Chesapeake Energy 2012 Annual Report Download - page 167

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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16. Asset Retirement Obligations
The components of the change in our asset retirement obligations are shown below.
Years Ended December 31,
2012 2011
($ in millions)
Asset retirement obligations, beginning of period .................................................... $ 323 $ 301
Additions ............................................................................................................. 29 20
Revisions(a) ......................................................................................................... 42 (1)
Settlements and disposals .................................................................................. (41) (16)
Accretion expense .............................................................................................. 22 19
Asset retirement obligations, end of period ............................................................. $ 375 $ 323
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(a) Revisions in estimated liabilities can result from changes in estimated service and equipment costs, changes in
the estimated timing of settling asset retirement obligations and changes in estimated inflation rates. In 2012, we
revised our asset retirement obligations related to natural gas and oil properties based on an increase in estimated
service and equipment costs and changes to the estimated timing of settling the asset retirement obligations.
17. Major Customers and Segment Information
Sales to Plains Marketing, L.P. constituted 11% of our total natural gas, oil and NGL revenues (before the effects
of hedging) for the year ended December 31, 2012. There were no sales to individual customers constituting 10% or
more of total revenues (before the effects of hedging) for the years ended December 31, 2011 and 2010.
In accordance with accounting guidance for disclosures about segments of an enterprise and related information,
we have three reportable operating segments. Our exploration and production operating segment, natural gas, oil and
NGL marketing, gathering and compression operating segment and oilfield services operating segment are managed
separately because of the nature of their products and services. The exploration and production operating segment
is responsible for finding and producing natural gas, oil and NGL. The marketing, gathering and compression operating
segment is responsible for marketing, gathering and compression of natural gas, oil and NGL primarily from
Chesapeake-operated wells. The oilfield services operating segment is responsible for contract drilling, oilfield trucking,
oilfield rentals, hydraulic fracturing and other oilfield services operations for both Chesapeake-operated wells and wells
operated by third parties.
COO, a wholly owned subsidiary of COS, is a diversified oilfield services company that we formed in October
2011 to own and operate our oilfield services business. COO provides a wide range of well site services, primarily to
Chesapeake and its working interest partners, including contract drilling, hydraulic fracturing, oilfield rentals,
transportation and manufacturing of natural gas compressor packages and related production equipment. In connection
with the reorganization of our oilfield services subsidiaries and operations, those subsidiaries were released from the
guarantees and other credit support obligations that existed for the benefit of Chesapeake and its other subsidiaries,
including Chesapeake’s senior notes and contingent convertible senior notes, its corporate revolving bank credit facility
and its multi-counterparty hedging facility. In addition, COO and its subsidiaries entered into agreements with
Chesapeake pursuant to which they sublease rigs, provide certain oilfield services and obtain certain administrative
services.