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| CHESAPEAKE ENERGY CORPORATION - SUPPLEMENTAL TABLES |
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| CONSOLIDATED BALANCE SHEETS (unaudited) |
| | | | | | | | | | | | | | |
| | Successor |
| ($ in millions) | | December 31, 2022 | | December 31, 2021 |
| Assets | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 130 | | | $ | 905 | |
| Restricted cash | | 62 | | | 9 | |
| Accounts receivable, net | | 1,438 | | | 1,115 | |
| Short-term derivative assets | | 34 | | | 5 | |
| Assets held for sale | | 819 | | | — | |
| Other current assets | | 215 | | | 69 | |
| Total current assets | | 2,698 | | 2,103 |
| Property and equipment: | | | | |
| Natural gas and oil properties, successful efforts method | | | | |
| Proved natural gas and oil properties | | 11,096 | | | 7,682 | |
| Unproved properties | | 2,022 | | | 1,530 | |
| Other property and equipment | | 500 | | | 495 | |
| Total property and equipment | | 13,618 | | | 9,707 | |
| Less: accumulated depreciation, depletion and amortization | | (2,431) | | | (908) | |
| Property and equipment held for sale, net | | — | | | 3 | |
| Total property and equipment, net | | 11,187 | | | 8,802 | |
| Long-term derivative assets | | 47 | | | — | |
| Deferred income tax assets | | 1,351 | | | — | |
| Other long-term assets | | 185 | | | 104 | |
| Total assets | | $ | 15,468 | | | $ | 11,009 | |
| | | | |
| Liabilities and stockholders' equity | | | | |
| Current liabilities: | | | | |
| Accounts payable | | $ | 603 | | | $ | 308 | |
| Accrued interest | | 42 | | | 38 | |
| Short-term derivative liabilities | | 432 | | | 899 | |
| Other current liabilities | | 1,627 | | | 1,202 | |
| Total current liabilities | | 2,704 | | | 2,447 | |
| Long-term debt, net | | 3,093 | | | 2,278 | |
| Long-term derivative liabilities | | 174 | | | 249 | |
| Asset retirement obligations, net of current portion | | 323 | | | 349 | |
| Other long-term liabilities | | 50 | | | 15 | |
| Total liabilities | | 6,344 | | | 5,338 | |
| Contingencies and commitments | | | | |
| Stockholders' equity: | | | | |
| Successor common stock, $0.01 par value, 450,000,000 shares authorized: 134,715,094 and 117,917,349 shares issued | | 1 | | | 1 | |
| Successor additional paid-in capital | | 5,724 | | | 4,845 | |
| Retained earnings | | 3,399 | | | 825 | |
| Total stockholders' equity | | 9,124 | | | 5,671 | |
| Total liabilities and stockholders' equity | | $ | 15,468 | | | $ | 11,009 | |
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| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
| | | | | | | | | | | | | | |
| | Successor |
| | Three Months Ended
December 31, 2022 | | Three Months Ended
December 31, 2021 |
| ($ in millions except per share data) | | | | |
| Revenues and other: | | | | |
| Natural gas, oil and NGL | | $ | 2,201 | | | $ | 1,786 | |
| Marketing | | 935 | | | 820 | |
| Natural gas and oil derivatives | | 988 | | | 477 | |
| Gains on sales of assets | | 2 | | | 3 | |
| Total revenues and other | | 4,126 | | | 3,086 | |
| Operating expenses: | | | | |
| Production | | 126 | | | 103 | |
| Gathering, processing and transportation | | 257 | | | 239 | |
| Severance and ad valorem taxes | | 55 | | | 52 | |
| Exploration | | 9 | | | 3 | |
| Marketing | | 936 | | | 817 | |
| General and administrative | | 40 | | | 28 | |
| Separation and other termination costs | | 5 | | | — | |
| Depreciation, depletion and amortization | | 453 | | | 340 | |
| | | | |
| Other operating expense, net | | 17 | | | 83 | |
| Total operating expenses | | 1,898 | | | 1,665 | |
| Income from operations | | 2,228 | | | 1,421 | |
| Other income (expense): | | | | |
| Interest expense | | (40) | | | (26) | |
| Losses on purchases, exchanges or extinguishments of debt | | (5) | | | — | |
| Other income | | 7 | | | — | |
| Total other expense | | (38) | | | (26) | |
| Income before income taxes | | 2,190 | | | 1,395 | |
| Income tax benefit | | (1,390) | | | (39) | |
| Net income | | 3,580 | | 1,434 |
| Deemed dividend on warrants | | (67) | | | — | |
| Net income available to common stockholders | | $ | 3,513 | | | $ | 1,434 | |
| Earnings per common share: | | | | |
| Basic | | $ | 26.16 | | | $ | 12.90 | |
| Diluted | | $ | 24.00 | | | $ | 11.13 | |
| Weighted average common shares outstanding (in thousands): | | | | |
| Basic | | 134,275 | | | 111,160 | |
| Diluted | | 146,346 | | | 128,846 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor |
| | Year Ended
December 31, 2022 | | Period from February 10, 2021 through
December 31, 2021 | | | Period from January 1, 2021 through February 9, 2021 |
| ($ in millions except per share data) | | | | | | | |
| Revenues and other: | | | | | | | |
| Natural gas, oil and NGL | | $ | 9,892 | | | $ | 4,401 | | | | $ | 398 | |
| Marketing | | 4,231 | | | 2,263 | | | | 239 | |
| Natural gas and oil derivatives | | (2,680) | | | (1,127) | | | | (382) | |
| Gains on sales of assets | | 300 | | | 12 | | | | 5 | |
| Total revenues and other | | 11,743 | | | 5,549 | | | | 260 | |
| Operating expenses: | | | | | | | |
| Production | | 475 | | | 297 | | | | 32 | |
| Gathering, processing and transportation | | 1,059 | | | 780 | | | | 102 | |
| Severance and ad valorem taxes | | 242 | | | 158 | | | | 18 | |
| Exploration | | 23 | | | 7 | | | | 2 | |
| Marketing | | 4,215 | | | 2,257 | | | | 237 | |
| General and administrative | | 142 | | | 97 | | | | 21 | |
| Separation and other termination costs | | 5 | | | 11 | | | | 22 | |
| Depreciation, depletion and amortization | | 1,753 | | | 919 | | | | 72 | |
| Impairments | | — | | | 1 | | | | — | |
| Other operating expense (income), net | | 49 | | | 84 | | | | (12) | |
| Total operating expenses | | 7,963 | | | 4,611 | | | | 494 | |
| Income (loss) from operations | | 3,780 | | | 938 | | | | (234) | |
| Other income (expense): | | | | | | | |
| Interest expense | | (160) | | | (73) | | | | (11) | |
| Losses on purchases, exchanges or extinguishments of debt | | (5) | | | — | | | | — | |
| Other income | | 36 | | | 31 | | | | 2 | |
| Reorganization items, net | | — | | | — | | | | 5,569 | |
| Total other income (expense) | | (129) | | | (42) | | | | 5,560 | |
| Income before income taxes | | 3,651 | | | 896 | | | | 5,326 | |
| Income tax benefit | | (1,285) | | | (49) | | | | (57) | |
| Net income | | 4,936 | | 945 | | | 5,383 |
| | | | | | | |
| | | | | | | |
| Deemed dividend on warrants | | (67) | | | — | | | | — | |
| | | | | | | |
| Net income available to common stockholders | | $ | 4,869 | | | $ | 945 | | | | $ | 5,383 | |
| Earnings per common share: | | | | | | | |
| Basic | | $ | 38.71 | | | $ | 9.29 | | | | $ | 550.35 | |
| Diluted | | $ | 33.36 | | | $ | 8.12 | | | | $ | 534.51 | |
| Weighted average common shares outstanding (in thousands): | | | | | | | |
| Basic | | 125,785 | | 101,754 | | | 9,781 |
| Diluted | | 145,961 | | 116,341 | | | 10,071 |
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| CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
| | | | | | | | | | | | | | |
| | Successor |
| | | Three Months Ended December 31, 2022 | | Three Months Ended December 31, 2021 |
| ($ in millions) | | | | |
| Cash flows from operating activities: | | | | |
| Net income | | $ | 3,580 | | | $ | 1,434 | |
| Adjustments to reconcile net income to cash provided by operating activities: | | | | |
| Depreciation, depletion and amortization | | 453 | | | 340 | |
| Deferred income tax benefit | | (1,351) | | | (49) | |
| Derivative gains, net | | (988) | | | (477) | |
| Cash payments on derivative settlements, net | | (716) | | | (705) | |
| Share-based compensation | | 6 | | | 4 | |
| Gains on sales of assets | | (2) | | | (3) | |
| Exploration | | 4 | | | 1 | |
| Losses on purchases, exchanges or extinguishments of debt | | 5 | | | — | |
| Other | | 12 | | | 36 | |
| Changes in assets and liabilities | | 47 | | | (18) | |
| Net cash provided by operating activities | | 1,050 | | | 563 | |
| Cash flows from investing activities: | | | | |
| Capital expenditures | | (524) | | | (265) | |
| Business combination, net | | — | | | (194) | |
| Contributions to investments | | (18) | | | — | |
| Proceeds and adjustments from divestitures of property and equipment | | (2) | | | 4 | |
| Net cash used in investing activities | | (544) | | | (455) | |
| Cash flows from financing activities: | | | | |
| Proceeds from New Credit Facility | | 1,600 | | | — | |
| Payments on New Credit Facility | | (550) | | | — | |
| Proceeds from Exit Credit Facility | | 2,328 | | | — | |
| Payments on Exit Credit Facility | | (2,999) | | | — | |
| Proceeds from warrant exercise | | 24 | | | — | |
| Debt issuance and other financing costs | | (17) | | | — | |
| Cash paid to repurchase and retire common stock | | (406) | | | — | |
| Cash paid for common stock dividends | | (424) | | | (52) | |
| | | | |
| Net cash used in financing activities | | (444) | | | (52) | |
| Net increase in cash, cash equivalents and restricted cash | | 62 | | | 56 | |
| Cash, cash equivalents and restricted cash, beginning of period | | 130 | | | 858 | |
| Cash, cash equivalents and restricted cash, end of period | | $ | 192 | | | $ | 914 | |
| | | | |
| Cash and cash equivalents | | $ | 130 | | | $ | 905 | |
| Restricted cash | | 62 | | | 9 | |
| Total cash, cash equivalents and restricted cash | | $ | 192 | | | $ | 914 | |
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| | Successor | | | Predecessor |
| | | Year Ended
December 31, 2022 | | Period from February 10, 2021 through
December 31, 2021 | | | Period from January 1, 2021 through
February 9, 2021 |
| ($ in millions) | | | | | | | |
| Cash flows from operating activities: | | | | | | | |
| Net income | | $ | 4,936 | | | $ | 945 | | | | $ | 5,383 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
| Depreciation, depletion and amortization | | 1,753 | | | 919 | | | | 72 | |
| Deferred income tax benefit | | (1,332) | | | (49) | | | | (57) | |
| Derivative losses, net | | 2,680 | | | 1,127 | | | | 382 | |
| Cash payments on derivative settlements, net | | (3,561) | | | (1,142) | | | | (17) | |
| Share-based compensation | | 22 | | | 9 | | | | 3 | |
| Gains on sales of assets | | (300) | | | (12) | | | | (5) | |
| Impairments | | — | | | 1 | | | | — | |
| Non-cash reorganization items, net | | — | | | — | | | | (6,680) | |
| Exploration | | 14 | | | 2 | | | | 2 | |
| | | | | | | |
| Losses on purchases, exchanges or extinguishments of debt | | 5 | | | — | | | | — | |
| Other | | 31 | | | 46 | | | | 45 | |
| Changes in assets and liabilities | | (123) | | | (37) | | | | 851 | |
| Net cash provided by (used in) operating activities | | 4,125 | | 1,809 | | | (21) |
| Cash flows from investing activities: | | | | | | | |
| Capital expenditures | | (1,823) | | | (669) | | | | (66) | |
| Business combination, net | | (1,967) | | | (194) | | | | — | |
| Contributions to investments | | (18) | | | — | | | | — | |
| Proceeds from divestitures of property and equipment | | 407 | | | 13 | | | | — | |
| Net cash used in investing activities | | (3,401) | | (850) | | | (66) |
| Cash flows from financing activities: | | | | | | | |
| Proceeds from New Credit Facility | | 1,600 | | | — | | | | — | |
| Payments on New Credit Facility | | (550) | | | — | | | | — | |
| Proceeds from Exit Credit Facility | | 9,583 | | | 30 | | | | — | |
| Payments on Exit Credit Facility | | (9,804) | | | (80) | | | | (479) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Payments on DIP Facility borrowings | | — | | | — | | | | (1,179) | |
| Proceeds from issuance of senior notes, net | | — | | | — | | | | 1,000 | |
| Proceeds from issuance of common stock | | — | | | — | | | | 600 | |
| Proceeds from warrant exercise | | 27 | | | 2 | | | | — | |
| Debt issuance and other financing costs | | (17) | | | (3) | | | | (8) | |
| Cash paid to repurchase and retire common stock | | (1,073) | | | — | | | | — | |
| | | | | | | |
| Cash paid for common stock dividends | | (1,212) | | | (119) | | | | — | |
| | | | | | | |
| Other | | — | | | (1) | | | | — | |
| Net cash used in financing activities | | (1,446) | | | (171) | | | | (66) | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | | (722) | | | 788 | | | | (153) | |
| Cash, cash equivalents and restricted cash, beginning of period | | 914 | | | 126 | | | | 279 | |
| Cash, cash equivalents and restricted cash, end of period | | $ | 192 | | | $ | 914 | | | | $ | 126 | |
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| | | | | | | |
| Cash and cash equivalents | | $ | 130 | | | $ | 905 | | | | $ | 40 | |
| Restricted cash | | 62 | | | 9 | | | | 86 | |
| Total cash, cash equivalents and restricted cash | | $ | 192 | | | $ | 914 | | | | $ | 126 | |
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| NATURAL GAS, OIL AND NGL PRODUCTION AND AVERAGE SALES PRICES (unaudited) |
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| | Successor |
| | Three Months Ended December 31, 2022 |
| | Natural Gas | | Oil | | NGL | | Total |
| | MMcf per day | | $/Mcf | | MBbl per day | | $/Bbl | | MBbl per day | | $/Bbl | | MMcfe per day | | $/Mcfe |
| Marcellus | | 1,941 | | | 5.35 | | | — | | | — | | | — | | | — | | | 1,941 | | | 5.35 | |
| Haynesville | | 1,572 | | | 5.17 | | | — | | | — | | | — | | | — | | | 1,572 | | | 5.17 | |
| Eagle Ford | | 127 | | | 4.30 | | | 52 | | | 84.55 | | | 16 | | | 26.31 | | | 538 | | | 10.03 | |
| | | | | | | | | | | | | | | | |
| Total | | 3,640 | | | 5.24 | | | 52 | | | 84.55 | | | 16 | | | 26.31 | | | 4,051 | | | 5.90 | |
| | | | | | | | | | | | | | | | |
| Average NYMEX Price | | | | 6.26 | | | | | 82.64 | | | | | | | | | |
Average Realized Price
(including realized derivatives) | | | | 3.40 | | | | | 64.67 | | | | | 26.31 | | | | | 3.99 | |
| | | | | | | | | | | | | | | | |
| | Successor |
| | Three Months Ended December 31, 2021 |
| | Natural Gas | | Oil | | NGL | | Total |
| | MMcf per day | | $/Mcf | | MBbl per day | | $/Bbl | | MBbl per day | | $/Bbl | | MMcfe per day | | $/Mcfe |
| Marcellus | | 1,315 | | | 4.94 | | | — | | | — | | | — | | | — | | | 1,315 | | | 4.94 | |
| Haynesville | | 1,249 | | | 5.20 | | | — | | | — | | | — | | | — | | | 1,249 | | | 5.20 | |
| Eagle Ford | | 125 | | | 4.59 | | | 54 | | | 77.67 | | | 18 | | | 36.16 | | | 552 | | | 9.72 | |
| Powder River Basin | | 48 | | | 5.48 | | | 8 | | | 76.41 | | | 3 | | | 47.91 | | | 117 | | | 8.95 | |
| Total | | 2,737 | | | 5.05 | | | 62 | | | 77.50 | | | 21 | | | 38.06 | | | 3,233 | | | 6.00 | |
| | | | | | | | | | | | | | | | |
| Average NYMEX Price | | | | 5.83 | | | | | 77.19 | | | | | | | | | |
Average Realized Price
(including realized derivatives) | | | | 2.92 | | | | | 50.93 | | | | | 38.06 | | | | | 3.70 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor |
| | Year Ended December 31, 2022 |
| | Natural Gas | | Oil | | NGL | | Total |
| | MMcf per day | | $/Mcf | | MBbl per day | | $/Bbl | | MBbl per day | | $/Bbl | | MMcfe per day | | $/Mcfe |
| Marcellus | | 1,836 | | | 6.03 | | | — | | | — | | | — | | | — | | | 1,836 | | | 6.03 | |
| Haynesville | | 1,611 | | | 5.92 | | | — | | | — | | | — | | | — | | | 1,611 | | | 5.92 | |
| Eagle Ford | | 127 | | | 5.64 | | | 51 | | | 96.10 | | | 16 | | | 36.76 | | | 529 | | | 11.76 | |
| Powder River Basin | | 10 | | | 5.45 | | | 2 | | | 95.18 | | | 1 | | | 53.96 | | | 26 | | | 10.66 | |
| Total | | 3,584 | | | 5.96 | | | 53 | | | 96.07 | | | 17 | | | 37.48 | | | 4,002 | | | 6.77 | |
| | | | | | | | | | | | | | | | |
| Average NYMEX Price | | | | 6.64 | | | | | 94.23 | | | | | | | | | |
Average Realized Price
(including realized derivatives) | | | | 3.67 | | | | | 66.36 | | | | | 37.48 | | | | | 4.32 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor |
| | Period from February 10, 2021 through December 31, 2021 |
| | Natural Gas | | Oil | | NGL | | Total |
| | MMcf per day | | $/Mcf | | MBbl per day | | $/Bbl | | MBbl per day | | $/Bbl | | MMcfe per day | | $/Mcfe |
| Marcellus | | 1,296 | | | 3.25 | | | — | | | — | | | — | | | — | | | 1,296 | | | 3.25 | |
| Haynesville | | 750 | | | 4.10 | | | — | | | — | | | — | | | — | | | 750 | | | 4.10 | |
| Eagle Ford | | 137 | | | 4.02 | | | 60 | | | 69.25 | | | 19 | | | 29.76 | | | 608 | | | 8.65 | |
| Powder River Basin | | 53 | | | 4.33 | | | 9 | | | 67.90 | | | 3 | | | 40.00 | | | 129 | | | 7.69 | |
| Total | | 2,236 | | | 3.61 | | | 69 | | | 69.07 | | | 22 | | | 31.37 | | | 2,783 | | | 4.87 | |
| | | | | | | | | | | | | | | | |
| Average NYMEX Price | | | | 3.97 | | | | 69.35 | | | | | | | | |
Average Realized Price
(including realized derivatives) | | | | 2.62 | | | | 49.06 | | | | 31.42 | | | | 3.57 |
| | | | | | | | | | | | | | | | |
| | Predecessor |
| | Period from January 1, 2021 through February 9, 2021 |
| | Natural Gas | | Oil | | NGL | | Total |
| | MMcf per day | | $/Mcf | | MBbl per day | | $/Bbl | | MBbl per day | | $/Bbl | | MMcfe per day | | $/Mcfe |
| Marcellus | | 1,233 | | | 2.42 | | | — | | | — | | | — | | | — | | | 1,233 | | | 2.42 | |
| Haynesville | | 543 | | | 2.44 | | | — | | | — | | | — | | | — | | | 543 | | | 2.44 | |
| Eagle Ford | | 165 | | | 2.57 | | | 74 | | | 53.37 | | | 18 | | | 23.94 | | | 721 | | | 6.71 | |
| Powder River Basin | | 61 | | | 2.92 | | | 10 | | | 51.96 | | | 4 | | | 34.31 | | | 144 | | | 5.71 | |
| Total | | 2,002 | | | 2.45 | | | 84 | | | 53.21 | | | 22 | | | 25.92 | | | 2,641 | | | 3.77 | |
| | | | | | | | | | | | | | | | |
| Average NYMEX Price | | | | 2.47 | | | | 52.10 | | | | | | | | |
Average Realized Price
(including realized derivatives) | | | | 2.52 | | | | 46.85 | | | | 25.55 | | | | 3.65 |
| | | | | | | | | | | | | | | | |
| | Non-GAAP Combined |
| | Year Ended December 31, 2021 |
| | Natural Gas | | Oil | | NGL | | Total |
| | MMcf per day | | $/Mcf | | MBbl per day | | $/Bbl | | MBbl per day | | $/Bbl | | MMcfe per day | | $/Mcfe |
| Marcellus | | 1,289 | | | 3.16 | | | — | | | — | | | — | | | — | | | 1,289 | | | 3.16 | |
| Haynesville | | 727 | | | 3.96 | | | — | | | — | | | — | | | — | | | 727 | | | 3.96 | |
| Eagle Ford | | 140 | | | 3.84 | | | 62 | | | 67.14 | | | 18 | | | 29.14 | | | 621 | | | 8.40 | |
| Powder River Basin | | 54 | | | 4.16 | | | 9 | | | 66.08 | | | 4 | | | 39.26 | | | 130 | | | 7.44 | |
| Total | | 2,210 | | | 3.49 | | | 71 | | | 67.01 | | | 22 | | | 30.77 | | | 2,767 | | | 4.75 | |
| | | | | | | | | | | | | | | | |
| Average NYMEX Price | | | | 3.84 | | | | | 67.92 | | | | | | | | | |
Average Realized Price
(including realized derivatives) | | | | 2.61 | | | | | 48.77 | | | | | 30.77 | | | | | 3.58 | |
| | |
| ADJUSTED GROSS MARGIN (unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor |
| | Three Months Ended December 31, 2022 | | Three Months Ended December 31, 2021 |
| ($ in millions, except per unit) | | $ | | $/Mcfe | | $ | | $/Mcfe |
| Marcellus | | | | | | | | |
| Natural gas, oil and NGL sales | | $ | 956 | | | 5.35 | | | $ | 598 | | | 4.94 | |
| Production expenses | | 22 | | | 0.12 | | | 11 | | 0.09 | |
| Gathering, processing and transportation expenses | | 99 | | | 0.55 | | | 83 | | 0.69 | |
| Severance and ad valorem taxes | | 4 | | | 0.02 | | | 3 | | 0.02 | |
| Adjusted gross margin (Non-GAAP) | | $ | 831 | | | 4.66 | | | $ | 501 | | | 4.14 | |
| | | | | | | | |
| Haynesville | | | | | | | | |
| Natural gas, oil and NGL sales | | $ | 748 | | | 5.17 | | | $ | 597 | | | 5.20 | |
| Production expenses | | 46 | | | 0.32 | | | 29 | | 0.25 | |
| Gathering, processing and transportation expenses | | 73 | | | 0.51 | | | 54 | | 0.47 | |
| Severance and ad valorem taxes | | 27 | | | 0.18 | | | 10 | | 0.09 | |
| Adjusted gross margin (Non-GAAP) | | $ | 602 | | | 4.16 | | | $ | 504 | | | 4.39 | |
| | | | | | | | |
| Eagle Ford | | | | | | | | |
| Natural gas, oil and NGL sales | | $ | 497 | | | 10.03 | | | $ | 495 | | | 9.72 | |
| Production expenses | | 58 | | | 1.19 | | | 53 | | 1.04 | |
| Gathering, processing and transportation expenses | | 85 | | | 1.73 | | | 79 | | 1.55 | |
| Severance and ad valorem taxes | | 24 | | | 0.49 | | | 29 | | 0.57 | |
| Adjusted gross margin (Non-GAAP) | | $ | 330 | | | 6.62 | | | $ | 334 | | | 6.56 | |
| | | | | | | | |
| Powder River Basin | | | | | | | | |
| Natural gas, oil and NGL sales | | $ | — | | | — | | | $ | 96 | | | 8.95 | |
| Production expenses | | — | | | — | | | 10 | | 0.92 | |
| Gathering, processing and transportation expenses | | — | | | — | | | 23 | | 2.13 | |
| Severance and ad valorem taxes | | — | | | — | | | 10 | | 0.91 | |
| Adjusted gross margin (Non-GAAP) | | $ | — | | | — | | | $ | 53 | | | 4.99 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor | | Non-GAAP Combined |
| | Year Ended December 31, 2022 | | Period from February 10, 2021 through December 31, 2021 | | | Period from January 1, 2021 through February 9, 2021 | | Year Ended December 31, 2021 |
| ($ in millions, except per unit) | | $ | | $/Mcfe | | $ | | $/Mcfe | | | $ | | $/Mcfe | | $ | | $/Mcfe |
| Marcellus | | | | | | | | | | | | | | | | | |
| Natural gas, oil and NGL sales | | $ | 4,041 | | | 6.03 | | | $ | 1,370 | | | 3.25 | | | | $ | 119 | | | 2.42 | | | $ | 1,489 | | | 3.16 | |
| Production expenses | | 76 | | 0.11 | | | 34 | | 0.08 | | | | 4 | | 0.08 | | | 38 | | 0.08 | |
| Gathering, processing and transportation expenses | | 381 | | 0.57 | | | 287 | | 0.68 | | | | 34 | | 0.70 | | | 321 | | 0.68 | |
| Severance and ad valorem taxes | | 17 | | 0.03 | | | 9 | | 0.02 | | | | 1 | | 0.01 | | | 10 | | 0.02 | |
| Adjusted gross margin (Non-GAAP) | | $ | 3,567 | | | 5.32 | | | $ | 1,040 | | | 2.47 | | | | $ | 80 | | | 1.63 | | | $ | 1,120 | | | 2.38 | |
| | | | | | | | | | | | | | | | | |
| Haynesville | | | | | | | | | | | | | | | | | |
| Natural gas, oil and NGL sales | | $ | 3,481 | | | 5.92 | | | $ | 998 | | | 4.10 | | | | $ | 53 | | | 2.44 | | | $ | 1,051 | | | 3.96 | |
| Production expenses | | 155 | | 0.26 | | | 59 | | 0.24 | | | | 4 | | 0.19 | | | 63 | | 0.24 | |
| Gathering, processing and transportation expenses | | 313 | | 0.53 | | | 118 | | 0.49 | | | | 11 | | 0.49 | | | 129 | | 0.49 | |
| Severance and ad valorem taxes | | 75 | | 0.13 | | | 22 | | 0.09 | | | | 2 | | 0.09 | | | 24 | | 0.09 | |
| Adjusted gross margin (Non-GAAP) | | $ | 2,938 | | | 5.00 | | | $ | 799 | | | 3.28 | | | | $ | 36 | | | 1.67 | | | $ | 835 | | | 3.14 | |
| | | | | | | | | | | | | | | | | |
| Eagle Ford | | | | | | | | | | | | | | | | | |
| Natural gas, oil and NGL sales | | $ | 2,271 | | | 11.76 | | | $ | 1,712 | | | 8.65 | | | | $ | 193 | | | 6.71 | | | $ | 1,905 | | | 8.40 | |
| Production expenses | | 234 | | 1.22 | | | 173 | | 0.88 | | | | 21 | | 0.71 | | | 194 | | 0.85 | |
| Gathering, processing and transportation expenses | | 343 | | 1.78 | | | 290 | | 1.46 | | | | 45 | | 1.55 | | | 335 | | 1.48 | |
| Severance and ad valorem taxes | | 139 | | 0.71 | | | 96 | | 0.48 | | | | 13 | | 0.45 | | | 109 | | 0.48 | |
| Adjusted gross margin (Non-GAAP) | | $ | 1,555 | | | 8.05 | | | $ | 1,153 | | | 5.83 | | | | $ | 114 | | | 4.00 | | | $ | 1,267 | | | 5.59 | |
| | | | | | | | | | | | | | | | | |
| Powder River Basin | | | | | | | | | | | | | | | | | |
| Natural gas, oil and NGL sales | | $ | 99 | | | 10.66 | | | $ | 321 | | | 7.69 | | | | $ | 33 | | | 5.71 | | | $ | 354 | | | 7.44 | |
| Production expenses | | 10 | | 0.94 | | | 31 | | 0.74 | | | | 3 | | 0.56 | | | 34 | | 0.72 | |
| Gathering, processing and transportation expenses | | 22 | | 2.32 | | | 85 | | 2.03 | | | | 12 | | 2.09 | | | 97 | | 2.04 | |
| Severance and ad valorem taxes | | 11 | | 1.09 | | | 31 | | 0.75 | | | | 2 | | 0.48 | | | 33 | | 0.70 | |
| Adjusted gross margin (Non-GAAP) | | $ | 56 | | | 6.31 | | | $ | 174 | | | 4.17 | | | | $ | 16 | | | 2.58 | | | $ | 190 | | | 3.98 | |
| | |
| CAPITAL EXPENDITURES ACCRUED (unaudited) |
| | | | | | | | | | | | | | |
| | Successor |
| | Three Months Ended December 31, 2022 | | Three Months Ended December 31, 2021 |
| ($ in millions) | | | | |
| Drilling and completion capital expenditures: | | | | |
| Marcellus | | $ | 123 | | | $ | 65 | |
| Haynesville | | 216 | | | 121 | |
| Eagle Ford | | 64 | | | 30 | |
| Powder River Basin | | — | | | 20 | |
| Total drilling and completion capital expenditures | | 403 | | | 236 | |
| Non-drilling and completion - field | | 41 | | | 12 | |
| Non-drilling and completion - corporate | | 23 | | | 20 | |
| Total capital expenditures | | $ | 467 | | | $ | 268 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor | | Non-GAAP Combined |
| | Year Ended December 31, 2022 | | Period from February 10, 2021 through December 31, 2021 | | | Period from January 1, 2021 through February 9, 2021 | | Year Ended December 31, 2021 |
| ($ in millions) | | | | | | | | | |
| Drilling and completion capital expenditures: | | | | | | | | | |
| Marcellus | | $ | 461 | | | $ | 220 | | | | $ | 26 | | | $ | 246 | |
| Haynesville | | 834 | | | 259 | | | | 22 | | | 281 | |
| Eagle Ford | | 414 | | | 78 | | | | 5 | | | 83 | |
| Powder River Basin | | 22 | | | 32 | | | | — | | | 32 | |
| Total drilling and completion capital expenditures | | 1,731 | | | 589 | | | | 53 | | | 642 | |
| Non-drilling and completion - field | | 115 | | | 39 | | | | 6 | | | 45 | |
| Non-drilling and completion - corporate | | 90 | | | 56 | | | | 3 | | | 59 | |
| Total capital expenditures | | $ | 1,936 | | | $ | 684 | | | | $ | 62 | | | $ | 746 | |
| | |
| NON-GAAP FINANCIAL MEASURES |
As a supplement to the financial results prepared in accordance with U.S. GAAP, Chesapeake’s quarterly earnings releases contain certain financial measures that are not prepared or presented in accordance with U.S. GAAP. These non-GAAP financial measures include Adjusted Net Income (Loss), Adjusted EBITDAX, Adjusted Gross Margin, Free Cash Flow, Adjusted Free Cash Flow and Net Debt. A reconciliation of each financial measure to its most directly comparable GAAP financial measure is included in the tables below.
These financial measures are non-GAAP and should not be considered as an alternative to, or more meaningful than, net income (loss), earnings (loss) per common share, gross margin or cash flow provided by operating activities prepared in accordance with GAAP.
Chesapeake believes that the non-GAAP measures presented, when viewed in combination with its financial measures prepared in accordance with GAAP, provide useful information as they exclude certain items management believes affects the comparability of operating results. Management believes these adjusted financial measures are a meaningful adjunct to earnings and cash flows calculated in accordance with GAAP because (a) management uses these financial measures to evaluate the company’s trends and performance relative to other oil and natural gas producing companies, (b) these financial measures are comparable to estimates provided by securities analysts, and (c) items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provide by the company generally excludes information regarding these types of items.
Because not all companies use identical calculations, Chesapeake’s non-GAAP measures may not be comparable to similar titled measures of other companies.
| | |
| RECONCILIATION OF NET INCOME AVAILABLE TO COMMON STOCKHOLDERS TO ADJUSTED NET INCOME (unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor |
| | Three Months Ended December 31, 2022 | | Three Months Ended December 31, 2021 |
| | $ | | $/Share | | $ | | $/Share |
| ($ in millions, except per share data) | | | | | | | | |
| Net income available to common stockholders (GAAP) | | $ | 3,513 | | | $ | 26.16 | | | $ | 1,434 | | | $ | 12.90 | |
| Effect of dilutive securities | | — | | | (2.16) | | | — | | | (1.77) | |
| Diluted income available to common stockholders (GAAP) | | $ | 3,513 | | | $ | 24.00 | | | $ | 1,434 | | | $ | 11.13 | |
| | | | | | | | |
| Adjustments: | | | | | | | | |
| Unrealized gains on natural gas and oil derivatives | | (1,702) | | | (11.63) | | | (1,163) | | | (9.03) | |
| Separation and other termination costs | | 5 | | | 0.03 | | | — | | | — | |
| Gains on sales of assets | | (2) | | | (0.02) | | | (3) | | | (0.02) | |
| Other operating expense, net | | 25 | | | 0.17 | | | 89 | | | 0.69 | |
| Losses on purchases, exchanges or extinguishments of debt | | 5 | | | 0.04 | | | — | | | — | |
| | | | | | | | |
| Other | | 9 | | | 0.06 | | | — | | | — | |
Deferred income tax benefit(a) | | (1,351) | | | (9.22) | | | (49) | | | (0.38) | |
Tax effect of adjustments(b) | | 49 | | | 0.33 | | | — | | | — | |
| Adjusted net income available to common stockholders (Non-GAAP) | | $ | 551 | | | $ | 3.76 | | | $ | 308 | | | $ | 2.39 | |
| Deemed dividend on warrants | | 67 | | | 0.46 | | | — | | | — | |
| Adjusted net income (Non-GAAP) | | $ | 618 | | | $ | 4.22 | | | $ | 308 | | | $ | 2.39 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor |
| | Year Ended December 31, 2022 | | Period from February 10, 2021 through December 31, 2021 | | | Period from January 1, 2021 through February 9, 2021 |
| | $ | | $/Share | | $ | | $/Share | | | $ | | $/Share |
| ($ in millions, except per share data) | | | | | | | | | | | | | |
| Net income available to common stockholders (GAAP) | | $ | 4,869 | | | $ | 38.71 | | | $ | 945 | | | $ | 9.29 | | | | $ | 5,383 | | | $ | 550.35 | |
| Effect of dilutive securities | | — | | | (5.35) | | | — | | | (1.17) | | | | — | | | (15.84) | |
| Diluted income available to common stockholders (GAAP) | | $ | 4,869 | | | $ | 33.36 | | | $ | 945 | | | $ | 8.12 | | | | $ | 5,383 | | | $ | 534.51 | |
| | | | | | | | | | | | | |
| Adjustments: | | | | | | | | | | | | | |
| Unrealized (gains) losses on natural gas and oil derivatives | | (895) | | | (6.13) | | | (41) | | | (0.35) | | | | 369 | | | 36.64 | |
| Separation and other termination costs | | 5 | | | 0.03 | | | 11 | | | 0.09 | | | | 22 | | | 2.18 | |
| Gains on sales of assets | | (300) | | | (2.06) | | | (12) | | | (0.10) | | | | (5) | | | (0.50) | |
| Other operating expense (income), net | | 78 | | | 0.53 | | | 93 | | | 0.79 | | | | (12) | | | (1.19) | |
| Losses on purchases, exchanges or extinguishments of debt | | 5 | | | 0.04 | | | — | | | — | | | | — | | | — | |
| Impairments | | — | | | — | | | 1 | | | 0.01 | | | | — | | | — | |
| Reorganization items, net | | — | | | — | | | — | | | — | | | | (5,569) | | | (552.97) | |
| Other interest expense | | 12 | | | 0.08 | | | — | | | — | | | | — | | | — | |
| Other | | (10) | | | (0.07) | | | (18) | | | (0.15) | | | | — | | | — | |
Deferred income tax benefit(a) | | (1,332) | | | (9.12) | | | (49) | | | (0.42) | | | | — | | | — | |
Tax effect of adjustments(b) | | 14 | | | 0.10 | | | (13) | | | (0.11) | | | | (57) | | | (5.66) | |
| Adjusted net income available to common stockholders (Non-GAAP) | | $ | 2,446 | | | $ | 16.76 | | | $ | 917 | | | $ | 7.88 | | | | $ | 131 | | | $ | 13.01 | |
| Deemed dividend on warrants | | 67 | | | 0.46 | | | — | | | — | | | | — | | | — | |
| Adjusted net income (Non-GAAP) | | $ | 2,513 | | | $ | 17.22 | | | $ | 917 | | | $ | 7.88 | | | | $ | 131 | | | $ | 13.01 | |
| | | | | |
| (a) | In the 2022 Successor Period and 2022 Successor Quarter, we recorded a net deferred tax asset of $1.3 billion as a result of a partial release of the valuation allowance for potential tax benefits that will more likely than not be realized. |
| (b) | The 2022 Successor Period and 2022 Successor Quarters include an incremental tax effect attributed to the reconciling adjustments using blended rates of 3.0% for the 2022 Successor Fourth Quarter, 5.7% for the 2022 Successor Third Quarter, 5.8% for the 2022 Successor Second Quarter and 6.0% for the 2022 Successor First Quarter. The 2021 Successor Period includes a tax effect attributed to the reconciling adjustments using an estimated rate of 2%. The 2021 Predecessor Period includes an income tax benefit of $57 million attributed to deferred income tax effects associated with Predecessor accumulated other comprehensive income, eliminated in fresh start accounting. |
| | |
| RECONCILIATION OF NET INCOME TO ADJUSTED EBITDAX (unaudited) |
| | | | | | | | | | | | | | |
| | Successor |
| | Three Months Ended December 31, 2022 | | Three Months Ended December 31, 2021 |
| ($ in millions) | | | | |
| Net income (GAAP) | | $ | 3,580 | | | $ | 1,434 | |
| | | | |
| Adjustments: | | | | |
| Interest expense | | 40 | | | 26 | |
| Income tax benefit | | (1,390) | | | (39) | |
| Depreciation, depletion and amortization | | 453 | | | 340 | |
| Exploration | | 9 | | | 3 | |
| Unrealized gains on natural gas and oil derivatives | | (1,702) | | | (1,163) | |
| Separation and other termination costs | | 5 | | | — | |
| Gains on sales of assets | | (2) | | | (3) | |
| Other operating expense, net | | 25 | | | 89 | |
| | | | |
| Losses on purchases, exchanges or extinguishments of debt | | 5 | | | — | |
| Other | | 9 | | | — | |
| Adjusted EBITDAX (Non-GAAP) | | $ | 1,032 | | | $ | 687 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor | | Non-GAAP Combined |
| | Year Ended December 31, 2022 | | Period from February 10, 2021 through December 31, 2021 | | | Period from January 1, 2021 through February 9, 2021 | | Year Ended December 31, 2021 |
| ($ in millions) | | | | | | | | | |
| Net income (GAAP) | | $ | 4,936 | | | $ | 945 | | | | $ | 5,383 | | | $ | 6,328 | |
| | | | | | | | | |
| Adjustments: | | | | | | | | | |
| Interest expense | | 160 | | | 73 | | | | 11 | | | 84 | |
| Income tax benefit | | (1,285) | | | (49) | | | | (57) | | | (106) | |
| Depreciation, depletion and amortization | | 1,753 | | | 919 | | | | 72 | | | 991 | |
| Exploration | | 23 | | | 7 | | | | 2 | | | 9 | |
| Unrealized (gains) losses on natural gas and oil derivatives | | (895) | | | (41) | | | | 369 | | | 328 | |
| Separation and other termination costs | | 5 | | | 11 | | | | 22 | | | 33 | |
| Gains on sales of assets | | (300) | | | (12) | | | | (5) | | | (17) | |
| Other operating expense (income), net | | 78 | | | 93 | | | | (12) | | | 81 | |
| Impairments | | — | | | 1 | | | | — | | | 1 | |
| Losses on purchases, exchanges or extinguishments of debt | | 5 | | | — | | | | — | | | — | |
| Reorganization items, net | | — | | | — | | | | (5,569) | | | (5,569) | |
| Other | | (10) | | | (18) | | | | — | | | (18) | |
| Adjusted EBITDAX (Non-GAAP) | | $ | 4,470 | | | $ | 1,929 | | | | $ | 216 | | | $ | 2,145 | |
| | |
| RECONCILIATION OF GROSS MARGIN TO ADJUSTED GROSS MARGIN (unaudited) |
| | | | | | | | | | | | | | |
| | Successor |
| | Three Months Ended December 31, 2022 | | Three Months Ended December 31, 2021 |
| | |
| Gross margin (GAAP) | | | | |
| Natural gas, oil and NGL sales | | $ | 2,201 | | | $ | 1,786 | |
| Less: | | | | |
| Production expenses | | (126) | | | (103) | |
| Gathering, processing and transportation expenses | | (257) | | | (239) | |
| Severance and ad valorem taxes | | (55) | | | (52) | |
| Depreciation, depletion and amortization | | (453) | | | (340) | |
| Gross margin (GAAP) | | 1,310 | | | 1,052 | |
| Add back: Depreciation, depletion and amortization | | 453 | | | 340 | |
| Adjusted gross margin (Non-GAAP) | | $ | 1,763 | | | $ | 1,392 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor | | Non-GAAP Combined |
| | Year Ended
December 31, 2022 | | Period from February 10, 2021 through
December 31, 2021 | | | Period from January 1, 2021 through February 9, 2021 | | Year Ended December 31, 2021 |
| | | | | |
| Gross margin (GAAP) | | | | | | | | | |
| Natural gas, oil and NGL sales | | $ | 9,892 | | | $ | 4,401 | | | | $ | 398 | | | $ | 4,799 | |
| Less: | | | | | | | | | |
| Production expenses | | (475) | | | (297) | | | | (32) | | | (329) | |
| Gathering, processing and transportation expenses | | (1,059) | | | (780) | | | | (102) | | | (882) | |
| Severance and ad valorem taxes | | (242) | | | (158) | | | | (18) | | | (176) | |
| Depreciation, depletion and amortization | | (1,753) | | | (919) | | | | (72) | | | (991) | |
| Gross margin (GAAP) | | 6,363 | | | 2,247 | | | | 174 | | | 2,421 | |
| Add back: Depreciation, depletion and amortization | | 1,753 | | | 919 | | | | 72 | | | 991 | |
| Adjusted gross margin (Non-GAAP) | | $ | 8,116 | | | $ | 3,166 | | | | $ | 246 | | | $ | 3,412 | |
| | |
| RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW (unaudited) |
| | | | | | | | | | | | | | |
| | Successor |
| | Three Months Ended December 31, 2022 | | Three Months Ended December 31, 2021 |
| ($ in millions) | | | | |
| Net cash provided by operating activities (GAAP) | | $ | 1,050 | | | $ | 563 | |
| Cash capital expenditures | | (524) | | | (265) | |
| Free cash flow (Non-GAAP) | | 526 | | | 298 | |
| Cash paid for acquisition costs | | — | | | 74 | |
| Cash contributions to investments | | (18) | | | — | |
| Free cash flow associated with assets under contract | | (235) | | | — | |
| Adjusted free cash flow (Non-GAAP) | | $ | 273 | | | $ | 372 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor | | Non-GAAP Combined |
| | Year Ended December 31, 2022 | | Period from February 10, 2021 through December 31, 2021 | | | Period from January 1, 2021 through February 9, 2021 | | Year Ended December 31, 2021 |
| ($ in millions) | | | | | | | | | |
| Net cash provided by (used in) operating activities (GAAP) | | $ | 4,125 | | | $ | 1,809 | | | | $ | (21) | | | $ | 1,788 | |
| Cash capital expenditures | | (1,823) | | | (669) | | | | (66) | | | (735) | |
| Free cash flow (Non-GAAP) | | 2,302 | | | 1,140 | | | | (87) | | | 1,053 | |
| Cash paid for reorganization items, net | | — | | | 65 | | | | 66 | | | 131 | |
| Cash paid for acquisition costs | | 23 | | | 74 | | | | — | | | 74 | |
| Cash contributions to investments | | (18) | | | — | | | | — | | | — | |
| Free cash flow associated with assets under contract | | (235) | | | — | | | | — | | | — | |
| Adjusted free cash flow (Non-GAAP) | | $ | 2,072 | | | $ | 1,279 | | | | $ | (21) | | | $ | 1,258 | |
| | |
| RECONCILIATION OF TOTAL DEBT TO NET DEBT (unaudited) |
| | | | | | | | |
| | Successor |
| | December 31, 2022 |
| ($ in millions) | | |
| Total debt (GAAP) | | $ | 3,093 | |
| Premiums and issuance costs on debt | | (93) | |
| Principal amount of debt | | 3,000 | |
| Cash and cash equivalents | | (130) | |
| Net debt (Non-GAAP) | | $ | 2,870 | |
