Chesapeake Energy 2013 Annual Report Download - page 134

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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The carrying value of our investment in FTS was less than our underlying equity in net assets by approximately
$54 million as of December 31, 2013, of which $14 million was attributed to non-depreciable assets. During 2013, the
value attributed to non-depreciable assets decreased by $282 million, which primarily represents our proportionate
share, net of tax, of an impairment recorded by FTS related to its non-depreciable assets noted above. The value not
attributed to non-depreciable assets is being accreted over the estimated useful lives of the underlying assets.
Chaparral Energy, Inc. Chaparral Energy, Inc. (Chaparral), based in Oklahoma City, Oklahoma, is a private
independent oil and natural gas company engaged in the production, acquisition and exploitation of oil and natural gas
properties. In 2013, we recorded positive equity method adjustments of $10 million related to our share of Chaparral’s
net income, a $5 million charge related to our share of its other comprehensive income, and an amortization adjustment
of $3 million related to our carrying value in excess of our underlying equity in net assets. The carrying value of our
investment in Chaparral was in excess of our underlying equity in net assets by approximately $48 million as of
December 31, 2013. This excess was attributed to the natural gas and oil reserves held by Chaparral and was being
amortized over the estimated life of these reserves based on a unit of production rate. Subsequent to December 31,
2013, we sold our investment in Chaparral for cash proceeds of $215 million.
Sundrop Fuels, Inc. Sundrop Fuels, Inc. (Sundrop), is a privately held cellulosic biofuels company based in
Longmont, Colorado that is constructing a nonfood biomass-based “green gasoline” plant. In 2013, we recorded a $16
million charge related to our share of Sundrop’s net loss. Additionally, in 2013, we funded our final investment of $40
million upon Sundrop’s achievement of certain operational milestones. The carrying value of our investment in Sundrop
was in excess of our underlying equity in net assets by approximately $62 million as of December 31, 2013. This excess
will be amortized over the life of the plant, once it is placed into service.
Sold Investments
Clean Energy Fuels Corp. In 2013, we sold all of our shares of Clean Energy Fuels Corp. (NASDAQ:CLNE)
(Clean Energy) common stock for cash proceeds of approximately $13 million. We recorded a $3 million gain related
to the sale. In 2013, we sold our $100 million investment in Clean Energy convertible notes for cash proceeds of $85
million. The buyer also assumed our commitment to purchase the third and final $50 million tranche of Clean Energy
convertible notes. We recorded a $15 million loss related to this sale.
Gastar Exploration Ltd. In 2013, we sold our investment in Gastar Exploration Ltd. (NYSE MKT:GST) for cash
proceeds of $10 million.
Chesapeake Midstream Partners, L.P. In 2012, we sold all of our common and subordinated units representing
limited partner interests in Chesapeake Midstream Partners, L.P., now named Access Midstream Partners, L.P.
(NYSE:ACMP), and all of our limited liability company interests in the sole member of its general partner to funds
affiliated with Global Infrastructure Partners for cash proceeds of $2.0 billion. We recorded a $1.032 billion gain
associated with the transaction, including the recognition of a $13 million deferred gain related to equipment previously
sold to ACMP. During 2012, we recorded positive equity method adjustments of $46 million for our share of ACMP’s
income, received cash distributions of $56 million from ACMP and recorded accretion adjustments of $4 million related
to our share of equity in excess of cost.
Glass Mountain Pipeline, LLC. In 2012, our wholly owned midstream subsidiary, Chesapeake Midstream
Development, L.L.C. (CMD), entered into an agreement with two other parties to form Glass Mountain Pipeline, LLC
to construct a 210-mile pipeline in western and north central Oklahoma in which CMD had a 50% ownership interest.
In 2012, CMD sold its interest for $99 million and recorded a gain of $62 million.
Other. In 2013, we sold an equity investment for cash proceeds of $6 million and recorded a $5 million gain
associated with the transaction.