Chesapeake Energy Corp. (NASDAQ:CHK) Q3 2022 Results Conference Call November 2, 2022 9:00 AM ET Company Participants Chris Ayres - VP, IR & Treasurer Domenic Dell'Osso - President, CEO Josh Viets - EVP, COO Mohit Singh - CFO Conference Call Participants Scott Hanold - RBC Capital Markets Umang Choudhary - Goldman Sachs Doug Leggate - Bank of America Zach Parham - JP Morgan Charles Meade - Johnson Rice Subhasish Chandra - Benchmark Nicholas Pope - Seaport Research Phillips Johnston - Capital One Matt Por ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol Name of Each Exchange on Which Registered Common Stock, $0.01 par value per share CHK The Nasdaq Stock Market LLC Class A Warrants to purchase Common Stock CHKEW The Nasdaq Stock Market LLC Class B Warrants to purchase Common Stock CHKEZ The Nasdaq Stock Market LLC Class C Warrants to purchase Common Stock CHKEL The Nasdaq Stock Market LLC FOR ...

Chesapeake Energy Corporation (NASDAQ:CHK) Barclays 2022 CEO Energy-Power Conference September 7, 2022 12:30 PM ET Company Participants Nick Dell'Osso - President and Chief Executive Officer Conference Call Participants Unidentified Company Representative Okay. Welcome, everyone. I'm not sure if it's afternoon or morning. I've been up here all day. But good morning, good afternoon. We are very pleased to have with us Mr. Nick Dell'Osso, President and CEO of Chesapeake Energy. We're in for a real treat tod ...

Answering the Call for Affordable, Reliable, Lower Carbon Energy 2Q 2022 EARNINGS / AUGUST 2, 2022 ENERGY Forward-Looking Statements This presentation and the accompanying outlook include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements other than statements of historical fact. They include statements that give our current expectations, management's outlook guidance o ...

Financial Data and Key Metrics Changes - The company reported strong cash flows driven by capital-efficient development, with significant share repurchases amounting to approximately 75% of shares issued in the Chief transaction [8][9][12] - The capital returns framework is leading among gas companies, with a buyback program increased to $2 billion [21][14] Business Line Data and Key Metrics Changes - The integration of Vine and Chief assets has been successful, contributing to strong cash flows and shareholder returns [8][10] - The company is reallocating capital from the Eagle Ford to the Haynesville, indicating a strategic shift in focus [9][15] Market Data and Key Metrics Changes - The company believes it has the premier natural gas portfolio in the U.S., with industry-leading capital efficiency and strong operating margins [10][11] - The Eagle Ford has been deemed non-core, with plans for a strategic exit to enhance shareholder value [12][13] Company Strategy and Development Direction - The company aims to maximize shareholder value by focusing on the Marcellus and Haynesville assets, which are expected to deliver superior returns [9][12] - The strategic exit from the Eagle Ford will be guided by principles ensuring accretive actions and enhancing capital returns [14][96] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic direction, emphasizing the strength of the company's assets and balance sheet [10][98] - The company is optimistic about growth opportunities in the Haynesville and maintaining a strong position in the Marcellus despite capacity constraints [26][28] Other Important Information - The company is focused on LNG opportunities, having secured contracts that recognize responsibly sourced gas, enhancing its market position [64][66] - The integration of Chief and Vine assets has already resulted in increased gas flow and improved drilling efficiency [70][72] Q&A Session Summary Question: What are the tax implications of the Eagle Ford sale and how will proceeds be utilized? - Management indicated it is too early to discuss tax implications and emphasized a focus on returning capital to shareholders through buybacks [20][21] Question: What triggered the decision to exit the Eagle Ford? - The decision was influenced by the high quality of the Vine and Chief assets and a desire to refine the capital allocation model [33][34] Question: Will the company continue to buy back shares using free cash flow? - Management confirmed a free cash flow-driven return strategy, leaning towards buybacks given the current stock valuation [43][44] Question: How is the company addressing constraints in the Haynesville? - Management outlined plans for capacity additions and improvements in gathering and treating facilities to support growth [45][46] Question: What is the company's approach to hedging in the current market? - The company plans to maintain a consistent hedge strategy while being opportunistic in layering additional hedges [51][56] Question: How does the company view the service cost environment and inflation? - Management is closely monitoring inflation and believes that a competitive portfolio can absorb inflationary pressures [80][84] Question: What are the drivers behind the impressive Marcellus results? - The company attributes success to strong acreage positions and effective capital management practices [87][89]

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets increased from $11,009 million (Dec 31, 2021) to $13,899 million (June 30, 2022), primarily driven by an increase in natural gas and oil properties. Total liabilities also increased significantly from $5,338 million to $8,091 million, largely due to short-term derivative liabilities and long-term debt Total Assets | Period | Amount (Millions USD) | | :----- | :-------------------- | | June 30, 2022 | $13,899 | | December 31, 2021 | $11,009 | Total Liabilities | Period | Amount (Millions USD) | | :----- | :-------------------- | | June 30, 2022 | $8,091 | | December 31, 2021 | $5,338 | Key Balance Sheet Items (Millions USD) | Item | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :---------------- | | Proved Natural Gas and Oil Properties | $10,816 | $7,682 | | Short-term Derivative Liabilities | $2,059 | $899 | | Long-term Debt, net | $3,046 | $2,278 | | Total Stockholders' Equity | $5,808 | $5,671 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2022, the company reported a net income of $1,237 million, a significant improvement from a net loss of $439 million in the prior-year quarter. This was driven by a substantial increase in natural gas, oil, and NGL revenues, despite large derivative losses. For the six months ended June 30, 2022, net income was $473 million, compared to a net loss of $144 million in the 2021 Successor Period Three Months Ended June 30 (Millions USD, except EPS) | Metric | 2022 (Successor) | 2021 (Successor) | Change (YoY) | | :----------------------------- | :--------------- | :--------------- | :----------- | | Natural Gas, Oil & NGL Revenue | $2,790 | $892 | +$1,898 | | Natural Gas & Oil Derivatives | $(514) | $(740) | +$226 | | Total Revenues & Other | $3,520 | $693 | +$2,827 | | Total Operating Expenses | $2,179 | $1,123 | +$1,056 | | Income (Loss) from Operations | $1,341 | $(430) | +$1,771 | | Net Income (Loss) | $1,237 | $(439) | +$1,676 | | Basic EPS | $9.75 | $(4.48) | +$14.23 | | Diluted EPS | $8.27 | $(4.48) | +$12.75 | Six Months Ended June 30 (Millions USD, except EPS) | Metric | 2022 (Successor) | 2021 (Successor) | 2021 (Predecessor) | | :----------------------------- | :--------------- | :--------------- | :----------------- | | Natural Gas, Oil & NGL Revenue | $4,704 | $1,445 | $398 | | Natural Gas & Oil Derivatives | $(2,639) | $(694) | $(382) | | Total Revenues & Other | $4,455 | $1,573 | $260 | | Total Operating Expenses | $3,908 | $1,718 | $494 | | Income (Loss) from Operations | $547 | $(145) | $(234) | | Net Income (Loss) | $473 | $(144) | $5,383 | | Basic EPS | $3.82 | $(1.47) | $550.35 | | Diluted EPS | $3.25 | $(1.47) | $534.51 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income for the three months ended June 30, 2022, was $1,237 million, a significant increase from a comprehensive loss of $439 million in the prior-year quarter. For the six months ended June 30, 2022, comprehensive income was $473 million, compared to a loss of $144 million in the 2021 Successor Period. No other comprehensive income items were recognized in the Successor periods Comprehensive Income (Loss) (Millions USD) | Period | Three Months Ended June 30 | Six Months Ended June 30 | | :---------------- | :------------------------- | :----------------------- | | 2022 Successor | $1,237 | $473 | | 2021 Successor | $(439) | $(144) | | 2021 Predecessor | N/A | $5,386 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to $1,762 million for the six months ended June 30, 2022, compared to $803 million in the 2021 Successor Period, primarily due to higher commodity prices and increased sales volumes from acquisitions. Net cash used in investing activities was $2,362 million, largely due to business combinations and capital expenditures. Net cash used in financing activities was $288 million, including significant payments for common stock dividends and repurchases Cash Flows from Operating Activities (Six Months Ended June 30, Millions USD) | Period | Net Cash Provided by (Used in) Operating Activities | | :--------------- | :-------------------------------------------------- | | 2022 Successor | $1,762 | | 2021 Successor | $803 | | 2021 Predecessor | $(21) | Cash Flows from Investing Activities (Six Months Ended June 30, Millions USD) | Period | Net Cash Used in Investing Activities | | :--------------- | :------------------------------------ | | 2022 Successor | $(2,362) | | 2021 Successor | $(220) | | 2021 Predecessor | $(66) | Cash Flows from Financing Activities (Six Months Ended June 30, Millions USD) | Period | Net Cash Used in Financing Activities | | :--------------- | :------------------------------------ | | 2022 Successor | $(288) | | 2021 Successor | $(87) | | 2021 Predecessor | $(66) | - Key cash flow items for the six months ended June 30, 2022, included capital expenditures of **$(759) million**, business combination (net) of **$(2,006) million**, cash paid for common stock dividends of **$(508) million**, and cash paid to repurchase and retire common stock of **$(558) million**[67](index=67&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased from $5,671 million at December 31, 2021, to $5,808 million at June 30, 2022. This was influenced by the issuance of common stock for the Marcellus Acquisition ($764 million), net income ($1,237 million), offset by significant share repurchases ($515 million) and common stock dividends ($301 million) Total Stockholders' Equity (Millions USD) | Period | Amount | | :---------------- | :----- | | June 30, 2022 | $5,808 | | December 31, 2021 | $5,671 | - Key changes in stockholders' equity for the six months ended June 30, 2022, included the issuance of common stock for the Marcellus Acquisition (**$764 million**), net income (**$1,237 million**), repurchase and retirement of common stock (**$(515) million**), and dividends on common stock (**$(301) million**)[69](index=69&type=chunk) [Note 1. Basis of Presentation and Summary of Significant Accounting Policies](index=15&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Chesapeake Energy Corporation is a natural gas and oil exploration and production company operating onshore in the United States. The financial statements are prepared in accordance with GAAP and SEC regulations, reflecting the company's emergence from Chapter 11 bankruptcy on February 9, 2021, distinguishing between "Predecessor" (pre-emergence) and "Successor" (post-emergence) periods. The company operates as a single reportable segment - Chesapeake Energy Corporation is a natural gas and oil exploration and production company engaged in the acquisition, exploration, and development of properties onshore in the United States[71](index=71&type=chunk) - The company filed Chapter 11 Cases on the Petition Date and emerged on February 9, 2021, with financial statements distinguishing between "Successor" (post-February 9, 2021) and "Predecessor" (on or prior to February 9, 2021) periods[71](index=71&type=chunk) - The company has concluded it has only one reportable operating segment due to the similar nature of its exploration and production business[74](index=74&type=chunk) - As of June 30, 2022, restricted cash was **$9 million**, primarily maintained to pay certain convenience class unsecured claims following bankruptcy emergence[75](index=75&type=chunk) [Note 2. Chapter 11 Emergence](index=16&type=section&id=Note%202.%20Chapter%2011%20Emergence) The company emerged from Chapter 11 bankruptcy on February 9, 2021, following the confirmation of its Plan of Reorganization. This involved significant transactions including the issuance of new common stock and warrants to various claim holders, cancellation of pre-petition equity interests, and the establishment of new debt facilities - The Debtors emerged from the Chapter 11 Cases on February 9, 2021 (the Effective Date), after the Bankruptcy Court confirmed the Plan of Reorganization[82](index=82&type=chunk) - Upon emergence, **97,907,081 shares** of New Common Stock were issued, and additional shares and warrants were reserved for future issuance to eligible claim holders[83](index=83&type=chunk) - All equity interests in the Predecessor, including common and preferred stock, were canceled, released, and extinguished without any distribution[84](index=84&type=chunk) - Holders of obligations under the FLLO Term Loan Facility received **23,022,420 shares** of New Common Stock[85](index=85&type=chunk) - Holders of Allowed Second Lien Notes Claim received shares of New Common Stock and Class A, B, and C Warrants[87](index=87&type=chunk) - The 2021 Long Term Incentive Plan (LTIP) was approved with a share reserve equal to **6,800,000 shares** of New Common Stock[92](index=92&type=chunk) [Note 3. Fresh Start Accounting](index=18&type=section&id=Note%203.%20Fresh%20Start%20Accounting) Upon emergence from bankruptcy on February 9, 2021, Chesapeake applied fresh start accounting, revaluing its assets and liabilities to their estimated fair values. The enterprise value was estimated at $4.85 billion, and the reorganization value of assets was $6.814 billion. This process resulted in significant adjustments to the balance sheet, including a gain on settlement of liabilities subject to compromise of $6.443 billion - The company qualified for and applied fresh start accounting on the Effective Date (February 9, 2021), reallocating its reorganization value to individual assets based on estimated fair value[97](index=97&type=chunk)[98](index=98&type=chunk) Enterprise Value and Reorganization Value (Millions USD) as of February 9, 2021 | Metric | Amount | | :--------------------------------- | :----- | | Estimated Enterprise Value | $4,851 | | Reorganization Value of Successor Assets | $6,814 | - The fair values of natural gas and oil properties, other property and equipment, long-term debt, asset retirement obligations, and warrants were estimated as of the Effective Date[104](index=104&type=chunk) Reorganization Items, Net (Predecessor Period from Jan 1, 2021 through Feb 9, 2021, Millions USD) | Item | Amount | | :------------------------------------------ | :----- | | Gains on the settlement of liabilities subject to compromise | $6,443 | | Accrual for allowed claims | $(1,002) | | Gain on fresh start adjustments | $201 | | **Total reorganization items, net** | **$5,569** | - No reorganization items, net were recognized for the 2022 Successor Quarter, 2022 Successor Period, 2021 Successor Quarter, or 2021 Successor Period[136](index=136&type=chunk) [Note 4. Natural Gas and Oil Property Transactions](index=26&type=section&id=Note%204.%20Natural%20Gas%20and%20Oil%20Property%20Transactions) Chesapeake completed two significant acquisitions: the Marcellus Acquisition on March 9, 2022, for approximately $2.77 billion (cash and stock), and the Vine Acquisition on November 1, 2021, for approximately $1.5 billion (stock and cash). These acquisitions added high-quality producing assets and drilling locations. The company also divested its Powder River Basin assets on March 25, 2022, for $450 million, recognizing a gain of $299 million - The Marcellus Acquisition closed on March 9, 2022, for approximately **$2.77 billion** (including **$2 billion** cash and **9.4 million** common shares), acquiring high-quality producing assets and drilling locations[138](index=138&type=chunk)[139](index=139&type=chunk) - The Vine Acquisition closed on November 1, 2021, for approximately **$1.5 billion** (including **18.7 million** common shares and **$90 million** cash), acquiring natural gas properties in the Haynesville and Mid-Bossier shale plays[143](index=143&type=chunk)[146](index=146&type=chunk) - The divestiture of Powder River Basin assets closed on March 25, 2022, for **$450 million** cash, resulting in a gain of approximately **$299 million**[155](index=155&type=chunk) Revenues from Acquisitions (Millions USD) | Acquisition | Period | Natural Gas, Oil & NGL Revenues | | :---------- | :-------------------------------- | :------------------------------ | | Marcellus | March 10 - June 30, 2022 | $473 | | Vine | Six Months Ended June 30, 2022 | $878 | [Note 5. Earnings Per Share](index=30&type=section&id=Note%205.%20Earnings%20Per%20Share) Basic EPS for the three months ended June 30, 2022, was $9.75, significantly up from $(4.48) in the prior-year quarter. Diluted EPS was $8.27, also a substantial increase. For the six months ended June 30, 2022, basic EPS was $3.82 and diluted EPS was $3.25. Potentially dilutive securities include warrants, RSUs, and PSUs Earnings Per Common Share (Three Months Ended June 30) | Metric | 2022 Successor | 2021 Successor | | :--------- | :------------- | :------------- | | Basic EPS | $9.75 | $(4.48) | | Diluted EPS | $8.27 | $(4.48) | Earnings Per Common Share (Six Months Ended June 30) | Metric | 2022 Successor | 2021 Successor | 2021 Predecessor | | :--------- | :------------- | :------------- | :--------------- | | Basic EPS | $3.82 | $(1.47) | $550.35 | | Diluted EPS | $3.25 | $(1.47) | $534.51 | - Potentially dilutive securities during the Successor Periods consist of issuable shares related to warrants, unvested Restricted Stock Units (RSUs), and unvested Performance Share Units (PSUs)[157](index=157&type=chunk) - The diluted earnings per share calculation for the 2022 Successor Quarter and Period 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[159](index=159&type=chunk) [Note 6. Debt](index=31&type=section&id=Note%206.%20Debt) As of June 30, 2022, total long-term debt, net, was $3,046 million, up from $2,278 million at December 31, 2021. This increase is primarily due to borrowings under the Exit Credit Facility and the assumption of Vine's senior notes. The Exit Credit Facility has an initial borrowing base of $2.5 billion, with $775 million in Tranche A Loans and $221 million in Tranche B Loans outstanding as of June 30, 2022 Long-term Debt, Net (Millions USD) | Period | Amount | | :---------------- | :----- | | June 30, 2022 | $3,046 | | December 31, 2021 | $2,278 | Outstanding Debt Components (June 30, 2022, Millions USD) | Debt Type | Carrying Amount | | :-------------------------------- | :-------------- | | Exit Credit Facility - Tranche A Loans | $775 | | Exit Credit Facility - Tranche B Loans | $221 | | 5.50% Senior Notes due 2026 | $500 | | 5.875% Senior Notes due 2029 | $500 | | 6.75% Senior Notes due 2029 (Vine Notes) | $950 | - The Exit Credit Facility has an initial borrowing base of **$2.5 billion**, redetermined semiannually[167](index=167&type=chunk) - The Credit Agreement contains financial covenants including a first lien leverage ratio of not more than **2.75 to 1:00**, a total leverage ratio of not more than **3.50 to 1:00**, and a current ratio of not less than **1.00 to 1:00**[169](index=169&type=chunk) [Note 7. Contingencies and Commitments](index=33&type=section&id=Note%207.%20Contingencies%20and%20Commitments) The company is involved in various litigation and regulatory proceedings, including those related to its Chapter 11 emergence and environmental risks. While significant judgment is required for estimates, management believes no pending or threatened lawsuit is likely to have a material adverse effect on future financial position. Contractual commitments for gathering, processing, and transportation agreements totaled approximately $4.2 billion as of June 30, 2022 - The Chapter 11 Plan, effective February 9, 2021, provided for the treatment of claims against the company's bankruptcy estates[181](index=181&type=chunk) - The company is involved in various lawsuits and disputes incidental to its business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims, and contract actions[183](index=183&type=chunk) - Management is of the opinion that no pending or threatened lawsuit or dispute is likely to have a material adverse effect on future consolidated financial position, results of operations, or cash flows[186](index=186&type=chunk) Aggregate Undiscounted Commitments under Gathering, Processing and Transportation Agreements (Millions USD) as of June 30, 2022 | Period | Amount | | :------------ | :----- | | Remainder of 2022 | $296 | | 2023 | $536 | | 2024 | $496 | | 2025 | $426 | | 2026 | $386 | | 2027-2036 | $2,062 | | **Total** | **$4,202** | [Note 8. Other Current Liabilities](index=35&type=section&id=Note%208.%20Other%20Current%20Liabilities) Other current liabilities increased from $1,202 million at December 31, 2021, to $1,730 million at June 30, 2022. The primary components include revenues and royalties due others, accrued drilling and production costs, and accrued hedging costs Other Current Liabilities (Millions USD) | Item | 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** | [Note 9. Revenue](index=35&type=section&id=Note%209.%20Revenue) Natural gas, oil, and NGL sales significantly increased in the 2022 Successor Quarter and Period compared to prior periods, primarily due to higher average prices and increased sales volumes from the Vine and Marcellus Acquisitions. For the three months ended June 30, 2022, total natural gas, oil, and NGL sales were $2,790 million, with Marcellus contributing $1,152 million and Haynesville $988 million Natural Gas, Oil and NGL Sales by Operating Area (Three Months Ended June 30, Millions USD) | Operating Area | 2022 Successor | 2021 Successor | | :------------- | :------------- | :------------- | | Marcellus | $1,152 | $226 | | Haynesville | $988 | $124 | | Eagle Ford | $650 | $458 | | Powder River Basin | — | $84 | | **Total** | **$2,790** | **$892** | Natural Gas, Oil and NGL Sales by Operating Area (Six Months Ended June 30, Millions USD) | Operating Area | 2022 Successor | 2021 Successor | 2021 Predecessor | | :------------- | :------------- | :------------- | :--------------- | | Marcellus | $1,761 | $389 | $119 | | Haynesville | $1,640 | $194 | $53 | | Eagle Ford | $1,204 | $730 | $193 | | Powder River Basin | $99 | $132 | $33 | | **Total** | **$4,704** | **$1,445** | **$398** | - Natural gas, oil and NGL sales in the 2022 Successor Quarter increased **$1,898 million** compared to the 2021 Successor Quarter, including **$1,068 million** due to increased sales volumes (Vine and Marcellus Acquisitions) and **$1,069 million** due to higher average prices received[295](index=295&type=chunk) [Note 10. Income Taxes](index=37&type=section&id=Note%2010.%20Income%20Taxes) The company recorded an income tax expense of $31 million for the 2022 Successor Period, with an effective tax rate of 6.2%. A full valuation allowance is maintained against net deferred tax assets due to historical losses, though future profitability could lead to its release. The company experienced an Ownership Change upon bankruptcy emergence, resulting in an annual limitation of $54 million on NOL carryforwards and other tax attributes under Section 382 of the Code Income Tax Expense and Effective Tax Rate (Millions USD) | Period | Income Tax Expense (Benefit) | Effective Tax Rate | | :---------------- | :--------------------------- | :----------------- | | 2022 Successor Period | $31 | 6.2% | | 2021 Successor Period | — | 0.0% | | 2021 Predecessor Period | $(57) | (1.1%) | - A full valuation allowance was recorded against net deferred tax assets for federal and state purposes as of June 30, 2022, and December 31, 2021, due to historical losses, but there is a possibility of release in the foreseeable future if profitability trends emerge[206](index=206&type=chunk) - An Ownership Change occurred upon emergence from bankruptcy on February 9, 2021, resulting in an annual limitation of **$54 million** on NOL carryforwards and other tax attributes under Section 382 of the Code[208](index=208&type=chunk) - Cancellation of debt income (CODI) of **$5 billion** reduced NOL carryforwards, and **$593 million** of federal NOLs were estimated to expire due to the Section 382 limitation[209](index=209&type=chunk) [Note 11. Equity](index=39&type=section&id=Note%2011.%20Equity) The company issued new common stock for allowed claims upon bankruptcy emergence, and further shares for the Vine and Marcellus Acquisitions. An annual dividend program was initiated in May 2021, with a quarterly dividend of $2.32 per share declared in August 2022. The share repurchase program was expanded to $2.0 billion, with $598 million in common stock repurchased by June 30, 2022 - On the Effective Date, **97,907,081 shares** of New Common Stock were issued to holders of allowed claims, and **2,092,918 shares** were reserved for future distributions[211](index=211&type=chunk) - The company issued **18,709,399 shares** for the Vine Acquisition (November 1, 2021) and **9,442,185 shares** for the Marcellus Acquisition (March 9, 2022)[212](index=212&type=chunk) Common Stock Dividend Payments (2022 Successor Period, Millions USD) | Payment Date | Dividend Payment | | :----------- | :--------------- | | March 22, 2022 | $210 | | June 2, 2022 | $298 | | **Total** | **$508** | - A quarterly dividend of **$2.32 per share** (**$0.55 base**, **$1.77 variable**) was declared on August 2, 2022, payable September 1, 2022[214](index=214&type=chunk)[263](index=263&type=chunk) - The share repurchase program was expanded by **$1.0 billion** in June 2022, bringing the total authorized amount to **$2.0 billion** (expires December 31, 2023)[215](index=215&type=chunk) - By June 30, 2022, the company repurchased **6.8 million shares** of common stock for an aggregate price of **$598 million**[216](index=216&type=chunk)[254](index=254&type=chunk) [Note 12. Share-Based Compensation](index=40&type=section&id=Note%2012.%20Share-Based%20Compensation) Following bankruptcy emergence, all Predecessor share-based awards were canceled. The Successor period introduced the 2021 Long Term Incentive Plan (LTIP), granting Restricted Stock Units (RSUs) and Performance Share Units (PSUs). As of June 30, 2022, unrecognized compensation expense for RSUs was $50 million (over 2.41 years) and for PSUs was $21 million (over 2.46 years) - Predecessor common stock and existing share-based compensation awards were canceled upon emergence from Chapter 11[220](index=220&type=chunk)[221](index=221&type=chunk) - The 2021 Long Term Incentive Plan (LTIP) was adopted with a share reserve of **6,800,000 shares** of New Common Stock, providing for grants of RSUs, PSUs, and other awards[222](index=222&type=chunk) Unrecognized Share-Based Compensation Expense (Millions USD) | Award Type | Unrecognized Expense | Weighted Average Period | | :---------------- | :------------------- | :---------------------- | | Unvested RSUs | $50 | 2.41 years | | Unvested PSUs | $21 | 2.46 years | Total RSU, Stock Option, and PSU Compensation Costs (Millions USD) | Period | 2022 Successor (Six Months) | 2021 Successor (Period Feb 10-Jun 30) | 2021 Predecessor (Period Jan 1-Feb 9) | | :---------------- | :-------------------------- | :------------------------------------ | :------------------------------------ | | Total Compensation | $12 | $3 | $3 | [Note 13. Derivative and Hedging Activities](index=42&type=section&id=Note%2013.%20Derivative%20and%20Hedging%20Activities) The company uses derivative instruments (swaps, collars, options) to mitigate exposure to commodity price fluctuations, not for speculative trading. All instruments are net settled. As of June 30, 2022, the total estimated fair value of natural gas and oil derivatives was a net liability of $(2,490) million, significantly higher than $(1,143) million at December 31, 2021, reflecting increased market volatility - The company uses derivative instruments (financial price swaps, basis protection swaps, collars, three-way collars, options, and swaptions) to reduce exposure to fluctuations in future commodity prices[234](index=234&type=chunk) - The company does not intend to hold or issue derivative financial instruments for speculative trading purposes and has not designated any for hedge accounting treatment[234](index=234&type=chunk) Total Estimated Fair Value of Natural Gas and Oil Derivatives (Net Liability, Millions USD) | Period | Amount | | :---------------- | :------- | | June 30, 2022 | $(2,490) | | December 31, 2021 | $(1,143) | Estimated Fair Value of Derivatives by Type (June 30, 2022, Millions USD) | Type | Amount | | :---------- | :------- | | Natural Gas | $(2,062) | | Oil | $(428) | - Derivative instruments expose the company to counterparty credit risk, which is mitigated by contracting with highly rated counterparties and requiring collateral if obligations exceed defined thresholds[239](index=239&type=chunk)[240](index=240&type=chunk) [Note 14. Other Operating Expense (Income), Net](index=44&type=section&id=Note%2014.%20Other%20Operating%20Expense%20(Income),%20Net) For the six months ended June 30, 2022, other operating expense, net, was $31 million, primarily driven by $33 million in costs related to the Marcellus Acquisition, including integration, consulting, financial advisory, legal fees, and change in control expenses Other Operating Expense (Income), Net (Millions USD) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Period from Feb 10, 2021 through June 30, 2021 | Period from Jan 1, 2021 through Feb 9, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :--------------------------------------------- | :-------------------------------------------- | | Other operating expense (income), net | $8 | $(4) | $31 | $(2) | $(12) | - Approximately **$33 million** of costs related to the Marcellus Acquisition, including integration, consulting, financial advisory, legal fees, and change in control expenses, were recognized during the 2022 Successor Period[242](index=242&type=chunk)[319](index=319&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) [Introduction](index=45&type=section&id=Introduction) Chesapeake is an independent E&P company focused on natural gas, oil, and NGL production from U.S. onshore unconventional assets (Marcellus, Haynesville, Eagle Ford). Its strategy aims to generate sustainable Free Cash Flow, improve margins, and enhance ESG performance, including achieving net-zero direct greenhouse gas emissions by 2035. The company views combined 2021 Predecessor and Successor periods for meaningful comparison - Chesapeake is an independent exploration and production company with a portfolio of onshore U.S. unconventional natural gas and liquids assets, including interests in approximately **8,300 gross natural gas and oil wells** as of June 30, 2022[245](index=245&type=chunk) - The company's strategy focuses on generating sustainable Free Cash Flow, improving margins through operating efficiencies and financial discipline, and enhancing Environmental, Social, and Governance (ESG) performance[246](index=246&type=chunk) - Chesapeake aims to achieve net-zero direct greenhouse gas emissions by **2035**, having already achieved interim goals of **0.07% methane intensity** and **4.5 GHG intensity** by the end of 2021[247](index=247&type=chunk)[248](index=248&type=chunk) - Management views operating results for the six months ended June 30, 2021, by combining the 2021 Predecessor Period and the 2021 Successor Period for more meaningful comparisons and understanding operational trends[249](index=249&type=chunk)[251](index=251&type=chunk) [Recent Developments](index=47&type=section&id=Recent%20Developments) Recent developments include the Marcellus Acquisition (March 2022) and Vine Acquisition (November 2021) to strengthen competitive position and increase operating cash flows. The company also divested its Powder River Basin assets (March 2022) for $450 million, recognizing a $299 million gain. The share repurchase program was increased to $2.0 billion, and quarterly base dividends were raised by 10% - Completed the Marcellus Acquisition (March 9, 2022) and Vine Acquisition (November 1, 2021), which meaningfully increased operating cash flows and added high-quality assets[252](index=252&type=chunk) - Completed the sale of Powder River Basin assets (March 25, 2022) for **$450 million** cash, recognizing a gain of approximately **$299 million**[253](index=253&type=chunk) - The share repurchase program was increased from **$1.0 billion** to **$2.0 billion** in June 2022, with approximately **6.8 million shares** repurchased by June 30, 2022[254](index=254&type=chunk) - Paid approximately **$508 million** in common stock dividends in the 2022 Successor Period and increased the quarterly base dividend by **10%** to **$0.55 per share**[254](index=254&type=chunk) - The company is monitoring the impact of the COVID-19 pandemic and Russia's invasion of Ukraine, which could intensify commodity price volatility and inflationary cost pressures[255](index=255&type=chunk)[256](index=256&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) [Liquidity Overview](index=48&type=section&id=Liquidity%20Overview) The company believes it has sufficient liquidity for the foreseeable future, with $960 million available as of June 30, 2022, including $17 million cash on hand and $943 million unused borrowing capacity under the Exit Credit Facility. Total indebtedness was reduced by $9.4 billion post-Chapter 11 emergence - The company emerged from Chapter 11 Cases as a fundamentally stronger company, having reduced total indebtedness by **$9.4 billion**[260](index=260&type=chunk) Liquidity Available (Millions USD) as of June 30, 2022 | Item | Amount | | :------------------------------------------ | :----- | | Cash on hand | $17 | | Unused borrowing capacity (Exit Credit Facility) | $943 | | **Total Liquidity Available** | **$960** | - As of June 30, 2022, outstanding borrowings under the Exit Credit Facility included **$775 million** in Tranche A Loans and **$221 million** in Tranche B Loans[261](index=261&type=chunk) [Dividend](index=48&type=section&id=Dividend) Chesapeake paid $508 million in common stock dividends during the 2022 Successor Period and declared a quarterly dividend of $2.32 per share for September 2022, consisting of a $0.55 base and $1.77 variable component. Future dividends are at the Board's discretion and subject to various restrictions - The company paid **$508 million** in common stock dividends during the 2022 Successor Period[262](index=262&type=chunk) - A quarterly dividend of **$2.32 per share** (**$0.55 base**, **$1.77 variable**) was declared on August 2, 2022, payable September 1, 2022[263](index=263&type=chunk) - The declaration and payment of future dividends are at the full discretion of the Board of Directors and are restricted by Oklahoma corporate law, the Certificate of Incorporation, the Credit Agreement, and indentures governing senior notes[264](index=264&type=chunk) [Derivative and Hedging Activities](index=48&type=section&id=Derivative%20and%20Hedging%20Activities) The company uses derivative instruments to mitigate commodity price risk and improve revenue predictability, but these can limit cash flows during rising prices. These instruments are considered highly effective in achieving risk management objectives - The company uses various derivative instruments to mitigate exposure to commodity price declines and to better predict total revenue[265](index=265&type=chunk) - These derivative transactions may limit cash flows in periods of rising commodity prices[265](index=265&type=chunk) - Derivative instruments are considered highly effective in achieving risk management objectives[333](index=333&type=chunk) [Contractual Obligations and Off-Balance Sheet Arrangements](index=49&type=section&id=Contractual%20Obligations%20and%20Off-Balance%20Sheet%20Arrangements) Material contractual obligations include senior notes, Exit Credit Facility borrowings, derivative obligations, asset retirement obligations, lease obligations, and various other commitments. As of June 30, 2022, estimated gross undiscounted future commitments for gathering, processing, and transportation agreements totaled approximately $4.2 billion - Material contractual obligations include repayment of senior notes, outstanding borrowings and interest payment obligations under the Exit Credit Facility, derivative obligations, asset retirement obligations, lease obligations, and undrawn letters of credit[267](index=267&type=chunk) - Estimated gross undiscounted future commitments under gathering, processing, and transportation agreements were approximately **$4.2 billion** as of June 30, 2022[267](index=267&type=chunk) [Post-Emergence Debt](index=49&type=section&id=Post-Emergence%20Debt) Post-emergence financing includes the Exit Credit Facility (reserve-based, $2.5 billion initial borrowing base, redetermined semi-annually) and $1.0 billion in Senior Notes (2026 and 2029). The Exit Credit Facility includes $1.75 billion of revolving Tranche A Loans and $221 million of fully funded Tranche B Loans - The Exit Credit Facility has an initial borrowing base of **$2.5 billion**, redetermined semiannually on or around May 1 and November 1[268](index=268&type=chunk) - The aggregate initial elected commitments under the Exit Credit Facility were **$1.75 billion** of revolving Tranche A Loans and **$221 million** of fully funded Tranche B Loans[268](index=268&type=chunk) - The company issued **$500 million** aggregate principal amount of 2026 Notes and **$500 million** aggregate principal amount of 2029 Notes[270](index=270&type=chunk) [Assumption and Repayment of Vine Debt](index=49&type=section&id=Assumption%20and%20Repayment%20of%20Vine%20Debt) In conjunction with the Vine Acquisition, Vine's Second Lien Term Loan was repaid for $163 million, and its $950 million 6.75% Senior Notes due 2029 were assumed by Chesapeake - Vine's Second Lien Term Loan was repaid and terminated for **$163 million**, inclusive of a **$13 million** make whole premium[271](index=271&type=chunk) - Vine's **$950 million** aggregate principal amount of 6.75% Senior Notes due 2029 were assumed by the company[271](index=271&type=chunk) [Capital Expenditures](index=49&type=section&id=Capital%20Expenditures) For 2022, the company expects capital expenditures of $1.75 billion to $1.95 billion, primarily directed towards natural gas assets (75%). These expenditures are planned to be funded by cash on hand, operating cash flow, and Exit Credit Facility borrowings - Expected capital expenditures for the year ending December 31, 2022, are approximately **$1.75 billion to $1.95 billion**[272](index=272&type=chunk) - Approximately **75%** of 2022 capital expenditures are expected to be directed toward natural gas assets[272](index=272&type=chunk) - The 2022 capital program is planned to be funded through cash on hand, expected cash flow from operations, and borrowings under the Exit Credit Facility[272](index=272&type=chunk) [Sources of Funds](index=50&type=section&id=Sources%20of%20Funds) Total sources of cash and cash equivalents for the six months ended June 30, 2022, were $2,943 million, primarily from operating activities ($1,762 million), net proceeds from Exit Credit Facility Tranche A Loans ($775 million), and divestitures ($403 million) Sources of Cash and Cash Equivalents (Six Months Ended June 30, Millions USD) | Source | 2022 Successor | 2021 Successor | 2021 Predecessor | | :------------------------------------------ | :------------- | :------------- | :--------------- | | Cash provided by (used in) operating activities | $1,762 | $803 | $(21) | | Proceeds from Exit Credit Facility - Tranche A Loans, net | $775 | — | — | | Proceeds from issuance of senior notes | — | — | $1,000 | | Proceeds from issuance of common stock | — | — | $600 | | Proceeds from divestitures of property and equipment | $403 | $6 | — | | **Total sources of cash and cash equivalents** | **$2,943** | **$811** | **$1,579** | - The increase in cash provided by operating activities in the 2022 Successor Period is primarily due to higher prices for natural gas, oil, and NGL sold and increased volumes from the Vine and Marcellus Acquisitions[276](index=276&type=chunk) [Uses of Funds](index=51&type=section&id=Uses%20of%20Funds) Total uses of cash and cash equivalents for the six months ended June 30, 2022, were $3,831 million. Major uses included business combinations ($2,006 million, primarily Marcellus Acquisition), capital expenditures ($759 million), common stock dividends ($508 million), and share repurchases ($558 million) Uses of Cash and Cash Equivalents (Six Months Ended June 30, Millions USD) | Use | 2022 Successor | 2021 Successor | 2021 Predecessor | | :------------------------------------------ | :------------- | :------------- | :--------------- | | Capital expenditures | $759 | $226 | $66 | | Business combination, net | $2,006 | — | — | | Payments on DIP Facility borrowings | — | — | $1,179 | | Cash paid for common stock dividends | $508 | $34 | — | | Cash paid to repurchase and retire common stock | $558 | — | — | | **Total uses of cash and cash equivalents** | **$3,831** | **$315** | **$1,732** | - Capital expenditures significantly increased in the 2022 Successor Period primarily due to increased drilling and completion activity in Haynesville and Marcellus following the Vine and Marcellus Acquisitions[282](index=282&type=chunk) - The Marcellus Acquisition accounted for approximately **$2 billion** of the business combination, net, in the 2022 Successor Period[283](index=283&type=chunk) [Results of Operations](index=52&type=section&id=Results%20of%20Operations) [Natural Gas, Oil and NGL Production and Average Sales Prices](index=52&type=section&id=Natural%20Gas,%20Oil%20and%20NGL%20Production%20and%20Average%20Sales%20Prices) For the three months ended June 30, 2022, total production was 4,125 MMcfe per day at an average sales price of $7.43 per Mcfe. This represents a significant increase in production and price compared to the prior-year quarter (2,598 MMcfe/day at $3.77/Mcfe), primarily driven by the Marcellus and Vine acquisitions Natural Gas, Oil and NGL Production and Average Sales Prices (Three Months Ended June 30) | Metric | 2022 Successor | 2021 Successor | | :-------------------------- | :------------- | :------------- | | Total Production (MMcfe/day) | 4,125 | 2,598 | | Average Sales Price ($/Mcfe) | $7.43 | $3.77 | | Marcellus Production (MMcf/day) | 1,957 | 1,279 | | Haynesville Production (MMcf/day) | 1,643 | 531 | | Eagle Ford Production (MMcfe/day) | 525 | 650 | Natural Gas, Oil and NGL Production and Average Sales Prices (Six Months Ended June 30) | Metric | 2022 Successor | 2021 Successor | 2021 Predecessor | | :-------------------------- | :------------- | :------------- | :--------------- | | Total Production (MMcfe/day) | 3,922 | 2,596 | 2,641 | | Average Sales Price ($/Mcfe) | $6.62 | $3.95 | $3.77 | [Natural Gas, Oil and NGL Sales](index=53&type=section&id=Natural%20Gas,%20Oil%20and%20NGL%20Sales) Natural gas, oil, and NGL sales for the three months ended June 30, 2022, increased by $1,898 million YoY to $2,790 million. This was primarily due to a $1,068 million increase from higher sales volumes (Vine and Marcellus Acquisitions) and a $1,069 million increase from higher average prices. For the six months ended June 30, 2022, sales increased by $2,861 million compared to the combined 2021 periods Natural Gas, Oil and NGL Sales by Operating Area (Three Months Ended June 30, Millions USD) | Operating Area | 2022 Successor | 2021 Successor | | :------------- | :------------- | :------------- | | Marcellus | $1,152 | $226 | | Haynesville | $988 | $124 | | Eagle Ford | $650 | $458 | | Powder River Basin | — | $84 | | **Total** | **$2,790** | **$892** | Natural Gas, Oil and NGL Sales by Operating Area (Six Months Ended June 30, Millions USD) | Operating Area | 2022 Successor | 2021 Successor | 2021 Predecessor | | :------------- | :------------- | :------------- | :--------------- | | Marcellus | $1,761 | $389 | $119 | | Haynesville | $1,640 | $194 | $53 | | Eagle Ford | $1,204 | $730 | $193 | | Powder River Basin | $99 | $132 | $33 | | **Total** | **$4,704** | **$1,445** | **$398** | - Natural gas, oil and NGL sales in the 2022 Successor Quarter increased **$1,898 million** compared to the 2021 Successor Quarter, driven by **$1,068 million** from increased sales volumes (Vine and Marcellus Acquisitions) and **$1,069 million** from higher average prices[295](index=295&type=chunk) [Production Expenses](index=55&type=section&id=Production%20Expenses) Production expenses for the three months ended June 30, 2022, increased by $44 million to $118 million, primarily due to the Vine and Marcellus Acquisitions and additional workovers in Eagle Ford. Per Mcfe, total production expenses remained flat at $0.31. For the six months ended June 30, 2022, expenses increased by $82 million Total Production Expenses (Millions USD, except $/Mcfe) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | 2021 Successor (Feb 10-Jun 30) | 2021 Predecessor (Jan 1-Feb 9) | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Production Expenses | $118 | $74 | $228 | $114 | $32 | | Total Production Expenses ($/Mcfe) | $0.31 | $0.31 | $0.32 | $0.31 | $0.30 | - Production expenses in the 2022 Successor Quarter increased **$44 million** compared to the 2021 Successor Quarter, primarily due to the Vine and Marcellus Acquisitions and additional workovers in Eagle Ford[299](index=299&type=chunk) - Production expenses in the 2022 Successor Period increased **$82 million** compared to the combined 2021 Successor and Predecessor Periods, driven by the Vine and Marcellus Acquisitions and Eagle Ford workovers[300](index=300&type=chunk) [Gathering, Processing and Transportation Expenses](index=56&type=section&id=Gathering,%20Processing%20and%20Transportation%20Expenses) Gathering, processing, and transportation expenses for the three months ended June 30, 2022, increased by $63 million to $274 million, mainly due to the Vine and Marcellus Acquisitions. Per Mcfe, these expenses decreased from $0.89 to $0.73. For the six months ended June 30, 2022, expenses increased by $92 million Total Gathering, Processing and Transportation Expenses (Millions USD, except $/Mcfe) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | 2021 Successor (Feb 10-Jun 30) | 2021 Predecessor (Jan 1-Feb 9) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Expenses | $274 | $211 | $516 | $322 | $102 | | Total Expenses ($/Mcfe) | $0.73 | $0.89 | $0.73 | $0.88 | $0.96 | - Gathering, processing and transportation expenses in the 2022 Successor Quarter increased **$63 million**, primarily due to the Vine Acquisition (**$61 million** in Haynesville) and Marcellus Acquisition (**$41 million** in Marcellus)[302](index=302&type=chunk) - Gathering, processing and transportation expenses in the 2022 Successor Period increased **$92 million**, primarily due to the Vine Acquisition (**$104 million** in Haynesville) and Marcellus Acquisition (**$51 million** in Marcellus)[303](index=303&type=chunk) [Severance and Ad Valorem Taxes](index=57&type=section&id=Severance%20and%20Ad%20Valorem%20Taxes) Severance and ad valorem taxes for the three months ended June 30, 2022, increased by $16 million to $57 million, driven by improved pricing ($14 million) and the Vine and Marcellus Acquisitions ($7 million). Per Mcfe, these taxes decreased from $0.17 to $0.15. For the six months ended June 30, 2022, expenses increased by $37 million Total Severance and Ad Valorem Taxes (Millions USD, except $/Mcfe) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | 2021 Successor (Feb 10-Jun 30) | 2021 Predecessor (Jan 1-Feb 9) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Taxes | $57 | $41 | $120 | $65 | $18 | | Total Taxes ($/Mcfe) | $0.15 | $0.17 | $0.17 | $0.18 | $0.17 | - Severance and ad valorem taxes in the 2022 Successor Quarter increased **$16 million**, driven by **$14 million** from improved pricing and **$7 million** from the Vine and Marcellus Acquisitions[305](index=305&type=chunk) - Severance and ad valorem taxes in the 2022 Successor Period increased **$37 million**, driven by **$21 million** from improved pricing and **$13 million** from the Vine and Marcellus Acquisitions[306](index=306&type=chunk) [Gross Margin by Operating Area](index=58&type=section&id=Gross%20Margin%20by%20Operating%20Area) Gross margin for the three months ended June 30, 2022, significantly increased to $2,341 million ($6.24/Mcfe) from $566 million ($2.40/Mcfe) in the prior-year quarter. This improvement was largely driven by higher sales prices and increased volumes from acquisitions. For the six months ended June 30, 2022, gross margin was $3,840 million ($5.40/Mcfe) Gross Margin by Operating Area (Three Months Ended June 30, Millions USD, except $/Mcfe) | Operating Area | 2022 Successor | 2021 Successor | | :------------- | :------------- | :------------- | | Marcellus | $1,024 | $135 | | Haynesville | $851 | $83 | | Eagle Ford | $466 | $303 | | Powder River Basin | — | $45 | | **Total Gross Margin** | **$2,341** | **$566** | | **Total Gross Margin ($/Mcfe)** | **$6.24** | **$2.40** | Gross Margin by Operating Area (Six Months Ended June 30, Millions USD, except $/Mcfe) | Operating Area | 2022 Successor | 2021 Successor | 2021 Predecessor | | :------------- | :------------- | :------------- | :--------------- | | Marcellus | $1,545 | $250 | $80 | | Haynesville | $1,394 | $134 | $36 | | Eagle Ford | $845 | $491 | $114 | | Powder River Basin | $56 | $69 | $16 | | **Total Gross Margin** | **$3,840** | **$944** | **$246** | | **Total Gross Margin ($/Mcfe)** | **$5.40** | **$2.58** | **$2.34** | [Natural Gas and Oil Derivatives](index=59&type=section&id=Natural%20Gas%20and%20Oil%20Derivatives) For the three months ended June 30, 2022, total losses on natural gas and oil derivatives were $(514) million, an improvement from $(740) million in the prior-year quarter. This included $(857) million in realized natural gas losses and $436 million in unrealized natural gas gains. For the six months ended June 30, 2022, total losses were $(2,639) million Total Losses on Natural Gas and Oil Derivatives (Three Months Ended June 30, Millions USD) | Metric | 2022 Successor | 2021 Successor | | :------------------------------------------ | :------------- | :------------- | | Natural gas derivatives - realized losses | $(857) | $(11) | | Natural gas derivatives - unrealized gains (losses) | $436 | $(422) | | Oil derivatives - realized losses | $(189) | $(113) | | Oil derivatives - unrealized gains (losses) | $96 | $(194) | | **Total losses on natural gas and oil derivatives** | **$(514)** | **$(740)** | Total Losses on Natural Gas and Oil Derivatives (Six Months Ended June 30, Millions USD) | Metric | 2022 Successor | 2021 Successor | 2021 Predecessor | | :------------------------------------------ | :------------- | :------------- | :--------------- | | Natural gas derivatives - realized gains (losses) | $(1,285) | $(16) | $6 | | Natural gas derivatives - unrealized losses | $(936) | $(304) | $(179) | | Oil derivatives - realized losses | $(348) | $(174) | $(19) | | Oil derivatives - unrealized losses | $(70) | $(200) | $(190) | | **Total losses on natural gas and oil derivatives** | **$(2,639)** | **$(694)** | **$(382)** | [General and Administrative Expenses](index=60&type=section&id=General%20and%20Administrative%20Expenses) Net G&A expenses for the three months ended June 30, 2022, increased by $12 million to $36 million, primarily due to adjustments in employee benefits and compensation. Per Mcfe, net G&A remained flat at $0.10. For the six months ended June 30, 2022, net G&A increased by $23 million to $62 million Total G&A, Net (Millions USD, except $/Mcfe) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | 2021 Successor (Feb 10-Jun 30) | 2021 Predecessor (Jan 1-Feb 9) | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total G&A, net | $36 | $24 | $62 | $39 | $21 | | Total G&A, net ($/Mcfe) | $0.10 | $0.10 | $0.09 | $0.11 | $0.20 | - Gross compensation and benefits and non-labor expenses increased by **$21 million** in the 2022 Successor Quarter and **$25 million** in the 2022 Successor Period, primarily due to adjustments in employee benefits and compensation and timing of stock award grants[314](index=314&type=chunk) - Allocations and reimbursements increased by **$9 million** in the 2022 Successor Quarter and **$23 million** in the 2022 Successor Period, primarily due to increased drilling and production activity from the Vine and Marcellus Acquisitions[315](index=315&type=chunk) [Separation and Other Termination Costs](index=60&type=section&id=Separation%20and%20Other%20Termination%20Costs) The company recognized $11 million in separation and other termination costs during the 2021 Successor Quarter and Period, and $22 million in the 2021 Predecessor Period, related to one-time termination benefits for employees. No such costs were incurred in the 2022 Successor periods Separation and Other Termination Costs (Millions USD) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | 2021 Successor (Feb 10-Jun 30) | 2021 Predecessor (Jan 1-Feb 9) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Separation and other termination costs | — | $11 | — | $11 | $22 | [Depreciation, Depletion and Amortization](index=60&type=section&id=Depreciation,%20Depletion%20and%20Amortization) Depreciation, depletion, and amortization (DD&A) for the three months ended June 30, 2022, increased to $451 million ($1.20/Mcfe) from $229 million ($0.97/Mcfe) in the prior-year quarter. This increase is primarily due to the Vine and Marcellus Acquisitions. For the six months ended June 30, 2022, DD&A was $860 million ($1.21/Mcfe) Depreciation, Depletion and Amortization (DD&A) (Millions USD, except $/Mcfe) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | 2021 Successor (Feb 10-Jun 30) | 2021 Predecessor (Jan 1-Feb 9) | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | DD&A | $451 | $229 | $860 | $351 | $72 | | DD&A per Mcfe | $1.20 | $0.97 | $1.21 | $0.96 | $0.68 | - The absolute and per unit increases in DD&A for the 2022 Successor Quarter and Period are primarily the result of the Vine Acquisition and Marcellus Acquisition[317](index=317&type=chunk) [Other Operating Expense (Income), Net](index=61&type=section&id=Other%20Operating%20Expense%20(Income),%20Net) For the six months ended June 30, 2022, other operating expense, net, was $31 million, primarily driven by $33 million in costs related to the Marcellus Acquisition, including integration, consulting, financial advisory, legal fees, and change in control expenses Other Operating Expense (Income), Net (Millions USD) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Period from Feb 10, 2021 through June 30, 2021 | Period from Jan 1, 2021 through Feb 9, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :--------------------------------------------- | :-------------------------------------------- | | Other operating expense (income), net | $8 | $(4) | $31 | $(2) | $(12) | - During the 2022 Successor Period, approximately **$33 million** of costs related to the Marcellus Acquisition were recognized, including integration costs, consulting fees, financial advisory fees, legal fees, and change in control expense[319](index=319&type=chunk) [Interest Expense](index=61&type=section&id=Interest%20Expense) Total interest expense for the three months ended June 30, 2022, increased to $36 million from $18 million in the prior-year quarter. For the six months ended June 30, 2022, it increased to $68 million from $30 million in the 2021 Successor Period. This rise is attributed to increased outstanding debt obligations, including the assumed Vine senior notes and higher borrowings under the Exit Credit Facility Total Interest Expense (Millions USD) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | 2021 Successor (Feb 10-Jun 30) | 2021 Predecessor (Jan 1-Feb 9) | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Interest Expense | $36 | $18 | $68 | $30 | $11 | - The increase in total interest expense is due to increased outstanding debt obligations, including the assumption of Vine's **$950 million** senior notes and increased borrowings under the Exit Credit Facility[321](index=321&type=chunk) [Reorganization Items, Net](index=62&type=section&id=Reorganization%20Items,%20Net) In the 2021 Predecessor Period, the company recorded a net gain of $5.569 billion in reorganization items, net, primarily from the gain on settlement of liabilities subject to compromise related to the Chapter 11 Cases. No reorganization items were recognized in the 2022 Successor or 2021 Successor periods Reorganization Items, Net (Millions USD) for 2021 Predecessor Period (Jan 1 - Feb 9, 2021) | Item | Amount | | :------------------------------------------ | :----- | | Gains on the settlement of liabilities subject to compromise | $6,443 | | Accrual for allowed claims | $(1,002) | | Gain on fresh start adjustments | $201 | | **Total reorganization items, net** | **$5,569** | - No reorganization items, net were recognized for the 2022 Successor Quarter, 2022 Successor Period, 2021 Successor Quarter, or 2021 Successor Period[322](index=322&type=chunk) [Income Taxes](index=62&type=section&id=Income%20Taxes) Income tax expense for the 2022 Successor Period was $31 million, with an effective tax rate of 6.2%. The effective tax rate for the 2021 Successor Period was 0.0%, and for the 2021 Predecessor Period was (1.1%), which included a $57 million benefit from the elimination of income tax effects associated with hedging settlements Income Tax Expense and Effective Tax Rate (Millions USD) | Period | Income Tax Expense (Benefit) | Effective Tax Rate | | :---------------- | :--------------------------- | :----------------- | | 2022 Successor Period | $31 | 6.2% | | 2021 Successor Period | — | 0.0% | | 2021 Predecessor Period | $(57) | (1.1%) | - The income tax provision for the 2021 Predecessor Period included an income tax benefit of **$57 million** for the elimination of income tax effects associated with hedging settlements as part of fresh start accounting[323](index=323&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) [Commodity Price Risk](index=65&type=section&id=Commodity%20Price%20Risk) The company is exposed to volatility in natural gas, oil, and NGL prices and uses derivative instruments to mitigate this risk, which are considered highly effective. As of June 30, 2022, natural gas and oil derivatives were net liabilities of $2,062 million and $428 million, respectively. A 10% price change would significantly impact derivative valuations and revenues - The company's results of operations and cash flows are impacted by changes in market prices for natural gas, oil, and NGL, which have historically been volatile[333](index=333&type=chunk) - Derivative instruments are used to mitigate a portion of exposure to adverse price changes and are considered highly effective in achieving risk management objectives[333](index=333&type=chunk) Fair Values of Natural Gas and Oil Derivatives (Net Liabilities, Millions USD) as of June 30, 2022 | Commodity | Amount | | :---------- | :------- | | Natural Gas | $(2,062) | | Oil | $(428) | - For the 2022 Successor Period, a **10% increase or decrease** in prices would impact natural gas revenue by approximately **$355 million**, oil revenue by **$102 million**, and NGL revenue by **$13 million**[335](index=335&type=chunk) - A **10% increase** in forward natural gas prices would decrease the valuation of natural gas derivatives by approximately **$483 million**, while a **10% decrease** would increase it by approximately **$475 million**[335](index=335&type=chunk) [Interest Rate Risk](index=65&type=section&id=Interest%20Rate%20Risk) The company's interest rate exposure primarily relates to floating-rate borrowings under its Exit Credit Facility. As of June 30, 2022, with $996 million in outstanding variable-rate debt, a 1.0% increase in interest rates would result in an approximate $10 million increase in annual interest expense - The company's exposure to interest rate changes primarily relates to borrowings under its Exit Credit Facility, which bear interest at floating rates[336](index=336&type=chunk) - As of June 30, 2022, outstanding borrowings under the Exit Credit Facility totaled **$775 million** for Tranche A Loans and **$221 million** for Tranche B Loans[336](index=336&type=chunk) - A **1.0% increase** in interest rates, based on variable borrowings as of June 30, 2022, would result in an approximate **$10 million increase** in annual interest expense[336](index=336&type=chunk) [ITEM 4. Controls and Procedures](index=66&type=section&id=ITEM%204.%20Controls%20and%20Procedures) [Evaluation of Disclosure Controls and Procedures](index=66&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) As of June 30, 2022, management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective - As of June 30, 2022, management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective[339](index=339&type=chunk) [Changes in Internal Control Over Financial Reporting](index=66&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in internal control over financial reporting during the quarter ended June 30, 2022, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - There were no changes in internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[340](index=340&type=chunk) [PART II. OTHER INFORMATION](index=67&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=67&type=section&id=ITEM%201.%20Legal%20Proceedings) [Chapter 11 Proceedings](index=67&type=section&id=Chapter%2011%20Proceedings) 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 - 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[343](index=343&type=chunk) [Litigation and Regulatory Proceedings](index=67&type=section&id=Litigation%20and%20Regulatory%20Proceedings) The company is involved in various litigation and regulatory proceedings, many of which were in early stages as of the Petition Date. Accrued liabilities are estimated on a case-by-case basis, and most pre-petition legal proceedings were settled or will be resolved through the claims reconciliation process - The company was involved in a number of litigation and regulatory proceedings as of the Petition Date, many in early stages and seeking indeterminate damages and penalties[344](index=344&type=chunk) - Total accrued liability for litigation and regulatory proceedings is determined on a case-by-case basis, representing an estimate of probable losses[344](index=344&type=chunk) - The majority of pre-petition legal proceedings were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process[345](index=345&type=chunk) [Business Operations](index=67&type=section&id=Business%20Operations) The company is involved in various lawsuits and disputes incidental to its business operations, including commercial, personal injury, royalty, property damage, and contract actions. Most pre-petition cases were settled or will be resolved through the bankruptcy claims process - The company is involved in various lawsuits and disputes incidental to its business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims, and contract actions[345](index=345&type=chunk) - The majority of these pre-petition legal proceedings were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process[345](index=345&type=chunk) [Environmental Contingencies](index=67&type=section&id=Environmental%20Contingencies) The oil and gas business carries environmental risks, which the company mitigates through policies, programs, and reviews. Environmental reserves are established for probable and estimable liabilities. The company was dismissed from Oklahoma lawsuits alleging earthquake causation - The nature of the oil and gas business carries certain environmental risks, which the company addresses through

Summary of Chesapeake Energy Corporation Conference Call Company Overview - **Company**: Chesapeake Energy Corporation (NASDAQ: CHK) - **Industry**: Energy, specifically focused on natural gas production in the Marcellus, Haynesville, and Eagle Ford regions Key Points and Arguments 1. **Stock Buyback Authorization**: Chesapeake announced a doubling of its buyback authorization from $1 billion to $2 billion, indicating confidence in the stock's undervaluation [2][3] 2. **Free Cash Flow Projections**: The company projects $14 billion in free cash flow over the next five years, which is over 115% of its market cap, with $9 billion expected to be returned to shareholders [4][9] 3. **Asset Quality and Inventory**: Chesapeake has a deep inventory with 2,500 locations yielding over 100% rate of return, emphasizing the quality and longevity of its asset base [5][16] 4. **Balance Sheet Strength**: The company maintains a strong balance sheet with a commitment to keeping leverage at one time or less, which is crucial for sustainability amid price cyclicality [5][9][30] 5. **ESG Commitment**: Chesapeake emphasizes its commitment to environmental, social, and governance (ESG) principles, highlighting its low carbon footprint and efforts to improve its environmental impact [6][34] 6. **Shareholder Return Framework**: The company has a structured approach to returning cash to shareholders, including a base dividend of $2 per share and a variable dividend structure that returns 50% of free cash flow after the base dividend [8][9] 7. **Market Positioning**: Chesapeake believes it is uniquely positioned in the energy market due to its high yield and low financial leverage compared to peers, allowing for significant cash flow distribution to shareholders [13][36] 8. **Production Growth**: The company anticipates low single-digit growth in production, with a focus on optimizing capital allocation across its diverse portfolio [14][25] 9. **Marcellus Asset Performance**: The Marcellus region is highlighted as a key asset, expected to generate $7 billion in free cash flow over five years, with stable pricing dynamics despite infrastructure constraints [22][23] 10. **Haynesville and Eagle Ford Contributions**: The Haynesville is projected to grow by about 10% year-over-year, contributing $4 billion in free cash flow, while the Eagle Ford is expected to generate $3 billion over the same period [25][27] Additional Important Insights - **Market Dynamics**: There is a palpable concern in Europe regarding commodity prices and supply, positioning the U.S. as a critical player in global energy supply [7] - **Future Growth Potential**: Chesapeake is open to pursuing international LNG contracts, indicating a strategy to diversify its market presence [40] - **Infrastructure Constraints**: The company acknowledges current constraints in the Haynesville but believes that ongoing infrastructure projects will facilitate future growth [45] - **Shareholder Base Changes**: The turnover in the shareholder base has decreased from 88% to about 30%, indicating a more stable and income-oriented investor profile [32][33] This summary encapsulates the key themes and insights from the conference call, reflecting Chesapeake Energy's strategic focus on shareholder returns, asset quality, and market positioning within the energy sector.

Financial Performance & Capital Returns - Chesapeake Energy projects approximately $14 billion of Free Cash Flow (FCF) over the next five years, representing approximately 115% of its market capitalization at the adjusted strip [5] - The company plans to return approximately $9 billion to shareholders through dividends and buybacks over the next five years at the adjusted strip [5] - Chesapeake Energy has authorized a $2 billion equity repurchase program by 2023E [5, 7, 30] - The company is committed to maintaining a net debt-to-EBITDAX ratio of less than 10x, down to $250/$50 [5, 7, 26, 28] - Chesapeake Energy's base dividend has a breakeven point of approximately $215/mcf [10] Asset Portfolio & Production - Chesapeake Energy has over 2,500 locations with greater than 100% IRR at $400/$75 flat pricing [5] - The company's 2022E total daily production rate is projected to be 670-690 mboe/d [14, 47] - The company has approximately 650,000 net acres in Marcellus, 350,000 net acres in Haynesville, and 610,000 net acres in Eagle Ford [14] - The company projects $7 billion of 5-year Free Cash Flow (FCF) net of allocated hedges, corporate items, and taxes from Marcellus [20] - The company projects $3 billion of 5-year Free Cash Flow (FCF) net of allocated hedges, corporate items, and taxes from Eagle Ford [23] ESG Initiatives - Chesapeake Energy is retrofitting over 19,000 pneumatic devices, aiming to reduce reported GHG emissions by approximately 40% and methane emissions by approximately 80% by YE'22 [34] - The company is targeting net-zero direct GHG emissions by 2035 [34] - Chesapeake Energy aims for zero routine flaring on wells completed in 2021 and beyond, enterprise-wide by 2025 [34]

Chesapeake Energy Corporation (NASDAQ:CHK) Q1 2022 Earnings Conference Call May 5, 2022 8:30 AM ET Company Participants Brad Sylvester – Vice President-Investor Relations and Communications Nick Dell’Osso – President and Chief Executive Officer Mohit Singh – Executive Vice President and Chief Financial Officer Josh Viets – Executive Vice President and Chief Operating Officer ​ Conference Call Participants Doug Leggate – Bank of America Matt Portillo – TPH Nicholas Pope – Seaport Research Scott Hanold – RBC ...

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [ITEM 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and stockholders' equity, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial events [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show the company's financial position as of March 31, 2022, and December 31, 2021, with total assets and liabilities significantly increasing due to acquisitions and derivative liabilities Key Balance Sheet Data | Metric | March 31, 2022 ($ millions) | December 31, 2021 ($ millions) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Total Assets | 13,293 | 11,009 | | Total Liabilities | 7,910 | 5,338 | | Total Stockholders' Equity | 5,383 | 5,671 | - Short-term derivative liabilities increased significantly from **$899 million** at December 31, 2021, to **$2,638 million** at March 31, 2022[59](index=59&type=chunk) - Proved oil and natural gas properties increased from **$7,682 million** to **$10,259 million**, reflecting recent property transactions[57](index=57&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations reveal a net loss for the three months ended March 31, 2022, primarily due to substantial losses on oil and natural gas derivatives, despite higher revenues Net Income (Loss) and EPS | Metric | Three Months Ended March 31, 2022 (Successor) | Period from Feb 10, 2021 through Mar 31, 2021 (Successor) | Period from Jan 1, 2021 through Feb 9, 2021 (Predecessor) | | :--------------------------------- | :------------------------------------------ | :-------------------------------------------------------- | :-------------------------------------------------------- | | Net Income (Loss) ($ millions) | (764) | 295 | 5,383 | | Basic EPS ($) | (6.32) | 3.01 | 550.35 | | Diluted EPS ($) | (6.32) | 2.75 | 534.51 | Revenues and Other | Metric | Three Months Ended March 31, 2022 (Successor) | Period from Feb 10, 2021 through Mar 31, 2021 (Successor) | Period from Jan 1, 2021 through Feb 9, 2021 (Predecessor) | | :-------------------------------- | :------------------------------------------ | :-------------------------------------------------------- | :-------------------------------------------------------- | | Oil, Natural Gas and NGL ($ millions) | 1,914 | 553 | 398 | | Marketing ($ millions) | 867 | 277 | 239 | | Oil and Natural Gas Derivatives ($ millions) | (2,125) | 46 | (382) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The comprehensive income (loss) statement shows that for the three months ended March 31, 2022, the comprehensive loss was identical to the net loss, indicating no other comprehensive income or loss activities Comprehensive Income (Loss) | Period | Amount ($ millions) | | :------------------------------------------ | :------------------ | | Three Months Ended March 31, 2022 (Successor) | (764) | | Period from Feb 10, 2021 through Mar 31, 2021 (Successor) | 295 | | Period from Jan 1, 2021 through Feb 9, 2021 (Predecessor) | 5,386 | - Other comprehensive income was **zero** for both the 2022 and 2021 Successor periods, indicating no reclassification of losses on settled derivative instruments or other comprehensive income activities[62](index=62&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flows from operating activities were strong in the 2022 Successor Period, but significant cash was used for investing activities, primarily the Marcellus Acquisition and capital expenditures, resulting in a net decrease in cash and cash equivalents Cash Flow Summary | Activity | Three Months Ended March 31, 2022 (Successor) ($ millions) | Period from Feb 10, 2021 through Mar 31, 2021 (Successor) ($ millions) | Period from Jan 1, 2021 through Feb 9, 2021 (Predecessor) ($ millions) | | :------------------------------------------ | :------------------------------------------------------- | :--------------------------------------------------------------------- | :--------------------------------------------------------------------- | | Net Cash Provided by (Used in) Operating Activities | 853 | 409 | (21) | | Net Cash Used in Investing Activities | (1,947) | (73) | (66) | | Net Cash Provided by (Used in) Financing Activities | 208 | (54) | (66) | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | (886) | 282 | (153) | - A significant cash outflow of **$2,006 million** was recorded for business combinations (net) in the three months ended March 31, 2022[63](index=63&type=chunk) - Capital expenditures for the three months ended March 31, 2022, totaled **$344 million**[63](index=63&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) The statements of stockholders' equity show a decrease in total equity from December 31, 2021, to March 31, 2022, primarily due to the net loss and common stock dividends, partially offset by common stock issuance for the Marcellus Acquisition and warrant exercises Stockholders' Equity Changes (Successor) | Metric | December 31, 2021 ($ millions) | March 31, 2022 ($ millions) | | :--------------------------------- | :----------------------------- | :-------------------------- | | Total Stockholders' Equity | 5,671 | 5,383 | - Issuance of common stock for the Marcellus Acquisition contributed **$764 million** to additional paid-in capital[67](index=67&type=chunk) - Net loss of **$764 million** and dividends on common stock of **$211 million** reduced retained earnings[67](index=67&type=chunk) - The company repurchased and retired **1 million shares** of common stock for **$83 million**[67](index=67&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, the impact of Chapter 11 emergence and fresh start accounting, significant property transactions, debt, equity, and derivative activities [Note 1. Basis of Presentation and Summary of Significant Accounting Policies](index=13&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis for preparing the financial statements in accordance with GAAP and SEC rules, distinguishing between 'Successor' and 'Predecessor' periods due to Chapter 11 emergence, and confirms the company operates as a single reportable segment - The company is an oil and natural gas exploration and production company operating onshore in the United States[68](index=68&type=chunk) - Financial statements distinguish between 'Successor' (post-February 9, 2021) and 'Predecessor' (on or prior to February 9, 2021) periods due to Chapter 11 emergence[68](index=68&type=chunk) - The company has concluded it has only one reportable operating segment due to the similar nature of its exploration and production business[71](index=71&type=chunk) - Restricted cash of **$9 million** as of March 31, 2022, is primarily maintained to pay certain convenience class unsecured claims following bankruptcy emergence[72](index=72&type=chunk) [Note 2. Chapter 11 Emergence](index=14&type=section&id=Note%202.%20Chapter%2011%20Emergence) This note details the company's emergence from Chapter 11 bankruptcy on February 9, 2021, and the significant transactions that occurred as part of the Plan of Reorganization, including the issuance of new common stock and warrants, and the cancellation of all pre-petition equity interests - The company emerged from Chapter 11 bankruptcy on **February 9, 2021** (the Effective Date)[79](index=79&type=chunk) - On the Effective Date, **97,907,081 shares** of New Common Stock were issued, and **37,174,210 shares** were reserved for warrant exercise[80](index=80&type=chunk) - All equity interests in the Predecessor company (common and preferred stock) were canceled without any distribution[81](index=81&type=chunk) - Holders of pre-petition debt received New Common Stock, Warrants, or Tranche A/B Loans as part of the reorganization[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Note 3. Fresh Start Accounting](index=16&type=section&id=Note%203.%20Fresh%20Start%20Accounting) This note explains the application of fresh start accounting on February 9, 2021, due to the company's bankruptcy emergence, involving revaluation of assets and liabilities to fair values, making post-emergence financial statements non-comparable to prior periods, and leading to a significant gain on settlement of liabilities - Fresh start accounting was applied on **February 9, 2021**, because existing voting shareholders received less than **50%** of new voting shares and the reorganization value (**$6.8 billion**) was less than post-petition liabilities (**$13.2 billion**)[94](index=94&type=chunk) - The estimated enterprise value of the Successor was determined to be **$4.85 billion**[96](index=96&type=chunk) - The reorganization value of Successor assets was **$6.814 billion** as of February 9, 2021[102](index=102&type=chunk) - A net gain of **$5.569 billion** was recorded in reorganization items, net, in the 2021 Predecessor Period, primarily from a **$6.443 billion** gain on settlement of liabilities subject to compromise[133](index=133&type=chunk) [Note 4. Oil and Natural Gas Property Transactions](index=24&type=section&id=Note%204.%20Oil%20and%20Natural%20Gas%20Property%20Transactions) This note details significant oil and natural gas property transactions, including the Marcellus Acquisition for approximately $2.77 billion in March 2022, the Vine Acquisition for approximately $1.5 billion in November 2021, and the divestiture of Powder River Basin assets for $450 million in March 2022, which resulted in a $279 million gain - The Marcellus Acquisition was completed on **March 9, 2022**, for approximately **$2.77 billion**, consisting of **$2 billion** in cash and **9.4 million shares** of common stock[135](index=135&type=chunk)[137](index=137&type=chunk) - The Vine Acquisition was completed on **November 1, 2021**, for approximately **$1.5 billion**, consisting of **18.7 million shares** of common stock and **$90 million** in cash[141](index=141&type=chunk)[144](index=144&type=chunk) - The Powder River Basin assets were divested on **March 25, 2022**, for approximately **$450 million** in cash, recognizing a gain of approximately **$279 million**[152](index=152&type=chunk) - Marcellus Acquisition contributed **$59 million** in oil, natural gas, and NGL revenues and **$200 million** in net losses on derivatives for the period from March 10-31, 2022[140](index=140&type=chunk) [Note 5. Earnings Per Share](index=28&type=section&id=Note%205.%20Earnings%20Per%20Share) This note explains the calculation of basic and diluted earnings per share, with both basic and diluted EPS at $(6.32) for the three months ended March 31, 2022, as potentially dilutive securities were excluded due to the net loss Earnings (Loss) Per Common Share | Period | Basic EPS ($) | Diluted EPS ($) | | :------------------------------------------ | :------------ | :-------------- | | Three Months Ended March 31, 2022 (Successor) | (6.32) | (6.32) | | Period from Feb 10, 2021 through Mar 31, 2021 (Successor) | 3.01 | 2.75 | | Period from Jan 1, 2021 through Feb 9, 2021 (Predecessor) | 550.35 | 534.51 | - During the 2022 Successor Period, **19,621,344 issuable shares** related to warrants, **457,680 restricted stock units**, and **47,458 performance share units** were excluded from the diluted EPS calculation due to the net loss, making them antidilutive[156](index=156&type=chunk) [Note 6. Debt](index=29&type=section&id=Note%206.%20Debt) This note details the company's long-term debt, which increased from $2,278 million at December 31, 2021, to $2,774 million at March 31, 2022, primarily due to borrowings under the Exit Credit Facility to fund the Marcellus Acquisition and the assumption of Vine Senior Notes Long-Term Debt, Net | Date | Amount ($ millions) | | :--------------- | :------------------ | | March 31, 2022 | 2,774 | | December 31, 2021| 2,278 | - As of March 31, 2022, the company had **$500 million** in outstanding Tranche A Loans and **$221 million** in Tranche B Loans under the Exit Credit Facility[160](index=160&type=chunk) - The company assumed **$950 million** aggregate principal amount of **6.75% senior notes due 2029** (Vine Notes) as a result of the Vine Acquisition[170](index=170&type=chunk) - The Marcellus Acquisition was partially funded by **$914 million** of borrowings under the Exit Credit Facility[135](index=135&type=chunk) [Note 7. Contingencies and Commitments](index=31&type=section&id=Note%207.%20Contingencies%20and%20Commitments) This note outlines various contingencies, including ongoing litigation, regulatory proceedings, and environmental risks, with most pre-petition legal matters addressed by the Chapter 11 Plan, and details contractual commitments, such as $4.356 billion in future gathering, processing, and transportation agreements as of March 31, 2022 - The Chapter 11 Plan of Reorganization provided for the treatment of claims against the company's bankruptcy estates, including pre-petition liabilities[177](index=177&type=chunk) - The company is involved in various lawsuits (commercial, personal injury, royalty, property damage, contract actions), with most pre-petition cases settled or to be resolved by the Bankruptcy Court[179](index=179&type=chunk) - Aggregate undiscounted commitments under gathering, processing, and transportation agreements totaled **$4.356 billion** as of March 31, 2022[185](index=185&type=chunk) - Management believes no pending or threatened lawsuit or dispute is likely to have a material adverse effect on future consolidated financial position, results of operations, or cash flows[182](index=182&type=chunk) [Note 8. Other Current Liabilities](index=33&type=section&id=Note%208.%20Other%20Current%20Liabilities) This note provides a breakdown of other current liabilities, which increased from $1,202 million at December 31, 2021, to $1,341 million at March 31, 2022, with revenues and royalties due others constituting the largest component Other Current Liabilities | Metric | March 31, 2022 ($ millions) | December 31, 2021 ($ millions) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Total Other Current Liabilities | 1,341 | 1,202 | | Revenues and Royalties Due Others | 733 | 617 | | Accrued Drilling and Production Costs | 196 | 142 | [Note 9. Revenue](index=33&type=section&id=Note%209.%20Revenue) This note disaggregates revenue by operating area and product type, showing total oil, natural gas, and NGL revenue of $1,914 million for the three months ended March 31, 2022, with natural gas as the largest contributor, and marketing revenue of $867 million Oil, Natural Gas and NGL Revenue (Three Months Ended March 31, 2022) | Product Type | Amount ($ millions) | | :----------- | :------------------ | | Oil | 516 | | Natural Gas | 1,328 | | NGL | 70 | | **Total** | **1,914** | - Marketing revenue for the three months ended March 31, 2022, was **$867 million**[191](index=191&type=chunk) - Accounts receivable, net, totaled **$1,383 million** as of March 31, 2022, primarily from oil, natural gas, and NGL sales (**$1,082 million**)[195](index=195&type=chunk) [Note 10. Income Taxes](index=35&type=section&id=Note%2010.%20Income%20Taxes) This note details the company's income tax position, reporting a $46 million income tax benefit for the 2022 Successor Period with an effective tax rate of 5.7%, maintaining a full valuation allowance against net deferred tax assets, and discussing the impact of Chapter 11 emergence on tax attributes, including a $5 billion reduction in NOL carryforwards - An income tax benefit of **$46 million** was recorded for the 2022 Successor Period, with an estimated annual effective tax rate of **5.7%**[197](index=197&type=chunk) - A full valuation allowance is recorded against net deferred tax assets for federal and state purposes due to the belief that deferred tax assets will not be realized based on current projections[199](index=199&type=chunk) - Cancellation of debt income (CODI) of **$5 billion** realized upon bankruptcy emergence reduced NOL carryforwards[203](index=203&type=chunk) - An annual limitation of **$54 million** applies to NOL carryforwards and other tax attributes due to an ownership change post-bankruptcy under Section 382 of the Code[201](index=201&type=chunk) [Note 11. Equity](index=36&type=section&id=Note%2011.%20Equity) This note details changes in equity, including the issuance of new common stock for the Vine and Marcellus Acquisitions, the initiation of a new annual dividend strategy in May 2021, and the commencement of a $1 billion share repurchase program in March 2022, under which 1 million shares were repurchased - **9,442,185 shares** of New Common Stock were issued for the Marcellus Acquisition on **March 9, 2022**, and **18,709,399 shares** for the Vine Acquisition on **November 1, 2021**[205](index=205&type=chunk) - Dividends of **$210 million** (**$1.7675 per share**) were paid in the 2022 Successor Period[206](index=206&type=chunk) - A quarterly dividend of **$2.34 per share** (**$0.50 base, $1.84 variable**) was declared on **May 4, 2022**[206](index=206&type=chunk) - The company repurchased **1 million shares** of common stock for **$83 million** in March 2022 under a **$1 billion** share repurchase program[207](index=207&type=chunk)[334](index=334&type=chunk) [Note 12. Share-Based Compensation](index=37&type=section&id=Note%2012.%20Share-Based%20Compensation) This note describes the company's post-bankruptcy share-based compensation under the 2021 Long Term Incentive Plan (LTIP), which includes restricted stock units (RSUs) and performance share units (PSUs), with approximately $57 million of unrecognized compensation expense for RSUs and $23 million for PSUs as of March 31, 2022 - The 2021 Long Term Incentive Plan (LTIP) was adopted on the Effective Date with a share reserve of **6,800,000 shares** of New Common Stock[215](index=215&type=chunk) - As of March 31, 2022, total unrecognized compensation expense for unvested restricted stock units was approximately **$57 million**, to be recognized over an average of **2.62 years**[218](index=218&type=chunk) - As of March 31, 2022, total unrecognized compensation expense for unvested performance share units was approximately **$23 million**, to be recognized over an average of **2.68 years**[222](index=222&type=chunk) [Note 13. Derivative and Hedging Activities](index=39&type=section&id=Note%2013.%20Derivative%20and%20Hedging%20Activities) This note details the company's use of derivative instruments to manage commodity price exposure, with the total estimated fair value of derivative instruments being a net liability of $(3,022) million as of March 31, 2022, a significant increase from $(1,143) million at December 31, 2021, primarily driven by natural gas derivatives Total Estimated Fair Value of Derivatives (Net Liability) | Date | Amount ($ millions) | | :--------------- | :------------------ | | March 31, 2022 | (3,022) | | December 31, 2021| (1,143) | - As of March 31, 2022, oil derivatives had a net liability of **$(523) million**, and natural gas derivatives had a net liability of **$(2,499) million**[230](index=230&type=chunk) - The company recognized total losses on oil and natural gas derivatives of **$(2,125) million** for the three months ended March 31, 2022[232](index=232&type=chunk) - Derivative instruments are classified as **Level 2 fair value measurements**, utilizing established index prices, volatility curves, and discount factors[236](index=236&type=chunk)[237](index=237&type=chunk) [Note 14. Other Operating Expense (Income), Net](index=42&type=section&id=Note%2014.%20Other%20Operating%20Expense%20(Income),%20Net) This note reports other operating expenses, which totaled $23 million for the three months ended March 31, 2022, primarily consisting of costs related to the Marcellus Acquisition - Other operating expense (income), net, was **$23 million** for the three months ended March 31, 2022[299](index=299&type=chunk) - These costs primarily included consulting fees, financial advisory fees, legal fees, and change in control expense related to the Marcellus Acquisition[238](index=238&type=chunk)[299](index=299&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, liquidity, and results of operations, highlighting strategic initiatives, recent acquisitions and divestitures, and the impact of market dynamics and global events [Introduction](index=43&type=section&id=Introduction) The introduction outlines Chesapeake Energy Corporation's core business as an independent oil and natural gas E&P company in key U.S. onshore plays, emphasizing a strategy of generating sustainable Free Cash Flow, improving margins, and achieving strong ESG performance, including a net-zero direct greenhouse gas emissions goal by 2035 - Chesapeake is an independent exploration and production company focused on oil, natural gas, and NGL production in the Marcellus, Haynesville, and Eagle Ford Shales[241](index=241&type=chunk) - The company's strategy is to generate sustainable Free Cash Flow, improve margins through operating efficiencies, and enhance ESG performance[242](index=242&type=chunk) - Key ESG goals include achieving **net-zero direct greenhouse gas emissions by 2035**, eliminating routine flaring by 2025, and reducing methane intensity to **0.09%** and GHG intensity to **5.5 by 2025**[243](index=243&type=chunk) - The company achieved interim ESG goals by exiting 2021 with a **0.07% methane intensity** and **4.5 GHG intensity**, and Haynesville assets were certified as responsibly sourced gas[244](index=244&type=chunk) [Recent Developments](index=45&type=section&id=Recent%20Developments) Recent developments include the completion of the Marcellus and Vine Acquisitions, which enhanced the company's asset base and cash flows, and the divestiture of Powder River Basin assets, while also addressing the ongoing impacts of the COVID-19 pandemic, the Russia-Ukraine conflict, and inflationary cost pressures on the business - Completed Marcellus Acquisition (**March 9, 2022**) and Vine Acquisition (**November 1, 2021**), strengthening competitive position and increasing operating cash flows[248](index=248&type=chunk) - Completed the sale of Powder River Basin assets for **$450 million** in cash on **March 25, 2022**, recognizing a gain of approximately **$279 million**[249](index=249&type=chunk) - Experienced limited operational impacts from COVID-19, with demand recovering and prices expected to be positively impacted in the near term[250](index=250&type=chunk) - The Russia-Ukraine conflict has caused and could intensify volatility in oil, natural gas, and NGL prices, potentially impacting global growth and demand[251](index=251&type=chunk) - The global market is experiencing inflationary pressures, including rising fuel costs, a tightening steel market, and labor/supply chain shortages, which could increase operating and capital costs[251](index=251&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily derived from cash flows from operations and its Exit Credit Facility, totaling $1.252 billion as of March 31, 2022, with indebtedness reduced by $9.4 billion post-Chapter 11, and plans for a dividend strategy, share repurchase program, and $1.5-$1.8 billion in 2022 capital expenditures, with 75% directed to natural gas assets - As of March 31, 2022, the company had **$1.252 billion** of liquidity available, including **$19 million** cash on hand and **$1.233 billion** unused borrowing capacity under the Exit Credit Facility[255](index=255&type=chunk) - Total indebtedness was reduced by **$9.4 billion** as a result of the Chapter 11 Cases[253](index=253&type=chunk) - Paid **$210 million** in common stock dividends in the 2022 Successor Period[256](index=256&type=chunk) - Repurchased **1 million shares** of common stock for **$83 million** in March 2022 under a share repurchase program[279](index=279&type=chunk) - Planned 2022 capital expenditures are approximately **$1.5 – $1.8 billion**, with about **75%** allocated to natural gas assets[266](index=266&type=chunk) Sources of Cash and Cash Equivalents (Three Months Ended March 31, 2022) | Source | Amount ($ millions) | | :------------------------------------------ | :------------------ | | Cash provided by operating activities | 853 | | Proceeds from Exit Credit Facility - Tranche A Loans, net | 500 | | Proceeds from divestitures of property and equipment | 403 | | **Total Sources** | **1,757** | Uses of Cash and Cash Equivalents (Three Months Ended March 31, 2022) | Use | Amount ($ millions) | | :------------------------------------------ | :------------------ | | Business combination, net | 2,006 | | Capital expenditures | 344 | | Cash paid for common stock dividends | 210 | | Cash paid to repurchase and retire common stock | 83 | | **Total Uses** | **2,643** | [Results of Operations](index=50&type=section&id=Results%20of%20Operations) The results of operations show a significant increase in oil, natural gas, and NGL sales in the 2022 Successor Period, driven by higher sales volumes from the Vine and Marcellus Acquisitions and improved commodity prices, leading to corresponding increases in production, gathering, processing, transportation, and severance and ad valorem taxes - Total oil, natural gas, and NGL sales in the 2022 Successor Period increased by **$963 million** compared to the combined 2021 Successor and Predecessor Periods, with **$569 million** from increased sales volumes (acquisitions) and **$394 million** from higher average prices[286](index=286&type=chunk) Average Daily Production (Three Months Ended March 31, 2022) | Product | MBbl per day / MMcf per day | | :---------- | :-------------------------- | | Oil | 60 MBbl per day | | Natural Gas | 3,247 MMcf per day | | NGL | 19 MBbl per day | | **Total** | **620 MBoe per day** | - Total production expenses increased by **$38 million** in the 2022 Successor Period, primarily due to the Vine Acquisition and additional workovers in the Eagle Ford[288](index=288&type=chunk) - Total gathering, processing, and transportation expenses increased by **$29 million**, mainly due to the Vine Acquisition[289](index=289&type=chunk) - Severance and ad valorem taxes increased by **$21 million**, driven by improved pricing (**$15 million**) and the Vine Acquisition (**$6 million**)[291](index=291&type=chunk) - Gross margin by operating area was **$1,499 million** for the three months ended March 31, 2022[293](index=293&type=chunk) - Total losses on oil and natural gas derivatives amounted to **$(2,125) million** for the three months ended March 31, 2022[295](index=295&type=chunk) - Total interest expense increased due to higher outstanding debt from the Vine and Marcellus Acquisitions[300](index=300&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily commodity price risk for oil, natural gas, and NGL, and interest rate risk, utilizing derivative instruments to mitigate commodity price volatility, and noting that floating-rate debt exposes it to changes in interest rates - Primary market risks include commodity price risk (oil, natural gas, NGL) and interest rate risk[312](index=312&type=chunk) - Derivative instruments are used to mitigate exposure to commodity price declines, with fair values based on established index prices, volatility curves, and discount factors[313](index=313&type=chunk)[314](index=314&type=chunk) - As of March 31, 2022, the fair values of oil and natural gas derivatives were net liabilities of **$523 million** and **$2,499 million**, respectively[315](index=315&type=chunk) - A **10% increase** in forward oil prices would decrease oil derivative valuation by approximately **$133 million**, while a **10% increase** in forward natural gas prices would decrease natural gas derivative valuation by approximately **$575 million**[315](index=315&type=chunk) - Interest rate risk primarily relates to floating-rate borrowings under the Exit Credit Facility; a **1.0% increase** in interest rates would increase annual interest expense by approximately **$7 million**[316](index=316&type=chunk) [ITEM 4. Controls and Procedures](index=61&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting during the period - Disclosure controls and procedures were evaluated and concluded to be **effective** as of March 31, 2022[319](index=319&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter[320](index=320&type=chunk) [PART II. OTHER INFORMATION](index=62&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, equity sales, and other disclosures [ITEM 1. Legal Proceedings](index=62&type=section&id=ITEM%201.%20Legal%20Proceedings) This section discusses legal and regulatory proceedings, noting that Chapter 11 proceedings stayed many actions and the Plan of Reorganization addressed pre-petition liabilities, with the company involved in various lawsuits incidental to business operations, but management believes no pending matters will have a material adverse effect on its future financial position - Chapter 11 proceedings automatically stayed actions against the company, and the Plan of Reorganization addressed pre-petition liabilities[323](index=323&type=chunk) - The company is involved in various lawsuits, including commercial disputes, personal injury claims, royalty claims, property damage claims, and contract actions[325](index=325&type=chunk) - The company was dismissed from numerous lawsuits in Oklahoma alleging earthquake causation[327](index=327&type=chunk) - Management assesses that no pending or threatened lawsuit is likely to have a material adverse effect on the company's future consolidated financial position, results of operations, or cash flows[328](index=328&type=chunk) [ITEM 1A. Risk Factors](index=63&type=section&id=ITEM%201A.%20Risk%20Factors) This section refers to the comprehensive risk factors detailed in the 2021 Form 10-K and introduces an additional risk factor concerning the conflict in Ukraine, which is expected to intensify volatility in oil, natural gas, and NGL prices, potentially having a substantial negative impact on the global economy and the company's business - Business risks are primarily described in Item 1A of the company's **2021 Form 10-K**[330](index=330&type=chunk) - A new risk factor highlights that the conflict in Ukraine and related price volatility and geopolitical instability could negatively impact the business[331](index=331&type=chunk)[332](index=332&type=chunk) - The Ukraine conflict could intensify volatility in oil, natural gas, and NGL prices and potentially have a substantial negative impact on the global economy and the company's business[332](index=332&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the company's share repurchase program, where the Board authorized up to $1.0 billion in repurchases on December 2, 2021, and in March 2022, the company repurchased 1 million shares for an average price of $82.98 per share, leaving $917 million remaining under the authorization - The Board of Directors authorized a share repurchase program of up to **$1.0 billion** in aggregate value of common stock and/or warrants on **December 2, 2021**[333](index=333&type=chunk) - In March 2022, **1,000,000 shares** of common stock were repurchased at an average price of **$82.98 per share**[334](index=334&type=chunk) - As of March 31, 2022, **$917 million** remained available for repurchases under the program[334](index=334&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=63&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reported period - No defaults upon senior securities were reported[335](index=335&type=chunk) [ITEM 4. Mine Safety Disclosures](index=63&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section indicates that information concerning mine safety violations and other regulatory matters is provided in Exhibit 95.1 - Mine safety disclosures are included in **Exhibit 95.1** to this Form 10-Q[336](index=336&type=chunk) [ITEM 5. Other Information](index=63&type=section&id=ITEM%205.%20Other%20Information) This section states that there is no other information applicable for this item - This item is not applicable[337](index=337&type=chunk) [ITEM 6. Exhibits](index=64&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed, furnished, or incorporated by reference, including various legal and corporate documents such as merger agreements, certificates of incorporation, bylaws, registration rights agreements, and Sarbanes-Oxley certifications - The exhibits include key documents such as the Fifth Amended Joint Plan of Reorganization, merger agreements for the Vine and Marcellus Acquisitions, the Second Amended and Restated Certificate of Incorporation and Bylaws, Registration Rights Agreements, and Section 302 and 906 certifications[341](index=341&type=chunk)