Supplemental Oil and Gas Disclosures (Unaudited) | SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) The Company’s operating natural gas and oil properties are located solely in the United States. The Company also has licenses to properties in Canada, the development of which is subject to an indefinite moratorium. See “Our Operations – Other – New Brunswick, Canada” in Item 1 of Part 1 of this Annual Report. Costs Incurred in Natural Gas and Oil Exploration and Development The table below sets forth capitalized costs incurred in natural gas and oil property acquisition, exploration and development activities: (in millions, except per Mcfe amounts) 2022 2021 2020 Unproved property acquisition costs $ 202 $ 139 $ 124 (1) Exploration costs — — — Development costs 2,021 984 784 Capitalized costs incurred $ 2,223 $ 1,123 $ 908 Full cost pool amortization per Mcfe $ 0.67 $ 0.42 $ 0.38 (1) Excluded $90 million of unevaluated property acquisition costs associated with the non-cash Montage Merger. Capitalized interest is included as part of the cost of natural gas and oil properties. The Company capitalized $121 million, $97 million and $88 million during 2022, 2021 and 2020, respectively, based on the Company’s weighted average cost of borrowings used to finance expenditures. In addition to capitalized interest, the Company capitalized internal costs totaling $85 million, $64 million and $56 million during 2022, 2021 and 2020, respectively, which were directly related to the acquisition, exploration and development of the Company’s natural gas and oil properties. Results of Operations from Natural Gas and Oil Producing Activities The table below sets forth the results of operations from natural gas and oil producing activities: (in millions) 2022 2021 2020 Sales $ 10,577 $ 4,640 $ 1,348 Production (lifting) costs (1,969) (1,304) (866) Depreciation, depletion and amortization (1,169) (537) (348) Impairment of natural gas and oil properties — — (2,825) 7,439 2,799 (2,691) Provision for income taxes (1) — — — Results of operations (2) $ 7,439 $ 2,799 $ (2,691) (1) Prior to the recognition of a valuation allowance, in 2020 the Company recognized an income tax benefit of $624 million. (2) Results of operations exclude the gain (loss) on unsettled commodity derivative instruments. See Note 6 . The results of operations shown above exclude general and administrative expenses and interest expense and are not necessarily indicative of the contribution made by the Company’s natural gas and oil operations to its consolidated operating results. Income tax expense is calculated by applying the statutory tax rates to the revenues less costs, including depreciation, depletion and amortization, and after giving effect to permanent differences and tax credits. Natural Gas and Oil Reserve Quantities The Company engaged the services of Netherland, Sewell & Associates, Inc., or NSAI, an independent petroleum engineering firm, to audit the reserves estimated by the Company’s reservoir engineers. In conducting its audit, the engineers and geologists of NSAI studied the Company’s major properties in detail and independently developed reserve estimates. NSAI’s audit consists primarily of substantive testing, which includes a detailed review of the Company’s major properties, and accounted for approximately 99% of the present worth of the Company’s total proved reserves as of December 31, 2022. For 2021 and 2020, NSAI’s audit accounted for 99% and 97%, respectively, of the then-present worth of the Company’s total proved properties. A reserve audit is not the same as a financial audit, and a reserve audit is less rigorous in nature than a reserve report prepared by an independent petroleum engineering firm containing its own estimate of reserves. Reserve estimates are inherently imprecise, and the Company’s reserve estimates are generally based upon extrapolation of historical production trends, historical prices of natural gas and crude oil and analogy to similar properties and volumetric calculations. Accordingly, the Company’s estimates are expected to change, and such changes could be material and occur in the near term as future information becomes available. The following table summarizes the changes in the Company’s proved natural gas, oil and NGL reserves for 2020, 2021 and 2022, all of which were located in the United States: Natural Gas (Bcf) Oil (MBbls) NGL (MBbls) Total (Bcfe) December 31, 2019 8,630 72,925 608,761 12,721 Revisions of previous estimates due to price (2,143) (32,507) (338,639) (4,370) Revisions of previous estimates other than price 763 3,816 106,444 1,424 Extensions, discoveries and other additions 714 135 4,371 741 Production (694) (5,141) (25,927) (880) Acquisition of reserves in place (1) 1,911 18,796 55,141 2,354 Disposition of reserves in place — — — — December 31, 2020 9,181 58,024 410,151 11,990 Revisions of previous estimates due to price (2) 501 1,414 (15,525) 415 Revisions of previous estimates other than price (3) 1,402 17,384 127,197 2,270 Extensions, discoveries and other additions (3) 1,389 9,381 85,901 1,961 Production (1,015) (6,610) (30,940) (1,240) Acquisition of reserves in place (4) 5,750 247 180 5,753 Disposition of reserves in place (1) (61) — (1) December 31, 2021 17,207 79,779 576,964 21,148 Revisions of previous estimates due to price 61 (107) (828) 55 Revisions of previous estimates other than price (5) (458) (2,149) 40,138 (230) Extensions, discoveries and other additions 2,106 10,877 42,719 2,428 Production (1,520) (4,993) (30,446) (1,733) Acquisition of reserves in place — — — — Disposition of reserves in place (34) (21) (1,411) (43) December 31, 2022 17,362 83,386 627,136 21,625 (1) The 2020 acquisition amounts are primarily associated with the Montage Merger. (2) The 15,525 MBbl reduction in NGL volumes for 2021 is the result of changes to the Company’s five-year development plan and elections to retain ethane in the natural gas stream in line with ethane transportation contracts. This election is driven by commodity pricing, whereby higher natural gas pricing relative to ethane pricing creates a more economically favorable position. (3) Includes 1,155 Bcf, 15 MBbls and 126 MBbls of natural gas, oil and NGL proved reserves, respectively, that were previously presented as “Extensions, discoveries and other additions” which have been reclassified to “Revisions of previous estimate other than price” to conform with current year presentation for infill reserves. (4) The 2021 acquisition amounts are primarily associated with the Indigo Merger and the GEPH Merger. (5) Includes performance revisions of a positive 272 Bcf, negative 681 MBbls and positive 41,490 MBbls of natural gas, oil and NGL proved reserves, respectively. Includes additions associated with infill development of 303 Bcf, 5,254 MBbls, and 40,423 MBbls of natural gas, oil and NGL proved reserves, respectively. Includes downward revisions from change in development plans of 1,033 Bcf, 6,722 MBbls, and 41,775 MBbls of natural gas, oil and NGL proved reserves, respectively. Natural Gas (Bcf) Oil (MBbls) NGL (MBbls) Total (Bcfe) Proved developed reserves as of: December 31, 2020 6,342 33,563 276,548 8,203 December 31, 2021 9,308 40,930 296,832 11,335 December 31, 2022 9,793 41,138 350,821 12,145 Proved undeveloped reserves as of: December 31, 2020 2,839 24,461 133,603 3,787 December 31, 2021 7,899 38,849 280,132 9,813 December 31, 2022 7,569 42,248 276,315 9,480 The Company’s estimated proved natural gas, oil and NGL reserves were 21,625 Bcfe at December 31, 2022, compared to 21,148 Bcfe at December 31, 2021. The Company’s reserves increased in 2022, compared to 2021, as extensions and discoveries, positive performance revisions, and positive price revisions were only partially offset by production, changes in the development plan, and dispositions. The Company’s reserves increased in 2021, as compared to 2020, as acquisitions, additions and positive price and performance revisions were only partially offset by production and disposition. The following table summarizes the changes in reserves for 2020, 2021 and 2022: (in Bcfe) Appalachia Haynesville Other (1) Total December 31, 2019 12,720 — 1 12,721 Net revisions Price revisions (4,370) — — (4,370) Performance and production revisions 1,424 — — 1,424 Total net revisions (2,946) — — (2,946) Extensions, discoveries and other additions Proved developed 267 — — 267 Proved undeveloped 474 — — 474 Total reserve additions 741 — — 741 Production (880) — — (880) Acquisition of reserves in place 2,354 — — 2,354 Disposition of reserves in place — — — — December 31, 2020 11,989 — 1 11,990 Net revisions Price revisions 415 — — 415 Performance and production revisions (2) 2,271 — (1) 2,270 Total net revisions 2,686 — (1) 2,685 Extensions, discoveries and other additions Proved developed (2) 197 — — 197 Proved undeveloped (2) 1,764 — — 1,764 Total reserve additions 1,961 — — 1,961 Production (1,108) (132) — (1,240) Acquisition of reserves in place — 5,753 — 5,753 Disposition of reserves in place (1) — — (1) December 31, 2021 15,527 5,621 — 21,148 Net revisions Price revisions (4) 59 — 55 Performance and production revisions (3) (33) (197) — (230) Total net revisions (37) (138) — (175) Extensions, discoveries and other additions Proved developed 235 171 — 406 Proved undeveloped 1,038 984 — 2,022 Total reserve additions 1,273 1,155 — 2,428 Production (1,054) (679) — (1,733) Acquisition of reserves in place — — — — Disposition of reserves in place (43) — — (43) December 31, 2022 15,666 5,959 — 21,625 (1) Other includes properties outside of Appalachia and Haynesville. (2) Includes 158 Bcf, 2 MBbls and 14 MBbls of natural gas, oil and NGL proved developed reserves, respectively, that were previously presented as “Extensions, discoveries and other additions” which have been reclassified to “Performance and production revisions” to conform with current year presentation for infill reserves. Includes 997 Bcf, 13 MBbls and 112 MBbls of natural gas, oil and NGL proved undeveloped reserves, respectively, that were previously presented as “Extensions, discoveries and other additions” which have been reclassified to “Performance and production revisions” to conform with current year presentation for infill reserves. (3) Includes Appalachia reserves with positive performance revisions of 381 Bcf, additions associated with infill development of 577 Bcf, and downward revisions from changes in development plans of 991 Bcf. Includes Haynesville reserves with positive performance revisions of 136 Bcf and downward revisions from changes in development plans of 333 Bcf. As of December 31, 2022, the Company had no proved undeveloped reserves that had a negative present value on a 10% discounted basis. The Company’s December 31, 2021 reserves included no proved undeveloped reserves that had a negative present value on a 10% discounted basis. The Company’s December 31, 2020 proved reserves included 2,437 Bcfe of proved undeveloped reserves from 138 locations that had a positive present value on an undiscounted basis in compliance with proved reserve requirements, but that have a negative $207 million present value when discounted at 10%. The Company has no reserves from synthetic gas, synthetic oil or nonrenewable natural resources intended to be upgraded into synthetic gas or oil. The Company used standard engineering and geoscience methods, or a combination of methodologies in determining estimates of material properties, including performance and test date analysis, offset statistical analogy of performance data, volumetric evaluation, including analysis of petrophysical parameters (including porosity, net pay, fluid saturations (i.e., water, oil and gas) and permeability) in combination with estimated reservoir parameters (including reservoir temperature and pressure, formation depth and formation volume factors), geological analysis, including structure and isopach maps and seismic analysis, including review of 2-D and 3-D data to ascertain faults, closure and other factors. Standardized Measure of Discounted Future Net Cash Flows The following standardized measure of discounted future net cash flows relating to proved natural gas, oil and NGL reserves as of December 31, 2022, 2021 and 2020 are calculated after income taxes, discounted using a 10% annual discount rate and do not purport to present the fair market value of the Company’s proved gas, oil and NGL reserves: (in millions) 2022 2021 2020 Future cash inflows $ 132,037 $ 75,314 $ 17,997 Future production costs (29,632) (23,235) (11,969) Future development costs (1) (7,458) (6,032) (1,924) Future income tax expense (19,323) (8,135) — Future net cash flows 75,624 37,912 4,104 10% annual discount for estimated timing of cash flows (38,036) (19,181) (2,257) Standardized measure of discounted future net cash flows $ 37,588 $ 18,731 $ 1,847 (1) Includes abandonment costs. Under the standardized measure, future cash inflows were estimated by applying an average price from the first day of each month from the previous 12 months, adjusted for known contractual changes, to the estimated future production of year-end proved reserves. Prices used for the standardized measure above were as follows: 2022 2021 2020 Natural gas (per MMBtu) $ 6.36 $ 3.60 $ 1.98 Oil (per Bbl) 93.67 66.56 39.57 NGLs (per Bbl) 34.35 28.65 10.27 Future cash inflows were reduced by estimated future production and development costs based on year-end costs to determine pre-tax cash inflows. Future income taxes were computed by applying the year-end statutory rate to the excess of pre-tax cash inflows over the Company’s tax basis in the associated proved gas and oil properties after giving effect to permanent differences and tax credits. Following is an analysis of changes in the standardized measure during 2022, 2021 and 2020: (in millions) 2022 2021 2020 Standardized measure, beginning of year $ 18,731 $ 1,847 $ 3,700 Sales and transfers of natural gas and oil produced, net of production costs (8,611) (3,332) (478) Net changes in prices and production costs 23,198 10,417 (2,720) Extensions, discoveries, and other additions, net of future production and development costs 4,976 3,183 81 Acquisition of reserves in place 1 6,499 443 Sales of reserves in place (49) (1) — Revisions of previous quantity estimates (400) 596 (987) Net change in income taxes (5,158) (3,689) 35 Changes in estimated future development costs (709) 137 1,241 Previously estimated development costs incurred during the year 1,208 419 624 Changes in production rates (timing) and other 2,159 2,470 (466) Accretion of discount 2,242 185 374 Standardized measure, end of year $ 37,588 $ 18,731 $ 1,847 |