Chesapeake Energy 2013 Annual Report Download - page 106

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
98
Other Commitments
In April 2011, we entered into a master frac service agreement with our equity affiliate, FTS International, Inc.
(FTS), which expires on December 31, 2014. Pursuant to this agreement, we are committed to enter into a
predetermined number of backstop contracts, providing at least a 10% gross margin to FTS, if utilization of FTS fleets
falls below a certain level. To date, we have not been required to enter into any backstop contracts.
As part of our normal course of business, we enter into various agreements providing, or otherwise arranging,
financial or performance assurances to third parties on behalf of our wholly owned guarantor subsidiaries. These
agreements may include future payment obligations or commitments regarding operational performance that effectively
guarantee our subsidiaries’ future performance.
In connection with divestitures, our purchase and sale agreements generally provide indemnification to the
counterparty for liabilities incurred as a result of a breach of a representation or warranty by the indemnifying party or
in regards to perfecting title to property. These indemnifications generally have a discrete term and are intended to
protect the parties against risks that are difficult to predict or cannot be quantified at the time of the consummation of
a particular transaction.
Certain of our natural gas and oil properties are burdened by non-operating interests such as royalty and overriding
royalty interests, including overriding royalty interests sold through our VPP transactions. As the holder of the working
interest from which such interests have been created, we have the responsibility to bear the cost of developing and
producing the reserves attributable to such interests. See Note 12 for further discussion of our VPP transactions.
5. Other Liabilities
Other current liabilities as of December 31, 2013 and 2012 are detailed below.
December 31,
2013 2012
($ in millions)
Revenues and royalties due others .............................................................. $ 1,409 $ 1,337
Accrued natural gas, oil and NGL drilling and production costs.................... 457 525
Joint interest prepayments received ............................................................. 464 749
Accrued compensation and benefits............................................................. 320 225
Other accrued taxes ..................................................................................... 161 130
Accrued dividends ........................................................................................ 101 101
Other ............................................................................................................ 599 674
Total other current liabilities ................................................................. $ 3,511 $ 3,741