Chesapeake Energy 2012 Annual Report Download - page 68

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Contractual Obligations and Off-balance Sheet Arrangements
From time to time, we enter into arrangements and transactions that can give rise to off-balance sheet obligations.
As of December 31, 2012, these arrangements and transactions included (i) operating lease agreements, (ii) VPP
obligations (to physically deliver and purchase volumes and pay related production expenses and taxes in the future),
(iii) open purchase commitments, (iv) open delivery commitments, (v) open drilling commitments, (vi) undrawn letters
of credit, (vii) open gathering and transportation commitments and (viii) various other commitments we enter into in
the ordinary course of business that could result in a future cash obligation.
The table below summarizes our contractual cash obligations for both recorded obligations and certain off-balance
sheet arrangements and commitments as of December 31, 2012.
Payments Due By Period
Total
Less Than
1 Year 1-3 Years 3-5 Years
More Than
5 Years
Long-term debt:
Principal ........................................... $13,065 $ 464 $ 1,661 $ 4,700 $ 6,240
Interest ............................................. 5,058 767 1,392 1,204 1,695
Financing lease obligations
and other(a) .......................................... 798 17 37 34 710
Operating lease obligations(b) ............... 768 181 320 229 38
Asset retirement obligations(c) .............. 375 736 35 297
Purchase obligations(d) .......................... 18,811 1,781 3,869 3,817 9,344
Equity investment obligations ............. 111 106 5 — —
Unrecognized tax benefits(e) ................. 214 — — 214 —
Standby letters of credit...................... 31 31———
Other .................................................. 111 22 30 17 42
Total contractual cash obligations(f) $39,342 $3,376 $ 7,350 $ 10,250 $ 18,366
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(a) See Note 1 of the notes to our consolidated financial statements included in Item 8 of this report for a description
of our other long-term liabilities.
(b) See Note 4 of the notes to our consolidated financial statements included in Item 8 of this report for a description
of our operating lease obligations.
(c) Asset retirement obligations represent estimated discounted costs for future dismantlement and abandonment
costs. These obligations are recorded as liabilities on our December 31, 2012 balance sheet. See Note 16 of the
notes to our consolidated financial statements included in Item 8 of this report for more information on our asset
retirement obligations.
(d) See Note 4 of the notes to our consolidated financial statements included in Item 8 of this report for a description
of transportation and drilling contract commitments.
(e) See Note 5 of the notes to our consolidated financial statements included in Item 8 of this report for a description
of unrecognized tax benefits.
(f) Does not include our costs to produce reserves attributable to non-expense-bearing royalty and other interests
in our properties, including VPPs, which are discussed below.
As the operator of the properties from which VPP volumes have been sold, we have the responsibility to bear
the cost of producing the reserves attributable to such interests, which we include as a component of production
expenses and production taxes in our consolidated statements of operations in the periods such costs are incurred.
As with all non-expense-bearing royalty interests, volumes conveyed in a VPP transaction are excluded from our
estimated proved reserves; however, the estimated production expenses and taxes associated with VPP volumes
expected to be delivered in future periods are included as a reduction of the future net cash flows attributable to our
proved reserves for purposes of determining the cost center ceiling for impairment purposes and in determining our
standardized measure. The amount of these production expenses and taxes, based on cost levels as of December