Chesapeake Energy 2013 Annual Report Download - page 146

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
138
Fair Value of Other Financial Instruments
The following disclosure of the estimated fair value of financial instruments is made in accordance with accounting
guidance for financial instruments. The carrying values of financial instruments comprising cash and cash equivalents,
restricted cash, accounts payable and accounts receivable approximate fair values due to the short-term maturities of
these instruments. We estimate the fair value of our exchange-traded debt using quoted market prices (Level 1). The
fair value of all other debt, which consists of our credit facilities and our term loan, is estimated using our credit default
swap rate (Level 2). Fair value is compared to the carrying value, excluding the impact of interest rate derivatives, in
the table below.
December 31, 2013 December 31, 2012
Carrying
Amount Estimated Fair Value Carrying Amount Estimated Fair Value
($ in millions)
Current maturities of long-term debt (Level 1)...... $ — $ — $ 463 $ 480
Long-term debt (Level 1) ...................................... $10,501 $ 11,557 $ 9,759 $ 10,457
Long-term debt (Level 2) ...................................... $2,372 $ 2,369 $ 2,378 $ 2,284
19. Asset Retirement Obligations
The components of the change in our asset retirement obligations are shown below.
Years Ended December 31,
2013 2012
($ in millions)
Asset retirement obligations, beginning of period.................................................... $ 375 $ 323
Additions ............................................................................................................. 20 29
Revisions(a) ......................................................................................................... 8 42
Settlements and disposals .................................................................................. (20) (41)
Accretion expense .............................................................................................. 22 22
Asset retirement obligations, end of period ............................................................. $ 405 $ 375
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(a) Revisions in estimated liabilities during the period relate primarily to changes in estimates of asset retirement
costs and include, but are not limited to, revisions of estimated inflation rates, changes in property lives, and the
expected timing of settlement.
20. Major Customers and Segment Information
There were no sales to individual customers constituting 10% or more of total revenues (before the effects of
hedging) for the years ended December 31, 2013 and 2011. Sales to Plains Marketing, L.P. constituted 11% of our
total revenues (before the effects of hedging) for the year ended December 31, 2012.
We have three reportable operating segments, each of which is managed separately because of the nature of
its products and services. The exploration and production operating segment is responsible for finding and producing
natural gas, oil and NGL. The marketing, gathering and compression operating segment is responsible for marketing,
gathering and compression of natural gas, oil and NGL. The oilfield services operating segment is responsible for
drilling, oilfield trucking, oilfield rentals, hydraulic fracturing and other oilfield services operations for both Chesapeake-
operated wells and wells operated by third parties.
Management evaluates the performance of our segments based upon income (loss) before income taxes.
Revenues from the sale of natural gas, oil and NGL related to Chesapeake’s ownership interests by the marketing,
gathering and compression operating segment are reflected as revenues within our exploration and production
operating segment. Such amounts totaled $7.570 billion, $5.464 billion and $5.246 billion for the years ended December
31, 2013, 2012 and 2011, respectively. Revenues generated by the oilfield services operating segment for work
performed for Chesapeake’s exploration and production operating segment are reclassified to the full cost pool based
on Chesapeake’s ownership interest. Revenues reclassified totaled $1.309 billion, $1.315 billion and $737 million for
the years ended December 31, 2013, 2012 and 2011, respectively. No income is recognized in our consolidated