Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2022 | Jul. 29, 2022 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 1-13726 | |
Entity Registrant Name | CHESAPEAKE ENERGY CORPORATION | |
Entity Incorporation, State or Country Code | OK | |
Entity Tax Identification Number | 73-1395733 | |
Entity Address, Address Line One | 6100 North Western Avenue, | |
Entity Address, City or Town | Oklahoma City, | |
Entity Address, State or Province | OK | |
Entity Address, Postal Zip Code | 73118 | |
City Area Code | (405) | |
Local Phone Number | 848-8000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 120,848,720 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0000895126 | |
Current Fiscal Year End Date | --12-31 | |
Class A Warrants to purchase Common Stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Class A Warrants to purchase Common Stock | |
Trading Symbol | CHKEW | |
Security Exchange Name | NASDAQ | |
Class B Warrants to purchase Common Stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Class B Warrants to purchase Common Stock | |
Trading Symbol | CHKEZ | |
Security Exchange Name | NASDAQ | |
Class C Warrants to purchase Common Stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Class C Warrants to purchase Common Stock | |
Trading Symbol | CHKEL | |
Security Exchange Name | NASDAQ | |
Common Stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | CHK | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 17 | $ 905 |
Restricted cash | 9 | 9 |
Accounts receivable, net | 1,804 | 1,115 |
Short-term derivative assets | 2 | 5 |
Other current assets | 178 | 69 |
Total current assets | 2,010 | 2,103 |
Natural gas and oil properties, successful efforts method | ||
Proved natural gas and oil properties | 10,816 | 7,682 |
Unproved properties | 2,211 | 1,530 |
Other property and equipment | 498 | 495 |
Total property and equipment | 13,525 | 9,707 |
Less: accumulated depreciation, depletion and amortization | (1,747) | (908) |
Property and equipment held for sale, net | 5 | 3 |
Total property and equipment, net | 11,783 | 8,802 |
Long-term derivative assets | 13 | 0 |
Other long-term assets | 93 | 104 |
Total assets | 13,899 | 11,009 |
Current liabilities: | ||
Accounts payable | 414 | 308 |
Accrued interest | 38 | 38 |
Short-term derivative liabilities | 2,059 | 899 |
Other current liabilities | 1,730 | 1,202 |
Total current liabilities | 4,241 | 2,447 |
Long-term debt, net | 3,046 | 2,278 |
Long-term derivative liabilities | 446 | 249 |
Asset retirement obligations, net of current portion | 337 | 349 |
Other long-term liabilities | 21 | 15 |
Total liabilities | 8,091 | 5,338 |
Contingencies and commitments (Note 7) | ||
Stockholders' equity: | ||
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,590,256 and 117,917,349 shares issued | 1 | 1 |
Successor additional paid-in capital | 5,619 | 4,845 |
Retained earnings | 188 | 825 |
Total stockholders' equity | 5,808 | 5,671 |
Total liabilities and stockholders' equity | $ 13,899 | $ 11,009 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 450,000,000 | 450,000,000 |
Common stock, shares issued (in shares) | 121,590,256 | 117,917,349 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Revenues and other: | |||||
Natural gas and oil derivatives | $ (382) | $ (514) | $ (740) | $ (694) | $ (2,639) |
Gains on sales of assets | 5 | 21 | 2 | 6 | 300 |
Total revenues and other | 260 | 3,520 | 693 | 1,573 | 4,455 |
Operating expenses: | |||||
Production | 32 | 118 | 74 | 114 | 228 |
Gathering, processing and transportation | 102 | 274 | 211 | 322 | 516 |
Severance and ad valorem taxes | 18 | 57 | 41 | 65 | 120 |
Exploration | 2 | 7 | 1 | 2 | 12 |
General and administrative | 21 | 36 | 24 | 39 | 62 |
Separation and other termination costs | 22 | 0 | 11 | 11 | 0 |
Depreciation, depletion and amortization | 72 | 451 | 229 | 351 | 860 |
Impairments | 0 | 0 | 1 | 1 | 0 |
Other operating expense (income), net | (12) | 8 | (4) | (2) | 31 |
Total operating expenses | 494 | 2,179 | 1,123 | 1,718 | 3,908 |
Income (loss) from operations | (234) | 1,341 | (430) | (145) | 547 |
Other income (expense): | |||||
Interest expense | (11) | (36) | (18) | (30) | (68) |
Other income | 2 | 9 | 9 | 31 | 25 |
Reorganization items, net | 5,569 | 0 | 0 | ||
Total other income (expense) | 5,560 | (27) | (9) | 1 | (43) |
Income (loss) before income taxes | 5,326 | 1,314 | (439) | (144) | 504 |
Income tax expense | (57) | 77 | 0 | 0 | 31 |
Net income (loss) available to common stockholders | 5,383 | 1,237 | (439) | (144) | 473 |
Net income (loss) available to common stockholders | $ 5,383 | $ 1,237 | $ (439) | $ (144) | $ 473 |
Earnings (loss) per common share: | |||||
Basic (in dollars per share) | $ 550.35 | $ 9.75 | $ (4.48) | $ (1.47) | $ 3.82 |
Diluted (in dollars per share) | $ 534.51 | $ 8.27 | $ (4.48) | $ (1.47) | $ 3.25 |
Weighted average common shares outstanding (in thousands): | |||||
Basic (in shares) | 9,781 | 126,814 | 97,931 | 97,922 | 123,826 |
Diluted (in shares) | 10,071 | 149,532 | 97,931 | 97,922 | 145,534 |
Natural gas, oil and NGL | |||||
Revenues and other: | |||||
Revenue | $ 398 | $ 2,790 | $ 892 | $ 1,445 | $ 4,704 |
Marketing | |||||
Revenues and other: | |||||
Revenue | 239 | 1,223 | 539 | 816 | 2,090 |
Operating expenses: | |||||
Expense | $ 237 | $ 1,228 | $ 535 | $ 815 | $ 2,079 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | |||||
Net income (loss) | $ 5,383 | $ 1,237 | $ (439) | $ (144) | $ 473 |
Other comprehensive income, net of income tax: | |||||
Reclassification of losses on settled derivative instruments | 3 | 0 | 0 | 0 | 0 |
Other comprehensive income | 3 | 0 | 0 | 0 | 0 |
Comprehensive income (loss) | $ 5,386 | $ 1,237 | $ (439) | $ (144) | $ 473 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 1 Months Ended | 5 Months Ended | 6 Months Ended |
Feb. 09, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 5,383 | $ (144) | $ 473 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation, depletion and amortization | 72 | 351 | 860 |
Deferred income tax benefit | (57) | 0 | 0 |
Derivative losses, net | 382 | 694 | 2,639 |
Cash payments on derivative settlements, net | (17) | (145) | (1,611) |
Share-based compensation | 3 | 3 | 10 |
Gains on sales of assets | (5) | (6) | (300) |
Impairments | 0 | 1 | 0 |
Non-cash reorganization items, net | (6,680) | 0 | 0 |
Exploration | 2 | 1 | 10 |
Other | 45 | (3) | 5 |
Changes in assets and liabilities | 851 | 51 | (324) |
Net cash provided by (used in) operating activities | (21) | 803 | 1,762 |
Cash flows from investing activities: | |||
Capital expenditures | (66) | (226) | (759) |
Business combination, net | 0 | 0 | (2,006) |
Proceeds from divestitures of property and equipment | 0 | 6 | 403 |
Net cash used in investing activities | (66) | (220) | (2,362) |
Cash flows from financing activities: | |||
Proceeds from Exit Credit Facility - Tranche A Loans | 0 | 30 | 4,550 |
Payments on Exit Credit Facility - Tranche A Loans | (479) | (80) | (3,775) |
Payments on DIP Facility borrowings | (1,179) | 0 | 0 |
Proceeds from issuance of senior notes, net | 1,000 | 0 | 0 |
Proceeds from issuance of common stock | 600 | 0 | 0 |
Proceeds from warrant exercise | 0 | 2 | 3 |
Debt issuance and other financing costs | (8) | (3) | 0 |
Cash paid to repurchase and retire common stock | 0 | 0 | (558) |
Cash paid for common stock dividends | 0 | (34) | (508) |
Other | 0 | (2) | 0 |
Net cash used in financing activities | (66) | (87) | (288) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (153) | 496 | (888) |
Cash, cash equivalents and restricted cash, beginning of period | 279 | 126 | 914 |
Cash, cash equivalents and restricted cash, end of period | 126 | 622 | 26 |
Cash and cash equivalents | 40 | 612 | 17 |
Restricted cash | 86 | 10 | 9 |
Total cash, cash equivalents and restricted cash | 126 | 622 | 26 |
Supplemental cash flow information: | |||
Cash paid for reorganization items, net | 66 | 65 | 0 |
Interest paid, net of capitalized interest | 13 | 3 | 69 |
Income taxes paid, net of refunds received | 0 | (3) | 113 |
Supplemental disclosure of significant non-cash investing and financing activities: | |||
Put option premium on equity backstop agreement | 60 | 0 | 0 |
Common stock issued for business combination | 0 | 0 | 764 |
Operating lease obligations recognized | 0 | 0 | 25 |
Change in accrued drilling and completion costs | |||
Supplemental disclosure of significant non-cash investing and financing activities: | |||
Change in accrued drilling and completion costs | $ (5) | $ 14 | $ 106 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Class A Warrants | Class B Warrants | Class C Warrants | Preferred Stock | Common Stock | Additional Paid-in Capital | Additional Paid-in Capital Class A Warrants | Additional Paid-in Capital Class B Warrants | Additional Paid-in Capital Class C Warrants | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income |
Preferred stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2020 | 5,563,358 | |||||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 9,780,547 | |||||||||||
Beginning balance at Dec. 31, 2020 | $ (5,341) | $ 1,631 | $ 0 | $ 16,937 | $ (23,954) | $ 45 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock for Marcellus Acquisition | 0 | |||||||||||
Share-based compensation (in shares) | 67 | |||||||||||
Share-based compensation | 3 | 3 | ||||||||||
Hedging activity | 3 | 3 | ||||||||||
Net income (loss) | 5,383 | 5,383 | ||||||||||
Cancellation of Predecessor Equity (in shares) | (5,563,358) | (9,780,614) | ||||||||||
Cancellation of Predecessor Equity | (48) | $ (1,631) | (16,940) | 18,571 | (48) | |||||||
Issuance of Successor common stock (in shares) | 97,907,081 | |||||||||||
Issuance of Successor common stock | 3,331 | $ 1 | 3,330 | |||||||||
Issuance of common stock for warrant exercise | $ 93 | $ 94 | $ 68 | $ 93 | $ 94 | $ 68 | ||||||
Preferred stock, shares outstanding, ending balance (in shares) at Feb. 09, 2021 | 0 | |||||||||||
Ending balance (in shares) at Feb. 09, 2021 | 97,907,081 | |||||||||||
Ending balance at Feb. 09, 2021 | 3,586 | $ 0 | $ 1 | 3,585 | 0 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income (loss) | 295 | 295 | ||||||||||
Preferred stock, shares outstanding, ending balance (in shares) at Mar. 31, 2021 | 0 | |||||||||||
Ending balance (in shares) at Mar. 31, 2021 | 97,907,081 | |||||||||||
Ending balance at Mar. 31, 2021 | 3,881 | $ 0 | $ 1 | 3,585 | 295 | 0 | ||||||
Preferred stock, shares outstanding, beginning balance (in shares) at Feb. 09, 2021 | 0 | |||||||||||
Beginning balance (in shares) at Feb. 09, 2021 | 97,907,081 | |||||||||||
Beginning balance at Feb. 09, 2021 | 3,586 | $ 0 | $ 1 | 3,585 | 0 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock for Marcellus Acquisition | 0 | |||||||||||
Hedging activity | 0 | |||||||||||
Preferred stock, shares outstanding, ending balance (in shares) at Jun. 30, 2021 | 0 | |||||||||||
Ending balance (in shares) at Jun. 30, 2021 | 97,954,037 | |||||||||||
Ending balance at Jun. 30, 2021 | 3,413 | $ 0 | $ 1 | 3,590 | (178) | 0 | ||||||
Preferred stock, shares outstanding, beginning balance (in shares) at Mar. 31, 2021 | 0 | |||||||||||
Beginning balance (in shares) at Mar. 31, 2021 | 97,907,081 | |||||||||||
Beginning balance at Mar. 31, 2021 | 3,881 | $ 0 | $ 1 | 3,585 | 295 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Share-based compensation (in shares) | 921 | |||||||||||
Share-based compensation | 3 | 3 | ||||||||||
Hedging activity | 0 | |||||||||||
Issuance of common stock for warrant exercise (in shares) | 46,035 | |||||||||||
Issuance of common stock for warrant exercise | 2 | 2 | ||||||||||
Net income (loss) | (439) | (439) | ||||||||||
Dividends on common stock | (34) | (34) | ||||||||||
Preferred stock, shares outstanding, ending balance (in shares) at Jun. 30, 2021 | 0 | |||||||||||
Ending balance (in shares) at Jun. 30, 2021 | 97,954,037 | |||||||||||
Ending balance at Jun. 30, 2021 | 3,413 | $ 0 | $ 1 | 3,590 | (178) | 0 | ||||||
Preferred stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2021 | 0 | |||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 117,917,349 | |||||||||||
Beginning balance at Dec. 31, 2021 | 5,671 | $ 0 | $ 1 | 4,845 | 825 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock for Marcellus Acquisition (in shares) | 9,442,185 | |||||||||||
Issuance of common stock for Marcellus Acquisition | 764 | 764 | ||||||||||
Share-based compensation (in shares) | 23,169 | |||||||||||
Share-based compensation | 5 | 5 | ||||||||||
Issuance of common stock for warrant exercise (in shares) | 669,669 | |||||||||||
Issuance of common stock for warrant exercise | 1 | 1 | ||||||||||
Repurchase and retirement of common stock (in shares) | (1,000,000) | |||||||||||
Repurchase and retirement of common stock | (83) | (83) | ||||||||||
Net income (loss) | (764) | (764) | ||||||||||
Dividends on common stock | (211) | (211) | ||||||||||
Preferred stock, shares outstanding, ending balance (in shares) at Mar. 31, 2022 | 0 | |||||||||||
Ending balance (in shares) at Mar. 31, 2022 | 127,052,372 | |||||||||||
Ending balance at Mar. 31, 2022 | 5,383 | $ 0 | $ 1 | 5,615 | (233) | 0 | ||||||
Preferred stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2021 | 0 | |||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 117,917,349 | |||||||||||
Beginning balance at Dec. 31, 2021 | 5,671 | $ 0 | $ 1 | 4,845 | 825 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock for Marcellus Acquisition | 764 | |||||||||||
Hedging activity | 0 | |||||||||||
Preferred stock, shares outstanding, ending balance (in shares) at Jun. 30, 2022 | 0 | |||||||||||
Ending balance (in shares) at Jun. 30, 2022 | 121,590,256 | |||||||||||
Ending balance at Jun. 30, 2022 | 5,808 | $ 0 | $ 1 | 5,619 | 188 | 0 | ||||||
Preferred stock, shares outstanding, beginning balance (in shares) at Mar. 31, 2022 | 0 | |||||||||||
Beginning balance (in shares) at Mar. 31, 2022 | 127,052,372 | |||||||||||
Beginning balance at Mar. 31, 2022 | 5,383 | $ 0 | $ 1 | 5,615 | (233) | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Share-based compensation (in shares) | 146,054 | |||||||||||
Share-based compensation | 3 | 3 | ||||||||||
Hedging activity | 0 | |||||||||||
Issuance of common stock for warrant exercise (in shares) | 166,606 | |||||||||||
Issuance of common stock for warrant exercise | 1 | 1 | ||||||||||
Issuance of reserved common stock and warrants (in shares) | 36,951 | |||||||||||
Issuance of reserved common stock and warrants | 0 | |||||||||||
Repurchase and retirement of common stock (in shares) | (5,811,727) | |||||||||||
Repurchase and retirement of common stock | (515) | (515) | ||||||||||
Net income (loss) | 1,237 | 1,237 | ||||||||||
Dividends on common stock | (301) | (301) | ||||||||||
Preferred stock, shares outstanding, ending balance (in shares) at Jun. 30, 2022 | 0 | |||||||||||
Ending balance (in shares) at Jun. 30, 2022 | 121,590,256 | |||||||||||
Ending balance at Jun. 30, 2022 | $ 5,808 | $ 0 | $ 1 | $ 5,619 | $ 188 | $ 0 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | 1. Basis of Presentation and Summary of Significant Accounting Policies Description of Company Chesapeake Energy Corporation (“Chesapeake”, “we”, “our”, “us” or the “Company”) is a natural gas and oil exploration and production company engaged in the acquisition, exploration and development of properties for the production of natural gas, oil and NGL from underground reservoirs. Our operations are located onshore in the United States. As discussed in Note 2 below, we filed the Chapter 11 Cases on the Petition Date and subsequently operated as a debtor-in-possession, in accordance with applicable provisions of the Bankruptcy Code, until emergence on February 9, 2021. To facilitate our financial statement presentations, we refer to the post-emergence reorganized Company in these condensed consolidated financial statements and footnotes as the “Successor” for periods subsequent to February 9, 2021, and to the pre-emergence Company as “Predecessor” for periods on or prior to February 9, 2021. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Chesapeake were prepared in accordance with GAAP and the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures have been condensed or omitted. This Quarterly Report on Form 10-Q (this “Form 10-Q”) relates to our financial position as of June 30, 2022 and December 31, 2021, the three months ended June 30, 2022 (“2022 Successor Quarter”), the six months ended June 30, 2022 (“2022 Successor Period”), the three months ended June 30, 2021 (“2021 Successor Quarter”), the period of February 10, 2021 through June 30, 2021 (“2021 Successor Period”) and the period of January 1, 2021 through February 9, 2021 (“2021 Predecessor Period”). Our annual report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”) should be read in conjunction with this Form 10-Q. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of our condensed consolidated financial statements and accompanying notes and include the accounts of our direct and indirect wholly owned subsidiaries and entities in which we have a controlling financial interest. Intercompany accounts and balances have been eliminated. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. Segments Operating segments are defined as components of an enterprise that engage in activities from which it may earn revenues and incur expenses for which separate operational financial information is available and is regularly evaluated by the chief operating decision maker for the purpose of allocating an enterprise’s resources and assessing its operating performance. We have concluded that we have only one reportable operating segment due to the similar nature of the exploration and production business across Chesapeake and its consolidated subsidiaries and the fact that our marketing activities are ancillary to our operations. Restricted Cash As of June 30, 2022, we had restricted cash of $9 million. The restricted funds are maintained primarily to pay certain convenience class unsecured claims following our emergence from bankruptcy. Voluntary Filing under Chapter 11 Bankruptcy On the Petition Date, the Debtors filed the Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court. On June 29, 2020, the Bankruptcy Court entered an order authorizing the joint administration of the Chapter 11 Cases under the caption In re Chesapeake Energy Corporation , Case No. 20-33233. Subsidiaries with noncontrolling interests, consolidated variable interest entities and certain de minimis subsidiaries (collectively, the “Non-Filing Entities”) were not part of the bankruptcy filing. The Non-Filing Entities continued to operate in the ordinary course of business. The Bankruptcy Court confirmed the Plan and entered the Confirmation Order on January 16, 2021. The Debtors emerged from the Chapter 11 Cases on the Effective Date. The Company’s bankruptcy proceedings and related matters have been summarized below. During the pendency of the Chapter 11 Cases, we operated our business as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code. The Bankruptcy Court granted the first day relief we requested that was designed primarily to mitigate the impact of the Chapter 11 Cases on our operations, vendors, suppliers, customers and employees. As a result, we were able to conduct normal business activities and pay all associated obligations for the period following the Petition Date and were also authorized to pay mineral interest owner royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided prior to the Petition Date. During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of business required the prior approval of the Bankruptcy Court. Subject to certain specific exceptions under the Bankruptcy Code, the filing of the Chapter 11 Cases automatically stayed all judicial or administrative actions against us and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to pre-petition claims. Absent an order from the Bankruptcy Court, substantially all of the Debtors’ pre-petition liabilities were subject to compromise and discharge under the Bankruptcy Code. The automatic stay was lifted on the Effective Date. We have applied ASC 852, Reorganizations, in preparing the unaudited condensed consolidated financial statements for the period ended February 9, 2021. ASC 852 requires that the financial statements, for periods subsequent to the Chapter 11 Cases, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses, realized gains and losses and provisions for losses that were realized or incurred during the bankruptcy proceedings, including gain on settlement of liabilities subject to compromise, losses related to executory contracts that have been approved for rejection by the Bankruptcy Court, and unamortized debt issuance costs, premiums and discounts associated with debt classified as liabilities subject to compromise, were recorded as reorganization items, net. See Note 3 for more information regarding reorganization items. |
Chapter 11 Emergence
Chapter 11 Emergence | 6 Months Ended |
Jun. 30, 2022 | |
Reorganizations [Abstract] | |
Chapter 11 Emergence | 2. Chapter 11 Emergence As described in Note 1 , on the Petition Date, the Debtors filed the Chapter 11 Cases and on September 11, 2020, the Debtors filed the Plan, which was subsequently amended, and entered the Confirmation Order on January 16, 2021. The Debtors then emerged from bankruptcy upon effectiveness of the Plan on the Effective Date. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. Plan of Reorganization In accordance with the Plan confirmed by the Bankruptcy Court, the following significant transactions occurred upon the Company’s emergence from bankruptcy on February 9, 2021: • On the Effective Date, we issued 97,907,081 shares of New Common Stock, reserved 2,092,918 shares of New Common Stock for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims and reserved 37,174,210 shares of New Common Stock for issuance upon exercise of the Warrants, which were the result of the transactions described below. We also entered into a registration rights agreement, warrant agreements and amended our articles of incorporation and bylaws for the authorization of the New Common Stock and to provide registration rights thereunder, among other corporate governance actions. See Note 11 for further discussion of our post-emergence equity. • Each holder of an equity interest in the Predecessor, including Predecessor’s common and preferred stock, had such interest canceled, released, and extinguished without any distribution. • Each holder of obligations under the pre-petition revolving credit facility received, at such holder's prior determined allocation, its pro rata share of either Tranche A Loans or Tranche B Loans, on a dollar for dollar basis. • Each holder of obligations under the FLLO Term Loan Facility received its pro rata share of 23,022,420 shares of New Common Stock. • Each holder of an Allowed Second Lien Notes Claim received its pro rata share of 3,635,118 shares of New Common Stock, 11,111,111 Class A Warrants to purchase 11,111,111 shares of New Common Stock, 12,345,679 Class B Warrants to purchase 12,345,679 shares of New Common Stock, and 6,858,710 Class C Warrants to purchase 6,858,710 shares of New Common Stock. • Each holder of an Allowed Unsecured Notes Claim received its pro rata share of 1,311,089 shares of New Common Stock and 2,473,757 Class C Warrants to purchase 2,473,757 shares of New Common Stock. • Each holder of an Allowed General Unsecured Claim received its pro rata share of 231,112 shares of New Common Stock and 436,060 Class C Warrants to purchase 436,060 shares of New Common Stock; provided that to the extent such Allowed General Unsecured Claim is a Convenience Claim, such holder instead received its pro rata share of $10 million, which pro rata share shall not exceed five percent of such Convenience Claim. • Participants in the Rights Offering extending to the applicable classes under the Plan received 62,927,320 shares of New Common Stock. • In connection with the Rights Offering described above, the Backstop Parties under the Backstop Commitment Agreement received 6,337,031 shares of New Common Stock in respect to the Put Option Premium, and 442,991 shares of New Common Stock were issued in connection with the backstop obligation thereunder to purchase unsubscribed shares of the New Common Stock. • 2,092,918 shares of New Common Stock and 3,948,893 Class C Warrants were reserved for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims. The reserved New Common Stock and Class C Warrants will be issued on a pro rata basis upon the determination of the allowed portion of all disputed General Unsecured Claims and Unsecured Notes Claims. • The 2021 Long Term Incentive Plan (the “LTIP”) was approved with a share reserve equal to 6,800,000 shares of New Common Stock. • Each holder of an Allowed Other Secured Claim will receive, at the Company's option and in consultation with the Required Consenting Stakeholders (as defined in the Plan): (a) payment in full in cash; (b) the collateral securing its secured claim; (c) reinstatement of its secured claim; or (d) such other treatment that renders its secured claim unimpaired in accordance with Section 1124 of the Bankruptcy Code. • Each holder of an Allowed Other Priority Claim will receive cash up to the allowed amount of its claim. Additionally, pursuant to the Plan confirmed by the Bankruptcy Court, the Company’s post-emergence Board of Directors is comprised of seven directors, including the Company’s Chief Executive Officer, Domenic J. Dell’Osso Jr., the Company’s Executive Chairman, Michael Wichterich, and five non-employee directors, Timothy S. Duncan, Benjamin C. Duster, IV, Sarah Emerson, Matthew M. Gallagher and Brian Steck. 3. Fresh Start Accounting Fresh Start Accounting In connection with our emergence from bankruptcy and in accordance with ASC 852, we qualified for and applied fresh start accounting on the Effective Date. We were required to apply fresh start accounting because (i) the holders of existing voting shares of the Company prior to its emergence received less than 50% of the voting shares of the Company outstanding following its emergence from bankruptcy and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan of approximately $6.8 billion was less than the post-petition liabilities and allowed claims of $13.2 billion. In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair value in conformity with FASB ASC Topic 820 - Fair Value Measurements and FASB ASC Topic 805 - Business Combinations . Accordingly, the consolidated financial statements after February 9, 2021 are not comparable with the consolidated financial statements as of or prior to that date. The Effective Date fair values of the Successor’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor. Reorganization Value Reorganization value is derived from an estimate of enterprise value, or fair value of the Company’s interest-bearing debt and stockholders’ equity. Under ASC 852, reorganization value generally approximates fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of a restructuring. As set forth in the disclosure statement, amended for updated pricing, and approved by the Bankruptcy Court, the enterprise value of the Successor was estimated to be between $3.5 billion and $4.9 billion. With the assistance of third-party valuation advisors, we determined the enterprise value and corresponding implied equity value of the Successor using various valuation approaches and methods, including: (i) income approach using a calculation of present value of future cash flows based on our financial projections, (ii) the market approach using selling prices of similar assets and (iii) the cost approach. For GAAP purposes, the Company valued the Successor’s individual assets, liabilities and equity instruments and determined an estimate of the enterprise value within the estimated range. Management concluded that the best estimate of enterprise value was $4.85 billion. Specific valuation approaches and key assumptions used to arrive at reorganization value, and the value of discrete assets and liabilities resulting from the application of fresh start accounting, are described below in greater detail within the valuation process. The enterprise value and corresponding implied equity value are dependent upon achieving the future financial results set forth in our valuation using an asset-based methodology of estimated proved reserves, undeveloped properties, and other financial information, considerations and projections, applying a combination of the income, cost and market approaches as of the fresh start reporting date of February 9, 2021. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially. The following table reconciles the enterprise value to the implied fair value of the Successor’s equity as of the Effective Date: February 9, 2021 Enterprise Value $ 4,851 Plus: Cash and cash equivalents (a) 48 Less: Fair value of debt (1,313) Successor equity value $ 3,586 ____________________________________________ (a) Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above. The following table reconciles the enterprise value to the reorganization value as of the Effective Date: February 9, 2021 Enterprise Value $ 4,851 Plus: Cash and cash equivalents (a) 48 Plus: Current liabilities 1,582 Plus: Asset retirement obligations (non-current portion) 236 Plus: Other non-current liabilities 97 Reorganization value of Successor assets $ 6,814 ____________________________________________ (a) Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above. Valuation Process The fair values of our natural gas and oil properties, other property and equipment, other long-term assets, long-term debt, asset retirement obligations and warrants were estimated as of the Effective Date. Natural gas and oil properties. The Company’s principal assets are its natural gas and oil properties, which are accounted for under the successful efforts accounting method. The Company determined the fair value of its natural gas and oil properties based on the discounted future net cash flows expected to be generated from these assets. Discounted cash flow models by operating area were prepared using the estimated future revenues and operating costs for all proved developed properties and undeveloped properties comprising the proved and unproved reserves. Significant inputs associated with the calculation of discounted future net cash flows include estimates of (i) recoverable reserves, (ii) production rates, (iii) future operating and development costs, (iv) future commodity prices escalated by an inflationary rate after five years, adjusted for differentials, and (v) a market-based weighted average cost of capital by operating area. The Company utilized NYMEX strip pricing, adjusted for differentials, to value the reserves. The NYMEX strip pricing inputs used are classified as Level 1 fair value assumptions and all other inputs are classified as Level 3 fair value assumptions. The discount rates utilized were derived using a weighted average cost of capital computation, which included an estimated cost of debt and equity for market participants with similar geographies and asset development type by operating area. Other property and equipment. The fair value of other property and equipment such as buildings, land, computer equipment, and other equipment was determined using replacement cost method under the cost approach which considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and the ability of those assets to generate cash flow. Long-term debt. A market approach, based upon quotes from major financial institutions, was used to measure the fair value of the $500 million aggregate principal amount of 5.50% Senior Notes due 2026 (the “2026 Notes”) and $500 million aggregate principal amount of 5.875% Senior Notes due 2029 (the “2029 Notes” and, together with the 2026 Notes, the “Notes”). The carrying value of borrowings under our Exit Credit Facility approximated fair value as the terms and interest rates are based on prevailing market rates. Asset retirement obligations. The fair value of the Company’s asset retirement obligations was revalued based upon estimated current reclamation costs for our assets with reclamation obligations, an appropriate long-term inflation adjustment, and our revised credit adjusted risk-free rate. The credit adjusted risk-free rate was based on an evaluation of an interest rate that equates to a risk-free interest rate adjusted for the effect of our credit standing. Warrants. The fair values of the Warrants issued upon the Effective Date were estimated using a Black-Scholes model, a commonly used option-pricing model. The Black-Scholes model was used to estimate the fair value of the warrants with an implied stock price of $20.52; initial exercise price per share of $27.63, $32.13 and $36.18 for Class A, Class B and Class C Warrants, respectively; expected volatility of 58% estimated using volatilities of similar entities; risk-free rate using a 5-year Treasury bond rate; and an expected annual dividend yield which was estimated to be zero. Condensed Consolidated Balance Sheet The following condensed consolidated balance sheet is as of February 9, 2021. This condensed consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Effective Date. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities and warrants. Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Assets Current assets: Cash and cash equivalents $ 243 $ (203) (a) $ — $ 40 Restricted cash — 86 (b) — 86 Accounts receivable, net 861 (18) (c) — 843 Short-term derivative assets — — — — Other current assets 66 (5) (d) — 61 Total current assets 1,170 (140) — 1,030 Property and equipment: Natural gas and oil properties, successful efforts method Proved natural gas and oil properties 25,794 — (21,108) (o) 4,686 Unproved properties 1,546 — (1,063) (o) 483 Other property and equipment 1,755 — (1,256) (o) 499 Total property and equipment 29,095 — (23,427) (o) 5,668 Less: accumulated depreciation, depletion and amortization (23,877) — 23,877 (o) — Property and equipment held for sale, net 9 — (7) (o) 2 Total property and equipment, net 5,227 — 443 (o) 5,670 Other long-term assets 198 — (84) (p) 114 Total assets $ 6,595 $ (140) $ 359 $ 6,814 Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Liabilities and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 391 $ 24 (e) $ — $ 415 Current maturities of long-term debt, net 1,929 (1,929) (f) — — Accrued interest 4 (4) (g) — — Short-term derivative liabilities 398 — — 398 Other current liabilities 645 124 (h) — 769 Total current liabilities 3,367 (1,785) — 1,582 Long-term debt, net — 1,261 (i) 52 (q) 1,313 Long-term derivative liabilities 90 — — 90 Asset retirement obligations, net of current portion 139 — 97 (r) 236 Other long-term liabilities 5 2 (j) — 7 Liabilities subject to compromise 9,574 (9,574) (k) — — Total liabilities 13,175 (10,096) 149 3,228 Contingencies and commitments ( Note 7 ) Stockholders’ equity (deficit): Predecessor preferred stock 1,631 (1,631) (l) — — Predecessor common stock — — — — Predecessor additional paid-in capital 16,940 (16,940) (l) — — Successor common stock — 1 (m) — 1 Successor additional paid-in-capital — 3,585 (m) — 3,585 Accumulated other comprehensive income 48 — (48) (s) — Accumulated deficit (25,199) 24,941 (n) 258 (t) — Total stockholders’ equity (deficit) (6,580) 9,956 210 3,586 Total liabilities and stockholders’ equity (deficit) $ 6,595 $ (140) $ 359 $ 6,814 Reorganization Adjustments (a) The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan: Sources: Proceeds from issuance of the Notes $ 1,000 Proceeds from Rights Offering 600 Proceeds from refunds of interest deposit for the Notes 5 Total sources of cash $ 1,605 Uses: Payment of roll-up of DIP Facility balance $ (1,179) Payment of Exit Credit Facility - Tranche A Loan (479) Transfers to restricted cash for professional fee reserve (76) Transfers to restricted cash for convenience claim distribution reserve (10) Payment of professional fees (31) Payment of DIP Facility interest and fees (12) Payment of FLLO alternative transaction fee (12) Payment of the Notes fees funded out of escrow (8) Payment of RBL interest and fees (1) Total uses of cash $ (1,808) Net cash used $ (203) (b) Represents the transfer of funds to a restricted cash account for purposes of funding the professional fee reserve and the convenience claim distribution reserve. (c) Reflects the removal of an insurance receivable associated with a discharged legal liability. (d) Reflects the collection of an interest deposit for the senior unsecured notes. (e) Changes in accounts payable include the following: Accrual of professional service provider success fees $ 38 Accrual of convenience claim distribution reserve 10 Accrual of professional service provider fees 5 Reinstatement of accounts payable from liabilities subject to compromise 2 Payment of professional fees (31) Net impact to accounts payable $ 24 (f) Reflects payment of the pre-petition credit facility for $1.179 billion and transfer of the Tranche A and Tranche B Loans to long-term debt for $750 million. (g) Reflect payments of accrued interest and fees on the DIP Facility. (h) Changes in other current liabilities include the following: Reinstatement of other current liabilities from liabilities subject to compromise $ 191 Accrual of the Notes fees 2 Settlement of Put Option Premium through issuance of Successor Common Stock (60) Payment of DIP Facility fees (9) Net impact to other current liabilities $ 124 (i) Changes in long-term debt include the following: Issuance of the Notes $ 1,000 Issuance of Tranche A and Tranche B Loans 750 Payments on Tranche A Loans (479) Debt issuance costs for the Notes (10) Net impact to long-term debt, net $ 1,261 (j) Reflects reinstatement of a long-term lease liability. (k) On the Effective Date, liabilities subject to compromise were settled in accordance with the Plan as follows: Liabilities subject to compromise pre-emergence $ 9,574 To be reinstated on the Effective Date: Accounts payable $ (2) Other current liabilities (191) Other long-term liabilities (2) Total liabilities reinstated $ (195) Consideration provided to settle amounts per the Plan or Reorganization: Issuance of Successor common stock associated with the Rights Offering and Backstop Commitment and settlement of the Put Option Premium $ (2,311) Proceeds from issuance of Successor common stock associated with the Rights Offering and Backstop Commitment 600 Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment (783) Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment (124) Issuance of Successor common stock to unsecured note holders (45) Issuance of Successor common stock to general unsecured claims (8) Fair value of Class A Warrants (93) Fair value of Class B Warrants (94) Fair value of Class C Warrants (68) Proceeds to holders of general unsecured claims (10) Total consideration provided to settle amounts per the Plan $ (2,936) Gain on settlement of liabilities subject to compromise $ 6,443 (l) Pursuant to the Plan, as of the Effective Date, all equity interests in Predecessor, including Predecessor’s common and preferred stock, were canceled without any distribution. (m) Reflects the Successor equity including the issuance of 97,907,081 shares of New Common Stock, 11,111,111 shares of Class A Warrants, 12,345,679 shares of Class B Warrants and 9,768,527 shares of Class C Warrants pursuant to the Plan. Issuance of Successor equity associated with the Rights Offering and Backstop Commitment $ 2,371 Issuance of Successor equity to holders of the FLLO Term Loan, incremental to the Rights Offering and Backstop Commitment 783 Issuance of Successor equity to holders of the Second Lien Notes, incremental to the Rights Offering and Backstop Commitment 124 Issuance of Successor equity to holders of the unsecured senior notes 45 Issuance of Successor equity to holders of allowed general unsecured claims 8 Fair value of Class A warrants 93 Fair value of Class B warrants 94 Fair value of Class C warrants 68 Total change in Successor common stock and additional paid-in capital 3,586 Less: par value of Successor common stock (1) Change in Successor additional paid-in capital $ 3,585 (n) Reflects the cumulative net impact of the effects on accumulated deficit as follows: Gain on settlement of liabilities subject to compromise $ 6,443 Accrual of professional service provider success fees (38) Accrual of professional service provider fees (5) Surrender of other receivable (18) Payment of FLLO alternative transaction fee (12) Total reorganization items, net 6,370 Cancellation of predecessor equity 18,571 Net impact on accumulated deficit $ 24,941 Fresh Start Adjustments (o) Reflects fair value adjustments to our (i) proved natural gas and oil properties, (ii) unproved properties, (iii) other property and equipment and (iv) property and equipment held for sale, and the elimination of accumulated depletion, depreciation and amortization. (p) Reflects the fair value adjustment to record historical contracts at their fair values. (q) Reflects the fair value adjustments to the 2026 Notes and 2029 Notes for $22 million and $30 million, respectively. (r) Reflects the adjustment to our asset retirement obligations using assumptions as of the Effective Date, including an inflation factor of 2% and an average credit-adjusted risk-free rate of 5.18%. (s) Reflects the fair value adjustment to eliminate the accumulated other comprehensive income of $9 million related to hedging settlements offset by the elimination of $57 million of income tax effects which has resulted in the recording of an income tax benefit of $57 million. See Note 10 for a discussion of income taxes. (t) Reflects the net cumulative impact of the fresh start adjustments on accumulated deficit as follows: Fresh start adjustments to property and equipment $ 443 Fresh start adjustments to other long-term assets (84) Fresh start adjustments to long-term debt (52) Fresh start adjustments to long-term asset retirement obligations (97) Fresh start adjustments to accumulated other comprehensive income (9) Total fresh start adjustments impacting reorganizations items, net 201 Income tax effects on accumulated other comprehensive income 57 Net impact to accumulated deficit $ 258 Reorganization Items, Net We incurred significant expenses, gains and losses associated with the reorganization, primarily the gain on settlement of liabilities subject to compromise, write-off of unamortized debt issuance costs and related unamortized premiums and discounts, debt and equity financing fees, provision for allowed claims and legal and professional fees incurred subsequent to the Chapter 11 filings for the restructuring process. The accrual for allowed claims primarily represents damages from contract rejections and settlements attributable to the midstream savings requirement as stipulated in the Plan. While the claims reconciliation process is ongoing, we do not believe any existing unresolved claims will result in a material adjustment to the financial statements. The amount of these items, which were incurred in reorganization items, net within our accompanying unaudited condensed consolidated statements of operations, have significantly affected our statements of operations. We did not have any reorganization items, net for the 2022 Successor Quarter, the 2022 Successor Period, the 2021 Successor Quarter or the 2021 Successor Period. The following table summarizes the components in reorganization items, net included in our unaudited condensed consolidated statements of operations: Predecessor Period from January 1, 2021 through February 9, 2021 Gains on the settlement of liabilities subject to compromise $ 6,443 Accrual for allowed claims (1,002) Gain on fresh start adjustments 201 Gain from release of commitment liabilities 55 Professional service provider fees and other (60) Success fees for professional service providers (38) Surrender of other receivable (18) FLLO alternative transaction fee (12) Total reorganization items, net $ 5,569 |
Fresh Start Accounting
Fresh Start Accounting | 6 Months Ended |
Jun. 30, 2022 | |
Reorganizations [Abstract] | |
Fresh Start Accounting | 2. Chapter 11 Emergence As described in Note 1 , on the Petition Date, the Debtors filed the Chapter 11 Cases and on September 11, 2020, the Debtors filed the Plan, which was subsequently amended, and entered the Confirmation Order on January 16, 2021. The Debtors then emerged from bankruptcy upon effectiveness of the Plan on the Effective Date. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. Plan of Reorganization In accordance with the Plan confirmed by the Bankruptcy Court, the following significant transactions occurred upon the Company’s emergence from bankruptcy on February 9, 2021: • On the Effective Date, we issued 97,907,081 shares of New Common Stock, reserved 2,092,918 shares of New Common Stock for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims and reserved 37,174,210 shares of New Common Stock for issuance upon exercise of the Warrants, which were the result of the transactions described below. We also entered into a registration rights agreement, warrant agreements and amended our articles of incorporation and bylaws for the authorization of the New Common Stock and to provide registration rights thereunder, among other corporate governance actions. See Note 11 for further discussion of our post-emergence equity. • Each holder of an equity interest in the Predecessor, including Predecessor’s common and preferred stock, had such interest canceled, released, and extinguished without any distribution. • Each holder of obligations under the pre-petition revolving credit facility received, at such holder's prior determined allocation, its pro rata share of either Tranche A Loans or Tranche B Loans, on a dollar for dollar basis. • Each holder of obligations under the FLLO Term Loan Facility received its pro rata share of 23,022,420 shares of New Common Stock. • Each holder of an Allowed Second Lien Notes Claim received its pro rata share of 3,635,118 shares of New Common Stock, 11,111,111 Class A Warrants to purchase 11,111,111 shares of New Common Stock, 12,345,679 Class B Warrants to purchase 12,345,679 shares of New Common Stock, and 6,858,710 Class C Warrants to purchase 6,858,710 shares of New Common Stock. • Each holder of an Allowed Unsecured Notes Claim received its pro rata share of 1,311,089 shares of New Common Stock and 2,473,757 Class C Warrants to purchase 2,473,757 shares of New Common Stock. • Each holder of an Allowed General Unsecured Claim received its pro rata share of 231,112 shares of New Common Stock and 436,060 Class C Warrants to purchase 436,060 shares of New Common Stock; provided that to the extent such Allowed General Unsecured Claim is a Convenience Claim, such holder instead received its pro rata share of $10 million, which pro rata share shall not exceed five percent of such Convenience Claim. • Participants in the Rights Offering extending to the applicable classes under the Plan received 62,927,320 shares of New Common Stock. • In connection with the Rights Offering described above, the Backstop Parties under the Backstop Commitment Agreement received 6,337,031 shares of New Common Stock in respect to the Put Option Premium, and 442,991 shares of New Common Stock were issued in connection with the backstop obligation thereunder to purchase unsubscribed shares of the New Common Stock. • 2,092,918 shares of New Common Stock and 3,948,893 Class C Warrants were reserved for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims. The reserved New Common Stock and Class C Warrants will be issued on a pro rata basis upon the determination of the allowed portion of all disputed General Unsecured Claims and Unsecured Notes Claims. • The 2021 Long Term Incentive Plan (the “LTIP”) was approved with a share reserve equal to 6,800,000 shares of New Common Stock. • Each holder of an Allowed Other Secured Claim will receive, at the Company's option and in consultation with the Required Consenting Stakeholders (as defined in the Plan): (a) payment in full in cash; (b) the collateral securing its secured claim; (c) reinstatement of its secured claim; or (d) such other treatment that renders its secured claim unimpaired in accordance with Section 1124 of the Bankruptcy Code. • Each holder of an Allowed Other Priority Claim will receive cash up to the allowed amount of its claim. Additionally, pursuant to the Plan confirmed by the Bankruptcy Court, the Company’s post-emergence Board of Directors is comprised of seven directors, including the Company’s Chief Executive Officer, Domenic J. Dell’Osso Jr., the Company’s Executive Chairman, Michael Wichterich, and five non-employee directors, Timothy S. Duncan, Benjamin C. Duster, IV, Sarah Emerson, Matthew M. Gallagher and Brian Steck. 3. Fresh Start Accounting Fresh Start Accounting In connection with our emergence from bankruptcy and in accordance with ASC 852, we qualified for and applied fresh start accounting on the Effective Date. We were required to apply fresh start accounting because (i) the holders of existing voting shares of the Company prior to its emergence received less than 50% of the voting shares of the Company outstanding following its emergence from bankruptcy and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan of approximately $6.8 billion was less than the post-petition liabilities and allowed claims of $13.2 billion. In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair value in conformity with FASB ASC Topic 820 - Fair Value Measurements and FASB ASC Topic 805 - Business Combinations . Accordingly, the consolidated financial statements after February 9, 2021 are not comparable with the consolidated financial statements as of or prior to that date. The Effective Date fair values of the Successor’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor. Reorganization Value Reorganization value is derived from an estimate of enterprise value, or fair value of the Company’s interest-bearing debt and stockholders’ equity. Under ASC 852, reorganization value generally approximates fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of a restructuring. As set forth in the disclosure statement, amended for updated pricing, and approved by the Bankruptcy Court, the enterprise value of the Successor was estimated to be between $3.5 billion and $4.9 billion. With the assistance of third-party valuation advisors, we determined the enterprise value and corresponding implied equity value of the Successor using various valuation approaches and methods, including: (i) income approach using a calculation of present value of future cash flows based on our financial projections, (ii) the market approach using selling prices of similar assets and (iii) the cost approach. For GAAP purposes, the Company valued the Successor’s individual assets, liabilities and equity instruments and determined an estimate of the enterprise value within the estimated range. Management concluded that the best estimate of enterprise value was $4.85 billion. Specific valuation approaches and key assumptions used to arrive at reorganization value, and the value of discrete assets and liabilities resulting from the application of fresh start accounting, are described below in greater detail within the valuation process. The enterprise value and corresponding implied equity value are dependent upon achieving the future financial results set forth in our valuation using an asset-based methodology of estimated proved reserves, undeveloped properties, and other financial information, considerations and projections, applying a combination of the income, cost and market approaches as of the fresh start reporting date of February 9, 2021. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially. The following table reconciles the enterprise value to the implied fair value of the Successor’s equity as of the Effective Date: February 9, 2021 Enterprise Value $ 4,851 Plus: Cash and cash equivalents (a) 48 Less: Fair value of debt (1,313) Successor equity value $ 3,586 ____________________________________________ (a) Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above. The following table reconciles the enterprise value to the reorganization value as of the Effective Date: February 9, 2021 Enterprise Value $ 4,851 Plus: Cash and cash equivalents (a) 48 Plus: Current liabilities 1,582 Plus: Asset retirement obligations (non-current portion) 236 Plus: Other non-current liabilities 97 Reorganization value of Successor assets $ 6,814 ____________________________________________ (a) Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above. Valuation Process The fair values of our natural gas and oil properties, other property and equipment, other long-term assets, long-term debt, asset retirement obligations and warrants were estimated as of the Effective Date. Natural gas and oil properties. The Company’s principal assets are its natural gas and oil properties, which are accounted for under the successful efforts accounting method. The Company determined the fair value of its natural gas and oil properties based on the discounted future net cash flows expected to be generated from these assets. Discounted cash flow models by operating area were prepared using the estimated future revenues and operating costs for all proved developed properties and undeveloped properties comprising the proved and unproved reserves. Significant inputs associated with the calculation of discounted future net cash flows include estimates of (i) recoverable reserves, (ii) production rates, (iii) future operating and development costs, (iv) future commodity prices escalated by an inflationary rate after five years, adjusted for differentials, and (v) a market-based weighted average cost of capital by operating area. The Company utilized NYMEX strip pricing, adjusted for differentials, to value the reserves. The NYMEX strip pricing inputs used are classified as Level 1 fair value assumptions and all other inputs are classified as Level 3 fair value assumptions. The discount rates utilized were derived using a weighted average cost of capital computation, which included an estimated cost of debt and equity for market participants with similar geographies and asset development type by operating area. Other property and equipment. The fair value of other property and equipment such as buildings, land, computer equipment, and other equipment was determined using replacement cost method under the cost approach which considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and the ability of those assets to generate cash flow. Long-term debt. A market approach, based upon quotes from major financial institutions, was used to measure the fair value of the $500 million aggregate principal amount of 5.50% Senior Notes due 2026 (the “2026 Notes”) and $500 million aggregate principal amount of 5.875% Senior Notes due 2029 (the “2029 Notes” and, together with the 2026 Notes, the “Notes”). The carrying value of borrowings under our Exit Credit Facility approximated fair value as the terms and interest rates are based on prevailing market rates. Asset retirement obligations. The fair value of the Company’s asset retirement obligations was revalued based upon estimated current reclamation costs for our assets with reclamation obligations, an appropriate long-term inflation adjustment, and our revised credit adjusted risk-free rate. The credit adjusted risk-free rate was based on an evaluation of an interest rate that equates to a risk-free interest rate adjusted for the effect of our credit standing. Warrants. The fair values of the Warrants issued upon the Effective Date were estimated using a Black-Scholes model, a commonly used option-pricing model. The Black-Scholes model was used to estimate the fair value of the warrants with an implied stock price of $20.52; initial exercise price per share of $27.63, $32.13 and $36.18 for Class A, Class B and Class C Warrants, respectively; expected volatility of 58% estimated using volatilities of similar entities; risk-free rate using a 5-year Treasury bond rate; and an expected annual dividend yield which was estimated to be zero. Condensed Consolidated Balance Sheet The following condensed consolidated balance sheet is as of February 9, 2021. This condensed consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Effective Date. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities and warrants. Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Assets Current assets: Cash and cash equivalents $ 243 $ (203) (a) $ — $ 40 Restricted cash — 86 (b) — 86 Accounts receivable, net 861 (18) (c) — 843 Short-term derivative assets — — — — Other current assets 66 (5) (d) — 61 Total current assets 1,170 (140) — 1,030 Property and equipment: Natural gas and oil properties, successful efforts method Proved natural gas and oil properties 25,794 — (21,108) (o) 4,686 Unproved properties 1,546 — (1,063) (o) 483 Other property and equipment 1,755 — (1,256) (o) 499 Total property and equipment 29,095 — (23,427) (o) 5,668 Less: accumulated depreciation, depletion and amortization (23,877) — 23,877 (o) — Property and equipment held for sale, net 9 — (7) (o) 2 Total property and equipment, net 5,227 — 443 (o) 5,670 Other long-term assets 198 — (84) (p) 114 Total assets $ 6,595 $ (140) $ 359 $ 6,814 Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Liabilities and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 391 $ 24 (e) $ — $ 415 Current maturities of long-term debt, net 1,929 (1,929) (f) — — Accrued interest 4 (4) (g) — — Short-term derivative liabilities 398 — — 398 Other current liabilities 645 124 (h) — 769 Total current liabilities 3,367 (1,785) — 1,582 Long-term debt, net — 1,261 (i) 52 (q) 1,313 Long-term derivative liabilities 90 — — 90 Asset retirement obligations, net of current portion 139 — 97 (r) 236 Other long-term liabilities 5 2 (j) — 7 Liabilities subject to compromise 9,574 (9,574) (k) — — Total liabilities 13,175 (10,096) 149 3,228 Contingencies and commitments ( Note 7 ) Stockholders’ equity (deficit): Predecessor preferred stock 1,631 (1,631) (l) — — Predecessor common stock — — — — Predecessor additional paid-in capital 16,940 (16,940) (l) — — Successor common stock — 1 (m) — 1 Successor additional paid-in-capital — 3,585 (m) — 3,585 Accumulated other comprehensive income 48 — (48) (s) — Accumulated deficit (25,199) 24,941 (n) 258 (t) — Total stockholders’ equity (deficit) (6,580) 9,956 210 3,586 Total liabilities and stockholders’ equity (deficit) $ 6,595 $ (140) $ 359 $ 6,814 Reorganization Adjustments (a) The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan: Sources: Proceeds from issuance of the Notes $ 1,000 Proceeds from Rights Offering 600 Proceeds from refunds of interest deposit for the Notes 5 Total sources of cash $ 1,605 Uses: Payment of roll-up of DIP Facility balance $ (1,179) Payment of Exit Credit Facility - Tranche A Loan (479) Transfers to restricted cash for professional fee reserve (76) Transfers to restricted cash for convenience claim distribution reserve (10) Payment of professional fees (31) Payment of DIP Facility interest and fees (12) Payment of FLLO alternative transaction fee (12) Payment of the Notes fees funded out of escrow (8) Payment of RBL interest and fees (1) Total uses of cash $ (1,808) Net cash used $ (203) (b) Represents the transfer of funds to a restricted cash account for purposes of funding the professional fee reserve and the convenience claim distribution reserve. (c) Reflects the removal of an insurance receivable associated with a discharged legal liability. (d) Reflects the collection of an interest deposit for the senior unsecured notes. (e) Changes in accounts payable include the following: Accrual of professional service provider success fees $ 38 Accrual of convenience claim distribution reserve 10 Accrual of professional service provider fees 5 Reinstatement of accounts payable from liabilities subject to compromise 2 Payment of professional fees (31) Net impact to accounts payable $ 24 (f) Reflects payment of the pre-petition credit facility for $1.179 billion and transfer of the Tranche A and Tranche B Loans to long-term debt for $750 million. (g) Reflect payments of accrued interest and fees on the DIP Facility. (h) Changes in other current liabilities include the following: Reinstatement of other current liabilities from liabilities subject to compromise $ 191 Accrual of the Notes fees 2 Settlement of Put Option Premium through issuance of Successor Common Stock (60) Payment of DIP Facility fees (9) Net impact to other current liabilities $ 124 (i) Changes in long-term debt include the following: Issuance of the Notes $ 1,000 Issuance of Tranche A and Tranche B Loans 750 Payments on Tranche A Loans (479) Debt issuance costs for the Notes (10) Net impact to long-term debt, net $ 1,261 (j) Reflects reinstatement of a long-term lease liability. (k) On the Effective Date, liabilities subject to compromise were settled in accordance with the Plan as follows: Liabilities subject to compromise pre-emergence $ 9,574 To be reinstated on the Effective Date: Accounts payable $ (2) Other current liabilities (191) Other long-term liabilities (2) Total liabilities reinstated $ (195) Consideration provided to settle amounts per the Plan or Reorganization: Issuance of Successor common stock associated with the Rights Offering and Backstop Commitment and settlement of the Put Option Premium $ (2,311) Proceeds from issuance of Successor common stock associated with the Rights Offering and Backstop Commitment 600 Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment (783) Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment (124) Issuance of Successor common stock to unsecured note holders (45) Issuance of Successor common stock to general unsecured claims (8) Fair value of Class A Warrants (93) Fair value of Class B Warrants (94) Fair value of Class C Warrants (68) Proceeds to holders of general unsecured claims (10) Total consideration provided to settle amounts per the Plan $ (2,936) Gain on settlement of liabilities subject to compromise $ 6,443 (l) Pursuant to the Plan, as of the Effective Date, all equity interests in Predecessor, including Predecessor’s common and preferred stock, were canceled without any distribution. (m) Reflects the Successor equity including the issuance of 97,907,081 shares of New Common Stock, 11,111,111 shares of Class A Warrants, 12,345,679 shares of Class B Warrants and 9,768,527 shares of Class C Warrants pursuant to the Plan. Issuance of Successor equity associated with the Rights Offering and Backstop Commitment $ 2,371 Issuance of Successor equity to holders of the FLLO Term Loan, incremental to the Rights Offering and Backstop Commitment 783 Issuance of Successor equity to holders of the Second Lien Notes, incremental to the Rights Offering and Backstop Commitment 124 Issuance of Successor equity to holders of the unsecured senior notes 45 Issuance of Successor equity to holders of allowed general unsecured claims 8 Fair value of Class A warrants 93 Fair value of Class B warrants 94 Fair value of Class C warrants 68 Total change in Successor common stock and additional paid-in capital 3,586 Less: par value of Successor common stock (1) Change in Successor additional paid-in capital $ 3,585 (n) Reflects the cumulative net impact of the effects on accumulated deficit as follows: Gain on settlement of liabilities subject to compromise $ 6,443 Accrual of professional service provider success fees (38) Accrual of professional service provider fees (5) Surrender of other receivable (18) Payment of FLLO alternative transaction fee (12) Total reorganization items, net 6,370 Cancellation of predecessor equity 18,571 Net impact on accumulated deficit $ 24,941 Fresh Start Adjustments (o) Reflects fair value adjustments to our (i) proved natural gas and oil properties, (ii) unproved properties, (iii) other property and equipment and (iv) property and equipment held for sale, and the elimination of accumulated depletion, depreciation and amortization. (p) Reflects the fair value adjustment to record historical contracts at their fair values. (q) Reflects the fair value adjustments to the 2026 Notes and 2029 Notes for $22 million and $30 million, respectively. (r) Reflects the adjustment to our asset retirement obligations using assumptions as of the Effective Date, including an inflation factor of 2% and an average credit-adjusted risk-free rate of 5.18%. (s) Reflects the fair value adjustment to eliminate the accumulated other comprehensive income of $9 million related to hedging settlements offset by the elimination of $57 million of income tax effects which has resulted in the recording of an income tax benefit of $57 million. See Note 10 for a discussion of income taxes. (t) Reflects the net cumulative impact of the fresh start adjustments on accumulated deficit as follows: Fresh start adjustments to property and equipment $ 443 Fresh start adjustments to other long-term assets (84) Fresh start adjustments to long-term debt (52) Fresh start adjustments to long-term asset retirement obligations (97) Fresh start adjustments to accumulated other comprehensive income (9) Total fresh start adjustments impacting reorganizations items, net 201 Income tax effects on accumulated other comprehensive income 57 Net impact to accumulated deficit $ 258 Reorganization Items, Net We incurred significant expenses, gains and losses associated with the reorganization, primarily the gain on settlement of liabilities subject to compromise, write-off of unamortized debt issuance costs and related unamortized premiums and discounts, debt and equity financing fees, provision for allowed claims and legal and professional fees incurred subsequent to the Chapter 11 filings for the restructuring process. The accrual for allowed claims primarily represents damages from contract rejections and settlements attributable to the midstream savings requirement as stipulated in the Plan. While the claims reconciliation process is ongoing, we do not believe any existing unresolved claims will result in a material adjustment to the financial statements. The amount of these items, which were incurred in reorganization items, net within our accompanying unaudited condensed consolidated statements of operations, have significantly affected our statements of operations. We did not have any reorganization items, net for the 2022 Successor Quarter, the 2022 Successor Period, the 2021 Successor Quarter or the 2021 Successor Period. The following table summarizes the components in reorganization items, net included in our unaudited condensed consolidated statements of operations: Predecessor Period from January 1, 2021 through February 9, 2021 Gains on the settlement of liabilities subject to compromise $ 6,443 Accrual for allowed claims (1,002) Gain on fresh start adjustments 201 Gain from release of commitment liabilities 55 Professional service provider fees and other (60) Success fees for professional service providers (38) Surrender of other receivable (18) FLLO alternative transaction fee (12) Total reorganization items, net $ 5,569 |
Natural Gas and Oil Property Tr
Natural Gas and Oil Property Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Natural Gas and Oil Property Transactions | 4. Natural Gas and Oil Property Transactions Marcellus Acquisition On March 9, 2022, we completed the Marcellus Acquisition for total consideration of approximately $2.77 billion, consisting of approximately $2 billion in cash, including working capital adjustments and approximately 9.4 million shares of our common stock, to acquire high quality producing assets and a deep inventory of premium drilling locations in the prolific Marcellus Shale in Northeast Pennsylvania. The Marcellus Acquisition was cash and indebtedness free, effective as of January 1, 2022, subject to customary purchase price adjustments. We funded the cash portion of the consideration with cash on hand and $914 million of borrowings under the Company’s Exit Credit Facility. See Note 6 for further discussion of debt. Preliminary Marcellus Acquisition Purchase Price Allocation We have accounted for the Marcellus Acquisition as a business combination, using the acquisition method. The following table represents the preliminary allocation of the total purchase price to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, valuation of pre-acquisition contingencies and final appraisals of assets acquired and liabilities assumed. We expect to complete the purchase price allocation during the 12-month period following the acquisition date, during which time the value of the assets and liabilities may be revised as appropriate. Preliminary Consideration: Cash $ 2,000 Fair value of Chesapeake’s common stock issued in the merger 764 Working capital adjustments 6 Total consideration $ 2,770 Fair Value of Liabilities Assumed: Current liabilities $ 420 Other long-term liabilities 129 Amounts attributable to liabilities assumed $ 549 Fair Value of Assets Acquired: Cash and cash equivalents $ — Other current assets 218 Proved natural gas and oil properties 2,309 Unproved properties 788 Other property and equipment 1 Other long-term assets 3 Amounts attributable to assets acquired $ 3,319 Total identifiable net assets $ 2,770 Natural Gas and Oil Properties For the Marcellus Acquisition, we applied applicable guidance, under which an acquirer should recognize the identifiable assets acquired and the liabilities assumed on the acquisition date at fair value. The fair value estimate of proved and unproved natural gas and oil properties as of the acquisition date was based on estimated natural gas and oil reserves and related future net cash flows discounted using a weighted average cost of capital, including estimates of future production rates and future development costs. We utilized NYMEX strip pricing adjusted for inflation to value the reserves. We then applied various discount rates depending on the classification of reserves and other risk characteristics. Management utilized the assistance of a third-party valuation expert to estimate the value of the natural gas and oil properties acquired. Additionally, the fair value estimate of proved and unproved natural gas and oil properties was corroborated by utilizing a market approach, which considers recent comparable transactions for similar assets. The inputs used to value natural gas and oil properties require significant judgment and estimates made by management and represent Level 3 inputs. Marcellus Acquisition Revenues and Expenses Subsequent to Acquisition We included in our condensed consolidated statements of operations natural gas, oil and NGL revenues of $473 million, net losses on natural gas and oil derivatives of $312 million, and direct operating expenses of $178 million, including depreciation, depletion and amortization related to the Marcellus Acquisition businesses for the period from March 10, 2022 (the date immediately following the completion of the Marcellus Acquisition) through June 30, 2022. Vine Acquisition On November 1, 2021, we acquired Vine, an energy company focused on the development of natural gas properties in the over-pressured stacked Haynesville and Mid-Bossier shale plays in Northwest Louisiana pursuant to a definitive agreement with Vine dated August 10, 2021, for total consideration of approximately $1.5 billion, consisting of approximately 18.7 million shares of our common stock and $90 million in cash. In conjunction with the Vine Acquisition, Vine’s Second Lien Term Loan was repaid and terminated for $163 million, inclusive of a $13 million make whole premium with cash on hand due to the agreement containing a change in control provision making the term loan callable upon closing. Vine’s reserve based loan facility, which had no borrowings as of November 1, 2021, was terminated at the time of the acquisition. Additionally, Vine’s 6.75% Senior Notes, with a principal amount of $950 million, were assumed by the Company. See Note 6 for additional discussion of the assumed debt. We funded the cash portion of the consideration with cash on hand. Preliminary Vine Purchase Price Allocation We have accounted for the Vine Acquisition as a business combination, using the acquisition method. The following table represents the preliminary allocation of the total purchase price of Vine to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, valuation of pre-acquisition contingencies, and final appraisals of assets acquired and liabilities assumed. We expect to complete the purchase price allocation during the 12-month period following the acquisition date, during which time the value of the assets and liabilities may be revised as appropriate. Preliminary Consideration: Cash $ 253 Fair value of Chesapeake’s common stock issued in the merger 1,231 Restricted stock unit replacement awards 6 Total consideration $ 1,490 Fair Value of Liabilities Assumed: Current liabilities $ 765 Long-term debt 1,021 Deferred tax liabilities 49 Other long-term liabilities 272 Amounts attributable to liabilities assumed $ 2,107 Fair Value of Assets Acquired: Cash and cash equivalents $ 59 Other current assets 206 Proved natural gas and oil properties 2,181 Unproved properties 1,118 Other property and equipment 1 Other long-term assets 32 Amounts attributable to assets acquired $ 3,597 Total identifiable net assets $ 1,490 Natural Gas and Oil Properties For the Vine Acquisition, we applied applicable guidance, under which an acquirer should recognize the identifiable assets acquired and the liabilities assumed on the acquisition date at fair value. The fair value estimate of proved and unproved natural gas and oil properties as of the acquisition date was based on estimated natural gas and oil reserves and related future net cash flows discounted using a weighted average cost of capital, including estimates of future production rates and future development costs. We utilized NYMEX strip pricing adjusted for inflation to value the reserves. We then applied various discount rates depending on the classification of reserves and other risk characteristics. Management utilized the assistance of a third-party valuation expert to estimate the value of the natural gas and oil properties acquired. Additionally, the fair value estimate of proved and unproved natural gas and oil properties was corroborated by utilizing a market approach, which considers recent comparable transactions for similar assets. The inputs used to value natural gas and oil properties require significant judgment and estimates made by management and represent Level 3 inputs. Financial Instruments and Other The fair value measurements of long-term debt were estimated based on a market approach using estimates provided by an independent investment data services firm and represent Level 2 inputs. Restricted Stock Unit Replacement Awards Included in consideration for the Vine Acquisition is approximately $6 million related to pre-combination service recognized on Vine’s restricted stock unit (“RSU”) awards. For RSUs that were accelerated or transitioned at the time of the merger, we recognized expense for the portion of the award that was accelerated and included in consideration the portion of the award related to pre-combination service. Vine Revenues and Expenses Subsequent to Acquisition We included in our condensed consolidated statements of operations natural gas, oil and NGL revenues of $878 million, net losses on natural gas and oil derivatives of $568 million, direct operating expenses of $443 million, including depreciation, depletion and amortization, and other expense of $23 million, related to the Vine business for the six months ended June 30, 2022. Combined Pro Forma Financial Information As the Vine Acquisition closed on November 1, 2021, all activity in 2022 is included in Chesapeake’s condensed consolidated statements of operations for the 2022 Successor Quarter and the 2022 Successor Period. The following unaudited pro forma financial information is based on our historical condensed consolidated financial statements adjusted to reflect as if the Marcellus Acquisition and Vine Acquisition had each occurred on February 10, 2021, the date Chesapeake emerged from bankruptcy. See Note 2 for additional information on the bankruptcy. The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including the estimated tax impact of the pro forma adjustments. Successor Six Months Ended June 30, 2022 Revenues $ 4,455 Net income available to common stockholders $ 369 Earnings per common share: Basic $ 2.90 Diluted $ 2.48 Successor Three Months Ended June 30, 2021 Period from February 10, 2021 through June 30, 2021 Revenues $ 668 $ 1,744 Net loss available to common stockholders $ (892) $ (573) Earnings per common share: Basic $ (7.06) $ (4.54) Diluted $ (7.06) $ (4.54) Powder River Divestiture |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 5. Earnings Per Share Basic earnings (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per common share is calculated in the same manner, but includes the impact of potentially dilutive securities. Potentially dilutive securities during the Successor Periods below consist of issuable shares related to warrants, unvested RSUs, and unvested performance share units (“PSUs”) and during the Predecessor Period have historically consisted of unvested RSUs, contingently issuable shares related to preferred stock and convertible senior notes unless their effect was antidilutive. The reconciliations between basic and diluted earnings (loss) per share are as follows: Successor Predecessor Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Period from February 10, 2021 through June 30, 2021 Period from January 1, 2021 through February 9, 2021 Numerator Net income (loss), basic and diluted $ 1,237 $ (439) $ 473 $ (144) $ 5,383 Denominator (in thousands) Weighted average common shares outstanding, basic 126,814 97,931 123,826 97,922 9,781 Effect of potentially dilutive securities Preferred stock — — — — 290 Warrants 22,322 — 21,295 — — Restricted stock units 349 — 368 — — Performance share units 47 — 45 — — Weighted average common shares outstanding, diluted 149,532 97,931 145,534 97,922 10,071 Earnings (loss) per common share: Basic $ 9.75 $ (4.48) $ 3.82 $ (1.47) $ 550.35 Diluted $ 8.27 $ (4.48) $ 3.25 $ (1.47) $ 534.51 Successor During the 2022 Successor Quarter and 2022 Successor Period, the diluted earnings per share calculation excludes the effect of 1,191,877 reserved shares of common stock and 2,248,726 reserved Class C Warrants related to the settlement of General Unsecured Claims associated with the Chapter 11 Cases, as all necessary conditions had not been met for such shares to be considered dilutive shares during the 2022 Successor Quarter and 2022 Successor Period. During the 2021 Successor Quarter and the 2021 Successor Period, the dilutive earnings (loss) per share calculation excludes the effect of 2,092,918 reserved shares of common stock and 3,948,893 reserved Class C warrants related to the settlement of General Unsecured Claims associated with the Chapter 11 Cases, as all necessary conditions had not been met to be considered dilutive shares during the 2021 Successor Quarter and the 2021 Successor Period. Additionally, as the 2021 Successor Quarter and the 2021 Successor Period had a net loss, the diluted earnings (loss) per share calculation excludes the antidilutive effect, calculated using the treasury stock method, of 12,186,128 and 11,275,229 issuable shares related to warrants and 121,348 and 66,817 shares of restricted stock, respectively. Predecessor |
Debt
Debt | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt Our long-term debt consisted of the following as of June 30, 2022 and December 31, 2021: Successor June 30, 2022 December 31, 2021 Carrying Amount Fair Value (a) Carrying Amount Fair Value (a) Exit Credit Facility - Tranche A Loans $ 775 $ 775 $ — $ — Exit Credit Facility - Tranche B Loans 221 221 221 221 5.50% senior notes due 2026 500 476 500 526 5.875% senior notes due 2029 500 472 500 535 6.75% senior notes due 2029 950 919 950 1,031 Premiums on senior notes 108 — 116 — Debt issuance costs (8) — (9) — Total long-term debt, net $ 3,046 $ 2,863 $ 2,278 $ 2,313 ____________________________________________ (a) The carrying value of borrowings under our Exit Credit Facility approximate fair value as the interest rates are based on prevailing market rates; therefore, they are a Level 1 fair value measurement. For all other debt, a market approach, based upon quotes from major financial institutions, which are Level 2 inputs, is used to measure the fair value. Successor Debt Our post-emergence exit financing consists of the Exit Credit Facility, which includes a reserve-based revolving credit facility and a non-revolving loan facility, the Notes and the Vine Notes (as defined below). Exit Credit Facility. On the Effective Date, pursuant to the terms of the Plan, the Company, as borrower, entered into a reserve-based credit agreement (the “Credit Agreement”) providing for a reserve-based credit facility with an initial borrowing base of $2.5 billion. The borrowing base will be redetermined semiannually on or around May 1 and November 1 of each year. Our borrowing base was reaffirmed in April 2022, and the next scheduled redetermination will be on or about October 1, 2022. The aggregate initial elected commitments of the lenders under the Exit Credit Facility were $1.75 billion of Tranche A Loans and $221 million of fully funded Tranche B Loans. The Exit Credit Facility provides for a $200 million sublimit of the aggregate commitments that are available for the issuance of letters of credit. The Exit Credit Facility bears interest at the ABR (alternate base rate) or LIBOR, at our election, plus an applicable margin (ranging from 2.25–3.25% per annum for ABR loans and 3.25–4.25% per annum for LIBOR loans, subject to a 1.00% LIBOR floor), depending on the percentage of the borrowing base then being utilized. The Tranche A Loans mature three years after the Effective Date and the Tranche B Loans mature four years after the Effective Date. The Tranche B Loans can be repaid if no Tranche A Loans are outstanding. The Credit Agreement contains financial covenants that require the Company and the guarantors party thereto, on a consolidated basis, to maintain (i) a first lien leverage ratio of not more than 2.75 to 1:00, (ii) a total leverage ratio of not more than 3.50 to 1:00, (iii) a current ratio of not less than 1.00 to 1:00 and (iv) at any time additional secured debt is outstanding, an asset coverage ratio of not less than 1.50 to 1:00, defined as PV-10 of proved developed producing reserves to total secured debt. The Company has no additional secured debt outstanding as of June 30, 2022. The Credit Agreement also contains customary affirmative and negative covenants, including, among other things, as to compliance with laws (including environmental laws and anti-corruption laws), delivery of quarterly and annual financial statements, conduct of business, maintenance of property, maintenance of insurance, restrictions on the incurrence of liens, indebtedness, asset dispositions, fundamental changes, restricted payments, and other customary covenants. The Company is required to pay a commitment fee of 0.50% per annum on the average daily unused portion of the current aggregate commitments under the Tranche A Loans. The Company is also required to pay customary letter of credit and fronting fees. Outstanding Senior Notes. On February 2, 2021, Chesapeake Escrow Issuer LLC, then an indirect wholly owned subsidiary of the Company, issued $500 million aggregate principal amount of its 2026 Notes and $500 million aggregate principal amount of its 2029 Notes. The Notes included a $52 million premium to reflect fair value adjustments at the date of emergence. The Notes are guaranteed on a senior unsecured basis by each of the Company’s subsidiaries that guarantee the Exit Credit Facility. The Notes were issued pursuant to an indenture, dated as of February 5, 2021, among the Issuer, the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee. Interest on the Notes is payable semi-annually, on February 1 and August 1 of each year to holders of record on the immediately preceding January 15 and July 15. Vine Senior Notes. As a result of the completion of the Vine Acquisition, the Company and certain of its subsidiaries entered into a supplemental indenture pursuant to which the Company assumed the obligations under Vine’s $950 million aggregate principal amount of 6.75% senior notes due 2029 (the “Vine Notes”) issued under the indenture dated April 7, 2021 with Wilmington Trust, National Association, as Trustee (the “Vine Indenture”). The Vine Notes included a $71 million premium to reflect fair value adjustments at the date of acquisition. The Company and certain of its subsidiaries have agreed to guarantee such obligations under the Vine Indenture. Additionally, certain subsidiaries of Vine entered into a supplemental indenture to the Company’s existing indenture, dated February 5, 2021 with Deutsche Bank Trust Company Americas as trustee (the “CHK Indenture”), pursuant to which such subsidiaries of Vine have agreed to guarantee obligations under the CHK Indenture. Interest on the Vine Notes is payable semi-annually, on April 15 and October 15 of each year to holders of record on the immediately preceding April 1 and October 1. The Notes and the Vine Notes are the Company’s senior unsecured obligations. Accordingly, they rank (i) equal in right of payment to all existing and future senior indebtedness, including borrowings under the Exit Credit Facility, (ii) effectively subordinate in right of payment to all of existing and future secured indebtedness, including indebtedness under the Exit Credit Facility, to the extent of the value of the collateral securing such indebtedness, (iii) structurally subordinate in right of payment to all existing and future indebtedness and other liabilities of any future subsidiaries that do not guarantee the Notes and any entity that is not a subsidiary that does not guarantee the Notes and (iv) senior in right of payment to all future subordinated indebtedness. Each guarantee of the Notes by a guarantor is a general, unsecured, senior obligation of such guarantor. Accordingly, the guarantees (i) rank equally in right of payment with all existing and future senior indebtedness of such guarantor (including such guarantor’s guarantee of indebtedness under the Exit Credit Facility), (ii) are subordinated to all existing and future secured indebtedness of such guarantor, including such guarantor’s guarantee of indebtedness under our Exit Credit Facility, to the extent of the value of the collateral of such guarantor securing such secured indebtedness, (iii) are structurally subordinated to all indebtedness and other liabilities of any future subsidiaries of such guarantor that do not guarantee the notes and (iv) rank senior in right of payment to all future subordinated indebtedness of such guarantor. Phase-Out of LIBOR In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) . The purpose of ASU 2020-04 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates such as LIBOR, which is expected to be phased out for most US |
Contingencies and Commitments
Contingencies and Commitments | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Commitments | 7. Contingencies and Commitments Contingencies Chapter 11 Proceedings Commencement of the Chapter 11 Cases automatically stayed the proceedings and actions against us that are referenced below, in addition to actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company’s bankruptcy estates. The Plan in the Chapter 11 Cases, which became effective on February 9, 2021, provided for the treatment of claims against the Company’s bankruptcy estates, including pre-petition liabilities that had not been satisfied or addressed during the Chapter 11 Cases. See Note 2 for additional information. Litigation and Regulatory Proceedings We were involved in a number of litigation and regulatory proceedings as of the Petition Date. Many of these proceedings were in early stages, and many of them sought damages and penalties, the amount of which is indeterminate. Our total accrued liability in respect of litigation and regulatory proceedings is determined on a case-by-case basis and represents an estimate of probable losses after considering, among other factors, the progress of each case or proceeding, our experience and the experience of others in similar cases or proceedings, and the opinions and views of legal counsel. Significant judgment is required in making these estimates and our final liabilities may ultimately be materially different. We are involved in, and expect to continue to be involved in, various lawsuits and disputes incidental to our business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions. The majority of the prepetition legal proceedings were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process before the Bankruptcy Court. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan. Environmental Contingencies The nature of the natural gas and oil business carries with it certain environmental risks for us and our subsidiaries. We have implemented various policies, programs, procedures, training and audits to reduce and mitigate such environmental risks. We conduct periodic reviews, on a company-wide basis, to assess changes in our environmental risk profile. Environmental reserves are established for environmental liabilities for which economic losses are probable and reasonably estimable. We manage our exposure to environmental liabilities in acquisitions by using an evaluation process that seeks to identify pre-existing contamination or compliance concerns and address the potential liability. Depending on the extent of an identified environmental concern, we may, among other things, exclude a property from the transaction, require the seller to remediate the property to our satisfaction in an acquisition or agree to assume liability for the remediation of the property. We were recently dismissed as a defendant from numerous lawsuits in Oklahoma alleging that we and other companies engaged in activities that have caused earthquakes. The lawsuits sought compensation for injury to real and personal property, diminution of property value, economic losses due to business interruption, interference with the use and enjoyment of property, annoyance and inconvenience, personal injury and emotional distress. In addition, they sought the reimbursement of insurance premiums and the award of punitive damages, attorneys’ fees, costs, expenses and interest. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan. Other Matters Based on management’s current assessment, we are of the opinion that no pending or threatened lawsuit or dispute relating to our business operations is likely to have a material adverse effect on our future consolidated financial position, results of operations or cash flows. The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates. Commitments Gathering, Processing and Transportation Agreements We have contractual commitments with midstream service companies and pipeline carriers for future gathering, processing and transportation of natural gas, oil and NGL to move certain of our production to market. Working interest owners and royalty interest owners, where appropriate, will be responsible for their proportionate share of these costs. Commitments related to gathering, processing and transportation agreements are not recorded as obligations in the accompanying condensed consolidated balance sheets; however, they are reflected in our estimates of proved reserves. The aggregate undiscounted commitments under our gathering, processing and transportation agreements, excluding any reimbursement from working interest and royalty interest owners, credits for third-party volumes or future costs under cost-of-service agreements, are presented below: Successor June 30, 2022 Remainder of 2022 $ 296 2023 536 2024 496 2025 426 2026 386 2027-2036 2,062 Total $ 4,202 In addition, we have entered into long-term agreements for certain natural gas gathering and related services within specified acreage dedication areas in exchange for cost-of-service based fees redetermined annually, or tiered fees based on volumes delivered relative to scheduled volumes. Future gathering fees may vary with the applicable agreement. Other Commitments As part of our normal course of business, we enter into various agreements providing, or otherwise arranging for, financial or performance assurances to third parties on behalf of our wholly owned guarantor subsidiaries. These agreements may include future payment obligations or commitments regarding operational performance that effectively guarantee our subsidiaries’ future performance. In connection with acquisitions and divestitures, our purchase and sale agreements generally provide indemnification to the counterparty for liabilities incurred as a result of a breach of a representation or warranty by the indemnifying party and/or other specified matters. These indemnifications generally have a discrete term and are intended to protect the parties against risks that are difficult to predict or cannot be quantified at the time of entering into or consummating a particular transaction. For divestitures of natural gas and oil properties, our purchase and sale agreements may require the return of a portion of the proceeds we receive as a result of uncured title or environmental defects. While executing our strategic priorities, we have incurred certain cash charges, including contract termination charges, financing extinguishment costs and charges for unused natural gas transportation and gathering capacity. |
Other Current Liabilities
Other Current Liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | 8. Other Current Liabilities Other current liabilities as of June 30, 2022 and December 31, 2021 are detailed below: Successor June 30, 2022 December 31, 2021 Revenues and royalties due others $ 926 $ 617 Accrued drilling and production costs 268 142 Accrued hedging costs 120 113 Accrued compensation and benefits 56 91 Other accrued taxes 134 86 Operating leases 45 29 Accrued share repurchases 40 — Joint interest prepayments received 16 14 Other 125 110 Total other current liabilities $ 1,730 $ 1,202 |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 9. Revenue The following table shows revenue disaggregated by operating area and product type: Successor Three Months Ended June 30, 2022 Natural Gas Oil NGL Total Marcellus $ 1,152 $ — $ — $ 1,152 Haynesville 988 — — 988 Eagle Ford 85 503 62 650 Natural gas, oil and NGL revenue $ 2,225 $ 503 $ 62 $ 2,790 Marketing revenue $ 637 $ 508 $ 78 $ 1,223 Successor Three Months Ended June 30, 2021 Natural Gas Oil NGL Total Marcellus $ 226 $ — $ — $ 226 Haynesville 124 — — 124 Eagle Ford 31 386 41 458 Powder River Basin 16 58 10 84 Natural gas, oil and NGL revenue $ 397 $ 444 $ 51 $ 892 Marketing revenue $ 146 $ 340 $ 53 $ 539 Successor Six Months Ended June 30, 2022 Natural Gas Oil NGL Total Marcellus $ 1,761 $ — $ — $ 1,761 Haynesville 1,640 — — 1,640 Eagle Ford 132 953 119 1,204 Powder River Basin 20 66 13 99 Natural gas, oil and NGL revenue $ 3,553 $ 1,019 $ 132 $ 4,704 Marketing revenue $ 1,045 $ 903 $ 142 $ 2,090 Successor Period from February 10, 2021 through June 30, 2021 Natural Gas Oil NGL Total Marcellus $ 389 $ — $ — $ 389 Haynesville 194 — — 194 Eagle Ford 74 592 64 730 Powder River Basin 30 86 16 132 Natural gas, oil and NGL revenue $ 687 $ 678 $ 80 $ 1,445 Marketing revenue $ 243 $ 502 $ 71 $ 816 Predecessor Period from January 1, 2021 through February 9, 2021 Natural Gas Oil NGL Total Marcellus $ 119 $ — $ — $ 119 Haynesville 53 — — 53 Eagle Ford 17 159 17 193 Powder River Basin 7 20 6 33 Natural gas, oil and NGL revenue $ 196 $ 179 $ 23 $ 398 Marketing revenue $ 78 $ 141 $ 20 $ 239 Accounts Receivable Our accounts receivable are primarily from purchasers of natural gas, oil and NGL and from exploration and production companies that own interests in properties we operate. This industry concentration could affect our overall exposure to credit risk, either positively or negatively, because our purchasers and joint working interest owners may be similarly affected by changes in economic, industry or other conditions. We monitor the creditworthiness of all our counterparties and we generally require letters of credit or parent guarantees for receivables from parties deemed to have sub-standard credit, unless the credit risk can otherwise be mitigated. We utilize an allowance method in accounting for bad debt based on historical trends in addition to specifically identifying receivables that we believe may be uncollectible. Accounts receivable as of June 30, 2022 and December 31, 2021 are detailed below: Successor June 30, 2022 December 31, 2021 Natural gas, oil and NGL sales $ 1,594 $ 922 Joint interest 201 158 Other 12 38 Allowance for doubtful accounts (3) (3) Total accounts receivable, net $ 1,804 $ 1,115 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes We estimate our annual effective tax rate (“AETR”) for continuing operations in recording our interim quarterly income tax provision for the various jurisdictions in which we operate. The tax effects of statutory rate changes, significant unusual or infrequently occurring items, and certain changes in the assessment of the realizability of deferred tax assets are excluded from the determination of our estimated AETR as such items are recognized as discrete items in the quarter in which they occur. Our estimated AETR for the 2022 Successor Period is 6.2% as a result of projecting current federal and state income taxes and a full valuation allowance against our anticipated net deferred asset position at December 31, 2022. Our estimated AETR for the 2021 Successor Period was 0.0% as a result of maintaining a full valuation allowance against our net deferred asset position. The income tax provision for the 2021 Predecessor Period was determined based on actual results for the period ended February 9, 2021, including those resulting from fresh start accounting. The effective tax rate for the 2021 Predecessor Period was (1.1%) which resulted from the elimination of the income tax effects associated with hedging settlements from accumulated other comprehensive income as part of fresh start accounting. We recorded an income tax benefit of $57 million in the 2021 Predecessor Period for the elimination of such income tax effects. Any changes to our deferred tax assets and liabilities for the 2021 Predecessor Period (whether resulting from Reorganization Adjustments, Fresh Start Adjustments or otherwise) were completely offset with a corresponding adjustment to our valuation allowance which resulted in the low effective tax rate. Accordingly, there are no balances shown for deferred tax assets or liabilities in the condensed consolidated balance sheet table shown in Note 3 . As of December 31, 2021, we were in a net deferred tax asset position and anticipate being in a net deferred tax asset position as of December 31, 2022. Based on all available positive and negative evidence, including projections of future taxable income, we believe it is more likely than not that our deferred tax assets will not be realized. As such, a full valuation allowance was recorded against our net deferred tax asset position for federal and state purposes as of June 30, 2022 and December 31, 2021. A significant piece of objectively verifiable negative evidence evaluated is the losses incurred in recent quarters. Should future results of operations demonstrate a trend of profitability, additional weight may be placed upon other evidence, such as forecasts of future taxable income. Additionally, future events and new evidence, such as the integration and realization of profit from recently acquired assets, could lead to increased weight being placed upon future forecasts and the conclusion that some or all of the deferred tax assets are more likely than not to be realizable. Therefore, we believe that there is a possibility that some or all of the valuation allowance could be released in the foreseeable future. Our ability to utilize net operating loss (“NOL”) carryforwards, disallowed business interest carryforwards, tax credits and possibly other tax attributes to reduce future taxable income and federal income tax is subject to various limitations under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). The utilization of such attributes may be subject to an annual limitation under Section 382 of the Code should transactions involving our equity result in a cumulative shift of more than 50% in the beneficial ownership of our stock during any three-year testing period (an “Ownership Change”). As a result of emergence from bankruptcy on February 9, 2021, the Company did experience an Ownership Change. We did not qualify for the exception under Section 382(l)(5) of the Code, and therefore an annual limitation was determined under Section 382(l)(6) of the Code, which is based on the post-emergence value of our equity multiplied by the adjusted federal long-term rate in effect for the month in which the ownership change occurred. The amount of the annual limitation has been computed to be $54 million. The limitation applies to our NOL carryforwards, disallowed business interest carryforwards and general business credits until such attributes expire or are fully utilized. As we believe we were in an overall net unrealized built-in loss position at the Effective Date, the limitation also applies to any recognized built-in losses incurred for a period of five years but only to the extent of the overall net unrealized built-in loss. Recognized built-in losses include a portion of our tax depreciation, depletion, and amortization deductions along with a portion of our realized hedging losses. We incurred sufficient recognized built-in losses during the 2021 tax year such that we have no further restriction on the company’s deductions for such items. Some states impose similar limitations on tax attribute utilization upon experiencing an ownership change. In Chapter 11 bankruptcy cases, the cancellation of debt income (“CODI”) realized upon emergence from bankruptcy is excludible from taxable income but results in a reduction of tax attributes in accordance with the attribute reduction and ordering rules of Section 108 of the Code. The amount of our CODI was $5 billion, all of which reduced our NOL carryforwards. As a result of the Section 382 limitation, $593 million of federal NOLs remaining after the CODI reduction were estimated to expire before they would become utilizable and as such were removed from our deferred tax assets. The states we operate in generally have similar rules for attribute reduction and Section 382 limitation which resulted in the reduction of certain of our state NOL carryforwards. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Equity | 11. Equity New Common Stock As discussed in Note 2 , on the Effective Date, we issued an aggregate of 97,907,081 shares of New Common Stock, par value $0.01 per share, to the holders of allowed claims, and 2,092,918 shares of New Common Stock were reserved for future distributions under the Plan. During the 2022 Successor Period, 36,951 reserved shares were issued to resolve allowed General Unsecured Claims. On November 1, 2021 we completed the Vine Acquisition and issued 18,709,399 shares of New Common Stock. On March 9, 2022, we completed the Marcellus Acquisition and issued 9,442,185 shares of New Common Stock. See further discussion of both acquisitions in Note 4 . Dividends In May 2021, we initiated a new annual dividend on our shares of common stock, expected to be paid quarterly. The following table summarizes our dividend payments in the 2022 Successor Period. Payment Date Stockholders of Record Date Dividend Payment Rate Per Share March 22, 2022 March 7, 2022 $ 210 $ 1.7675 June 2, 2022 May 19, 2022 $ 298 $ 2.34 On August 2, 2022, we declared a quarterly dividend payable of $2.32 per share, which will be paid on September 1, 2022 to stockholders of record at the close of business on August 17, 2022. The dividend consists of a base quarterly dividend in the amount of $0.55 per share and a variable quarterly dividend in the amount of $1.77 per share. Share Repurchase Program As of December 2, 2021, the Company was authorized to purchase up to $1 billion of the Company’s common stock and/or warrants under a share repurchase program. In June 2022, our Board of Directors authorized an expansion of the share repurchase program by $1.0 billion, bringing the total authorized share repurchase amount to $2.0 billion for stock and/or warrants. The share repurchase program will expire on December 31, 2023. In March 2022, we commenced our share repurchase program and repurchased 1 million shares of common stock for an aggregate price of $83 million. In June 2022, we repurchased 5.8 million shares of common stock for an aggregate price of $515 million, inclusive of shares for which cash settlement occurred in early July. The shares of common stock repurchased in March 2022 and June 2022 were retired and recorded as a reduction to common stock and retained earnings. Warrants Class A Warrants Class B Warrants Class C Warrants (a) Outstanding as of December 31, 2021 10,856,852 12,313,273 11,388,371 Converted into New Common Stock (b) (1,036,606) (22,392) (13,845) Outstanding as of March 31, 2022 9,820,246 12,290,881 11,374,526 Converted into New Common Stock (b) (68,300) (111) (161,849) Issued for General Unsecured Claims — — 69,720 Outstanding as of June 30, 2022 9,751,946 12,290,770 11,282,397 _________________________________________ (a) As of June 30, 2022, we had 2,248,726 of reserved Class C Warrants. (b) During the 2022 Successor Period, we issued 836,275 shares of common stock as a result of Warrant exercises. As discussed in Note 2 , on the Effective Date, we issued 11,111,111 Class A Warrants, 12,345,679 Class B Warrants and 9,768,527 Class C Warrants that are initially exercisable for one share of New Common Stock per Warrant at initial exercise prices of $27.63, $32.13 and $36.18 per share, respectively, subject to adjustments pursuant to the terms of the Warrants. The Warrants are exercisable from the Effective Date until February 9, 2026. The Warrants contain customary anti-dilution adjustments in the event of any stock split, reverse stock split, reclassification, stock dividend or other distributions. The exercise prices of the Warrants were adjusted to prevent the dilution of rights for the effects of the quarterly dividend distribution on June 2, 2022, and the adjusted exercise prices are $25.74, $29.93, and $33.70 per share for the Class A, Class B and Class C Warrants, respectively. Chapter 11 Proceedings Upon emergence from Chapter 11 on February 9, 2021, as discussed in Note 2 , Predecessor common stock and preferred stock were canceled and released under the Plan without receiving any recovery on account thereof. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | 12. Share-Based Compensation As discussed in Note 2 , on the Effective Date, our Predecessor common stock was canceled and New Common Stock was issued. Accordingly, our then existing share-based compensation awards were also canceled, which resulted in the recognition of any previously unamortized expense related to the canceled awards on the date of cancellation. Share-based compensation for the Predecessor and Successor Periods is not comparable. Successor Share-Based Compensation As of the Effective Date, the Board of Directors adopted the 2021 Long Term Incentive Plan (the “LTIP”) with a share reserve equal to 6,800,000 shares of New Common Stock. The LTIP provides for the grant of RSUs, restricted stock awards, stock options, stock appreciation rights, performance awards and other stock awards to the Company’s employees and non-employee directors. Restricted Stock Units. In the 2021 and 2022 Successor Periods, we granted RSUs to employees and non-employee directors under the LTIP, which will vest over a three-year period. The fair value of RSUs is based on the closing sales price of our common stock on the date of grant, and compensation expense is recognized ratably over the requisite service period. A summary of the changes in unvested RSUs is presented below: Unvested Restricted Stock Units Weighted Average Grant Date Fair Value Per Share (in thousands) Unvested as of December 31, 2021 775 $ 46.77 Granted 496 $ 75.38 Vested (292) $ 47.69 Forfeited (79) $ 51.42 Unvested as of June 30, 2022 900 $ 61.82 The aggregate intrinsic value of RSUs that vested during the 2022 Successor Period was approximately $26 million based on the stock price at the time of vesting. As of June 30, 2022, there was approximately $50 million of total unrecognized compensation expense related to unvested RSUs. The expense is expected to be recognized over a weighted average period of approximatel y 2.41 years. Performance Share Units. In the 2021 and 2022 Successor Periods, we granted PSUs to senior management under the LTIP, which will generally vest over a three-year period and will be settled in shares. The performance criteria include total shareholder return (“TSR”) and relative TSR (“rTSR”), and could result in a total payout between 0% - 200% of the target units. For the PSUs granted in 2021, the performance criteria also include share price hurdles which could result in a total payout out between 0% - 100% of the target units. The fair value of the PSUs was measured on the grant date using a Monte Carlo simulation, and compensation expense is recognized ratably over the requisite service period because these awards depend on a combination of service and market criteria. The following table presents the assumptions used in the valuation of the PSUs granted in 2022. Assumption TSR, rTSR Risk-free interest rate 2.00 % Volatility 70.2 % A summary of the changes in unvested PSUs is presented below: Unvested Performance Share Units Weighted Average Grant Date Fair Value Per Share (in thousands) Unvested as of December 31, 2021 183 $ 66.12 Granted 133 $ 109.65 Vested — $ — Forfeited (20) $ 54.06 Unvested as of June 30, 2022 296 $ 86.47 As of June 30, 2022 , there was approximatel y $21 million of total unrecognized compensation expense related to unvested PSUs. The expense is expected to be recognized over a weighted average period of approximat ely 2.46 years . Predecessor Share-Based Compensation Our Predecessor share-based compensation program consisted of RSUs, stock options, PSUs and cash restricted stock units (“CRSUs”) granted to employees and RSUs granted to non-employee directors under our long-term incentive plans. The RSUs and stock options were equity-classified awards and the PSUs and CRSUs were liability-classified awards. Restricted Stock Units. We granted RSUs to employees and non-employee directors. A summary of the changes in unvested RSUs is presented below: Unvested Weighted Average (in thousands) Unvested as of December 31, 2020 1 $ 616.57 Granted — $ — Vested — $ — Forfeited/canceled (1) $ 611.47 Unvested as of February 9, 2021 — $ — Stock Options. In the year ended December 31, 2020, we granted members of management stock options that vested ratably over a three-year period. Each stock option award had an exercise price equal to the closing price of our common stock on the grant date. Outstanding options expired seven years to ten years from the date of grant. We utilized the Black-Scholes option-pricing model to measure the fair value of stock options. The expected life of an option was determined using the simplified method. Volatility assumptions were estimated based on the average historical volatility of Chesapeake stock over the expected life of an option. The risk-free interest rate was based on the U.S. Treasury rate in effect at the time of the grant over the expected life of the option. The dividend yield was based on an annual dividend yield, taking into account our dividend policy, over the expected life of the option. The following table provides information related to stock option activity: Number of Weighted Weighted Average Contract Life in Years Aggregate Intrinsic Value (a) (in thousands) Outstanding as of December 31, 2020 20 $ 1,429.11 4.27 $ — Granted — $ — Exercised — $ — $ — Expired (1) $ 741.86 Forfeited/canceled (19) $ 1,452.40 Outstanding as of February 9, 2021 — $ — — $ — Exercisable as of February 9, 2021 — $ — — $ — ___________________________________________ (a) The intrinsic value of a stock option is the amount by which the current market value or the market value upon exercise of the underlying stock exceeds the exercise price of the option. Restricted Stock Units, Stock Option, and PSU Compensation. We recognized the following compensation costs, net of actual forfeitures, related to RSUs, stock options, and PSUs for the periods presented: Successor Predecessor Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Period from February 10, 2021 through June 30, 2021 Period from January 1, 2021 through February 9, 2021 General and administrative expenses $ 6 $ 2 $ 9 $ 2 $ 3 Natural gas and oil properties 1 1 2 1 — Production expense 1 — 1 — — Total RSU, stock option and PSU compensation $ 8 $ 3 $ 12 $ 3 $ 3 |
Derivative and Hedging Activiti
Derivative and Hedging Activities | 6 Months Ended |
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative and Hedging Activities | 13. Derivative and Hedging Activities We use derivative instruments to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility. These commodity derivative financial instruments include financial price swaps, basis protection swaps, collars, three-way collars, options and swaptions. All of our natural gas and oil derivative instruments are net settled based on the difference between the fixed-price payment and the floating-price payment, resulting in a net amount due to or from the counterparty. We do not intend to hold or issue derivative financial instruments for speculative trading purposes and have elected not to designate any of our derivative instruments for hedge accounting treatment. The estimated fair values of our natural gas and oil derivative instrument assets (liabilities) as of June 30, 2022 and December 31, 2021 are provided below: Successor June 30, 2022 December 31, 2021 Notional Volume Fair Value Notional Volume Fair Value Natural gas (Bcf): Fixed-price swaps 570 $ (1,442) 637 $ (675) Collars 607 (482) 205 (82) Three-way collars 17 (33) — — Call options 18 (41) 18 (17) Swaptions 7 (13) — — Basis protection swaps 470 (51) 252 (11) Total natural gas 1,689 (2,062) 1,112 (785) Oil (MMBbls): Fixed-price swaps 7 (362) 13 (356) Collars 6 (53) — — Basis protection swaps 14 (13) 9 (2) Total oil 27 (428) 22 (358) Total estimated fair value $ (2,490) $ (1,143) Effect of Derivative Instruments – Condensed Consolidated Balance Sheets The following table presents the fair value and location of each classification of derivative instrument included in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021 on a gross basis and after same-counterparty netting: Gross Fair Value (a) Amounts Netted in the Consolidated Balance Sheets Net Fair Value Presented in the Consolidated Balance Sheets Successor As of June 30, 2022 Commodity Contracts: Short-term derivative asset $ 51 $ (48) $ 2 Long-term derivative asset 45 (32) 13 Short-term derivative liability (2,108) 48 (2,059) Long-term derivative liability (478) 32 (446) Total derivatives $ (2,490) $ — $ (2,490) As of December 31, 2021 Commodity Contracts: Short-term derivative asset $ 56 $ (51) $ 5 Short-term derivative liability (950) 51 (899) Long-term derivative liability (249) — (249) Total derivatives $ (1,143) $ — $ (1,143) ___________________________________________ (a) These financial assets (liabilities) are measured at fair value on a recurring basis utilizing significant other observable inputs; see further discussion on fair value measurements below. Fair Value The fair value of our derivatives is based on third-party pricing models, which utilize inputs that are either readily available in the public market, such as natural gas, oil and NGL forward curves and discount rates, or can be corroborated from active markets or broker quotes, and as such are classified as Level 2. These values are compared to the values given by our counterparties for reasonableness. Derivatives are also subject to the risk that either party to a contract will be unable to meet its obligations. We factor non-performance risk into the valuation of our derivatives using current published credit default swap rates. To date, this has not had a material impact on the values of our derivatives. Credit Risk Considerations Our derivative instruments expose us to our counterparties’ credit risk. To mitigate this risk, we enter into derivative contracts only with counterparties that are highly rated or deemed by us to have acceptable credit strength and deemed by management to be competent and competitive market-makers, and we attempt to limit our exposure to non-performance by any single counterparty. As of June 30, 2022, our natural gas and oil derivative instruments were spread among 14 counterparties. Hedging Arrangements Certain of our hedging arrangements are with counterparties that are also lenders (or affiliates of lenders) under our Exit Credit Facility. The contracts entered into with these counterparties are secured by the same collateral that secures the Exit Credit Facility. The counterparties’ obligations must be secured by cash or letters of credit to the extent that any mark-to-market amounts owed to us exceed defined thresholds. As of June 30, 2022, we did not have any cash or letters of credit posted as collateral for our commodity derivatives. Effect of Derivative Instruments – Accumulated Other Comprehensive Income A reconciliation of the changes in accumulated other comprehensive income in our condensed consolidated statements of stockholders’ equity related to our terminated cash flow hedges is presented below: Predecessor Period from January 1, 2021 through February 9, 2021 Before Tax After Tax Balance, beginning of period $ (12) $ 45 Losses reclassified to income (a) 3 3 Fresh start adjustments 9 9 Elimination of tax effects — (57) Balance, end of period $ — $ — ___________________________________________ (a) These losses were included as a component of total natural gas and oil derivatives. Our accumulated other comprehensive loss balance represented the net deferred loss associated with commodity derivative contracts that were previously designated as cash flow hedges for which the original contract months were yet to occur. The remaining deferred gain or loss amounts were to be recognized in earnings in the month for which the original contract months were to occur. In connection with our adoption of fresh start accounting we recorded a fair value adjustment to eliminate the accumulated other comprehensive income related to hedging settlements including the elimination of tax effects. See Note 3 for a discussion of fresh start accounting adjustments. We did not have any changes or items impacting other comprehensive income for the 2022 Successor Quarter, the 2022 Successor Period, the 2021 Successor Quarter or the 2021 Successor Period. |
Other Operating Expense (Income
Other Operating Expense (Income), Net | 6 Months Ended |
Jun. 30, 2022 | |
Other Income and Expenses [Abstract] | |
Other Operating Expense (Income), Net | 14. Other Operating Expense (Income), Net During the 2022 Successor Period, we recognized approximately $33 million of costs related to our Marcellus Acquisition, which included integration costs, consulting fees, financial advisory fees, legal fees and change in control expense in accordance with Chief’s existing employment agreements. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policy) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationThe accompanying unaudited condensed consolidated financial statements of Chesapeake were prepared in accordance with GAAP and the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures have been condensed or omitted. |
Segments | Segments Operating segments are defined as components of an enterprise that engage in activities from which it may earn revenues and incur expenses for which separate operational financial information is available and is regularly evaluated by the chief operating decision maker for the purpose of allocating an enterprise’s resources and assessing its operating performance. We have concluded that we have only one reportable operating segment due to the similar nature of the exploration and production business across Chesapeake and its consolidated subsidiaries and the fact that our marketing activities are ancillary to our operations. |
Restricted Cash | Restricted Cash As of June 30, 2022, we had restricted cash of $9 million. The restricted funds are maintained primarily to pay certain convenience class unsecured claims following our emergence from bankruptcy. |
New Accounting Pronouncements | In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) . The purpose of ASU 2020-04 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates such as LIBOR, which is expected to be phased out for most US |
Fresh Start Accounting (Tables)
Fresh Start Accounting (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Reorganizations [Abstract] | |
Schedule of fresh start accounting adjustments | The following table reconciles the enterprise value to the implied fair value of the Successor’s equity as of the Effective Date: February 9, 2021 Enterprise Value $ 4,851 Plus: Cash and cash equivalents (a) 48 Less: Fair value of debt (1,313) Successor equity value $ 3,586 ____________________________________________ (a) Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above. The following table reconciles the enterprise value to the reorganization value as of the Effective Date: February 9, 2021 Enterprise Value $ 4,851 Plus: Cash and cash equivalents (a) 48 Plus: Current liabilities 1,582 Plus: Asset retirement obligations (non-current portion) 236 Plus: Other non-current liabilities 97 Reorganization value of Successor assets $ 6,814 ____________________________________________ The following condensed consolidated balance sheet is as of February 9, 2021. This condensed consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Effective Date. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities and warrants. Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Assets Current assets: Cash and cash equivalents $ 243 $ (203) (a) $ — $ 40 Restricted cash — 86 (b) — 86 Accounts receivable, net 861 (18) (c) — 843 Short-term derivative assets — — — — Other current assets 66 (5) (d) — 61 Total current assets 1,170 (140) — 1,030 Property and equipment: Natural gas and oil properties, successful efforts method Proved natural gas and oil properties 25,794 — (21,108) (o) 4,686 Unproved properties 1,546 — (1,063) (o) 483 Other property and equipment 1,755 — (1,256) (o) 499 Total property and equipment 29,095 — (23,427) (o) 5,668 Less: accumulated depreciation, depletion and amortization (23,877) — 23,877 (o) — Property and equipment held for sale, net 9 — (7) (o) 2 Total property and equipment, net 5,227 — 443 (o) 5,670 Other long-term assets 198 — (84) (p) 114 Total assets $ 6,595 $ (140) $ 359 $ 6,814 Predecessor Reorganization Adjustments Fresh Start Adjustments Successor Liabilities and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 391 $ 24 (e) $ — $ 415 Current maturities of long-term debt, net 1,929 (1,929) (f) — — Accrued interest 4 (4) (g) — — Short-term derivative liabilities 398 — — 398 Other current liabilities 645 124 (h) — 769 Total current liabilities 3,367 (1,785) — 1,582 Long-term debt, net — 1,261 (i) 52 (q) 1,313 Long-term derivative liabilities 90 — — 90 Asset retirement obligations, net of current portion 139 — 97 (r) 236 Other long-term liabilities 5 2 (j) — 7 Liabilities subject to compromise 9,574 (9,574) (k) — — Total liabilities 13,175 (10,096) 149 3,228 Contingencies and commitments ( Note 7 ) Stockholders’ equity (deficit): Predecessor preferred stock 1,631 (1,631) (l) — — Predecessor common stock — — — — Predecessor additional paid-in capital 16,940 (16,940) (l) — — Successor common stock — 1 (m) — 1 Successor additional paid-in-capital — 3,585 (m) — 3,585 Accumulated other comprehensive income 48 — (48) (s) — Accumulated deficit (25,199) 24,941 (n) 258 (t) — Total stockholders’ equity (deficit) (6,580) 9,956 210 3,586 Total liabilities and stockholders’ equity (deficit) $ 6,595 $ (140) $ 359 $ 6,814 Reorganization Adjustments (a) The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan: Sources: Proceeds from issuance of the Notes $ 1,000 Proceeds from Rights Offering 600 Proceeds from refunds of interest deposit for the Notes 5 Total sources of cash $ 1,605 Uses: Payment of roll-up of DIP Facility balance $ (1,179) Payment of Exit Credit Facility - Tranche A Loan (479) Transfers to restricted cash for professional fee reserve (76) Transfers to restricted cash for convenience claim distribution reserve (10) Payment of professional fees (31) Payment of DIP Facility interest and fees (12) Payment of FLLO alternative transaction fee (12) Payment of the Notes fees funded out of escrow (8) Payment of RBL interest and fees (1) Total uses of cash $ (1,808) Net cash used $ (203) (b) Represents the transfer of funds to a restricted cash account for purposes of funding the professional fee reserve and the convenience claim distribution reserve. (c) Reflects the removal of an insurance receivable associated with a discharged legal liability. (d) Reflects the collection of an interest deposit for the senior unsecured notes. (e) Changes in accounts payable include the following: Accrual of professional service provider success fees $ 38 Accrual of convenience claim distribution reserve 10 Accrual of professional service provider fees 5 Reinstatement of accounts payable from liabilities subject to compromise 2 Payment of professional fees (31) Net impact to accounts payable $ 24 (f) Reflects payment of the pre-petition credit facility for $1.179 billion and transfer of the Tranche A and Tranche B Loans to long-term debt for $750 million. (g) Reflect payments of accrued interest and fees on the DIP Facility. (h) Changes in other current liabilities include the following: Reinstatement of other current liabilities from liabilities subject to compromise $ 191 Accrual of the Notes fees 2 Settlement of Put Option Premium through issuance of Successor Common Stock (60) Payment of DIP Facility fees (9) Net impact to other current liabilities $ 124 (i) Changes in long-term debt include the following: Issuance of the Notes $ 1,000 Issuance of Tranche A and Tranche B Loans 750 Payments on Tranche A Loans (479) Debt issuance costs for the Notes (10) Net impact to long-term debt, net $ 1,261 (j) Reflects reinstatement of a long-term lease liability. (k) On the Effective Date, liabilities subject to compromise were settled in accordance with the Plan as follows: Liabilities subject to compromise pre-emergence $ 9,574 To be reinstated on the Effective Date: Accounts payable $ (2) Other current liabilities (191) Other long-term liabilities (2) Total liabilities reinstated $ (195) Consideration provided to settle amounts per the Plan or Reorganization: Issuance of Successor common stock associated with the Rights Offering and Backstop Commitment and settlement of the Put Option Premium $ (2,311) Proceeds from issuance of Successor common stock associated with the Rights Offering and Backstop Commitment 600 Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment (783) Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment (124) Issuance of Successor common stock to unsecured note holders (45) Issuance of Successor common stock to general unsecured claims (8) Fair value of Class A Warrants (93) Fair value of Class B Warrants (94) Fair value of Class C Warrants (68) Proceeds to holders of general unsecured claims (10) Total consideration provided to settle amounts per the Plan $ (2,936) Gain on settlement of liabilities subject to compromise $ 6,443 (l) Pursuant to the Plan, as of the Effective Date, all equity interests in Predecessor, including Predecessor’s common and preferred stock, were canceled without any distribution. (m) Reflects the Successor equity including the issuance of 97,907,081 shares of New Common Stock, 11,111,111 shares of Class A Warrants, 12,345,679 shares of Class B Warrants and 9,768,527 shares of Class C Warrants pursuant to the Plan. Issuance of Successor equity associated with the Rights Offering and Backstop Commitment $ 2,371 Issuance of Successor equity to holders of the FLLO Term Loan, incremental to the Rights Offering and Backstop Commitment 783 Issuance of Successor equity to holders of the Second Lien Notes, incremental to the Rights Offering and Backstop Commitment 124 Issuance of Successor equity to holders of the unsecured senior notes 45 Issuance of Successor equity to holders of allowed general unsecured claims 8 Fair value of Class A warrants 93 Fair value of Class B warrants 94 Fair value of Class C warrants 68 Total change in Successor common stock and additional paid-in capital 3,586 Less: par value of Successor common stock (1) Change in Successor additional paid-in capital $ 3,585 (n) Reflects the cumulative net impact of the effects on accumulated deficit as follows: Gain on settlement of liabilities subject to compromise $ 6,443 Accrual of professional service provider success fees (38) Accrual of professional service provider fees (5) Surrender of other receivable (18) Payment of FLLO alternative transaction fee (12) Total reorganization items, net 6,370 Cancellation of predecessor equity 18,571 Net impact on accumulated deficit $ 24,941 Fresh Start Adjustments (o) Reflects fair value adjustments to our (i) proved natural gas and oil properties, (ii) unproved properties, (iii) other property and equipment and (iv) property and equipment held for sale, and the elimination of accumulated depletion, depreciation and amortization. (p) Reflects the fair value adjustment to record historical contracts at their fair values. (q) Reflects the fair value adjustments to the 2026 Notes and 2029 Notes for $22 million and $30 million, respectively. (r) Reflects the adjustment to our asset retirement obligations using assumptions as of the Effective Date, including an inflation factor of 2% and an average credit-adjusted risk-free rate of 5.18%. (s) Reflects the fair value adjustment to eliminate the accumulated other comprehensive income of $9 million related to hedging settlements offset by the elimination of $57 million of income tax effects which has resulted in the recording of an income tax benefit of $57 million. See Note 10 for a discussion of income taxes. (t) Reflects the net cumulative impact of the fresh start adjustments on accumulated deficit as follows: Fresh start adjustments to property and equipment $ 443 Fresh start adjustments to other long-term assets (84) Fresh start adjustments to long-term debt (52) Fresh start adjustments to long-term asset retirement obligations (97) Fresh start adjustments to accumulated other comprehensive income (9) Total fresh start adjustments impacting reorganizations items, net 201 Income tax effects on accumulated other comprehensive income 57 Net impact to accumulated deficit $ 258 |
Schedule of reorganization items | The following table summarizes the components in reorganization items, net included in our unaudited condensed consolidated statements of operations: Predecessor Period from January 1, 2021 through February 9, 2021 Gains on the settlement of liabilities subject to compromise $ 6,443 Accrual for allowed claims (1,002) Gain on fresh start adjustments 201 Gain from release of commitment liabilities 55 Professional service provider fees and other (60) Success fees for professional service providers (38) Surrender of other receivable (18) FLLO alternative transaction fee (12) Total reorganization items, net $ 5,569 |
Natural Gas and Oil Property _2
Natural Gas and Oil Property Transactions (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of preliminary allocation of the total purchase price | We have accounted for the Marcellus Acquisition as a business combination, using the acquisition method. The following table represents the preliminary allocation of the total purchase price to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, valuation of pre-acquisition contingencies and final appraisals of assets acquired and liabilities assumed. We expect to complete the purchase price allocation during the 12-month period following the acquisition date, during which time the value of the assets and liabilities may be revised as appropriate. Preliminary Consideration: Cash $ 2,000 Fair value of Chesapeake’s common stock issued in the merger 764 Working capital adjustments 6 Total consideration $ 2,770 Fair Value of Liabilities Assumed: Current liabilities $ 420 Other long-term liabilities 129 Amounts attributable to liabilities assumed $ 549 Fair Value of Assets Acquired: Cash and cash equivalents $ — Other current assets 218 Proved natural gas and oil properties 2,309 Unproved properties 788 Other property and equipment 1 Other long-term assets 3 Amounts attributable to assets acquired $ 3,319 Total identifiable net assets $ 2,770 Preliminary Consideration: Cash $ 253 Fair value of Chesapeake’s common stock issued in the merger 1,231 Restricted stock unit replacement awards 6 Total consideration $ 1,490 Fair Value of Liabilities Assumed: Current liabilities $ 765 Long-term debt 1,021 Deferred tax liabilities 49 Other long-term liabilities 272 Amounts attributable to liabilities assumed $ 2,107 Fair Value of Assets Acquired: Cash and cash equivalents $ 59 Other current assets 206 Proved natural gas and oil properties 2,181 Unproved properties 1,118 Other property and equipment 1 Other long-term assets 32 Amounts attributable to assets acquired $ 3,597 Total identifiable net assets $ 1,490 |
Schedule of pro forma financial information | The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including the estimated tax impact of the pro forma adjustments. Successor Six Months Ended June 30, 2022 Revenues $ 4,455 Net income available to common stockholders $ 369 Earnings per common share: Basic $ 2.90 Diluted $ 2.48 Successor Three Months Ended June 30, 2021 Period from February 10, 2021 through June 30, 2021 Revenues $ 668 $ 1,744 Net loss available to common stockholders $ (892) $ (573) Earnings per common share: Basic $ (7.06) $ (4.54) Diluted $ (7.06) $ (4.54) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | The reconciliations between basic and diluted earnings (loss) per share are as follows: Successor Predecessor Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Period from February 10, 2021 through June 30, 2021 Period from January 1, 2021 through February 9, 2021 Numerator Net income (loss), basic and diluted $ 1,237 $ (439) $ 473 $ (144) $ 5,383 Denominator (in thousands) Weighted average common shares outstanding, basic 126,814 97,931 123,826 97,922 9,781 Effect of potentially dilutive securities Preferred stock — — — — 290 Warrants 22,322 — 21,295 — — Restricted stock units 349 — 368 — — Performance share units 47 — 45 — — Weighted average common shares outstanding, diluted 149,532 97,931 145,534 97,922 10,071 Earnings (loss) per common share: Basic $ 9.75 $ (4.48) $ 3.82 $ (1.47) $ 550.35 Diluted $ 8.27 $ (4.48) $ 3.25 $ (1.47) $ 534.51 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Our long-term debt consisted of the following as of June 30, 2022 and December 31, 2021: Successor June 30, 2022 December 31, 2021 Carrying Amount Fair Value (a) Carrying Amount Fair Value (a) Exit Credit Facility - Tranche A Loans $ 775 $ 775 $ — $ — Exit Credit Facility - Tranche B Loans 221 221 221 221 5.50% senior notes due 2026 500 476 500 526 5.875% senior notes due 2029 500 472 500 535 6.75% senior notes due 2029 950 919 950 1,031 Premiums on senior notes 108 — 116 — Debt issuance costs (8) — (9) — Total long-term debt, net $ 3,046 $ 2,863 $ 2,278 $ 2,313 ____________________________________________ (a) The carrying value of borrowings under our Exit Credit Facility approximate fair value as the interest rates are based on prevailing market rates; therefore, they are a Level 1 fair value measurement. For all other debt, a market approach, based upon quotes from major financial institutions, which are Level 2 inputs, is used to measure the fair value. |
Contingencies and Commitments (
Contingencies and Commitments (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of contractual obligation | The aggregate undiscounted commitments under our gathering, processing and transportation agreements, excluding any reimbursement from working interest and royalty interest owners, credits for third-party volumes or future costs under cost-of-service agreements, are presented below: Successor June 30, 2022 Remainder of 2022 $ 296 2023 536 2024 496 2025 426 2026 386 2027-2036 2,062 Total $ 4,202 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Other current liabilities | Other current liabilities as of June 30, 2022 and December 31, 2021 are detailed below: Successor June 30, 2022 December 31, 2021 Revenues and royalties due others $ 926 $ 617 Accrued drilling and production costs 268 142 Accrued hedging costs 120 113 Accrued compensation and benefits 56 91 Other accrued taxes 134 86 Operating leases 45 29 Accrued share repurchases 40 — Joint interest prepayments received 16 14 Other 125 110 Total other current liabilities $ 1,730 $ 1,202 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | The following table shows revenue disaggregated by operating area and product type: Successor Three Months Ended June 30, 2022 Natural Gas Oil NGL Total Marcellus $ 1,152 $ — $ — $ 1,152 Haynesville 988 — — 988 Eagle Ford 85 503 62 650 Natural gas, oil and NGL revenue $ 2,225 $ 503 $ 62 $ 2,790 Marketing revenue $ 637 $ 508 $ 78 $ 1,223 Successor Three Months Ended June 30, 2021 Natural Gas Oil NGL Total Marcellus $ 226 $ — $ — $ 226 Haynesville 124 — — 124 Eagle Ford 31 386 41 458 Powder River Basin 16 58 10 84 Natural gas, oil and NGL revenue $ 397 $ 444 $ 51 $ 892 Marketing revenue $ 146 $ 340 $ 53 $ 539 Successor Six Months Ended June 30, 2022 Natural Gas Oil NGL Total Marcellus $ 1,761 $ — $ — $ 1,761 Haynesville 1,640 — — 1,640 Eagle Ford 132 953 119 1,204 Powder River Basin 20 66 13 99 Natural gas, oil and NGL revenue $ 3,553 $ 1,019 $ 132 $ 4,704 Marketing revenue $ 1,045 $ 903 $ 142 $ 2,090 Successor Period from February 10, 2021 through June 30, 2021 Natural Gas Oil NGL Total Marcellus $ 389 $ — $ — $ 389 Haynesville 194 — — 194 Eagle Ford 74 592 64 730 Powder River Basin 30 86 16 132 Natural gas, oil and NGL revenue $ 687 $ 678 $ 80 $ 1,445 Marketing revenue $ 243 $ 502 $ 71 $ 816 Predecessor Period from January 1, 2021 through February 9, 2021 Natural Gas Oil NGL Total Marcellus $ 119 $ — $ — $ 119 Haynesville 53 — — 53 Eagle Ford 17 159 17 193 Powder River Basin 7 20 6 33 Natural gas, oil and NGL revenue $ 196 $ 179 $ 23 $ 398 Marketing revenue $ 78 $ 141 $ 20 $ 239 |
Schedule of accounts receivable | Accounts receivable as of June 30, 2022 and December 31, 2021 are detailed below: Successor June 30, 2022 December 31, 2021 Natural gas, oil and NGL sales $ 1,594 $ 922 Joint interest 201 158 Other 12 38 Allowance for doubtful accounts (3) (3) Total accounts receivable, net $ 1,804 $ 1,115 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Schedule of dividends | In May 2021, we initiated a new annual dividend on our shares of common stock, expected to be paid quarterly. The following table summarizes our dividend payments in the 2022 Successor Period. Payment Date Stockholders of Record Date Dividend Payment Rate Per Share March 22, 2022 March 7, 2022 $ 210 $ 1.7675 June 2, 2022 May 19, 2022 $ 298 $ 2.34 |
Schedule of warrants | Warrants Class A Warrants Class B Warrants Class C Warrants (a) Outstanding as of December 31, 2021 10,856,852 12,313,273 11,388,371 Converted into New Common Stock (b) (1,036,606) (22,392) (13,845) Outstanding as of March 31, 2022 9,820,246 12,290,881 11,374,526 Converted into New Common Stock (b) (68,300) (111) (161,849) Issued for General Unsecured Claims — — 69,720 Outstanding as of June 30, 2022 9,751,946 12,290,770 11,282,397 _________________________________________ (a) As of June 30, 2022, we had 2,248,726 of reserved Class C Warrants. (b) During the 2022 Successor Period, we issued 836,275 shares of common stock as a result of Warrant exercises. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of the changes in unvested restricted stock | A summary of the changes in unvested RSUs is presented below: Unvested Restricted Stock Units Weighted Average Grant Date Fair Value Per Share (in thousands) Unvested as of December 31, 2021 775 $ 46.77 Granted 496 $ 75.38 Vested (292) $ 47.69 Forfeited (79) $ 51.42 Unvested as of June 30, 2022 900 $ 61.82 Unvested Weighted Average (in thousands) Unvested as of December 31, 2020 1 $ 616.57 Granted — $ — Vested — $ — Forfeited/canceled (1) $ 611.47 Unvested as of February 9, 2021 — $ — |
Schedule valuation assumptions | The following table presents the assumptions used in the valuation of the PSUs granted in 2022. Assumption TSR, rTSR Risk-free interest rate 2.00 % Volatility 70.2 % |
Summary of the changes in unvested performance share | A summary of the changes in unvested PSUs is presented below: Unvested Performance Share Units Weighted Average Grant Date Fair Value Per Share (in thousands) Unvested as of December 31, 2021 183 $ 66.12 Granted 133 $ 109.65 Vested — $ — Forfeited (20) $ 54.06 Unvested as of June 30, 2022 296 $ 86.47 |
Schedule of stock option activity | The following table provides information related to stock option activity: Number of Weighted Weighted Average Contract Life in Years Aggregate Intrinsic Value (a) (in thousands) Outstanding as of December 31, 2020 20 $ 1,429.11 4.27 $ — Granted — $ — Exercised — $ — $ — Expired (1) $ 741.86 Forfeited/canceled (19) $ 1,452.40 Outstanding as of February 9, 2021 — $ — — $ — Exercisable as of February 9, 2021 — $ — — $ — ___________________________________________ (a) The intrinsic value of a stock option is the amount by which the current market value or the market value upon exercise of the underlying stock exceeds the exercise price of the option. |
Schedule of share-based compensation arrangements | We recognized the following compensation costs, net of actual forfeitures, related to RSUs, stock options, and PSUs for the periods presented: Successor Predecessor Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Period from February 10, 2021 through June 30, 2021 Period from January 1, 2021 through February 9, 2021 General and administrative expenses $ 6 $ 2 $ 9 $ 2 $ 3 Natural gas and oil properties 1 1 2 1 — Production expense 1 — 1 — — Total RSU, stock option and PSU compensation $ 8 $ 3 $ 12 $ 3 $ 3 |
Derivative and Hedging Activi_2
Derivative and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of estimated fair values of oil, natural gas and NGL derivative instruments | The estimated fair values of our natural gas and oil derivative instrument assets (liabilities) as of June 30, 2022 and December 31, 2021 are provided below: Successor June 30, 2022 December 31, 2021 Notional Volume Fair Value Notional Volume Fair Value Natural gas (Bcf): Fixed-price swaps 570 $ (1,442) 637 $ (675) Collars 607 (482) 205 (82) Three-way collars 17 (33) — — Call options 18 (41) 18 (17) Swaptions 7 (13) — — Basis protection swaps 470 (51) 252 (11) Total natural gas 1,689 (2,062) 1,112 (785) Oil (MMBbls): Fixed-price swaps 7 (362) 13 (356) Collars 6 (53) — — Basis protection swaps 14 (13) 9 (2) Total oil 27 (428) 22 (358) Total estimated fair value $ (2,490) $ (1,143) |
Schedule of effect of derivative instruments, condensed consolidated balance sheets | The following table presents the fair value and location of each classification of derivative instrument included in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021 on a gross basis and after same-counterparty netting: Gross Fair Value (a) Amounts Netted in the Consolidated Balance Sheets Net Fair Value Presented in the Consolidated Balance Sheets Successor As of June 30, 2022 Commodity Contracts: Short-term derivative asset $ 51 $ (48) $ 2 Long-term derivative asset 45 (32) 13 Short-term derivative liability (2,108) 48 (2,059) Long-term derivative liability (478) 32 (446) Total derivatives $ (2,490) $ — $ (2,490) As of December 31, 2021 Commodity Contracts: Short-term derivative asset $ 56 $ (51) $ 5 Short-term derivative liability (950) 51 (899) Long-term derivative liability (249) — (249) Total derivatives $ (1,143) $ — $ (1,143) ___________________________________________ |
Schedule of effect of derivative instruments, accumulated other comprehensive income (loss) | A reconciliation of the changes in accumulated other comprehensive income in our condensed consolidated statements of stockholders’ equity related to our terminated cash flow hedges is presented below: Predecessor Period from January 1, 2021 through February 9, 2021 Before Tax After Tax Balance, beginning of period $ (12) $ 45 Losses reclassified to income (a) 3 3 Fresh start adjustments 9 9 Elimination of tax effects — (57) Balance, end of period $ — $ — ___________________________________________ |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | |
Accounting Policies [Abstract] | ||
Number of reportable segments | segment | 1 | |
Restricted cash | $ | $ 9 | $ 9 |
Chapter 11 Emergence (Details)
Chapter 11 Emergence (Details) $ in Millions | Feb. 09, 2021 USD ($) boardMember shares | Jun. 30, 2022 shares |
Directors | ||
Debt Instrument [Line Items] | ||
Number of individuals elected in Board of Directors (in individuals) | boardMember | 7 | |
Non-Employee Directors | ||
Debt Instrument [Line Items] | ||
Number of individuals elected in Board of Directors (in individuals) | boardMember | 5 | |
2021 Long Term Incentive Plan | ||
Debt Instrument [Line Items] | ||
Common stock, reserved for future issuance (in shares) | 6,800,000 | |
Class C Warrants | ||
Debt Instrument [Line Items] | ||
Common stock, reserved for future issuance (in shares) | 2,248,726 | |
New Common Stock | ||
Debt Instrument [Line Items] | ||
Stock issued during period, new issues (in shares) | 97,907,081 | |
Common stock, reserved for future issuance (in shares) | 2,092,918 | |
New Common Stock | Rights Offering | ||
Debt Instrument [Line Items] | ||
Stock issued during period, new issues (in shares) | 62,927,320 | |
New Common Stock | Backstop Parties, Put Option Premium | ||
Debt Instrument [Line Items] | ||
Stock issued during period, new issues (in shares) | 6,337,031 | |
New Common Stock | Backstop Parties, Obligations | ||
Debt Instrument [Line Items] | ||
Stock issued during period, new issues (in shares) | 442,991 | |
New Common Stock | Class A Warrants | ||
Debt Instrument [Line Items] | ||
Warrants issued (in shares) | 11,111,111 | |
New Common Stock | Class B Warrants | ||
Debt Instrument [Line Items] | ||
Warrants issued (in shares) | 12,345,679 | |
New Common Stock | Class C Warrants | ||
Debt Instrument [Line Items] | ||
Common stock, reserved for future issuance (in shares) | 3,948,893 | |
Warrants issued (in shares) | 9,768,527 | |
New Common Stock | FLLO Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Stock issued during period, new issues (in shares) | 23,022,420 | |
New Common Stock | Second Lien Notes | ||
Debt Instrument [Line Items] | ||
Stock issued during period, new issues (in shares) | 3,635,118 | |
New Common Stock | Second Lien Notes | Class A Warrants | ||
Debt Instrument [Line Items] | ||
Common stock, reserved for future issuance (in shares) | 11,111,111 | |
New Common Stock | Second Lien Notes | Class B Warrants | ||
Debt Instrument [Line Items] | ||
Common stock, reserved for future issuance (in shares) | 12,345,679 | |
New Common Stock | Second Lien Notes | Class C Warrants | ||
Debt Instrument [Line Items] | ||
Common stock, reserved for future issuance (in shares) | 6,858,710 | |
Warrants issued (in shares) | 6,858,710 | |
New Common Stock | Allowed Unsecured Notes | ||
Debt Instrument [Line Items] | ||
Stock issued during period, new issues (in shares) | 1,311,089 | |
New Common Stock | Allowed Unsecured Notes | Class C Warrants | ||
Debt Instrument [Line Items] | ||
Common stock, reserved for future issuance (in shares) | 2,473,757 | |
Warrants issued (in shares) | 2,473,757 | |
New Common Stock | Allowed General Unsecured Claim | ||
Debt Instrument [Line Items] | ||
Stock issued during period, new issues (in shares) | 231,112 | |
Pro rata share received by holder | $ | $ 10 | |
Percent of convenience claim | 5% | |
New Common Stock | Allowed General Unsecured Claim | Class C Warrants | ||
Debt Instrument [Line Items] | ||
Common stock, reserved for future issuance (in shares) | 436,060 | |
Warrants issued (in shares) | 436,060 | |
New Common Stock | Upon Exercise of Warrants | ||
Debt Instrument [Line Items] | ||
Common stock, reserved for future issuance (in shares) | 37,174,210 |
Fresh Start Accounting - Additi
Fresh Start Accounting - Additional Information (Details) - USD ($) $ in Millions | Feb. 09, 2021 | Jun. 30, 2022 | Dec. 31, 2021 |
Reorganization, Chapter 11 [Line Items] | |||
Assets | $ 6,814 | $ 13,899 | $ 11,009 |
Liabilities | 3,228 | $ 8,091 | $ 5,338 |
Enterprise value | 4,851 | ||
Long-term debt, net | 1,313 | ||
DIP Facility | |||
Reorganization, Chapter 11 [Line Items] | |||
Payment of roll-up of DIP Facility balance | 1,179 | ||
Payment of roll-up of DIP Facility balance | 1,179 | ||
Predecessor | |||
Reorganization, Chapter 11 [Line Items] | |||
Assets | 6,595 | ||
Liabilities | 13,175 | ||
Long-term debt, net | 0 | ||
Fresh Start Adjustments | |||
Reorganization, Chapter 11 [Line Items] | |||
Assets | 359 | ||
Liabilities | 149 | ||
Long-term debt, net | 52 | ||
Minimum | Fresh Start Adjustments | |||
Reorganization, Chapter 11 [Line Items] | |||
Enterprise value | $ 3,500 | ||
Maximum | |||
Reorganization, Chapter 11 [Line Items] | |||
Percent of voting shares received by holders | 50% | ||
Maximum | Fresh Start Adjustments | |||
Reorganization, Chapter 11 [Line Items] | |||
Enterprise value | $ 4,900 |
Fresh Start Accounting - Succes
Fresh Start Accounting - Successor’s Equity (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Feb. 09, 2021 |
Reorganization, Chapter 11 [Line Items] | ||||
Enterprise Value | $ 4,851 | |||
Plus: Cash and cash equivalents | $ 17 | $ 905 | $ 612 | 40 |
Less: Fair value of debt | (1,313) | |||
Successor equity value | $ 5,808 | $ 5,671 | 3,586 | |
Restricted cash | 86 | |||
Fresh Start Adjustments | ||||
Reorganization, Chapter 11 [Line Items] | ||||
Plus: Cash and cash equivalents | 48 | |||
Less: Fair value of debt | (52) | |||
Successor equity value | 210 | |||
Restricted cash | $ 8 |
Fresh Start Accounting - Enterp
Fresh Start Accounting - Enterprise Value Reconciliation (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Feb. 09, 2021 |
Reorganization, Chapter 11 [Line Items] | ||||
Enterprise Value | $ 4,851 | |||
Plus: Cash and cash equivalents | $ 17 | $ 905 | $ 612 | 40 |
Plus: Current liabilities | 4,241 | 2,447 | 1,582 | |
Plus: Asset retirement obligations (non-current portion) | 337 | 349 | 236 | |
Plus: Other non-current liabilities | 7 | |||
Assets | $ 13,899 | $ 11,009 | 6,814 | |
Restricted cash | 86 | |||
Fresh Start Adjustments | ||||
Reorganization, Chapter 11 [Line Items] | ||||
Plus: Cash and cash equivalents | 48 | |||
Plus: Current liabilities | 0 | |||
Plus: Asset retirement obligations (non-current portion) | 97 | |||
Plus: Other non-current liabilities | 97 | |||
Assets | 359 | |||
Restricted cash | $ 8 |
Fresh Start Accounting - Debt a
Fresh Start Accounting - Debt and Warrants (Details) - USD ($) | Jun. 30, 2022 | Feb. 09, 2021 | Feb. 02, 2021 |
Debt Instrument [Line Items] | |||
Implied stock price (in dollars per share) | $ 20.52 | ||
Expected volatility rate | 58% | ||
Expected dividend yield rate | 0% | ||
Long-term debt, net | $ 1,313,000,000 | ||
Class A Warrants | |||
Debt Instrument [Line Items] | |||
Warrant, exercise price (in dollars per share) | $ 25.74 | $ 27.63 | |
Class B Warrants | |||
Debt Instrument [Line Items] | |||
Warrant, exercise price (in dollars per share) | 29.93 | 32.13 | |
Class C Warrants | |||
Debt Instrument [Line Items] | |||
Warrant, exercise price (in dollars per share) | $ 33.70 | $ 36.18 | |
Senior Notes | 5.50% senior notes due 2026 | |||
Debt Instrument [Line Items] | |||
Debt instrument, principal amount | $ 500,000,000 | $ 500,000,000 | |
Interest rate, stated percentage | 5.50% | 5.50% | |
Senior Notes | 5.875% senior notes due 2029 | |||
Debt Instrument [Line Items] | |||
Debt instrument, principal amount | $ 500,000,000 | $ 500,000,000 | |
Interest rate, stated percentage | 5.875% | 5.875% | |
Secured Debt | Debtor-in-Possession Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long-term debt, net | $ 750,000,000 |
Fresh Start Accounting - Conden
Fresh Start Accounting - Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Feb. 09, 2021 |
Current assets: | ||||
Cash and cash equivalents | $ 17 | $ 905 | $ 612 | $ 40 |
Restricted cash | 86 | |||
Accounts receivable, net | 843 | |||
Short-term derivative assets | 2 | 5 | 0 | |
Other current assets | 61 | |||
Total current assets | 2,010 | 2,103 | 1,030 | |
Property and equipment: | ||||
Proved natural gas and oil properties | 10,816 | 7,682 | 4,686 | |
Unproved properties | 2,211 | 1,530 | 483 | |
Other property and equipment | 498 | 495 | 499 | |
Total property and equipment | 13,525 | 9,707 | 5,668 | |
Less: accumulated depreciation, depletion and amortization | (1,747) | (908) | 0 | |
Property and equipment held for sale, net | 5 | 3 | 2 | |
Total property and equipment, net | 11,783 | 8,802 | 5,670 | |
Other long-term assets | 93 | 104 | 114 | |
Total assets | 13,899 | 11,009 | 6,814 | |
Current liabilities: | ||||
Accounts payable | 414 | 308 | 415 | |
Current maturities of long-term debt, net | 0 | |||
Accrued interest | 38 | 38 | 0 | |
Short-term derivative liabilities | 2,059 | 899 | 398 | |
Other current liabilities | 1,730 | 1,202 | 769 | |
Total current liabilities | 4,241 | 2,447 | 1,582 | |
Long-term debt, net | 1,313 | |||
Long-term derivative liabilities | 446 | 249 | 90 | |
Asset retirement obligations, net of current portion | 337 | 349 | 236 | |
Other long-term liabilities | 7 | |||
Liabilities subject to compromise | 0 | |||
Total liabilities | 8,091 | 5,338 | 3,228 | |
Contingencies and commitments (Note 7) | ||||
Stockholders’ equity (deficit): | ||||
Predecessor preferred stock | 0 | |||
Successor additional paid-in capital | 5,619 | 4,845 | ||
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,590,256 and 117,917,349 shares issued | 1 | 1 | 1 | |
Successor additional paid-in-capital | 3,585 | |||
Accumulated other comprehensive income | 0 | |||
Retained earnings | 188 | 825 | 0 | |
Total stockholders' equity | 5,808 | 5,671 | 3,586 | |
Total liabilities and stockholders' equity | $ 13,899 | $ 11,009 | 6,814 | |
Predecessor | ||||
Current assets: | ||||
Cash and cash equivalents | 243 | |||
Restricted cash | 0 | |||
Accounts receivable, net | 861 | |||
Short-term derivative assets | 0 | |||
Other current assets | 66 | |||
Total current assets | 1,170 | |||
Property and equipment: | ||||
Proved natural gas and oil properties | 25,794 | |||
Unproved properties | 1,546 | |||
Other property and equipment | 1,755 | |||
Total property and equipment | 29,095 | |||
Less: accumulated depreciation, depletion and amortization | (23,877) | |||
Property and equipment held for sale, net | 9 | |||
Total property and equipment, net | 5,227 | |||
Other long-term assets | 198 | |||
Total assets | 6,595 | |||
Current liabilities: | ||||
Accounts payable | 391 | |||
Current maturities of long-term debt, net | 1,929 | |||
Accrued interest | 4 | |||
Short-term derivative liabilities | 398 | |||
Other current liabilities | 645 | |||
Total current liabilities | 3,367 | |||
Long-term debt, net | 0 | |||
Long-term derivative liabilities | 90 | |||
Asset retirement obligations, net of current portion | 139 | |||
Other long-term liabilities | 5 | |||
Liabilities subject to compromise | 9,574 | |||
Total liabilities | 13,175 | |||
Contingencies and commitments (Note 7) | ||||
Stockholders’ equity (deficit): | ||||
Predecessor preferred stock | 1,631 | |||
Successor additional paid-in capital | 16,940 | |||
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,590,256 and 117,917,349 shares issued | 0 | |||
Successor additional paid-in-capital | 0 | |||
Accumulated other comprehensive income | 48 | |||
Retained earnings | (25,199) | |||
Total stockholders' equity | (6,580) | |||
Total liabilities and stockholders' equity | 6,595 | |||
Reorganization Adjustments | ||||
Current assets: | ||||
Cash and cash equivalents | (203) | |||
Restricted cash | 86 | |||
Accounts receivable, net | (18) | |||
Short-term derivative assets | 0 | |||
Other current assets | (5) | |||
Total current assets | (140) | |||
Property and equipment: | ||||
Proved natural gas and oil properties | 0 | |||
Unproved properties | 0 | |||
Other property and equipment | 0 | |||
Total property and equipment | 0 | |||
Less: accumulated depreciation, depletion and amortization | 0 | |||
Property and equipment held for sale, net | 0 | |||
Total property and equipment, net | 0 | |||
Other long-term assets | 0 | |||
Total assets | (140) | |||
Current liabilities: | ||||
Accounts payable | 24 | |||
Current maturities of long-term debt, net | (1,929) | |||
Accrued interest | (4) | |||
Short-term derivative liabilities | 0 | |||
Other current liabilities | 124 | |||
Total current liabilities | (1,785) | |||
Long-term debt, net | 1,261 | |||
Long-term derivative liabilities | 0 | |||
Asset retirement obligations, net of current portion | 0 | |||
Other long-term liabilities | 2 | |||
Liabilities subject to compromise | (9,574) | |||
Total liabilities | (10,096) | |||
Contingencies and commitments (Note 7) | ||||
Stockholders’ equity (deficit): | ||||
Predecessor preferred stock | (1,631) | |||
Successor additional paid-in capital | (16,940) | |||
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,590,256 and 117,917,349 shares issued | 1 | |||
Successor additional paid-in-capital | 3,585 | |||
Accumulated other comprehensive income | 0 | |||
Retained earnings | 24,941 | |||
Total stockholders' equity | 9,956 | |||
Total liabilities and stockholders' equity | (140) | |||
Fresh Start Adjustments | ||||
Current assets: | ||||
Cash and cash equivalents | 48 | |||
Restricted cash | 8 | |||
Accounts receivable, net | 0 | |||
Short-term derivative assets | 0 | |||
Other current assets | 0 | |||
Total current assets | 0 | |||
Property and equipment: | ||||
Proved natural gas and oil properties | (21,108) | |||
Unproved properties | (1,063) | |||
Other property and equipment | (1,256) | |||
Total property and equipment | (23,427) | |||
Less: accumulated depreciation, depletion and amortization | 23,877 | |||
Property and equipment held for sale, net | (7) | |||
Total property and equipment, net | 443 | |||
Other long-term assets | (84) | |||
Total assets | 359 | |||
Current liabilities: | ||||
Accounts payable | 0 | |||
Current maturities of long-term debt, net | 0 | |||
Accrued interest | 0 | |||
Short-term derivative liabilities | 0 | |||
Other current liabilities | 0 | |||
Total current liabilities | 0 | |||
Long-term debt, net | 52 | |||
Long-term derivative liabilities | 0 | |||
Asset retirement obligations, net of current portion | 97 | |||
Other long-term liabilities | 97 | |||
Liabilities subject to compromise | 0 | |||
Total liabilities | 149 | |||
Contingencies and commitments (Note 7) | ||||
Stockholders’ equity (deficit): | ||||
Predecessor preferred stock | 0 | |||
Successor additional paid-in capital | 0 | |||
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,590,256 and 117,917,349 shares issued | 0 | |||
Successor additional paid-in-capital | 0 | |||
Accumulated other comprehensive income | (48) | |||
Retained earnings | 258 | |||
Total stockholders' equity | 210 | |||
Total liabilities and stockholders' equity | $ 359 |
Fresh Start Accounting - Source
Fresh Start Accounting - Sources and Uses of Cash (Details) - USD ($) $ in Millions | 1 Months Ended | 5 Months Ended | 6 Months Ended | |
Feb. 09, 2021 | Feb. 09, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Sources: | ||||
Proceeds from issuance of the Notes | $ 1,000 | $ 0 | $ 0 | |
Reorganization Adjustments | ||||
Sources: | ||||
Proceeds from issuance of the Notes | $ 1,000 | |||
Proceeds from Rights Offering | 600 | |||
Proceeds from refunds of interest deposit for the Notes | 5 | |||
Total sources of cash | 1,605 | |||
Uses: | ||||
Payment of roll-up of DIP Facility balance | (1,179) | |||
Payment of Exit Credit Facility - Tranche A Loan | (479) | |||
Transfers to restricted cash for professional fee reserve | (76) | |||
Transfers to restricted cash for convenience claim distribution reserve | (10) | |||
Payment of professional fees | (31) | |||
Payment of DIP Facility interest and fees | (12) | |||
Payment of FLLO alternative transaction fee | (12) | |||
Payment of the Notes fees funded out of escrow | (8) | |||
Payment of RBL interest and fees | (1) | |||
Total uses of cash | (1,808) | |||
Net cash used | $ (203) |
Fresh Start Accounting - Change
Fresh Start Accounting - Changes in Accounts Payable (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Feb. 09, 2021 |
Reorganization, Chapter 11 [Line Items] | |||
Net impact to accounts payable | $ 414 | $ 308 | $ 415 |
Reorganization Adjustments | |||
Reorganization, Chapter 11 [Line Items] | |||
Accrual of professional service provider success fees | 38 | ||
Accrual of convenience claim distribution reserve | 10 | ||
Accrual of professional service provider fees | 5 | ||
Reinstatement of accounts payable from liabilities subject to compromise | 2 | ||
Payment of professional fees | (31) | ||
Net impact to accounts payable | $ 24 |
Fresh Start Accounting - Chan_2
Fresh Start Accounting - Changes in Other Current Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Feb. 09, 2021 |
Reorganization, Chapter 11 [Line Items] | |||
Total other current liabilities | $ 1,730 | $ 1,202 | $ 769 |
Reorganization Adjustments | |||
Reorganization, Chapter 11 [Line Items] | |||
Reinstatement of other current liabilities from liabilities subject to compromise | 191 | ||
Accrual of the Notes fees | 2 | ||
Settlement of Put Option Premium through issuance of Successor Common Stock | (60) | ||
Payment of DIP Facility fees | (9) | ||
Total other current liabilities | $ 124 |
Fresh Start Accounting - Chan_3
Fresh Start Accounting - Changes in Long-Term Debt (Details) $ in Millions | Feb. 09, 2021 USD ($) |
Reorganization, Chapter 11 [Line Items] | |
Long-term debt, net | $ 1,313 |
Reorganization Adjustments | |
Reorganization, Chapter 11 [Line Items] | |
Issuance of the Notes | 1,000 |
Chesapeake revolving credit facility | 750 |
Payments on Tranche A Loans | (479) |
Debt issuance costs for the Notes | (10) |
Long-term debt, net | $ 1,261 |
Fresh Start Accounting - Liabil
Fresh Start Accounting - Liabilities Subject to Compromise (Details) $ in Millions | Feb. 09, 2021 USD ($) |
Reorganization, Chapter 11 [Line Items] | |
Liabilities subject to compromise | $ 0 |
Consideration provided to settle amounts per the Plan or Reorganization: | |
Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment | (783) |
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment | (124) |
Issuance of Successor common stock to unsecured note holders | (45) |
Issuance of Successor common stock to general unsecured claims | (8) |
Class A Warrants | |
Consideration provided to settle amounts per the Plan or Reorganization: | |
Warrants | 93 |
Class B Warrants | |
Consideration provided to settle amounts per the Plan or Reorganization: | |
Warrants | 94 |
Class C Warrants | |
Consideration provided to settle amounts per the Plan or Reorganization: | |
Warrants | 68 |
Predecessor | |
Reorganization, Chapter 11 [Line Items] | |
Liabilities subject to compromise | 9,574 |
To be reinstated on the Effective Date: | |
Accounts payable | (2) |
Other current liabilities | (191) |
Other long-term liabilities | (2) |
Total liabilities reinstated | (195) |
Consideration provided to settle amounts per the Plan or Reorganization: | |
Issuance of Successor common stock associated with the Rights Offering and Backstop Commitment and settlement of the Put Option Premium | (2,311) |
Proceeds from issuance of Successor common stock associated with the Rights Offering and Backstop Commitment | 600 |
Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment | (783) |
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment | (124) |
Issuance of Successor common stock to unsecured note holders | (45) |
Issuance of Successor common stock to general unsecured claims | (8) |
Proceeds to holders of general unsecured claims | (10) |
Total consideration provided to settle amounts per the Plan | (2,936) |
Gains on the settlement of liabilities subject to compromise | 6,443 |
Predecessor | Class A Warrants | |
Consideration provided to settle amounts per the Plan or Reorganization: | |
Warrants | (93) |
Predecessor | Class B Warrants | |
Consideration provided to settle amounts per the Plan or Reorganization: | |
Warrants | (94) |
Predecessor | Class C Warrants | |
Consideration provided to settle amounts per the Plan or Reorganization: | |
Warrants | $ (68) |
Fresh Start Accounting - Equity
Fresh Start Accounting - Equity Issuance (Details) - New Common Stock | Feb. 09, 2021 shares |
Debt Instrument [Line Items] | |
Stock issued during period, new issues (in shares) | 97,907,081 |
Class A Warrants | |
Debt Instrument [Line Items] | |
Warrants issued (in shares) | 11,111,111 |
Class B Warrants | |
Debt Instrument [Line Items] | |
Warrants issued (in shares) | 12,345,679 |
Class C Warrants | |
Debt Instrument [Line Items] | |
Warrants issued (in shares) | 9,768,527 |
Fresh Start Accounting - Chan_4
Fresh Start Accounting - Change in Successor Additional Paid-in Capital (Details) - USD ($) $ in Millions | Feb. 09, 2021 | Jun. 30, 2022 | Dec. 31, 2021 |
Class of Stock [Line Items] | |||
Issuance of Successor equity associated with the Rights Offering and Backstop Commitment | $ 2,371 | ||
Issuance of Successor equity to holders of the FLLO Term Loan, incremental to the Rights Offering and Backstop Commitment | 783 | ||
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment | 124 | ||
Issuance of Successor common stock to unsecured note holders | 45 | ||
Issuance of Successor common stock to general unsecured claims | 8 | ||
Total change in Successor common stock and additional paid-in capital | 3,586 | ||
Less: par value of Successor common stock | (1) | $ (1) | $ (1) |
Change in Successor additional paid-in capital | 3,585 | ||
Class A Warrants | |||
Class of Stock [Line Items] | |||
Warrants | 93 | ||
Class B Warrants | |||
Class of Stock [Line Items] | |||
Warrants | 94 | ||
Class C Warrants | |||
Class of Stock [Line Items] | |||
Warrants | $ 68 |
Fresh Start Accounting - Cumula
Fresh Start Accounting - Cumulative Net Impact on Accumulated Deficit (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |||
Feb. 09, 2021 | Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | |
Reorganization, Chapter 11 [Line Items] | |||||||
Total reorganization items, net | $ (5,569,000,000) | $ 0 | $ 0 | ||||
Net impact on accumulated deficit | $ 0 | 0 | $ 188,000,000 | 188,000,000 | $ 825,000,000 | ||
Reorganization Adjustments | |||||||
Reorganization, Chapter 11 [Line Items] | |||||||
Gains on the settlement of liabilities subject to compromise | 6,443,000,000 | 6,443,000,000 | |||||
Accrual of professional service provider success fees | (38,000,000) | (38,000,000) | |||||
Accrual of professional service provider fees | (5,000,000) | (5,000,000) | |||||
Surrender of other receivable | (18,000,000) | 18,000,000 | |||||
Payment of FLLO alternative transaction fee | (12,000,000) | ||||||
Total reorganization items, net | 6,370,000,000 | (5,569,000,000) | $ 0 | $ 0 | $ 0 | $ 0 | |
Cancellation of predecessor equity | 18,571,000,000 | 18,571,000,000 | |||||
Net impact on accumulated deficit | $ 24,941,000,000 | $ 24,941,000,000 |
Fresh Start Accounting - Fresh
Fresh Start Accounting - Fresh Start Adjustments (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | ||
Feb. 09, 2021 | Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Reorganization, Chapter 11 [Line Items] | ||||||
Inflation factor | 2% | 2% | ||||
Average credit-adjusted risk-free rate | 5.18% | 5.18% | ||||
Income tax effects on accumulated other comprehensive income | $ 57 | $ 57 | ||||
Income tax benefit | 57 | 57 | $ (77) | $ 0 | $ 0 | $ (31) |
Fresh Start Adjustments | ||||||
Reorganization, Chapter 11 [Line Items] | ||||||
Fresh start adjustments to accumulated other comprehensive income | 9 | 9 | ||||
Income tax effects on accumulated other comprehensive income | 57 | 57 | ||||
Senior Notes | 5.50% senior notes due 2026 | ||||||
Reorganization, Chapter 11 [Line Items] | ||||||
Debt, fair value adjustments | 22 | 22 | ||||
Senior Notes | 5.875% senior notes due 2029 | ||||||
Reorganization, Chapter 11 [Line Items] | ||||||
Debt, fair value adjustments | $ 30 | $ 30 |
Fresh Start Accounting - Impact
Fresh Start Accounting - Impact on Accumulated Deficit (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Feb. 09, 2021 |
Reorganization, Chapter 11 [Line Items] | |||
Total property and equipment, net | $ 11,783 | $ 8,802 | $ 5,670 |
Other long-term assets | 93 | 104 | 114 |
Long-term debt, net | (1,313) | ||
Asset retirement obligations, net of current portion | $ (337) | $ (349) | (236) |
Income tax effects on accumulated other comprehensive income | 57 | ||
Fresh Start Adjustments | |||
Reorganization, Chapter 11 [Line Items] | |||
Total property and equipment, net | 443 | ||
Other long-term assets | (84) | ||
Long-term debt, net | (52) | ||
Asset retirement obligations, net of current portion | (97) | ||
Fresh start adjustments to accumulated other comprehensive income | (9) | ||
Total fresh start adjustments impacting reorganizations items, net | 201 | ||
Income tax effects on accumulated other comprehensive income | 57 | ||
Net impact to accumulated deficit | $ 258 |
Fresh Start Accounting - Reorga
Fresh Start Accounting - Reorganization Items, Net (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | ||
Feb. 09, 2021 | Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Reorganization, Chapter 11 [Line Items] | ||||||
Total reorganization items, net | $ 5,569,000,000 | $ 0 | $ 0 | |||
Reorganization Adjustments | ||||||
Reorganization, Chapter 11 [Line Items] | ||||||
Gains on the settlement of liabilities subject to compromise | $ 6,443,000,000 | 6,443,000,000 | ||||
Accrual for allowed claims | (1,002,000,000) | |||||
Gain on fresh start adjustments | 201,000,000 | |||||
Gain from release of commitment liabilities | 55,000,000 | |||||
Professional service provider fees and other | (60,000,000) | |||||
Success fees for professional service providers | (38,000,000) | |||||
Surrender of other receivable | 18,000,000 | (18,000,000) | ||||
FLLO alternative transaction fee | (12,000,000) | |||||
Total reorganization items, net | $ (6,370,000,000) | $ 5,569,000,000 | $ 0 | $ 0 | $ 0 | $ 0 |
Natural Gas and Oil Property _3
Natural Gas and Oil Property Transactions - Narrative (Details) - USD ($) shares in Millions | 1 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 6 Months Ended | ||||
Mar. 25, 2022 | Mar. 09, 2022 | Nov. 01, 2021 | Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | |
Business Acquisition [Line Items] | |||||||||
Natural gas and oil derivatives | $ 382,000,000 | $ 514,000,000 | $ 740,000,000 | $ 694,000,000 | $ 2,639,000,000 | ||||
Costs and expenses | 494,000,000 | 2,179,000,000 | 1,123,000,000 | 1,718,000,000 | 3,908,000,000 | ||||
Share-based compensation | 3,000,000 | 3,000,000 | 10,000,000 | ||||||
Nonoperating expense | (5,560,000,000) | 27,000,000 | 9,000,000 | (1,000,000) | 43,000,000 | ||||
Natural gas, oil and NGL | |||||||||
Business Acquisition [Line Items] | |||||||||
Revenue | $ 398,000,000 | 2,790,000,000 | $ 892,000,000 | $ 1,445,000,000 | 4,704,000,000 | ||||
6.75% Senior Notes | Senior Notes | |||||||||
Business Acquisition [Line Items] | |||||||||
Interest rate, stated percentage | 6.75% | ||||||||
Debt assumed | $ 950,000,000 | ||||||||
Disposed of by Sale | |||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||
Proceeds from divestitures of property and equipment | $ 450,000,000 | ||||||||
Gain (loss) on sale of oil and natural gas properties | $ 20,000,000 | 299,000,000 | |||||||
Marcellus | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration transferred | $ 2,770,000,000 | ||||||||
Cash | $ 2,000,000,000 | ||||||||
Shares issued in acquisition (in shares) | 9.4 | ||||||||
Natural gas and oil derivatives | $ 312,000,000 | ||||||||
Costs and expenses | 178,000,000 | ||||||||
Marcellus | Natural gas, oil and NGL | |||||||||
Business Acquisition [Line Items] | |||||||||
Revenue | $ 473,000,000 | ||||||||
Marcellus | Exit credit facility | |||||||||
Business Acquisition [Line Items] | |||||||||
Borrowings | $ 914,000,000 | ||||||||
Vine Energy Corporation (Vine) | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration transferred | 1,490,000,000 | ||||||||
Cash | $ 253,000,000 | ||||||||
Natural gas and oil derivatives | 568,000,000 | ||||||||
Costs and expenses | 443,000,000 | ||||||||
Common stock issued in the merger (in shares) | 18.7 | ||||||||
Extinguishment of debt | $ 163,000,000 | ||||||||
Premium paid with cash | 13,000,000 | ||||||||
Share-based compensation | 6,000,000 | ||||||||
Nonoperating expense | 23,000,000 | ||||||||
Vine Energy Corporation (Vine) | Natural gas, oil and NGL | |||||||||
Business Acquisition [Line Items] | |||||||||
Revenue | $ 878,000,000 | ||||||||
Vine Energy Corporation (Vine) | New RBL | |||||||||
Business Acquisition [Line Items] | |||||||||
Borrowings | 0 | ||||||||
Vine Energy Corporation (Vine) | Scenario, Plan [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash | $ 90,000,000 |
Natural Gas and Oil Property _4
Natural Gas and Oil Property Transactions - Purchase Price Allocation (Details) - USD ($) $ in Millions | 1 Months Ended | 5 Months Ended | 6 Months Ended | ||
Mar. 09, 2022 | Nov. 01, 2021 | Feb. 09, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Consideration: | |||||
Restricted stock unit replacement awards | $ 3 | $ 3 | $ 10 | ||
Marcellus | |||||
Consideration: | |||||
Cash | $ 2,000 | ||||
Fair value of Chesapeake’s common stock issued in the merger | 764 | ||||
Working capital adjustments | 6 | ||||
Total consideration | 2,770 | ||||
Fair Value of Liabilities Assumed: | |||||
Current liabilities | 420 | ||||
Other long-term liabilities | 129 | ||||
Amounts attributable to liabilities assumed | 549 | ||||
Fair Value of Assets Acquired: | |||||
Cash and cash equivalents | 0 | ||||
Other current assets | 218 | ||||
Proved natural gas and oil properties | 2,309 | ||||
Unproved properties | 788 | ||||
Other property and equipment | 1 | ||||
Other long-term assets | 3 | ||||
Amounts attributable to assets acquired | 3,319 | ||||
Total identifiable net assets | $ 2,770 | ||||
Vine Energy Corporation (Vine) | |||||
Consideration: | |||||
Cash | $ 253 | ||||
Fair value of Chesapeake’s common stock issued in the merger | 1,231 | ||||
Restricted stock unit replacement awards | 6 | ||||
Total consideration | 1,490 | ||||
Fair Value of Liabilities Assumed: | |||||
Current liabilities | 765 | ||||
Long-term debt | 1,021 | ||||
Deferred tax liabilities | 49 | ||||
Other long-term liabilities | 272 | ||||
Amounts attributable to liabilities assumed | 2,107 | ||||
Fair Value of Assets Acquired: | |||||
Cash and cash equivalents | 59 | ||||
Other current assets | 206 | ||||
Proved natural gas and oil properties | 2,181 | ||||
Unproved properties | 1,118 | ||||
Other property and equipment | 1 | ||||
Other long-term assets | 32 | ||||
Amounts attributable to assets acquired | 3,597 | ||||
Total identifiable net assets | $ 1,490 |
Natural Gas and Oil Property _5
Natural Gas and Oil Property Transactions - Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 5 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Business Acquisition [Line Items] | |||
Revenues | $ 668 | $ 1,744 | $ 4,455 |
Net income (loss) available to common stockholders | $ (892) | $ (573) | $ 369 |
Earnings per common share, basic (in dollars per share) | $ (7.06) | $ (4.54) | $ 2.90 |
Earnings per common share, diluted (in dollars per share) | $ (7.06) | $ (4.54) | $ 2.48 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |||||
Net income (loss), basic | $ 5,383 | $ 1,237 | $ (439) | $ (144) | $ 473 |
Net income (loss), diluted | $ 5,383 | $ 1,237 | $ (439) | $ (144) | $ 473 |
Weighted average common shares outstanding, basic (in shares) | 9,781 | 126,814 | 97,931 | 97,922 | 123,826 |
Effect of potentially dilutive securities | |||||
Preferred stock (in shares) | 290 | 0 | 0 | 0 | 0 |
Warrants (in shares) | 0 | 22,322 | 0 | 0 | 21,295 |
Restricted stock (in shares) | 0 | 349 | 0 | 0 | 368 |
Performance share units (in shares) | 0 | 47 | 0 | 0 | 45 |
Weighted average common shares outstanding, diluted (in shares) | 10,071 | 149,532 | 97,931 | 97,922 | 145,534 |
Basic (in dollars per share) | $ 550.35 | $ 9.75 | $ (4.48) | $ (1.47) | $ 3.82 |
Diluted (in dollars per share) | $ 534.51 | $ 8.27 | $ (4.48) | $ (1.47) | $ 3.25 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares | 3 Months Ended | 5 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | Feb. 09, 2021 | |
Warrant | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Securities excluded from the calculation of diluted EPS (in shares) | 12,186,128 | 11,275,229 | |||
Restricted stock | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Securities excluded from the calculation of diluted EPS (in shares) | 121,348 | 66,817 | |||
Class C Warrants | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Securities excluded from the calculation of diluted EPS (in shares) | 2,248,726 | 3,948,893 | 3,948,893 | 2,248,726 | |
Senior Notes | 5.50% senior notes due 2026 | |||||
Debt Instrument [Line Items] | |||||
Interest rate, stated percentage | 5.50% | 5.50% | 5.50% | ||
COMMON STOCK | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Securities excluded from the calculation of diluted EPS (in shares) | 1,191,877 | 2,092,918 | 2,092,918 | 1,191,877 |
Debt - Long-Term Debt Table (De
Debt - Long-Term Debt Table (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Feb. 09, 2021 | Feb. 02, 2021 |
Debt Instrument [Line Items] | ||||
Long-term debt, fair value | $ 2,863 | $ 2,313 | ||
Debt issuance costs | (8) | (9) | ||
Total long-term debt, net | 3,046 | 2,278 | ||
Line of Credit | Exit Credit Facility - Tranche A Loans | ||||
Debt Instrument [Line Items] | ||||
Chesapeake revolving credit facility | 775 | 0 | ||
Long-term debt, fair value | 775 | 0 | ||
Line of Credit | Exit Credit Facility - Tranche B Loans | ||||
Debt Instrument [Line Items] | ||||
Chesapeake revolving credit facility | 221 | 221 | ||
Long-term debt, fair value | 221 | 221 | ||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Premiums on senior notes | $ 108 | 116 | $ 52 | |
Senior Notes | 5.50% senior notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 5.50% | 5.50% | ||
Outstanding borrowings | $ 500 | 500 | ||
Long-term debt, fair value | $ 476 | 526 | ||
Senior Notes | 5.875% senior notes due 2029 | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 5.875% | 5.875% | ||
Outstanding borrowings | $ 500 | 500 | ||
Long-term debt, fair value | $ 472 | 535 | ||
Senior Notes | 6.75% senior notes due 2029 | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 6.75% | |||
Outstanding borrowings | $ 950 | 950 | ||
Long-term debt, fair value | 919 | $ 1,031 | ||
Premiums on senior notes | $ 71 |
Debt - Successor Debt (Details)
Debt - Successor Debt (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2022 | Dec. 31, 2021 | Feb. 09, 2021 | Feb. 02, 2021 | |
Line of Credit | Exit Credit Facility - Tranche A Loans | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 1,750,000,000 | |||
Term | 3 years | |||
Unused capacity, commitment fee percentage | 0.50% | |||
Line of Credit | Exit Credit Facility - Tranche B Loans | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 221,000,000 | |||
Term | 4 years | |||
Line of Credit | Exit credit facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 2,500,000,000 | |||
LIBOR Floor | 1% | |||
Line of Credit | Exit credit facility | Minimum | ||||
Debt Instrument [Line Items] | ||||
Current ratio | 1 | |||
Asset coverage ratio | 1.50 | |||
Line of Credit | Exit credit facility | Maximum | ||||
Debt Instrument [Line Items] | ||||
First lien leverage ratio | 2.75 | |||
Leverage ratio | 3.50 | |||
Line of Credit | Exit credit facility | Alternative Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Variable rate percentage | 2.25% | |||
Line of Credit | Exit credit facility | Alternative Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Variable rate percentage | 3.25% | |||
Line of Credit | Exit credit facility | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Variable rate percentage | 3.25% | |||
Line of Credit | Exit credit facility | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Variable rate percentage | 4.25% | |||
Line of Credit | Exit credit facility | Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 200,000,000 | |||
Secured Debt, Other | ||||
Debt Instrument [Line Items] | ||||
Outstanding borrowings | 0 | |||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Unamortized premium | 108,000,000 | $ 116,000,000 | $ 52,000,000 | |
Senior Notes | 5.50% senior notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Outstanding borrowings | $ 500,000,000 | 500,000,000 | ||
Debt instrument, principal amount | $ 500,000,000 | 500,000,000 | ||
Interest rate, stated percentage | 5.50% | 5.50% | ||
Senior Notes | 5.875% senior notes due 2029 | ||||
Debt Instrument [Line Items] | ||||
Outstanding borrowings | $ 500,000,000 | 500,000,000 | ||
Debt instrument, principal amount | $ 500,000,000 | $ 500,000,000 | ||
Interest rate, stated percentage | 5.875% | 5.875% | ||
Senior Notes | 6.75% senior notes due 2029 | ||||
Debt Instrument [Line Items] | ||||
Outstanding borrowings | $ 950,000,000 | $ 950,000,000 | ||
Debt instrument, principal amount | 950,000,000 | |||
Unamortized premium | $ 71,000,000 | |||
Interest rate, stated percentage | 6.75% |
Contingencies and Commitments_2
Contingencies and Commitments (Details) - Gathering, processing and transportation agreement $ in Millions | Jun. 30, 2022 USD ($) |
Other Commitments [Line Items] | |
Remainder of 2022 | $ 296 |
2023 | 536 |
2024 | 496 |
2025 | 426 |
2026 | 386 |
2027-2036 | 2,062 |
Total | $ 4,202 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Feb. 09, 2021 |
Other Liabilities Disclosure [Abstract] | |||
Revenues and royalties due others | $ 926 | $ 617 | |
Accrued drilling and production costs | 268 | 142 | |
Accrued hedging costs | 120 | 113 | |
Accrued compensation and benefits | 56 | 91 | |
Other accrued taxes | 134 | 86 | |
Operating leases | 45 | 29 | |
Accrued share repurchases | 40 | 0 | |
Joint interest prepayments received | 16 | 14 | |
Other | 125 | 110 | |
Total other current liabilities | $ 1,730 | $ 1,202 | $ 769 |
Revenue - Disaggregated Revenue
Revenue - Disaggregated Revenue (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Total | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | $ 398 | $ 2,790 | $ 892 | $ 1,445 | $ 4,704 |
Total | Marcellus | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 119 | 1,152 | 226 | 389 | 1,761 |
Total | Haynesville | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 53 | 988 | 124 | 194 | 1,640 |
Total | Eagle Ford | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 193 | 650 | 458 | 730 | 1,204 |
Total | Powder River Basin | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 33 | 84 | 132 | 99 | |
Natural Gas | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 196 | 2,225 | 397 | 687 | 3,553 |
Natural Gas | Marcellus | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 119 | 1,152 | 226 | 389 | 1,761 |
Natural Gas | Haynesville | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 53 | 988 | 124 | 194 | 1,640 |
Natural Gas | Eagle Ford | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 17 | 85 | 31 | 74 | 132 |
Natural Gas | Powder River Basin | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 7 | 16 | 30 | 20 | |
Oil | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 179 | 503 | 444 | 678 | 1,019 |
Oil | Marcellus | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 0 | 0 | 0 | 0 | 0 |
Oil | Haynesville | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 0 | 0 | 0 | 0 | 0 |
Oil | Eagle Ford | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 159 | 503 | 386 | 592 | 953 |
Oil | Powder River Basin | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 20 | 58 | 86 | 66 | |
NGL | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 23 | 62 | 51 | 80 | 132 |
NGL | Marcellus | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 0 | 0 | 0 | 0 | 0 |
NGL | Haynesville | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 0 | 0 | 0 | 0 | 0 |
NGL | Eagle Ford | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 17 | 62 | 41 | 64 | 119 |
NGL | Powder River Basin | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 6 | 10 | 16 | 13 | |
Marketing | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 239 | 1,223 | 539 | 816 | 2,090 |
Natural Gas | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 78 | 637 | 146 | 243 | 1,045 |
Oil | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 141 | 508 | 340 | 502 | 903 |
NGL | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | $ 20 | $ 78 | $ 53 | $ 71 | $ 142 |
Revenue - Accounts Receivable (
Revenue - Accounts Receivable (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Disaggregation of Revenue [Line Items] | ||
Allowance for doubtful accounts | $ (3) | $ (3) |
Total accounts receivable, net | 1,804 | 1,115 |
Natural gas, oil and NGL sales | ||
Disaggregation of Revenue [Line Items] | ||
Accounts receivable, gross | 1,594 | 922 |
Joint interest | ||
Disaggregation of Revenue [Line Items] | ||
Accounts receivable, gross | 201 | 158 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Accounts receivable, gross | $ 12 | $ 38 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 12 Months Ended | ||
Feb. 09, 2021 | Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | |||||||
Effective income tax rate | (1.10%) | ||||||
Income tax benefit | $ 57 | $ 57 | $ (77) | $ 0 | $ 0 | $ (31) | |
Deferred tax asset, operating loss carryforward, limitations | $ 54 | $ 54 | |||||
Cancellation of debt income | 5,000 | ||||||
Federal | |||||||
Business Acquisition [Line Items] | |||||||
Operating loss carryforwards, removed | $ 593 | $ 593 | |||||
Forecast | |||||||
Business Acquisition [Line Items] | |||||||
Effective income tax rate | 6.20% |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | ||||||||
Mar. 09, 2022 | Nov. 01, 2021 | Feb. 09, 2021 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Aug. 02, 2022 | Dec. 31, 2021 | Dec. 02, 2021 | |
Class of Stock [Line Items] | ||||||||||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||||||
Common stock, shares issued (in shares) | 121,590,256 | 121,590,256 | 117,917,349 | |||||||
Authorized amount | $ 2,000 | $ 2,000 | $ 1,000 | |||||||
Additional authorized amount | $ 1,000 | 1,000 | ||||||||
Repurchase and retirement of common stock (in shares) | 5,800,000 | 1,000,000 | ||||||||
Repurchase and retirement of common stock | $ 515 | $ 83 | $ 515 | $ 83 | ||||||
Class A Warrants | ||||||||||
Class of Stock [Line Items] | ||||||||||
Warrant, exercise price (in dollars per share) | $ 27.63 | $ 25.74 | $ 25.74 | |||||||
Class B Warrants | ||||||||||
Class of Stock [Line Items] | ||||||||||
Warrant, exercise price (in dollars per share) | 32.13 | $ 29.93 | $ 29.93 | |||||||
Class C Warrants | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock, reserved for future issuance (in shares) | 2,248,726 | 2,248,726 | ||||||||
Warrant, exercise price (in dollars per share) | $ 36.18 | $ 33.70 | $ 33.70 | |||||||
Subsequent Event | ||||||||||
Class of Stock [Line Items] | ||||||||||
Dividends payable (in dollars per share) | $ 2.32 | |||||||||
Dividends payable, base (in dollars per share) | 0.55 | |||||||||
Dividends payable, variable (in dollars per share) | $ 1.77 | |||||||||
Vine Energy Corporation (Vine) | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock issued in the merger (in shares) | 18,700,000 | |||||||||
New Common Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period, new issues (in shares) | 97,907,081 | |||||||||
Common stock, par value (in usd per share) | $ 0.01 | |||||||||
Common stock, reserved for future issuance (in shares) | 2,092,918 | |||||||||
Common stock, shares issued (in shares) | 36,951 | 36,951 | ||||||||
Number of shares initially exercisable for warrants (in shares) | 1 | |||||||||
New Common Stock | Class A Warrants | ||||||||||
Class of Stock [Line Items] | ||||||||||
Warrants issued (in shares) | 11,111,111 | |||||||||
New Common Stock | Class B Warrants | ||||||||||
Class of Stock [Line Items] | ||||||||||
Warrants issued (in shares) | 12,345,679 | |||||||||
New Common Stock | Class C Warrants | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock, reserved for future issuance (in shares) | 3,948,893 | |||||||||
Warrants issued (in shares) | 9,768,527 | |||||||||
New Common Stock | Vine Energy Corporation (Vine) | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock issued in the merger (in shares) | 18,709,399 | |||||||||
New Common Stock | Marcellus | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock issued in the merger (in shares) | 9,442,185 |
Equity - Schedule of Dividends
Equity - Schedule of Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 02, 2022 | Mar. 22, 2022 |
Equity [Abstract] | ||
Dividend Payment | $ 298 | $ 210 |
Common stock, dividends declared (in dollars per share) | $ 2.34 | $ 1.7675 |
Equity - Schedule of Warrants (
Equity - Schedule of Warrants (Details) - shares | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2022 | |
Warrant | |||
Warrants and Rights Outstanding [Roll Forward] | |||
Conversion of stock, shares issued (in shares) | 836,275 | ||
Class A Warrants | |||
Warrants and Rights Outstanding [Roll Forward] | |||
Outstanding, begging balance (in shares) | 9,820,246 | 10,856,852 | 10,856,852 |
Converted into New Common Stock (in shares) | (68,300) | (1,036,606) | |
Issued for General Unsecured Claims (in shares) | 0 | ||
Outstanding, ending balance (in shares) | 9,751,946 | 9,820,246 | 9,751,946 |
Class B Warrants | |||
Warrants and Rights Outstanding [Roll Forward] | |||
Outstanding, begging balance (in shares) | 12,290,881 | 12,313,273 | 12,313,273 |
Converted into New Common Stock (in shares) | (111) | (22,392) | |
Issued for General Unsecured Claims (in shares) | 0 | ||
Outstanding, ending balance (in shares) | 12,290,770 | 12,290,881 | 12,290,770 |
Class C Warrants | |||
Warrants and Rights Outstanding [Roll Forward] | |||
Outstanding, begging balance (in shares) | 11,374,526 | 11,388,371 | 11,388,371 |
Converted into New Common Stock (in shares) | (161,849) | (13,845) | |
Issued for General Unsecured Claims (in shares) | 69,720 | ||
Outstanding, ending balance (in shares) | 11,282,397 | 11,374,526 | 11,282,397 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Feb. 09, 2021 | |
Performance share units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 21 | |||
Share-based compensation expense, weighted average period for recognition | 2 years 5 months 15 days | |||
Performance share units | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total shareholder return and relative total shareholder return, percent of payout of target units | 0% | 0% | ||
Performance share units | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total shareholder return and relative total shareholder return, percent of payout of target units | 200% | 100% | ||
Performance share units | Management | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation, award vesting period | 3 years | |||
Stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation, award vesting period | 3 years | |||
Stock option | Management | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period | 7 years | |||
Stock option | Management | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period | 10 years | |||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation, award vesting period | 3 years | |||
Intrinsic value of restricted stock, vested | $ 26 | |||
Unrecognized compensation expense | $ 50 | |||
Share-based compensation expense, weighted average period for recognition | 2 years 4 months 28 days | |||
2021 Long Term Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock, reserved for future issuance (in shares) | 6,800,000 |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Stock (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands | 1 Months Ended | 6 Months Ended |
Feb. 09, 2021 | Jun. 30, 2022 | |
Unvested Restricted Stock Units | ||
Unvested restricted stock, beginning balance (in shares) | 1 | 775 |
Granted (in shares) | 0 | 496 |
Vested (in shares) | 0 | (292) |
Forfeited (in shares) | (1) | (79) |
Unvested restricted stock, ending balance (in shares) | 0 | 900 |
Weighted Average Grant Date Fair Value Per Share | ||
Unvested restricted stock, beginning balance (in dollars per share) | $ 616.57 | $ 46.77 |
Granted (in dollars per share) | 0 | 75.38 |
Vested (in dollars per share) | 0 | 47.69 |
Forfeited (in dollars per share) | 611.47 | 51.42 |
Unvested restricted stock, ending balance (in dollars per share) | $ 0 | $ 61.82 |
Share-Based Compensation - Assu
Share-Based Compensation - Assumptions (Details) - Performance share units - TSR, rTSR | 6 Months Ended |
Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2% |
Volatility | 70.20% |
Share-Based Compensation - Perf
Share-Based Compensation - Performance Share (Details) - Performance share units shares in Thousands | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Unvested Restricted Stock Units | |
Unvested restricted stock, beginning balance (in shares) | shares | 183 |
Granted (in shares) | shares | 133 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (20) |
Unvested restricted stock, ending balance (in shares) | shares | 296 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested restricted stock, beginning balance (in dollars per share) | $ / shares | $ 66.12 |
Granted (in dollars per share) | $ / shares | 109.65 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 54.06 |
Unvested restricted stock, ending balance (in dollars per share) | $ / shares | $ 86.47 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Option Activity Table (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 1 Months Ended | 12 Months Ended |
Feb. 09, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding, beginning balance (in shares) | 20 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Expired (in shares) | (1) | |
Forfeited/canceled (in shares) | (19) | |
Outstanding, ending balance (in shares) | 0 | 20 |
Exercisable (in shares) | 0 | |
Weighted Average Exercise Price Per Share | ||
Outstanding, beginning (in dollars per share) | $ 1,429.11 | |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 0 | |
Expired (in dollars per share) | 741.86 | |
Forfeited/canceled (in dollars per share) | 1,452.4 | |
Outstanding, ending (in dollars per share) | 0 | $ 1,429.11 |
Weighted average exercise price, exercisable (in dollars per share) | $ 0 | |
Weighted average contract life, outstanding | 4 years 3 months 7 days | |
Aggregate intrinsic value, outstanding | $ 0 | $ 0 |
Aggregate intrinsic value, exercised | 0 | |
Aggregate intrinsic value, exercisable | $ 0 |
Share-Based Compensation - Comp
Share-Based Compensation - Compensation Expense (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | $ 3 | $ 8 | $ 3 | $ 3 | $ 12 |
General and administrative expenses | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | 3 | 6 | 2 | 2 | 9 |
Natural gas and oil properties | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | 0 | 1 | 1 | 1 | 2 |
Production expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | $ 0 | $ 1 | $ 0 | $ 0 | $ 1 |
Derivative and Hedging Activi_3
Derivative and Hedging Activities - Derivative Instruments (Details) - Energy related derivative $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 USD ($) Bcf MMBbls | Dec. 31, 2021 USD ($) MMBbls Bcf | |
Derivative [Line Items] | ||
Fair Value | $ (2,490) | $ (1,143) |
Natural gas | ||
Derivative [Line Items] | ||
Notional Volume | Bcf | 1,689 | 1,112 |
Fair Value | $ (2,062) | $ (785) |
Natural gas | Fixed-price swaps | ||
Derivative [Line Items] | ||
Notional Volume | Bcf | 570 | 637 |
Fair Value | $ (1,442) | $ (675) |
Natural gas | Collars | ||
Derivative [Line Items] | ||
Notional Volume | Bcf | 607 | 205 |
Fair Value | $ (482) | $ (82) |
Natural gas | Three-way collars | ||
Derivative [Line Items] | ||
Notional Volume | Bcf | 17 | 0 |
Fair Value | $ (33) | $ 0 |
Natural gas | Call options | ||
Derivative [Line Items] | ||
Notional Volume | Bcf | 18 | 18 |
Fair Value | $ (41) | $ (17) |
Natural gas | Swaptions | ||
Derivative [Line Items] | ||
Notional Volume | Bcf | 7 | 0 |
Fair Value | $ (13) | $ 0 |
Natural gas | Basis protection swaps | ||
Derivative [Line Items] | ||
Notional Volume | Bcf | 470 | 252 |
Fair Value | $ (51) | $ (11) |
Oil | ||
Derivative [Line Items] | ||
Notional Volume | MMBbls | 27 | 22 |
Fair Value | $ (428) | $ (358) |
Oil | Fixed-price swaps | ||
Derivative [Line Items] | ||
Notional Volume | MMBbls | 7 | 13 |
Fair Value | $ (362) | $ (356) |
Oil | Collars | ||
Derivative [Line Items] | ||
Notional Volume | MMBbls | 6 | 0 |
Fair Value | $ (53) | $ 0 |
Oil | Basis protection swaps | ||
Derivative [Line Items] | ||
Notional Volume | MMBbls | 14 | 9 |
Fair Value | $ (13) | $ (2) |
Derivative and Hedging Activi_4
Derivative and Hedging Activities - Derivative Instruments in Balance Sheet Table (Details) - Not designated as hedging instrument - Commodity contract - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Derivatives, Fair Value [Line Items] | ||
Derivative asset (liability), fair value, gross asset (liability) | $ (2,490) | $ (1,143) |
Derivative asset (liability) fair value, net asset (liability), netted | 0 | 0 |
Total derivatives | 2,490 | 1,143 |
Short-term derivative asset | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | 51 | 56 |
Derivative asset, fair value, gross liability, netted | (48) | (51) |
Derivative asset | 2 | 5 |
Long-term derivative asset | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | 45 | |
Derivative asset, fair value, gross liability, netted | (32) | |
Derivative asset | 13 | |
Short-term derivative liability | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value, gross liability | (2,108) | (950) |
Derivative liability, fair value, gross asset, netted | 48 | 51 |
Derivative liability | (2,059) | (899) |
Long-term derivative liability | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value, gross liability | (478) | (249) |
Derivative liability, fair value, gross asset, netted | 32 | 0 |
Derivative liability | $ (446) | $ (249) |
Derivative and Hedging Activi_5
Derivative and Hedging Activities - Cash Flow Hedges Components of AOCI (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | |
Feb. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||
AOCI, after tax, beginning of period | $ 0 | ||||
Losses reclassified to income, after tax | $ 3 | $ 0 | $ 0 | 0 | $ 0 |
AOCI, after tax, end of period | 0 | ||||
Cash flow hedging | |||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||
AOCI, before tax, beginning of period | (12) | 0 | |||
Losses reclassified to income, before tax | 3 | ||||
Fresh start adjustments, before tax | 9 | ||||
Elimination of tax effects, before tax | 0 | ||||
AOCI, before tax, end of period | 0 | ||||
AOCI, after tax, beginning of period | 45 | $ 0 | |||
Losses reclassified to income, after tax | 3 | ||||
Fresh start adjustments, after tax | 9 | ||||
Elimination of tax effects, after tax | (57) | ||||
AOCI, after tax, end of period | $ 0 |
Derivative and Hedging Activi_6
Derivative and Hedging Activities - Narrative (Details) | Jun. 30, 2022 counterparty |
Energy related derivative | |
Derivative [Line Items] | |
Number of counterparties (in counterparties) | 14 |
Other Operating Expense (Inco_2
Other Operating Expense (Income), Net (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Marcellus | |
Business Acquisition [Line Items] | |
Acquisition related costs | $ 33 |