Chesapeake Energy 2010 Annual Report Download - page 153

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table sets forth the fair value of each classification of derivative instrument as of
December 31, 2010 and 2009 on a gross basis without regard to same-counterparty netting:
Fair Value
Balance Sheet Location
December 31,
2010
December 31,
2009
($ in millions)
Asset Derivatives:
Derivatives designated as hedging instruments:
Commodity contracts ................ Short-term derivative instruments $ 307 $ 417
Commodity contracts ................ Long-term derivative instruments 12 36
Foreign currency contracts ............ Long-term derivative instruments — 43
Total .......................................................... 319 496
Derivatives not designated as hedging instruments:
Commodity contracts ................ Short-term derivative instruments 921 318
Commodity contracts ................ Long-term derivative instruments 229 66
Total .......................................................... 1,150 384
Liability Derivatives:
Derivatives designated as hedging instruments:
Commodity contracts ................ Short-term derivative instruments (59) (1)
Interest rate contracts ................ Long-term derivative instruments (25) (11)
Foreign currency contracts ............ Long-term derivative instruments (43) —
Total .......................................................... (127) (12)
Derivatives not designated as hedging instruments:
Commodity contracts ................ Short-term derivative instruments (222) (42)
Commodity contracts ................ Long-term derivative instruments (1,837) (768)
Interest rate contracts ................ Short-term derivative instruments (15) (27)
Interest rate contracts ................ Long-term derivative instruments (29) (94)
Total .......................................................... (2,103) (931)
Total derivative instruments ..................................... $ (761) $ (63)
A consolidated summary of the effect of derivative instruments on the consolidated statements of
operations for the years ended December 31, 2010 and 2009 is provided below, separating fair value, cash
flow and non-qualifying derivatives.
The following table presents the gain (loss) recognized in net income (loss) for instruments designated as
fair value derivatives:
Years Ended
December 31,
Fair Value Derivatives Location of Gain (Loss) 2010 2009
($ in millions)
Interest rate contracts Interest expense(a) ................ $ 20 $ 37
(a) Interest expense on items hedged for the years ended December 31, 2010 and 2009 was $19 million and
$71 million, respectively, which is included in interest expense on the consolidated statements of
operations.
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