Chesapeake Energy 2012 Annual Report Download - page 88
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78
The components of natural gas, oil and NGL sales for 2012, 2011 and 2010 are presented below.
Years Ended December 31,
2012 2011 2010
($ in millions)
Natural gas, oil and NGL sales ................................................................. $ 5,359 $ 5,259 $ 4,248
Realized gains (losses) on natural gas, oil and NGL derivatives.............. 358 1,554 2,056
Unrealized gains (losses) on natural gas, oil and NGL derivatives........... 561 (782) (634)
Unrealized gains (losses) on ineffectiveness of cash flow hedges........... — (7) (23)
Total natural gas, oil and NGL sales ................................................ $ 6,278 $ 6,024 $ 5,647
Interest Rate Risk
The table below presents principal cash flows and related weighted average interest rates by expected maturity
dates.
Years of Maturity
2013 2014 2015 2016 2017 Thereafter Total
($ in millions)
Liabilities:
Debt – fixed rate(a) .................. $ 464 $ — $ 1,661 $ — $ 2,282 $ 6,240 $ 10,647
Average interest rate .............. 7.63% —% 7.89% —% 4.40% 6.44% 6.28%
Debt – variable rate(b) ............. $ — $ — $ — $ 418 $ 2,000 $ — $ 2,418
Average interest rate .............. —% —% —% 2.95% 5.75% —% 5.27%
___________________________________________
(a) This amount does not include the discount included in debt of $425 million and interest rate derivatives of $20
million.
(b) This amount does not include the discount included in debt of $40 million.
Changes in interest rates affect the amount of interest we earn on our cash, cash equivalents and short-term
investments and the interest rate we pay on borrowings under our revolving bank credit facilities. All of our other
indebtedness is fixed rate and, therefore, does not expose us to the risk of fluctuations in earnings or cash flow due
to changes in market interest rates. However, changes in interest rates do affect the fair value of our fixed-rate debt.
Interest Rate Derivatives
To mitigate a portion of our exposure to volatility in interest rates related to our senior notes and credit facilities,
we enter into interest rate derivatives. As of December 31, 2012, our interest rate derivative instruments consisted of
one type of instrument:
• Swaps: Chesapeake enters into fixed-to-floating interest rate swaps (we receive a fixed interest rate and
pay a floating market rate) to mitigate our exposure to changes in the fair value of our senior notes. We enter
into floating-to-fixed interest rate swaps (we receive a floating market rate and a pay fixed interest rate) to
manage our interest rate exposure related to our bank credit facility borrowings.