
(8)
|
|
Crude Oil Net
Written Call Options
|
|
|
Call
Options
(mbbls)
|
|
Avg.
NYMEX
Strike
Price
|
|
|
|
|
|
Q3 2017
|
|
1,334
|
|
$
|
83.50
|
|
Q4 2017
|
|
1,334
|
|
$
|
83.50
|
|
Total 2017
|
|
2,668
|
|
$
|
83.50
|
|
|
|
|
|
|
Q3 2018
|
|
460
|
|
$
|
52.49
|
|
Q4 2018
|
|
460
|
|
$
|
52.49
|
|
Total 2018
|
|
920
|
|
$
|
52.49
|
|
Crude Oil
Three-Way Collars
|
|
|
Open
Collars (mmbbls)
|
|
Avg. NYMEX
Sold Put Price
|
|
Avg. NYMEX
Bought Put Price
|
|
Avg. NYMEX
Sold Call Price
|
|
|
|
|
|
|
|
|
|
Q1 2018
|
|
450
|
|
$
|
39.15
|
|
|
$
|
47.00
|
|
|
$
|
55.00
|
|
Q2 2018
|
|
455
|
|
$
|
39.15
|
|
|
$
|
47.00
|
|
|
$
|
55.00
|
|
Q3 2018
|
|
460
|
|
$
|
39.15
|
|
|
$
|
47.00
|
|
|
$
|
55.00
|
|
Q4 2018
|
|
460
|
|
$
|
39.15
|
|
|
$
|
47.00
|
|
|
$
|
55.00
|
|
Total 2018
|
|
1,825
|
|
$
|
39.15
|
|
|
$
|
47.00
|
|
|
$
|
55.00
|
|
The company's natural gas hedging positions as of July 31, 2017 were as follows:
Open Natural Gas
Swaps
Losses from Closed
Natural Gas Trades
|
|
|
Open
Swaps
(bcf)
|
|
Avg.
NYMEX
Price
of
Open
Swaps
|
|
Losses
from Closed
Trades
($ in
millions)
|
|
|
|
|
|
|
|
Q3 2017
|
|
158
|
|
$
|
3.00
|
|
|
$
|
(1)
|
|
Q4 2017
|
|
164
|
|
$
|
3.16
|
|
|
(3)
|
|
Total 2017
|
|
322
|
|
$
|
3.08
|
|
|
$
|
(4)
|
|
|
|
|
|
|
|
|
Q1 2018
|
|
163
|
|
$
|
3.45
|
|
|
$
|
(6)
|
|
Q1 2018
|
|
107
|
|
$
|
2.89
|
|
|
(4)
|
|
Q3 2018
|
|
109
|
|
$
|
2.90
|
|
|
(4)
|
|
Q4 2018
|
|
109
|
|
$
|
2.98
|
|
|
(6)
|
|
Total 2018
|
|
488
|
|
$
|
3.10
|
|
|
$
|
(20)
|
|
Total 2019 –
2022
|
|
|
|
|
|
|
|
$
|
(49)
|
|
Natural Gas
Two-Way Collars
|
|
|
Open
Collars (bcf)
|
|
Avg. NYMEX
Bought Put
Price
|
|
Avg. NYMEX
Sold Call
Price
|
|
|
|
|
|
|
|
Q4 2017
|
|
24
|
|
$
|
3.25
|
|
|
$
|
3.68
|
|
Total 2017
|
|
24
|
|
$
|
3.25
|
|
|
$
|
3.68
|
|
|
|
|
|
|
|
|
Q1 2018
|
|
11
|
|
$
|
3.00
|
|
|
$
|
3.25
|
|
Q2 2018
|
|
12
|
|
$
|
3.00
|
|
|
$
|
3.25
|
|
Q3 2018
|
|
12
|
|
$
|
3.00
|
|
|
$
|
3.25
|
|
Q4 2018
|
|
12
|
|
$
|
3.00
|
|
|
$
|
3.25
|
|
Total 2018
|
|
47
|
|
$
|
3.00
|
|
|
$
|
3.25
|
|
Natural Gas Net
Written Call Options
|
|
|
Call
Options
(bcf)
|
|
Avg.
NYMEX
Strike
Price
|
|
|
|
|
|
Q3 2017
|
|
12
|
|
$
|
9.43
|
|
Q4 2017
|
|
12
|
|
$
|
9.43
|
|
Total 2017
|
|
24
|
|
$
|
9.43
|
|
|
|
|
|
|
Total 2018 –
2020
|
|
66
|
|
$
|
12.00
|
|
Natural Gas Basis
Protection Swaps
|
|
|
Volume
(bcf)
|
|
Avg. NYMEX
plus/(minus)
|
|
|
|
|
|
Q3 2017
|
|
6
|
|
$
|
(0.46)
|
|
Q4 2017
|
|
6
|
|
$
|
(0.46)
|
|
Total 2017
|
|
12
|
|
$
|
(0.46)
|
|
|
|
|
|
|
Total 2018 –
2022
|
|
1
|
|
$
|
(1.03)
|
|
The company's natural gas liquids hedging positions as of
July 31, 2017 were as follows:
Open Propane
Swaps
|
|
|
Volume
(mmgal)
|
|
Avg. NYMEX
Price of Open
Swaps
|
|
|
|
|
|
Q3 2017
|
|
17
|
|
$
|
0.66
|
|
Total 2017
|
|
17
|
|
$
|
0.66
|
|
View original
content:http://www.prnewswire.com/news-releases/chesapeake-energy-corporation-reports-2017-second-quarter-financial-and-operational-results-300498913.html
SOURCE Chesapeake Energy Corporation