Chesapeake Energy 2013 Annual Report Download - page 64

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Net Gains on Sales of Fixed Assets. In 2013, net gains on sales of fixed assets were $302 million compared to
net gains of $267 million and $437 million in 2012 and 2011, respectively, primarily related to gathering systems sold.
See Note 15 of the notes to our consolidated financial statements included in Item 8 of this report for a discussion of
our net gains on sales of fixed assets.
Interest Expense. Interest expense was $227 million in 2013 compared to $77 million in 2012 and $44 million in
2011 as follows:
Years Ended December 31,
2013 2012 2011
($ in millions)
Interest expense on senior notes ........................................................................ $ 740 $ 732 $ 653
Interest expense on credit facilities ..................................................................... 38 70 70
Interest expense on term loans ........................................................................... 116 173 —
Realized (gains) losses on interest rate derivatives(a) ......................................... (9) (1) 7
Unrealized (gains) losses on interest rate derivatives(b) ...................................... 67 (6) 7
Amortization of loan discount, issuance costs and other .................................... 91 89 39
Capitalized interest ............................................................................................. (816) (980) (732)
Total interest expense ................................................................................ $ 227 $ 77 $ 44
Average senior notes borrowings ........................................................................ 10,991 10,487 9,373
Average term loan borrowings ............................................................................ 2,000 2,096 —
Average credit facilities borrowings ..................................................................... 678 2,517 2,830
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(a) Includes settlements related to the current period interest accrual and the effect of gains/losses on early terminated
trades. Settlements of early-terminated trades are reflected in realized (gains) losses over the original life of the
hedged item.
(b) Includes changes in the fair value of open interest rate derivatives offset by amounts reclassified to realized gains/
losses during the period.
Interest expense, excluding unrealized gains or losses on interest rate derivatives and net of amounts capitalized,
was $0.65 per boe in 2013 compared to $0.35 per boe in 2012 and $0.18 per boe in 2011. The increase in 2013 interest
expense is primarily due to a decrease in the amount of interest capitalized as a result of a lower average balance of
unevaluated natural gas and oil properties, the primary asset on which interest is capitalized.
Earnings (Losses) on Investments. Losses on investments were $226 million in 2013, compared to losses of
$103 million in 2012 and earnings of $156 million in 2011. The 2013 and 2012 losses primarily related to our equity in
the net loss of FTS International, Inc. (FTS). The 2011 earnings primarily related to our equity in the net income of
ACMP. See Note 13 of the notes to our consolidated financial statements included in Item 8 of this report for a discussion
of our investments.
Gains (Losses) on Sales of Investments. We recorded losses on sales of investments of $7 million in 2013 and
gains on sales of investments of $1.092 billion in 2012. In 2013, we sold all of our shares of Clean Energy Fuels Corp.
(Clean Energy) for cash proceeds of $13 million. We also sold our $100 million investment in Clean Energy convertible
notes for cash proceeds of $85 million. We recorded a $15 million loss related to the sale of the Clean Energy convertible
notes and a $3 million gain related to the sale of the Clean Energy common stock. In addition, in 2013 we sold a $1
million equity investment for cash proceeds of $6 million and recorded a $5 million gain. In 2012, we sold all of our
common and subordinated units representing limited partner interests in ACMP and all of our limited liability company
interests in the sole member of its general partner for cash proceeds of $2.0 billion. We recorded a $1.032 billion pre-
tax gain associated with the transaction. Also in 2012, we sold our investment in Glass Mountain Pipeline, LLC for
cash proceeds of $99 million. We recorded a $62 million gain associated with the transaction.
Losses on Purchases of Debt and Extinguishment of Other Financing. We recorded losses on purchases of debt
and extinguishment of other financing of $193 million in 2013, $200 million in 2012 and $176 million in 2011. In 2013,
we terminated the financing master lease agreement on our real estate surface properties in the Fort Worth, Texas
area for $258 million and recorded a loss of approximately $123 million associated with the extinguishment. Also, in