Chesapeake Energy 2010 Annual Report Download - page 160

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following summary sets forth our future net cash flows relating to proved natural gas and oil reserves
based on the standardized measure:
Years Ended December 31,
2010 2009 2008
($ in millions)
Future cash inflows ............................................. $ 69,616(a) $ 49,322(b) $ 62,995(c)
Future production costs .......................................... (20,384) (16,620) (18,828)
Future development costs ........................................ (11,602) (8,881) (7,378)
Future income tax provisions ...................................... (6,859) (4,106) (9,813)
Future net cash flows ............................................ 30,771 19,715 26,976
Less effect of a 10% discount factor ................................ (17,588) (11,512) (15,143)
Standardized measure of discounted future net cash flows ............. $ 13,183 $ 8,203 $ 11,833
(a) Calculated using prices of $4.38 per mcf of natural gas and $79.42 per barrel of oil, before field
differentials.
(b) Calculated using prices of $3.87 per mcf of natural gas and $61.14 per barrel of oil, before field
differentials.
(c) Calculated using prices of $5.71 per mcf of natural gas and $44.61 per barrel of oil, before field
differentials.
The principal sources of change in the standardized measure of discounted future net cash flows are as
follows:
Years Ended December 31,
2010 2009 2008
($ in millions)
Standardized measure, beginning of period(a) ......................... $ 8,203 $ 11,833 $ 14,962
Sales of natural gas and oil produced, net of production costs(b) .......... (3,199) (2,307) (5,896)
Net changes in prices and production costs ........................... 3,337 (7,297) (5,025)
Extensions and discoveries, net of production and development costs ..... 5,580 2,374 2,752
Changes in future development costs ................................ 173 1,910 1,043
Development costs incurred during the period that reduced future
development costs ............................................. 717 650 1,130
Revisions of previous quantity estimates ............................. 199 (1,290) 1,524
Purchase of reserves-in-place ...................................... 255 41 362
Sales of reserves-in-place ......................................... (2,235) (377) (1,696)
Accretion of discount ............................................. 945 1,560 2,057
Net change in income taxes ........................................ (716) 2,521 1,843
Changes in production rates and other ............................... (76) (1,415) (1,223)
Standardized measure, end of period(a) .............................. $ 13,183 $ 8,203 $ 11,833
(a) The impact of cash flow hedges has not been included in any of the periods presented.
(b) Excluding gains (losses) on derivatives.
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