Chesapeake Energy 2013 Annual Report Download - page 53

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Capital expenditures related to additions to property and equipment associated with our midstream, oilfield services
and other fixed assets of $972 million, $2.651 billion and $2.009 billion during 2013, 2012 and 2011, respectively, were
primarily related to the expansion of our gathering systems and the growth of our oilfield services assets, in particular
our hydraulic fracturing assets. The $1.679 billion reduction of such expenditures in 2013 from 2012 is primarily the
result of our sale of substantially all of our midstream business and most of our gathering assets in 2012 and 2013
and a reduction in capital expenditures for our oilfield services business.
In late 2012, we fully repaid the $4.0 billion term loan that we established in May 2012 with cash proceeds from
asset sales and proceeds from the issuance of the $2.0 billion term loan that we established in November 2012. We
recorded approximately $200 million of losses associated with this repayment, including the write-off of $86 million of
deferred charges.
In 2011, we completed and settled tender offers to purchase $2.044 billion in principal amount of our senior notes
and contingent convertible senior notes for $2.186 billion in cash, including approximately $171 million in cash premiums,
primarily funded with a portion of the net proceeds we received from the sale of our Fayetteville Shale assets.
We paid dividends on our common stock of $233 million, $227 million and $207 million in 2013, 2012 and 2011,
respectively. We paid dividends on our preferred stock of $171 million, $171 million and $172 million in 2013, 2012
and 2011, respectively.
Bank Credit Facilities
During 2013, we had two revolving bank credit facilities as sources of liquidity.
Corporate
Credit Facility(a) Oilfield Services Credit Facility(b)
($ in millions)
Facility structure ..................................................................................... Senior secured
revolving Senior secured revolving
Maturity date .......................................................................................... December 2015 November 2016
Borrowing capacity ................................................................................ $ 4,000 $ 500
Amount outstanding as of December 31, 2013...................................... $ — $ 405
Letters of credit outstanding as of December 31, 2013 ......................... $ 23 $ —
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(a) Co-borrowers are Chesapeake Exploration, L.L.C., Chesapeake Appalachia, L.L.C. and Chesapeake Louisiana,
L.P.
(b) Borrower is Chesapeake Oilfield Operating, L.L.C. (COO).
Although the applicable interest rates under our corporate credit facility fluctuate based on our long-term senior
unsecured credit ratings, our credit facilities do not contain provisions which would trigger an acceleration of amounts
due under the respective facilities or a requirement to post additional collateral in the event of a downgrade of our
credit ratings.
Corporate Credit Facility. Our $4.0 billion syndicated revolving bank credit facility is used for general corporate
purposes. Borrowings under the facility are secured by proved reserves and bear interest at a variable rate. We were
in compliance with all covenants under the credit facility agreement as of December 31, 2013. See Note 3 of the notes
to our consolidated financial statements included in Item 8 of this report for further discussion of the terms of our
corporate credit facility, including the terms of an amendment that increased the required indebtedness to EBITDA
ratio as of September 30, 2012 and the subsequent two quarters.
Our indebtedness to EBITDA ratio as of December 31, 2013 was approximately 2.70 to 1.00. The ratio compares
consolidated indebtedness to consolidated EBITDA, both non-GAAP financial measures that are defined in the credit
facility agreement, for the 12-month period ending on the measurement date. Consolidated indebtedness consists of
outstanding indebtedness, less the cash and cash equivalents of Chesapeake and certain of our subsidiaries.
Consolidated EBITDA consists of the net income of Chesapeake and certain of our subsidiaries, excluding income
from investments and non-cash income plus interest expense, taxes, depreciation, amortization expense and other
non-cash or non-recurring expenses, and is calculated on a pro forma basis to give effect to any acquisitions, divestitures
or other adjustments.