Chesapeake Energy 2012 Annual Report Download - page 151

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
141
The following summary sets forth our future net cash flows relating to proved natural gas, oil and NGL reserves
based on the standardized measure:
Years Ended December 31,
2012 2011 2010
($ in millions)
Future cash inflows ............................................................................ $ 73,754 (a) $ 85,537 (b) $ 69,616 (c)
Future production costs ..................................................................... (18,809) (23,022) (20,384)
Future development costs .................................................................. (12,656) (14,471) (11,602)
Future income tax provisions ............................................................. (9,824) (12,266) (6,859)
Future net cash flows ......................................................................... 32,465 35,778 30,771
Less effect of a 10% discount factor .................................................. (17,799) (20,148) (17,588)
Standardized measure of discounted future net cash flows(d) ............ $ 14,666 $ 15,630 $ 13,183
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(a) Calculated using prices of $2.76 per mcf of natural gas and $94.84 per bbl of oil, before field differentials.
(b) Calculated using prices of $4.12 per mcf of natural gas and $95.97 per bbl of oil, before field differentials.
(c) Calculated using prices of $4.38 per mcf of natural gas and $79.42 per bbl of oil, before field differentials.
(d) Excludes future cash inflows attributable to production volumes sold to VPP buyers and includes future cash
outflows attributable to the costs of such production. See Note 11.
The principal sources of change in the standardized measure of discounted future net cash flows are as follows:
Years Ended December 31,
2012 2011 2010
($ in millions)
Standardized measure, beginning of period(a) .............................................. $ 15,630 $ 13,183 $ 8,203
Sales of natural gas and oil produced, net of production costs(b) ............... (3,867) (3,993) (3,199)
Net changes in prices and production costs ............................................. (2,720) 512 3,337
Extensions and discoveries, net of production and
development costs ................................................................................ 11,115 9,139 5,580
Changes in future development costs ...................................................... 3,687 667 173
Development costs incurred during the period that reduced
future development costs ...................................................................... 1,046 680 717
Revisions of previous quantity estimates ................................................. (8,699) (708) 199
Purchase of reserves-in-place .................................................................. 285 50 255
Sales of reserves-in-place ........................................................................ (3,246) (2,083) (2,235)
Accretion of discount ................................................................................ 1,988 1,515 945
Net change in income taxes ..................................................................... 1,142 (2,286) (716)
Changes in production rates and other .................................................... (1,695) (1,046) (76)
Standardized measure, end of period(a)(c)(d) ................................................... $ 14,666 $ 15,630 $ 13,183
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(a) The impact of cash flow hedges has not been included in any of the periods presented.
(b) Excluding gains (losses) on derivatives.
(c) Effect of noncontrolling interest of the Chesapeake Granite Wash Trust is immaterial.
(d) The standardized measure of discounted future net cash flows does not include estimated future cash inflows
attributable to future production of VPP volumes sold and does include estimated future cash outflows attributable
to the costs of future production of VPP volumes sold.