Chesapeake Energy 2010 Annual Report Download - page 106

Other Related Parties
During 2010, our 42%-owned affiliate, Chesapeake Midstream Partners, L.P. (CHKM), provided natural
gas gathering and treating services to us in the ordinary course of business. In addition, there are various
agreements in place whereby we support CHKM in various functions for which we are reimbursed. During
2010, our transactions with CHKM included the following:
Year Ended
December 31, 2010
($ in millions)
Amounts paid to CHKM:
Gas gathering fees ...................................................... $ 378
Amounts received from CHKM:
Compressor rentals ..................................................... 48
Inventory purchases ..................................................... 47
Other services provided(a) ................................................ 73
Total amounts received from CHKM ...................................... $ 168
(a) Includes amounts received related to the General and Administrative Services and Reimbursement
Agreement, the Employee Secondment Agreement, the Shared Services Agreement and the Additional
Services and Reimbursement Agreement agreed to at the formation of the joint venture.
As of December 31, 2010, we had a net payable to CHKM of $45 million.
During 2010 and 2009, our 26%-owned affiliate, Frac Tech Holdings, LLC, provided us hydraulic fracturing
and other services in the ordinary course of business. During 2010 and 2009, we paid Frac Tech $89 million
and $43 million, respectively, for these services. As of December 31, 2010 and 2009, we had $30 million and
$8 million, respectively, due Frac Tech for services provided and not yet paid.
Recently Issued Accounting Standards
The Financial Accounting Standards Board (FASB) recently issued the following standards which we
reviewed to determine the potential impact on our financial statements upon adoption.
In February 2010, the FASB amended its guidance on subsequent events to remove the requirement for
SEC filers to disclose the date through which an entity has evaluated subsequent events. The guidance was
effective upon issuance. We adopted this guidance in 2010.
The FASB also issued new guidance requiring additional disclosures about fair value measurements,
adding a new requirement to disclose transfers in and out of Levels 1 and 2 measurements and gross
presentation of activity within a Level 3 roll forward. The guidance also clarified existing disclosure
requirements regarding the level of disaggregation of fair value measurements and disclosures regarding
inputs and valuation techniques. We adopted this guidance in the Current Period. Adoption had no impact on
our financial position or results of operations. Required disclosures for the reconciliation of purchases, sales,
issuance and settlements of financial instruments valued with a Level 3 method are effective beginning on
January 1, 2011, and we do not expect the implementation to have a material impact on our financial position
or results of operations. See Note 14 of the notes to our consolidated financial statements in Item 8 of this
report for discussion regarding fair value measurements.
Forward-Looking Statements
This report includes “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 historical fact and give our current expectations or forecasts of future events. They include estimates
of natural gas and oil reserves, expected natural gas and oil production and future expenses, assumptions
regarding future natural gas and oil prices, planned capital expenditures, and anticipated asset acquisitions and
sales, as well as statements concerning anticipated cash flow and liquidity, business strategy and other plans
and objectives for future operations. Disclosures concerning the fair values of derivative contracts and their
estimated contribution to our future results of operations are based upon market information as of a specific
date. These market prices are subject to significant volatility.
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