OKLAHOMA CITY, Feb. 22, 2018 /PRNewswire/ -- Chesapeake
Energy Corporation (NYSE:CHK) today reported financial and
operational results for the 2017 full year and fourth quarter plus
other recent developments. Highlights include:
- Average 2017 production of approximately 547,800 barrels
of oil equivalent (boe) per day, up 3 percent compared to 2016
levels, adjusted for asset sales; oil production up 11 percent in
2017 fourth quarter compared to 2016 fourth quarter, adjusted for
asset sales
- Reduced production, general and administrative and
gathering, processing and transportation expenses by approximately
$510 million, down 18 percent
compared to 2016 levels
- Projected 2018 capital expenditures program of
approximately $1.975 - $2.375 billion, down 12 percent compared to 2017
levels, using midpoint
- Total 2018 production, adjusted for asset sales, expected
to grow approximately 3 percent year-over-year, using midpoint; oil
volumes adjusted for asset sales, expected to grow by approximately
5 percent compared to 2017 levels, using midpoint
Doug Lawler, Chesapeake's Chief Executive Officer,
commented, "I am very pleased with our fourth quarter and full year
2017 performance, as we made significant progress toward our goals
of reducing our debt, increasing cash flow generation and margin
enhancement. Fiscal year 2017 was a pivotal year for Chesapeake, as we restored our production and
increased net cash provided by operations, increased our oil
production, adjusted for asset sales, and significantly improved
our cost structure by reducing our combined production, general and
administrative and gathering, processing, and transportation
expenses by approximately $510
million. We further demonstrated the depth of our portfolio
by closing on approximately $1.3
billion in asset and property sales and signed additional
asset sales for approximately $575
million that we expect to close by the end of the 2018
second quarter. We reduced our outstanding secured term debt by
approximately $1.3 billion, or 32
percent, continued to remove legal obligations and recorded the
best environmental and safety performance in our company's
history.
"We are well-positioned to build on our 2017 accomplishments and
progress our strategic goals, with our 2018 guidance highlighting
improvements in our cost structure, increased oil production,
adjusted for asset sales, and increased net cash and margins
provided by operations. We expect to deliver production growth,
adjusted for asset sales, of 1 percent to 5 percent on reduced
capital expenditures. The expected improvements in our cost
structure, as well as improved basis pricing differentials and
higher NYMEX pricing, result in higher forecasted year-over-year
cash flows.
"Over the last four years, we have fundamentally transformed our
business, removing financial and operational complexity,
significantly improving our balance sheet, and addressing numerous
legacy issues that have affected past performance. Chesapeake
Energy continues to get stronger, and we believe we are well
positioned to create meaningful shareholder value in the years
ahead."
2017 Full Year Results
For the 2017 full year, Chesapeake reported net income of $953 million and net income available to common
stockholders of $813 million, or
$0.90 per diluted share. The
company's EBITDA for the 2017 full year was $2.376 billion. Adjusting items that are
typically excluded by securities analysts, the 2017 full year
adjusted net income attributable to Chesapeake was $742
million, or $0.82 per diluted
share, while the company's adjusted EBITDA was $2.160 billion. Reconciliations of financial
measures calculated in accordance with GAAP to non-GAAP measures
are provided on pages 12 - 16 of this release.
Chesapeake's oil, natural gas
and NGL unhedged revenue increased by 18 percent year over year due
to an increase in average price despite a 14 percent reduction in
production volumes sold. Average daily production for 2017 of
approximately 547,800 boe increased by 3 percent compared to 2016
levels, adjusted for asset sales, and consisted of approximately
89,500 barrels (bbls) of oil, 2.406 billion cubic feet (bcf) of
natural gas and 57,300 bbls of NGL.
During the full year production expenses were $2.81 per boe, while general and administrative
expenses (including stock-based compensation) were $1.31 per boe. Combined production and general
and administrative expenses during the 2017 full year were
$4.12 per boe, an increase of 1
percent year over year. Gathering, processing, and transportation
expenses during the 2017 full year were $7.36 per boe, a decrease of 8 percent year over
year.
2017 Fourth Quarter Results
For the 2017 fourth quarter, Chesapeake reported net income of $334 million and net income available to common
stockholders of $309 million, or
$0.33 per diluted share. The
company's EBITDA for the 2017 fourth quarter was $764 million. Adjusting for items that are
typically excluded by securities analysts, the 2017 fourth quarter
adjusted net income attributable to Chesapeake was $314
million, or $0.30 per diluted
share, while the company's adjusted EBITDA was $706 million. Reconciliations of financial
measures calculated in accordance with GAAP to non-GAAP measures
are provided on pages 12 - 16 of this release.
Chesapeake's oil, natural gas
and NGL unhedged revenue in the fourth quarter increased 16 percent
year over year due to a 3 percent increase in volumes and an
increase in commodity prices. Average daily production for the 2017
fourth quarter of approximately 593,200 boe increased by 15 percent
over 2016 fourth quarter levels and 10 percent sequentially,
adjusted for asset sales, and consisted of approximately 99,900
bbls of oil, 2.603 bcf of natural gas and 59,500 bbls of NGL.
Production expenses during the 2017 fourth quarter were
$2.50 per boe, while general and
administrative expenses (including stock-based compensation) during
the 2017 fourth quarter were $1.34
per boe. Combined production and general and administrative
expenses during the 2017 fourth quarter were $3.84 per boe, a decrease of 10 percent year over
year and a decrease of 7 percent quarter over quarter. Gathering,
processing, and transportation expenses during the 2017 fourth
quarter were $7.15 per boe, a
decrease of 10 percent year over year and a decrease of 3 percent
quarter over quarter.
Capital Spending Overview
Chesapeake's total capital
investments were approximately $2.458
billion during the 2017 full year, compared to approximately
$1.697 billion in the 2016 full year.
A summary of the company's 2017 and 2016 capital expenditures, as
well as the current 2018 capital expenditure guidance, is provided
in the table below.
|
2016
|
2017
|
2018
|
Operated activity
comparison
|
Q4
|
FY
|
Q4
|
FY
|
Outlook
|
Average rig
count
|
12
|
10
|
14
|
17
|
14 - 16
|
Gross wells
spud
|
60
|
213
|
66
|
341
|
275 - 300
|
Gross wells
completed
|
82
|
365
|
101
|
417
|
320 - 350
|
Gross wells
connected
|
110
|
428
|
118
|
411
|
320 - 350
|
|
|
|
|
|
|
Type of cost ($ in
millions)
|
|
|
|
|
|
Drilling and
completion costs
|
$
|
365
|
|
$
|
1,316
|
|
$
|
462
|
|
$
|
2,190
|
|
$1,700 -
$2,050
|
Exploration costs,
leasehold and additions to other PP&E
|
38
|
|
130
|
|
15
|
|
74
|
|
$100 -
$150
|
Subtotal capital
expenditures
|
$
|
403
|
|
$
|
1,446
|
|
$
|
477
|
|
$
|
2,264
|
|
$1,800 -
$2,200
|
Capitalized
interest
|
60
|
|
251
|
|
46
|
|
194
|
|
175
|
Total capital
expenditures
|
$
|
463
|
|
$
|
1,697
|
|
$
|
523
|
|
$
|
2,458
|
|
$1,975 -
$2,375
|
Balance Sheet and Liquidity
As of December 31, 2017,
Chesapeake's principal debt
balance was approximately $9.981
billion, compared to $9.989
billion as of December 31,
2016. The company's liquidity as of December 31, 2017 was approximately $2.893 billion, which included cash on hand and
undrawn borrowing capacity of approximately $2.888 billion under the company's senior secured
revolving credit facility. As of December
31, 2017, the company had $781
million of outstanding borrowings under the revolving credit
facility and had used $116 million of
the revolving credit facility for various letters of credit.
The company recently signed additional asset sales agreements
for properties in the Mid-Continent, including our Mississippian
Lime assets, for approximately $500
million in proceeds that we expect to close by the end of
the 2018 second quarter. In addition, the company sold
approximately 4.3 million shares of FTS International, Inc. (NYSE:
FTSI) for approximately $74 million
in net proceeds and continues to hold approximately 22.0 million
shares in the publicly traded company. FTSI is a provider of
hydraulic fracturing services in North
America and a company in which Chesapeake has owned a significant stake since
2006. FTSI completed its initial public offering of common
shares on February 6, 2018. The
proceeds from these divestitures will go toward reducing
Chesapeake's outstanding
borrowings under its revolving credit facility, to repurchase high
coupon debt to reduce annual interest expense, based on market
conditions.
Operations Update
Chesapeake's average daily
production for the 2017 full year was approximately 547,800 boe
compared to approximately 635,400 boe in the 2016 full year. A
summary of the company's 2017 average daily production and average
daily sales prices received by the company's operating divisions
can be found in the company's Form 10-K.
Chesapeake's average daily
production for the 2017 fourth quarter was approximately 593,200
boe compared to approximately 574,500 boe in the 2016 fourth
quarter. The following tables show average daily production and
average daily sales prices received by the company's operating
divisions for the 2017 fourth quarter.
|
|
Three Months Ended
December 31, 2017
|
|
|
Oil
|
|
Natural
Gas
|
|
NGL
|
|
Total
|
|
|
mbbl per day
|
|
$/bbl
|
|
mmcf per day
|
|
$/mcf
|
|
mbbl per day
|
|
$/bbl
|
|
mboe per day
|
|
%
|
|
$/boe
|
Marcellus
|
|
—
|
|
|
—
|
|
|
834
|
|
|
2.23
|
|
|
—
|
|
|
—
|
|
|
139
|
|
|
23
|
|
|
13.36
|
|
Haynesville
|
|
—
|
|
|
—
|
|
|
930
|
|
|
2.72
|
|
|
—
|
|
|
—
|
|
|
155
|
|
|
26
|
|
|
16.41
|
|
Eagle Ford
|
|
66
|
|
|
59.62
|
|
|
150
|
|
|
3.12
|
|
|
21
|
|
|
27.09
|
|
|
112
|
|
|
19
|
|
|
44.38
|
|
Utica
|
|
11
|
|
|
51.20
|
|
|
477
|
|
|
2.70
|
|
|
25
|
|
|
29.96
|
|
|
115
|
|
|
20
|
|
|
22.48
|
|
Mid-Continent
|
|
16
|
|
|
53.99
|
|
|
167
|
|
|
2.49
|
|
|
10
|
|
|
26.42
|
|
|
54
|
|
|
9
|
|
|
28.50
|
|
Powder River
Basin
|
|
7
|
|
|
54.36
|
|
|
45
|
|
|
2.90
|
|
|
3
|
|
|
33.30
|
|
|
18
|
|
|
3
|
|
|
34.83
|
|
Total
|
|
100
|
|
|
57.42
|
|
|
2,603
|
|
|
2.57
|
|
|
59
|
|
|
28.54
|
|
|
593
|
|
|
100
|
%
|
|
23.81
|
|
In the Powder River Basin (PRB), strong results from
Chesapeake's latest well placed on
production in the Turner formation provides additional confirmation
of the PRB's potential resource. In December
2017, the LEBAR 15-34-69 A TR 22H well was placed on
production in the gas condensate window of the Turner with a
lateral length of approximately 10,100 feet. This well reached a
peak rate of 2,600 boe per day (50% oil) and has cumulatively
produced 115,000 boe (50% oil) in its first 60 days of
production. The LEBAR well is currently producing
approximately 2,000 boe per day (45% oil) with a flowing tubing
pressure of 2,600 psi after approximately 80 days on production.
Chesapeake's seventh producing
well targeting the Turner formation, the BB 35-35-72 USA A TR 21H, was completed with a 9,677-foot
lateral and is scheduled to be placed on production next week. In
January 2018, Chesapeake placed three wells on production
from the Sussex formation, averaging approximately 6,895 feet in
lateral length, and achieving an average peak rate of 880 boe per
day (90% oil), while still cleaning up. Chesapeake added a third rig in October 2017 and expects to add a fourth rig in
April 2018. Chesapeake expects to place on production up
to 33 wells in 2018, compared to 25 wells in 2017.
In the Eagle Ford Shale in south Texas, Chesapeake is currently utilizing five
drilling rigs and expects to place on production up to 140 wells in
2018, compared to 166 wells in 2017.
In the Marcellus Shale in northeast Pennsylvania, Chesapeake is currently utilizing one drilling
rig and expects to place on production up to 55 wells in 2018,
compared to 43 wells in 2017. Chesapeake expects to keep its total gross
operated production from the region effectively flat compared to
2017 at approximately 2.1 bcf per day.
In the Haynesville Shale in Louisiana, Chesapeake is currently utilizing three
drilling rigs and expects to place on production up to 25 wells in
2018, compared to 36 wells in 2017. In December 2017, Chesapeake placed the Nabors
13&12-10-13 1HC well on
production from the Bossier formation, its first ever Bossier
horizontal well with a lateral length of more than 10,000 feet,
which achieved a peak rate of 35.8 million cubic feet of gas per
day.
In the Utica Shale in northeast Ohio, Chesapeake is currently utilizing two drilling
rigs and expects to place on production up to 40 wells in 2018,
compared to 67 wells in 2017.
In the company's Mid-Continent operating area in Oklahoma, Chesapeake is currently utilizing one drilling
rig and expects to place on production up to 40 wells in 2018,
compared to 71 wells in 2017. Chesapeake expects to spud its first
horizontal well targeting the Chester formation in Woods County in May
2018 and its first horizontal well targeting the Hunton
formation in June 2018. If
successful, Chesapeake could drill
up to 10 additional Chester and
Hunton tests in 2018.
Key Financial and Operational Results
The table below summarizes Chesapeake's key financial and operational
results during the 2017 fourth quarter and full year as compared to
results in prior periods.
|
Three Months
Ended
|
|
Full Year
Ended
|
|
12/31/17
|
|
12/31/16
|
|
12/31/17
|
|
12/31/16
|
Barrels of oil
equivalent production (in mmboe)
|
55
|
|
|
53
|
|
|
200
|
|
|
233
|
|
Oil production (in
mmbbls)
|
9
|
|
|
8
|
|
|
33
|
|
|
33
|
|
Average realized oil
price ($/bbl)(a)
|
56.47
|
|
|
47.37
|
|
|
53.19
|
|
|
43.58
|
|
Natural gas
production (in bcf)
|
239
|
|
|
236
|
|
|
878
|
|
|
1,049
|
|
Average realized
natural gas price ($/mcf)(a)
|
2.76
|
|
|
2.41
|
|
|
2.75
|
|
|
2.20
|
|
NGL production (in
mmbbls)
|
5
|
|
|
5
|
|
|
21
|
|
|
24
|
|
Average realized NGL
price ($/bbl)(a)
|
27.98
|
|
|
20.90
|
|
|
22.98
|
|
|
14.43
|
|
Production expenses
($/boe)
|
2.50
|
|
|
2.98
|
|
|
2.81
|
|
|
3.05
|
|
Gathering, processing
and transportation expenses ($/boe)
|
7.15
|
|
|
7.92
|
|
|
7.36
|
|
|
7.98
|
|
Oil -
($/bbl)
|
3.90
|
|
|
3.87
|
|
|
3.94
|
|
|
3.61
|
|
Natural Gas -
($/mcf)
|
1.30
|
|
|
1.46
|
|
|
1.34
|
|
|
1.47
|
|
NGL -
($/bbl)
|
7.83
|
|
|
8.05
|
|
|
7.88
|
|
|
7.83
|
|
Production taxes
($/boe)
|
0.45
|
|
|
0.38
|
|
|
0.44
|
|
|
0.32
|
|
General and
administrative expenses ($/boe)(b)
|
1.19
|
|
|
1.11
|
|
|
1.13
|
|
|
0.87
|
|
General and
administrative expenses (stock-based compensation) (non-cash)
($/boe)
|
0.15
|
|
|
0.17
|
|
|
0.18
|
|
|
0.16
|
|
DD&A of oil and
natural gas properties ($/boe)
|
5.23
|
|
|
4.03
|
|
|
4.56
|
|
|
4.31
|
|
DD&A of other
assets ($/boe)
|
0.37
|
|
|
0.40
|
|
|
0.41
|
|
|
0.45
|
|
Interest expense
($/boe)(a)
|
2.25
|
|
|
1.61
|
|
|
2.11
|
|
|
1.18
|
|
Marketing, gathering
and compression net margin($ in
millions)
|
(4)
|
|
|
(25)
|
|
|
(87)
|
|
|
(194)
|
|
Net cash provided by
(used in) operating activities ($
in millions)
|
472
|
|
|
(254)
|
|
|
745
|
|
|
(204)
|
|
Net cash provided by
(used in) operating activities ($/boe)
|
8.65
|
|
|
(4.79)
|
|
|
3.73
|
|
|
(0.88)
|
|
Operating cash flow
($ in millions)(c)
|
577
|
|
|
(107)
|
|
|
1,216
|
|
|
557
|
|
Operating cash flow
($/boe)
|
10.57
|
|
|
(2.02)
|
|
|
6.09
|
|
|
2.39
|
|
Net income (loss) ($
in millions)
|
334
|
|
|
(341)
|
|
|
953
|
|
|
(4,399)
|
|
Net income (loss)
available to common stockholders ($ in millions)
|
309
|
|
|
(740)
|
|
|
813
|
|
|
(4,915)
|
|
Net income (loss) per
share available to common stockholders – diluted ($)
|
0.33
|
|
|
(0.83)
|
|
|
0.90
|
|
|
(6.43)
|
|
Adjusted EBITDA ($ in
millions)(d)
|
706
|
|
|
385
|
|
|
2,160
|
|
|
1,350
|
|
Adjusted EBITDA
($/boe)
|
12.94
|
|
|
7.26
|
|
|
10.80
|
|
|
5.79
|
|
Adjusted net income
(loss) attributable to Chesapeake ($ in millions)(e)
|
314
|
|
|
64
|
|
|
742
|
|
|
(31)
|
|
Adjusted net income
(loss) attributable to Chesapeake per share - diluted ($ in
millions)(f)
|
0.30
|
|
|
0.07
|
|
|
0.82
|
|
|
(0.03)
|
|
|
|
(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, which are recorded in
general and administrative expenses in Chesapeake's Consolidated
Statement of Operations.
|
|
|
(c)
|
Defined as cash flow
provided by operating activities before changes in components of
working capital and other assets and liabilities. This is a
non-GAAP measure. See reconciliation to cash provided by (used in)
operating activities on page 14.
|
|
|
(d)
|
Defined as net income
(loss) before interest expense, income taxes and depreciation,
depletion and amortization expense, as adjusted to remove the
effects of certain items detailed on page 16. This is a
non-GAAP measure. See reconciliation of net income (loss) to
EBITDA on page 14 and reconciliation of EBITDA to adjusted EBITDA
on page 16.
|
|
|
(e)
|
Defined as net income
(loss) attributable to Chesapeake, as adjusted to remove the
effects of certain items detailed on pages 12 - 13. This is a
non-GAAP measure. See reconciliation of net income to
adjusted net income (loss) available to Chesapeake on pages
12-13.
|
|
|
(f)
|
Our presentation of
diluted adjusted net income (loss) attributable to Chesapeake per
share excludes 60 million and 211 million shares for the three
months ended December 31, 2017 and 2016, respectively, and 207
million and 247 million shares for the years ended December 31,2017
and 2016, respectively, considered antidilutive when calculating
diluted earnings per share.
|
2017 Fourth Quarter and Year-End Financial and Operational
Results Conference Call Information
A conference call to discuss this release has been scheduled on
Thursday, February 22, 2018 at
9:00 am EDT. The telephone number to
access the conference call is 719-325-4837 or toll-free
877-419-6600. The passcode for the call is 4866677. 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 4866677. 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.
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, anticipated timing of wells to be placed
into production, general and administrative expenses, capital
expenditures, the timing of anticipated asset sales and proceeds to
be received therefrom, the expected use of proceeds of anticipated
asset sales, projected cash flow and liquidity, our
ability to enhance our cash flow and financial flexibility, plans
and objectives for future operations, 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; an interruption
in operations at our headquarters due to a catastrophic event;
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:
|
MEDIA
CONTACT:
|
Brad Sylvester,
CFA
|
Gordon
Pennoyer
|
(405)
935-8870
|
(405)
935-8878
|
ir@chk.com
|
media@chk.com
|
CHESAPEAKE ENERGY
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions
except per share data)
(unaudited)
|
|
Three Months
Ended December 31,
|
|
Years
Ended December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
REVENUES:
|
|
|
|
|
|
|
|
Oil, natural gas and
NGL
|
$
|
1,258
|
|
|
$
|
678
|
|
|
$
|
4,985
|
|
|
$
|
3,288
|
|
Marketing, gathering
and compression
|
1,261
|
|
|
1,343
|
|
|
4,511
|
|
|
4,584
|
|
Total
Revenues
|
2,519
|
|
|
2,021
|
|
|
9,496
|
|
|
7,872
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Oil, natural gas and
NGL production
|
136
|
|
|
158
|
|
|
562
|
|
|
710
|
|
Oil, natural gas and
NGL gathering, processing and transportation
|
390
|
|
|
419
|
|
|
1,471
|
|
|
1,855
|
|
Production
taxes
|
25
|
|
|
20
|
|
|
89
|
|
|
74
|
|
Marketing, gathering
and compression
|
1,265
|
|
|
1,368
|
|
|
4,598
|
|
|
4,778
|
|
General and
administrative
|
73
|
|
|
68
|
|
|
262
|
|
|
240
|
|
Restructuring and
other termination costs
|
—
|
|
|
3
|
|
|
—
|
|
|
6
|
|
Provision for legal
contingencies, net
|
(73)
|
|
|
11
|
|
|
(38)
|
|
|
123
|
|
Oil, natural gas and
NGL depreciation, depletion and amortization
|
286
|
|
|
212
|
|
|
913
|
|
|
1,003
|
|
Depreciation and
amortization of other assets
|
20
|
|
|
21
|
|
|
82
|
|
|
104
|
|
Impairment of oil and
natural gas properties
|
—
|
|
|
—
|
|
|
—
|
|
|
2,564
|
|
Impairments of fixed
assets and other
|
(5)
|
|
|
43
|
|
|
421
|
|
|
838
|
|
Net gains on sales of
fixed assets
|
(3)
|
|
|
(7)
|
|
|
(3)
|
|
|
(12)
|
|
Total Operating
Expenses
|
2,114
|
|
|
2,316
|
|
|
8,357
|
|
|
12,283
|
|
INCOME (LOSS) FROM
OPERATIONS
|
405
|
|
|
(295)
|
|
|
1,139
|
|
|
(4,411)
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
Interest
expense
|
(124)
|
|
|
(99)
|
|
|
(426)
|
|
|
(296)
|
|
Losses on
investments
|
—
|
|
|
(5)
|
|
|
—
|
|
|
(8)
|
|
Loss on sale of
investment
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
Impairments of
investments
|
—
|
|
|
(119)
|
|
|
—
|
|
|
(119)
|
|
Gains (losses) on
purchases or exchanges of debt
|
50
|
|
|
(19)
|
|
|
233
|
|
|
236
|
|
Other
income
|
3
|
|
|
6
|
|
|
9
|
|
|
19
|
|
Total Other
Expense
|
(71)
|
|
|
(236)
|
|
|
(184)
|
|
|
(178)
|
|
INCOME (LOSS)
BEFORE INCOME TAXES
|
334
|
|
|
(531)
|
|
|
955
|
|
|
(4,589)
|
|
INCOME TAX EXPENSE
(BENEFIT):
|
|
|
|
|
|
|
|
Current income
taxes
|
(11)
|
|
|
(19)
|
|
|
(9)
|
|
|
(19)
|
|
Deferred income
taxes
|
11
|
|
|
(171)
|
|
|
11
|
|
|
(171)
|
|
Total Income Tax
Expense (Benefit)
|
—
|
|
|
(190)
|
|
|
2
|
|
|
(190)
|
|
NET INCOME
(LOSS)
|
334
|
|
|
(341)
|
|
|
953
|
|
|
(4,399)
|
|
Net (income) loss
attributable to noncontrolling interests
|
(1)
|
|
|
(1)
|
|
|
(4)
|
|
|
9
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CHESAPEAKE
|
333
|
|
|
(342)
|
|
|
949
|
|
|
(4,390)
|
|
Preferred stock
dividends
|
(23)
|
|
|
30
|
|
|
(85)
|
|
|
(97)
|
|
Loss on exchange of
preferred stock
|
—
|
|
|
(428)
|
|
|
(41)
|
|
|
(428)
|
|
Earnings allocated to
participating securities
|
(1)
|
|
|
—
|
|
|
(10)
|
|
|
—
|
|
NET INCOME (LOSS)
AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
309
|
|
|
$
|
(740)
|
|
|
$
|
813
|
|
|
$
|
(4,915)
|
|
EARNINGS (LOSS)
PER COMMON SHARE:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.34
|
|
|
$
|
(0.83)
|
|
|
$
|
0.90
|
|
|
$
|
(6.43)
|
|
Diluted
|
$
|
0.33
|
|
|
$
|
(0.83)
|
|
|
$
|
0.90
|
|
|
$
|
(6.43)
|
|
WEIGHTED AVERAGE
COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in
millions):
|
|
|
|
|
|
|
|
Basic
|
907
|
|
|
887
|
|
|
906
|
|
|
764
|
|
Diluted
|
1,053
|
|
|
887
|
|
|
906
|
|
|
764
|
|
CHESAPEAKE ENERGY
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
($ in
millions)
(unaudited)
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
|
|
Cash and cash
equivalents
|
$
|
5
|
|
|
$
|
882
|
|
Other current
assets
|
1,520
|
|
|
1,260
|
|
Total Current
Assets
|
1,525
|
|
|
2,142
|
|
|
|
|
|
Property and
equipment, net
|
10,680
|
|
|
10,609
|
|
Other long-term
assets
|
220
|
|
|
277
|
|
Total
Assets
|
$
|
12,425
|
|
|
$
|
13,028
|
|
|
|
|
|
Current
liabilities
|
$
|
2,356
|
|
|
$
|
3,648
|
|
Long-term debt,
net
|
9,921
|
|
|
9,938
|
|
Other long-term
liabilities
|
520
|
|
|
645
|
|
Total
Liabilities
|
12,797
|
|
|
14,231
|
|
|
|
|
|
Preferred
stock
|
1,671
|
|
|
1,771
|
|
Noncontrolling
interests
|
124
|
|
|
128
|
|
Common stock and
other stockholders' equity (deficit)
|
(2,167)
|
|
|
(3,102)
|
|
Total Equity
(Deficit)
|
(372)
|
|
|
(1,203)
|
|
|
|
|
|
Total Liabilities
and Equity
|
$
|
12,425
|
|
|
$
|
13,028
|
|
|
|
|
|
Common shares
outstanding (in millions)
|
909
|
|
|
896
|
|
Principal amount of
debt outstanding
|
$
|
9,981
|
|
|
$
|
9,989
|
|
CHESAPEAKE ENERGY
CORPORATION
SUPPLEMENTAL DATA
– OIL, NATURAL GAS AND NGL PRODUCTION, SALES AND INTEREST
EXPENSE
(unaudited)
|
|
Three Months
Ended December 31,
|
|
Years Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net
Production:
|
|
|
|
|
|
|
|
Oil
(mmbbl)
|
9
|
|
|
8
|
|
|
33
|
|
|
33
|
|
Natural gas
(bcf)
|
239
|
|
|
236
|
|
|
878
|
|
|
1,049
|
|
NGL
(mmbbl)
|
5
|
|
|
5
|
|
|
21
|
|
|
24
|
|
Oil equivalent
(mmboe)
|
55
|
|
|
53
|
|
|
200
|
|
|
233
|
|
Average daily
production (mboe)
|
593
|
|
|
575
|
|
|
548
|
|
|
635
|
|
Oil, natural gas
and NGL Sales ($ in millions):
|
|
|
|
|
|
|
|
Oil sales
|
$
|
528
|
|
|
$
|
399
|
|
|
$
|
1,668
|
|
|
$
|
1,351
|
|
Oil derivatives –
realized gains (losses)(a)
|
(9)
|
|
|
(5)
|
|
|
70
|
|
|
97
|
|
Oil derivatives –
unrealized gains (losses)(a)
|
(179)
|
|
|
(101)
|
|
|
(134)
|
|
|
(318)
|
|
Total oil
sales
|
340
|
|
|
293
|
|
|
1,604
|
|
|
1,130
|
|
|
|
|
|
|
|
|
|
Natural gas
sales
|
615
|
|
|
610
|
|
|
2,422
|
|
|
2,155
|
|
Natural gas
derivatives – realized gains (losses)(a)
|
44
|
|
|
(41)
|
|
|
(9)
|
|
|
151
|
|
Natural gas
derivatives – unrealized gains (losses)(a)
|
105
|
|
|
(296)
|
|
|
489
|
|
|
(500)
|
|
Total natural gas
sales
|
764
|
|
|
273
|
|
|
2,902
|
|
|
1,806
|
|
|
|
|
|
|
|
|
|
NGL sales
|
156
|
|
|
113
|
|
|
484
|
|
|
360
|
|
NGL derivatives –
realized gains (losses)(a)
|
(3)
|
|
|
(3)
|
|
|
(4)
|
|
|
(8)
|
|
NGL derivatives –
unrealized gains (losses)(a)
|
1
|
|
|
2
|
|
|
(1)
|
|
|
—
|
|
Total NGL
sales
|
154
|
|
|
112
|
|
|
479
|
|
|
352
|
|
|
|
|
|
|
|
|
|
Total oil, natural
gas and NGL sales
|
$
|
1,258
|
|
|
$
|
678
|
|
|
$
|
4,985
|
|
|
$
|
3,288
|
|
Average Sales
Price of Production:
|
|
|
|
|
|
|
|
Oil ($ per
bbl)
|
$
|
57.42
|
|
|
$
|
47.95
|
|
|
$
|
51.03
|
|
|
$
|
40.65
|
|
Natural gas ($ per
mcf)
|
$
|
2.57
|
|
|
$
|
2.59
|
|
|
$
|
2.76
|
|
|
$
|
2.05
|
|
NGL ($ per
bbl)
|
$
|
28.54
|
|
|
$
|
21.54
|
|
|
$
|
23.18
|
|
|
$
|
14.76
|
|
Oil equivalent ($ per
boe)
|
$
|
23.81
|
|
|
$
|
21.24
|
|
|
$
|
22.88
|
|
|
$
|
16.63
|
|
Average Sales
Price (including realized
gains (losses) on derivatives):
|
|
|
|
|
|
|
|
Oil ($ per
bbl)
|
$
|
56.47
|
|
|
$
|
47.37
|
|
|
$
|
53.19
|
|
|
$
|
43.58
|
|
Natural gas ($ per
mcf)
|
$
|
2.76
|
|
|
$
|
2.41
|
|
|
$
|
2.75
|
|
|
$
|
2.20
|
|
NGL ($ per
bbl)
|
$
|
27.98
|
|
|
$
|
20.90
|
|
|
$
|
22.98
|
|
|
$
|
14.43
|
|
Oil equivalent ($ per
boe)
|
$
|
24.41
|
|
|
$
|
20.30
|
|
|
$
|
23.17
|
|
|
$
|
17.66
|
|
Interest Expense
($ in millions):
|
|
|
|
|
|
|
|
Interest
expense(b)
|
$
|
123
|
|
|
$
|
87
|
|
|
$
|
425
|
|
|
$
|
286
|
|
Interest rate
derivatives – realized (gains) losses(c)
|
—
|
|
|
(2)
|
|
|
(3)
|
|
|
(11)
|
|
Interest rate
derivatives – unrealized (gains) losses(c)
|
1
|
|
|
14
|
|
|
4
|
|
|
21
|
|
Total Interest
Expense
|
$
|
124
|
|
|
$
|
99
|
|
|
$
|
426
|
|
|
$
|
296
|
|
|
|
(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 (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 (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 interest rate derivative settlements related to
current period interest and the effect of (gains) losses on
early-terminated trades. Settlements of early-terminated trades are
reflected in realized (gains) losses over the original life of the
hedged item. 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
December 31,
|
|
Years Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Beginning cash and
cash equivalents
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
882
|
|
|
$
|
825
|
|
|
|
|
|
|
|
|
|
Net cash provided
by (used in) operating activities
|
472
|
|
|
(254)
|
|
|
745
|
|
|
(204)
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Drilling and
completion costs(a)
|
(589)
|
|
|
(347)
|
|
|
(2,186)
|
|
|
(1,295)
|
|
Acquisitions of
proved and unproved properties(b)
|
(59)
|
|
|
(205)
|
|
|
(285)
|
|
|
(788)
|
|
Proceeds from
divestitures of proved and unproved properties
|
56
|
|
|
418
|
|
|
1,249
|
|
|
1,406
|
|
Additions to other
property and equipment(c)
|
(9)
|
|
|
(5)
|
|
|
(21)
|
|
|
(37)
|
|
Proceeds from sales
of other property and equipment
|
15
|
|
|
61
|
|
|
55
|
|
|
131
|
|
Cash paid for title
defects
|
—
|
|
|
—
|
|
|
—
|
|
|
(69)
|
|
Other
|
—
|
|
|
(3)
|
|
|
—
|
|
|
(8)
|
|
Net cash used in
investing activities
|
(586)
|
|
|
(81)
|
|
|
(1,188)
|
|
|
(660)
|
|
|
|
|
|
|
|
|
|
Net cash provided
by (used in) financing activities
|
114
|
|
|
1,213
|
|
|
(434)
|
|
|
921
|
|
Change in cash and
cash equivalents
|
—
|
|
|
878
|
|
|
(877)
|
|
|
57
|
|
Ending cash and
cash equivalents
|
$
|
5
|
|
|
$
|
882
|
|
|
$
|
5
|
|
|
$
|
882
|
|
|
|
(a)
|
Includes capitalized
interest of $2 million and $2 million for the three months ended
December 31, 2017 and 2016, respectively. Includes capitalized
interest of $9 million and $6 million for the years ended
December 31, 2017 and 2016, respectively
|
|
|
(b)
|
Includes capitalized
interest of $44 million and $56 million for the three months ended
December 31, 2017 and 2016, respectively. Includes capitalized
interest of $184 million and $236 million for the years ended
December 31, 2017 and 2016, respectively.
|
|
|
(c)
|
Includes capitalized
interest of $0 and $1 million for the three months ended
December 31, 2017 and 2016, respectively. Includes capitalized
interest of $1 million and $1 million for the years ended
December 31, 2017 and 2016, respectively.
|
CHESAPEAKE ENERGY
CORPORATION RECONCILIATION OF ADJUSTED NET INCOME
AVAILABLE TO COMMON STOCKHOLDERS ($ in millions except
per share data) (unaudited)
|
|
Three Months Ended
December 31,
|
|
2017
|
|
2016
|
|
$
|
|
$/Share(b)(c)
|
|
$
|
|
$/Share(b)(c)
|
Net income (loss)
available to common stockholders (GAAP)
|
$
|
309
|
|
|
$
|
0.34
|
|
|
$
|
(740)
|
|
|
$
|
0.83
|
|
Effect of dilutive
securities
|
35
|
|
|
|
|
—
|
|
|
|
Diluted earnings
(loss) per common stockholder (GAAP)
|
$
|
344
|
|
|
$
|
0.33
|
|
|
$
|
(740)
|
|
|
$
|
(0.83)
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Unrealized losses on
oil, natural gas and NGL derivatives
|
73
|
|
|
0.07
|
|
|
395
|
|
|
0.45
|
|
Restructuring and
other termination costs
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
Provision for legal
contingencies, net
|
(73)
|
|
|
(0.07)
|
|
|
11
|
|
|
0.01
|
|
Impairments of fixed
assets and other
|
(5)
|
|
|
—
|
|
|
43
|
|
|
0.05
|
|
Net gains on sales of
fixed assets
|
(3)
|
|
|
—
|
|
|
(7)
|
|
|
(0.01)
|
|
Impairments of
investments
|
—
|
|
|
—
|
|
|
119
|
|
|
0.13
|
|
(Gains) losses on
purchases or exchanges of debt
|
(50)
|
|
|
(0.05)
|
|
|
19
|
|
|
0.02
|
|
Loss on exchange of
preferred stock
|
—
|
|
|
—
|
|
|
428
|
|
|
0.48
|
|
Income tax expense
(benefit)(a)
|
—
|
|
|
—
|
|
|
(190)
|
|
|
(0.21)
|
|
Other
|
4
|
|
|
—
|
|
|
13
|
|
|
0.01
|
|
Adjusted net
income available to common stockholders(b)
(Non-GAAP)
|
290
|
|
|
0.28
|
|
|
94
|
|
|
0.10
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
23
|
|
|
0.02
|
|
|
(30)
|
|
|
(0.03)
|
|
Earnings allocated to
participating securities
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total adjusted net
income attributable to Chesapeake(b) (c)
(Non-GAAP)
|
$
|
314
|
|
|
$
|
0.30
|
|
|
$
|
64
|
|
|
$
|
0.07
|
|
|
|
(a)
|
Due to our valuation
allowance position, no income tax effect from the adjustments has
been included in determining adjusted net income for the three
months ended December 31, 2017. Our effective tax rate in the three
months ended December 31, 2016 was 35.7%.
|
|
|
(b)
|
Adjusted net income
(loss) available to common stockholders and total adjusted net
income (loss) attributable to Chesapeake, both in the aggregate and
per dilutive share, are not measures of financial performance under
GAAP, and should not be considered as an alternative to, or more
meaningful than, net income (loss) available to common stockholders
or earnings (loss) per share. Adjusted net income (loss) available
to common stockholders and adjusted earnings (loss) 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 (loss) 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
(loss) 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.
|
|
|
|
Because adjusted net
income (loss) available to common stockholders and total adjusted
net income (loss) attributable to Chesapeake exclude some, but not
all, items that affect net income (loss) available to common
stockholders and total adjusted net income (loss) attributable to
Chesapeake may vary among companies, our calculation of adjusted
net income (loss) available to common stockholders and total
adjusted net income (loss) attributable to Chesapeake may not be
comparable to similarly titled financial measures of other
companies.
|
|
|
(c)
|
Our presentation of
diluted net income (loss) available to common stockholders and
diluted adjusted net income (loss) per share excludes 60 million
and 211 million shares considered antidilutive for the three months
ended December 31, 2017 and 2016, respectively and thus excluded
from the calculation. The number of shares used for the non-GAAP
calculation were determined in a manner consistent with
GAAP.
|
CHESAPEAKE ENERGY
CORPORATION RECONCILIATION OF ADJUSTED NET INCOME
AVAILABLE TO COMMON STOCKHOLDERS ($ in millions except
per share data) (unaudited)
|
|
Years Ended
December 31,
|
|
2017
|
|
2016
|
|
$
|
|
$/Share(b)(c)
|
|
$
|
|
$/Share(b)(c)
|
Net income (loss)
available to common stockholders (GAAP)
|
$
|
813
|
|
|
$
|
0.90
|
|
|
$
|
(4,915)
|
|
|
(6.43)
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Unrealized losses
(gains) on oil, natural gas and NGL derivatives
|
(354)
|
|
|
(0.39)
|
|
|
818
|
|
|
1.07
|
|
Unrealized losses on
supply contract derivative
|
—
|
|
|
—
|
|
|
297
|
|
|
0.39
|
|
Restructuring and
other termination costs
|
—
|
|
|
—
|
|
|
6
|
|
|
0.01
|
|
Provision for legal
contingencies, net
|
(38)
|
|
|
(0.04)
|
|
|
123
|
|
|
0.16
|
|
Impairment of oil,
natural gas and NGL properties
|
—
|
|
|
—
|
|
|
2,564
|
|
|
3.36
|
|
Impairments of fixed
assets and other
|
421
|
|
|
0.46
|
|
|
838
|
|
|
1.10
|
|
Net gains on sales of
fixed assets
|
(3)
|
|
|
—
|
|
|
(12)
|
|
|
(0.02)
|
|
Impairments of
investments
|
—
|
|
|
—
|
|
|
119
|
|
|
0.16
|
|
Loss on sale of
investment
|
—
|
|
|
—
|
|
|
10
|
|
|
0.01
|
|
Gains on purchases or
exchanges of debt
|
(233)
|
|
|
(0.26)
|
|
|
(236)
|
|
|
(0.31)
|
|
Loss on exchange of
preferred stock
|
41
|
|
|
0.04
|
|
|
428
|
|
|
0.56
|
|
Income tax expense
(benefit)(a)
|
—
|
|
|
—
|
|
|
(190)
|
|
|
(0.25)
|
|
Other
|
—
|
|
|
—
|
|
|
22
|
|
|
0.03
|
|
Adjusted net
income (loss) available to common stockholders(b)
(Non-GAAP)
|
647
|
|
|
0.71
|
|
|
(128)
|
|
|
(0.16)
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
85
|
|
|
0.10
|
|
|
—
|
|
|
—
|
|
Earnings allocated to
participating securities
|
10
|
|
|
0.01
|
|
|
97
|
|
|
0.13
|
|
Total adjusted net
income (loss) attributable to Chesapeake(b) (c)
(Non-GAAP)
|
$
|
742
|
|
|
$
|
0.82
|
|
|
$
|
(31)
|
|
|
$
|
(0.03)
|
|
|
|
(a)
|
Due to our valuation
allowance position, no income tax effect from the adjustments has
been included in determining adjusted net income for the year ended
December 31, 2017. Our effective tax rate in the year ended
December 31, 2016 was 4.1%.
|
|
|
(b)
|
Adjusted net income
(loss) available to common stockholders and total adjusted net
income (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, or more
meaningful than, net income (loss) available to common stockholders
or earnings (loss) per share. Adjusted net income (loss) available
to common stockholders and adjusted earnings (loss) 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 (loss) 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
(loss) 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.
|
|
|
|
Because adjusted net
income (loss) available to common stockholders and total adjusted
net income (loss) attributable to Chesapeake exclude some, but not
all, items that affect net income (loss) available to common
stockholders and total adjusted net income (loss) attributable to
Chesapeake may vary among companies, our calculation of adjusted
net income (loss) available to common stockholders and total
adjusted net income (loss) attributable to Chesapeake may not be
comparable to similarly titled financial measures of other
companies.
|
|
|
(c)
|
Our presentation of
diluted net income (loss) available to common stockholders and
diluted adjusted net income (loss) attributable to Chesapeake per
share excludes 207 million and 247 million shares considered
antidilutive for the years ended December 31, 2017 and 2016,
respectively and thus excluded from the calculation. The number of
shares used for the non-GAAP calculation were determined in a
manner consistent with GAAP.
|
CHESAPEAKE ENERGY
CORPORATION RECONCILIATION OF OPERATING CASH FLOW AND
EBITDA ($ in
millions) (unaudited)
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES (GAAP)
|
$
|
472
|
|
|
$
|
(254)
|
|
|
$
|
745
|
|
|
$
|
(204)
|
|
Changes in components
of working capital and other assets and liabilities
|
105
|
|
|
147
|
|
|
471
|
|
|
761
|
|
OPERATING CASH
FLOW (Non-GAAP)(a)
|
$
|
577
|
|
|
$
|
(107)
|
|
|
$
|
1,216
|
|
|
$
|
557
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
(GAAP)
|
$
|
334
|
|
|
$
|
(341)
|
|
|
$
|
953
|
|
|
$
|
(4,399)
|
|
Interest
expense
|
124
|
|
|
99
|
|
|
426
|
|
|
296
|
|
Income tax expense
(benefit)
|
—
|
|
|
(190)
|
|
|
2
|
|
|
(190)
|
|
Depreciation and
amortization of other assets
|
20
|
|
|
21
|
|
|
82
|
|
|
104
|
|
Oil, natural gas and
NGL depreciation, depletion and amortization
|
286
|
|
|
212
|
|
|
913
|
|
|
1,003
|
|
EBITDA
(Non-GAAP)(b)
|
$
|
764
|
|
|
$
|
(199)
|
|
|
$
|
2,376
|
|
|
$
|
(3,186)
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES (GAAP)
|
$
|
472
|
|
|
$
|
(254)
|
|
|
$
|
745
|
|
|
$
|
(204)
|
|
Changes in assets and
liabilities
|
105
|
|
|
147
|
|
|
471
|
|
|
761
|
|
Interest expense, net
of unrealized gains (losses) on derivatives
|
123
|
|
|
85
|
|
|
422
|
|
|
275
|
|
Gains (losses) on
oil, natural gas and NGL derivatives, net
|
(41)
|
|
|
(444)
|
|
|
411
|
|
|
(578)
|
|
Losses on supply
contract derivative, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(151)
|
|
Cash (receipts)
payments on derivative settlements, net
|
(28)
|
|
|
39
|
|
|
18
|
|
|
(448)
|
|
Renegotiation of
natural gas gathering contract
|
—
|
|
|
49
|
|
|
—
|
|
|
115
|
|
Stock-based
compensation
|
(11)
|
|
|
(12)
|
|
|
(49)
|
|
|
(52)
|
|
Restructuring and
other termination costs
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(3)
|
|
Provision for legal
contingencies, net
|
77
|
|
|
(10)
|
|
|
42
|
|
|
(87)
|
|
Impairment of oil and
natural gas properties
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,564)
|
|
Impairments of fixed
assets and other
|
5
|
|
|
318
|
|
|
(4)
|
|
|
(467)
|
|
Net gains on sales of
fixed assets
|
3
|
|
|
7
|
|
|
3
|
|
|
12
|
|
Investment
activity
|
—
|
|
|
(5)
|
|
|
—
|
|
|
(18)
|
|
Impairments of
investments
|
—
|
|
|
(119)
|
|
|
—
|
|
|
(119)
|
|
Gains (losses) on
purchases or exchanges of debt
|
50
|
|
|
(19)
|
|
|
235
|
|
|
236
|
|
Other
items
|
9
|
|
|
21
|
|
|
82
|
|
|
106
|
|
EBITDA
(Non-GAAP)(b)
|
$
|
764
|
|
|
$
|
(199)
|
|
|
$
|
2,376
|
|
|
$
|
(3,186)
|
|
|
|
(a)
|
Operating cash flow
represents net cash provided by operating activities before changes
in components of working capital and other. Operating cash flow is
presented because management believes it is a useful adjunct to net
cash provided by operating activities under GAAP and provides
useful information to investors for analysis of the Company's
ability to generate cash to fund exploration and development, and
to service debt. 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. Because operating cash flow excludes some, but not
all, items that affect net cash provided by operating activities
and may vary among companies, our calculation of operating cash
flow may not be comparable to similarly titled measures of other
companies. The increase in operating cash flow for the three months
ended December 31, 2017 is mainly due to an increase in prices and
volumes. Operating cash flow for the year ended December 31,
2017 includes $290 million paid to assign an oil transportation
agreement to a third party and $126 million paid to terminate
future natural gas transportation commitments.
|
|
|
(b)
|
EBITDA represents net
income before interest expense, income taxes, and depreciation,
depletion and amortization expense. EBITDA is presented as a
supplemental financial measurement in the evaluation of our
business. We believe that it provides additional information
regarding our ability to meet our future debt service, capital
expenditures and working capital requirements. This measure is
widely used by investors and rating agencies in the valuation,
comparison, rating and investment recommendations of companies.
EBITDA is also a financial measurement that, with certain
negotiated adjustments, is reported to our lenders pursuant to our
bank credit agreements and is used in the financial covenants in
our bank credit agreements. EBITDA is not a measure of financial
performance (or liquidity) under GAAP. Accordingly, it should not
be considered as a substitute for net income, income from
operations or cash flows from operating activities prepared in
accordance with GAAP.
|
CHESAPEAKE ENERGY
CORPORATION RECONCILIATION OF ADJUSTED
EBITDA ($ in
millions) (unaudited)
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
EBITDA
(Non-GAAP)
|
$
|
764
|
|
|
$
|
(199)
|
|
|
$
|
2,376
|
|
|
$
|
(3,186)
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Unrealized losses
(gains) on oil, natural gas and NGL derivatives
|
73
|
|
|
395
|
|
|
(354)
|
|
|
818
|
|
Unrealized losses on
supply contract derivative
|
—
|
|
|
—
|
|
|
—
|
|
|
297
|
|
Restructuring and
other termination costs
|
—
|
|
|
3
|
|
|
—
|
|
|
6
|
|
Provision for legal
contingencies, net
|
(73)
|
|
|
11
|
|
|
(38)
|
|
|
123
|
|
Impairment of oil and
natural gas properties
|
—
|
|
|
—
|
|
|
—
|
|
|
2,564
|
|
Impairments of fixed
assets and other
|
(5)
|
|
|
43
|
|
|
421
|
|
|
838
|
|
Net gains on sales of
fixed assets
|
(3)
|
|
|
(7)
|
|
|
(3)
|
|
|
(12)
|
|
Impairments of
investments
|
—
|
|
|
119
|
|
|
—
|
|
|
119
|
|
Loss on sale of
investment
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
(Gains) losses on
purchases or exchanges of debt
|
(50)
|
|
|
19
|
|
|
(233)
|
|
|
(236)
|
|
Net loss (income)
attributable to noncontrolling interests
|
(1)
|
|
|
(1)
|
|
|
(4)
|
|
|
9
|
|
Other
|
1
|
|
|
2
|
|
|
(5)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(Non-GAAP)(a)
|
$
|
706
|
|
|
$
|
385
|
|
|
$
|
2,160
|
|
|
$
|
1,350
|
|
|
|
(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. Because adjusted
EBITDA excludes some, but not all, items that affect net income
(loss from continuing operations) attributable to common
stockholders, our calculations of adjusted EBITDA may not be
comparable to similarly titled measures of other
companies.
|
CHESAPEAKE ENERGY
CORPORATION ROLL-FORWARD
OF PROVED RESERVES YEAR
ENDED DECEMBER 31, 2017 (unaudited)
|
|
Mmboe(a)
|
|
|
Beginning balance,
December 31, 2016
|
1,708
|
|
Production
|
(200)
|
|
Extensions,
discoveries and other additions
|
723
|
|
Revisions of previous
estimates
|
(252)
|
|
Sale of reserves
in-place
|
(71)
|
|
Purchase of reserves
in-place
|
4
|
|
Ending balance,
December 31, 2017
|
1,912
|
|
|
|
Proved reserves
growth rate before acquisitions and divestitures
|
16
|
%
|
Proved reserves
growth rate after acquisitions and divestitures
|
12
|
%
|
|
|
Proved developed
reserves
|
1,116
|
|
Proved developed
reserves percentage
|
58
|
%
|
|
|
Standardized measure
of discounted future net cash flows ($ in millions)
(GAAP)
|
$
|
7,490
|
|
Add: Present value of
future income taxes discounted at 10% per
annum(a)
|
—
|
|
PV-10 ($ in
millions)(a) (Non-GAAP)
|
$
|
7,490
|
|
|
|
(a)
|
Reserve volumes and
PV-10 value estimated using SEC reserve recognition standards and
pricing assumptions based on the trailing 12-month average
first-day-of-the-month prices as of December 31, 2017 of $51.34 per
bbl of oil and $2.98 per mcf of natural gas, before basis
differential adjustments. PV-10 is a non-GAAP metric used by the
industry, investors and analysts to estimate the present value,
discounted at 10% per annum, of estimated future cash flows of the
company's estimated proved reserves before income tax. The table
above shows the reconciliation of PV-10 to the company's
standardized measure of discounted future net cash flows, the most
directly comparable GAAP measure for the year ended December 31,
2017. Future income taxes in the calculation of the standardized
measure of discounted future net cash flows were zero as of
December 31, 2017, as the historical tax basis of proved oil and
gas properties, net of operating loss carryforwards, and future tax
deductions exceeded the undiscounted future net cash flows before
income taxes of the Company's proved oil and gas reserves as of
December 31, 2017.
|
CHESAPEAKE ENERGY
CORPORATION RECONCILIATION OF PV-9 AND PV-10 TO STANDARDIZED
MEASURE ($ in
millions) (unaudited)
|
|
PV-9 – December 31,
2017 @ NYMEX Strip
|
|
$
|
8,026
|
|
Less: Change in
discount factor from 9 to 10
|
|
(386)
|
|
PV-10 – December 31,
2017 @ NYMEX Strip
|
|
7,640
|
|
Less: Change in
pricing assumption from NYMEX Strip to SEC
|
|
(150)
|
|
PV-10 – December 31,
2017 @ SEC
|
|
7,490
|
|
Less: Present value
of future income tax discounted at 10%
|
|
—
|
|
Standardized measure
of discounted future cash flows – December 31,
2017(a)
|
|
$
|
7,490
|
|
|
|
(a)
|
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 table
above 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,
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.
|
CHESAPEAKE ENERGY
CORPORATION
|
MANAGEMENT'S
OUTLOOK AS OF FEBRUARY 22, 2018
|
Chesapeake
periodically provides guidance on certain factors that affect the
company's future financial performance.
|
|
|
Year Ending
12/31/2018
|
Production Growth
adjusted for asset sales(a)
|
1% to 5%
|
Absolute
Production
|
|
Liquids -
mmbbls
|
51.0 -
55.0
|
Oil -
mmbbls
|
31.0 -
33.0
|
NGL -
mmbbls
|
20.0 -
22.0
|
Natural gas -
bcf
|
825 - 875
|
Total absolute
production - mmboe
|
190 - 200
|
Absolute daily rate -
mboe
|
515 - 550
|
Estimated Realized
Hedging Effects(b) (based on 2/16/18 strip
prices):
|
|
Oil -
$/bbl
|
($5.38)
|
Natural gas -
$/mcf
|
$0.19
|
NGL -
$/bbl
|
$0.02
|
Estimated Basis to
NYMEX Prices:
|
|
Oil -
$/bbl
|
$1.00 -
$1.20
|
Natural gas -
$/mcf
|
($0.10) -
($0.20)
|
NGL -
$/bbl
|
($5.20) -
($5.60)
|
Operating Costs per
Boe of Projected Production:
|
|
Production
expense
|
$2.60 -
$2.80
|
Gathering, processing
and transportation expenses
|
$6.95 -
$7.65
|
Oil -
$/bbl
|
$3.90 -
$4.10
|
Natural Gas -
$/mcf
|
$1.25 -
$1.40
|
NGL -
$/bbl
|
$7.85 -
$8.25
|
Production
taxes
|
$0.50 -
$0.60
|
General and
administrative(c)
|
$1.25 -
$1.35
|
Stock-based
compensation (noncash)
|
$0.10 -
$0.20
|
DD&A of natural
gas and liquids assets
|
$5.00 -
$6.00
|
Depreciation of other
assets
|
$0.35 -
$0.45
|
Interest
expense(d)
|
$2.40 -
$2.60
|
Marketing, gathering
and compression net margin(e)
|
($60) -
($40)
|
Book Tax
Rate
|
0%
|
Adjusted EBITDA,
based on 2/16/18 strip prices ($ in
millions)(f)
|
$2,200 -
$2,400
|
Capital Expenditures
($ in millions)(g)
|
$1,800 -
$2,200
|
Capitalized Interest
($ in millions)
|
$175
|
Total Capital
Expenditures ($ in millions)
|
$1,975 -
$2,375
|
|
|
(a)
|
Based on 2017
production of 515 mboe per day, adjusted for 2017 asset sales and
2018 asset sales signed to date.
|
|
|
(b)
|
Includes expected
settlements for oil, natural gas and NGL 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, which are recorded in
general and administrative expenses in Chesapeake's Consolidated
Statement of Operations.
|
|
|
(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)
|
Adjusted EBITDA is a
non-GAAP measure used by management to evaluate the company's
operational trends and performance relative to other oil and
natural gas producing companies. Adjusted EBITDA excludes certain
items that management believes affect the comparability of
operating results. The most directly comparable GAAP measure is net
income but, it is not possible, without unreasonable efforts, to
identify the amount or significance of events or transactions that
may be included in future GAAP net income but that management does
not believe to be representative of underlying business
performance. The company further believes that providing estimates
of the amounts that would be required to reconcile forecasted
adjusted EBITDA to forecasted GAAP net income would imply a degree
of precision that may be confusing or misleading to investors.
Items excluded from net income to arrive at adjusted EBITDA include
interest expense, income taxes, and depreciation, depletion and
amortization expense as well as one-time items or items whose
timing or amount cannot be reasonably estimated.
|
|
|
(g)
|
Includes capital
expenditures for drilling and completion, leasehold, geological and
geophysical costs, rig termination payments and other property,
plant and equipment. Excludes any additional proved property
acquisitions.
|
Oil, Natural Gas and Natural Gas Liquids Hedging
Activities
Chesapeake enters into oil,
natural gas and NGL 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 February 22, 2018, including
January and February derivative contracts that have settled, the
company had downside price protection on a portion of its 2018 oil,
natural gas and natural gas liquids production. Through swaps,
the company had downside oil price protection at an average price
of $52.87 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. Through swaps and two way
collars, the company had downside gas price protection at an
average price of $3.10 per mcf.
Chesapeake also had downside
ethane, propane and butane price protection through swaps at an
average price of $0.28, $0.73 and $0.88 per
gallon (as well as a portion of butane at 70.5% of WTI),
respectively. Further details summarized below.
In addition, the company had downside protection, through open
swaps on a portion of its 2019 oil production at an average price
of $56.04 per bbl.
The company's crude oil hedging positions were as follows:
Open Crude Oil
Swaps Gains (Losses)
from Closed Crude Oil Trades
|
|
Open
Swaps (mbbls)
|
|
Avg.
NYMEX Price
of Open
Swaps
|
|
Gains/Losses
from Closed
Trades ($ in
millions)
|
|
|
|
|
|
|
Q1 2018
|
5,580
|
|
|
$
|
52.26
|
|
|
$
|
(1)
|
|
Q2 2018
|
5,642
|
|
|
$
|
52.26
|
|
|
(1)
|
|
Q3 2018
|
5,244
|
|
|
$
|
53.52
|
|
|
(1)
|
|
Q4 2018
|
5,244
|
|
|
$
|
53.52
|
|
|
(1)
|
|
Total 2018
|
21,710
|
|
|
$
|
52.87
|
|
|
$
|
(4)
|
|
|
|
|
|
|
|
Total 2019 -
2022
|
3,273
|
|
|
$
|
56.04
|
|
|
$
|
(8)
|
|
Crude Oil Net
Written Call Options
|
|
Call
Options (mbbls)
|
|
Avg.
NYMEX Strike
Price
|
|
|
|
|
Q3 2018
|
920
|
|
$
|
52.87
|
|
Q4 2018
|
920
|
|
$
|
52.87
|
|
Total 2018
|
1,840
|
|
$
|
52.87
|
|
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
|
|
Oil Basis
Protection Swaps
|
|
Volume (mmbbls)
|
|
Avg.
NYMEX plus/(minus)
|
|
|
|
|
Q1 2018
|
2,610
|
|
$
|
3.21
|
|
Q2 2018
|
2,639
|
|
$
|
3.21
|
|
Q3 2018
|
2,760
|
|
$
|
3.42
|
|
Q4 2018
|
2,760
|
|
$
|
3.42
|
|
Total 2018
|
10,769
|
|
$
|
3.32
|
|
The company's natural gas hedging positions 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)
|
|
|
|
|
|
|
Q1 2018
|
174
|
|
$
|
3.44
|
|
|
$
|
(6)
|
|
Q2 2018
|
118
|
|
$
|
2.92
|
|
|
(4)
|
|
Q3 2018
|
120
|
|
$
|
2.94
|
|
|
(4)
|
|
Q4 2018
|
120
|
|
$
|
3.00
|
|
|
(6)
|
|
Total 2018
|
532
|
|
$
|
3.11
|
|
|
$
|
(20)
|
|
|
|
|
|
|
|
Total 2019 -
2022
|
—
|
|
$
|
—
|
|
|
$
|
(49)
|
|
Natural Gas
Two-Way Collars
|
|
Open Collars
(bcf)
|
|
Avg. NYMEX
Bought Put Price
|
|
Avg. NYMEX
Sold Call Price
|
|
|
|
|
|
|
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
|
|
|
|
|
Q1 2018
|
16
|
|
$
|
6.27
|
|
Q2 2018
|
16
|
|
$
|
6.27
|
|
Q3 2018
|
17
|
|
$
|
6.27
|
|
Q4 2018
|
17
|
|
$
|
6.27
|
|
Total 2018
|
66
|
|
$
|
6.27
|
|
|
|
|
|
Total 2019 –
2020
|
44
|
|
$
|
12.00
|
|
Natural Gas Basis
Protection Swaps
|
|
Volume (bcf)
|
|
Avg. NYMEX
plus/(minus)
|
|
|
|
|
Q1 2018
|
24
|
|
$
|
(0.08)
|
|
Q2 2018
|
18
|
|
$
|
(0.77)
|
|
Q3 2018
|
17
|
|
$
|
(0.77)
|
|
Q4 2018
|
6
|
|
$
|
(0.77)
|
|
Total 2018
|
65
|
|
$
|
(0.52)
|
|
The company's natural gas liquids hedging positions were as
follows:
Open Ethane
Swaps
|
|
Volume (mgal)
|
|
Avg. NYMEX
Price
of Open Swaps
|
|
|
|
|
Q1 2018
|
3,780
|
|
$
|
0.28
|
|
Q2 2018
|
3,822
|
|
$
|
0.28
|
|
Total 2018
|
7,602
|
|
$
|
0.28
|
|
Open Propane
Swaps
|
|
Volume (mgal)
|
|
Avg. NYMEX
Price
of Open Swaps
|
|
|
|
|
Q1 2018
|
3,780
|
|
$
|
0.73
|
|
Q2 2018
|
3,822
|
|
$
|
0.73
|
|
Q3 2018
|
3,864
|
|
$
|
0.73
|
|
Q4 2018
|
3,864
|
|
$
|
0.73
|
|
Total 2018
|
15,330
|
|
$
|
0.73
|
|
Open Butane
Swaps
|
|
Volume (mgal)
|
|
Avg. NYMEX
Price
of Open Swaps
|
|
|
|
|
Q1 2018
|
1,323
|
|
$
|
0.88
|
|
Q2 2018
|
1,338
|
|
$
|
0.88
|
|
Q3 2018
|
1,352
|
|
$
|
0.88
|
|
Q4 2018
|
1,352
|
|
$
|
0.88
|
|
Total 2018
|
5,365
|
|
$
|
0.88
|
|
Open Butane Swaps
Priced as a Percentage of WTI
|
|
Volume (mgal)
|
|
Avg. NYMEX as
a
% of WTI Open
Swaps
|
|
|
|
|
Q1 2018
|
1,323
|
|
70.5
|
%
|
Q2 2018
|
1,337
|
|
70.5
|
%
|
Q3 2018
|
1,352
|
|
70.5
|
%
|
Q4 2018
|
1,352
|
|
70.5
|
%
|
Total 2018
|
5,364
|
|
70.5
|
%
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content:http://www.prnewswire.com/news-releases/chesapeake-energy-corporation-reports-2017-full-year-and-fourth-quarter-financial-and-operational-results-and-announces-2018-guidance-300602546.html
SOURCE Chesapeake Energy Corporation