Chesapeake Energy 2013 Annual Report Download - page 136

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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Unconsolidated VIE
Mineral Acquisition Company I, L.P. In 2012, MAC-LP, L.L.C., a wholly owned non-guarantor unrestricted
subsidiary of Chesapeake, entered into a partnership agreement with KKR Royalty Aggregator LLC (KKR) to form
Mineral Acquisition Company I, L.P. The purpose of the partnership is to acquire mineral interests, or royalty interests
carved out of mineral interests, in oil and natural gas basins in the continental United States. We are committed to
acquire for our own account (outside the partnership) 10% of any acquisition agreed upon by the partnership up to a
maximum of $25 million, and the partnership will acquire the remaining 90% up to a maximum of $225 million, funded
entirely by KKR, making KKR the sole equity investor. We have significant influence over the decisions made by the
partnership, as we hold two of five seats on the board of directors. We will receive proportionate distributions from the
partnership of any cash received from royalties in excess of expenses paid, ranging from 7% to 22.5%. The partnership
is considered a VIE because KKR’s control over the partnership is disproportionate to its economic interest. This VIE
remains unconsolidated as the power to direct the activities of the partnership is shared between the Company and
KKR. We are using the equity method to account for this investment.
15. Other Property and Equipment
Other Property and Equipment
A summary of other property and equipment held for use and the useful lives thereof is as follows:
December 31, Useful
2013 2012 Life
($ in millions) (in years)
Oilfield services equipment ...................................................................... $ 2,192 $ 2,130 3 - 15
Buildings and improvements ................................................................... 1,433 1,580 10 - 39
Natural gas compressors ......................................................................... 368 505 3 - 20
Land ........................................................................................................ 212 515 —
Other ....................................................................................................... 1,190 1,178 2 - 20
Total other property and equipment, at cost...................................... 5,395 5,908
Less: accumulated depreciation ....................................................... (1,584) (1,293)
Total other property and equipment, net............................................ $ 3,811 $ 4,615
Net Gains on Sales of Fixed Assets
A summary by asset class of (gains) or losses on sales of fixed assets for the years ended December 31, 2013,
2012 and 2011 is as follows:
Years Ended December 31,
2013 2012 2011
($ in millions)
Gathering systems and treating plants ........................................................ $ (326) $ (286) $ (440)
Drilling rigs and equipment .......................................................................... 2 10 1
Buildings and land ....................................................................................... 27 7 2
Other ............................................................................................................ (5) 2 —
Total net gains on sales of fixed assets ................................................... $ (302) $ (267) $ (437)