Chesapeake Energy 2013 Annual Report Download - page 48

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In July 2013, we sold assets in the Haynesville Shale to EXCO Operating Company, LP (EXCO) for net proceeds
of approximately $257 million. Subsequent to closing, we have received approximately $47 million of additional net
proceeds for post-closing adjustments. The assets sold included our operated and non-operated interests in
approximately 9,600 net acres in DeSoto and Caddo parishes, Louisiana.
Also in July 2013, we sold assets in the northern Eagle Ford Shale to EXCO for net proceeds of approximately
$617 million. Subsequent to closing, we have received approximately $32 million of additional net proceeds for post-
closing adjustments and may receive up to $64 million of additional net proceeds for further post-closing adjustments.
The assets sold included approximately 55,000 net acres in Zavala, Dimmit, La Salle and Frio counties, Texas.
2013 Natural Gas and Oil Property Joint Venture
In June 2013, we completed a strategic joint venture with Sinopec International Petroleum Exploration and
Production Corporation (Sinopec) in which Sinopec purchased a 50% undivided interest in approximately 850,000
acres (425,000 acres net to Sinopec) in the Mississippi Lime play in northern Oklahoma. Total consideration for the
transaction was approximately $1.020 billion in cash, of which approximately $949 million of net proceeds was received
upon closing. We also received an additional $90 million at closing related to closing adjustments for activity between
the effective date and closing date of the transaction. We may receive up to an additional $71 million of net proceeds
for post-closing adjustments. All future exploration and development costs in the joint venture will be shared
proportionately between the parties with no drilling carries involved.
Major 2013 Midstream Asset Sales
In August 2013, our wholly owned subsidiary, Chesapeake Midstream Development, L.L.C. (CMD), sold its wholly
owned midstream subsidiary, Mid-America Midstream Gas Services, L.L.C. (MAMGS), to SemGas, L.P. (SemGas), a
wholly owned subsidiary of SemGroup Corporation, for net proceeds of approximately $306 million. We recorded a
$141 million gain associated with the transaction. MAMGS owned certain gathering and processing assets located in
the Mississippi Lime play, and the transaction with SemGas included a new long-term fixed-fee gathering and processing
agreement covering acreage dedication areas in the Mississippi Lime play.
In May 2013, CMD sold its wholly owned subsidiary, Granite Wash Midstream Gas Services, L.L.C. (GWMGS),
to MarkWest Oklahoma Gas Company, L.L.C., a wholly owned subsidiary of MarkWest Energy Partners, L.P. (NYSE:
MWE), for net proceeds of approximately $252 million. We recorded a $105 million gain associated with this transaction.
GWMGS owned certain midstream assets in the Anadarko Basin that service the Granite Wash and Hogshooter
formations. The transaction with MWE included new long-term fixed-fee agreements for gas gathering, compression,
treating and processing services.
In March 2013, CMD sold its interest in certain gathering system assets in Pennsylvania to Western Gas Partners,
LP (NYSE:WES) for net proceeds of approximately $134 million. We recorded a $55 million gain associated with this
transaction.
Liquidity and Capital Resources
Liquidity Overview
As of December 31, 2013, we had approximately $4.909 billion in cash availability (defined as unrestricted cash
on hand plus borrowing capacity under our revolving bank credit facilities) compared to $4.338 billion as of December
31, 2012. During 2013, we decreased our debt, net of unrestricted cash, by approximately $284 million, to $12.049
billion. As of December 31, 2013, we had negative working capital of approximately $1.859 billion compared to negative
working capital of approximately $2.854 billion (excluding current maturity of debt) as of December 31, 2012. Historically,
working capital deficits have existed primarily because our capital spending has exceeded our cash flow from operations.
Our business is capital intensive. During the year ended December 31, 2013, our capital expenditures exceeded
cash flow from operations, and we filled this spending gap with borrowings and proceeds from our joint venture with
Sinopec and from sales of assets that we determined were noncore or did not fit our long-term plans. In addition, as
of December 31, 2013 we had full availability under our corporate revolving bank credit facility, providing significant
additional liquidity if necessary. For 2014, we are projecting that our capital expenditures will approximate our cash
flow from operations.