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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
94
the cases includes claims of intentional interference with contractual relations and violations of antitrust laws.
Uncertainties in pending royalty cases generally include the complex nature of the claims and defenses, the potential
size of the class in class actions, the scope and types of the properties and agreements involved, and the applicable
production years.
Based on management’s current assessment, we are of the opinion that no pending or threatened lawsuit or
dispute relating to the Company’s business operations is likely to have a material adverse effect on its future consolidated
financial position, results of operations or cash flows. The final resolution of such matters could exceed amounts
accrued, however, and actual results could differ materially from management’s estimates.
Environmental Contingencies
The nature of the oil and gas business carries with it certain environmental risks for Chesapeake and its
subsidiaries. Chesapeake has implemented various policies, procedures, training and auditing to reduce and mitigate
such environmental risks. Chesapeake conducts periodic reviews, on a company-wide basis, to assess changes in
our environmental risk profile. Environmental reserves are established for environmental liabilities for which economic
losses are probable and reasonably estimable. We manage our exposure to environmental liabilities in acquisitions
by using an evaluation process that seeks to identify pre-existing contamination or compliance concerns and address
the potential liability. Depending on the extent of an identified environmental concern, Chesapeake may, among other
things, exclude a property from the transaction, require the seller to remediate the property to our satisfaction in an
acquisition or agree to assume liability for the remediation of the property.
Commitments
Operating Leases
Future operating lease commitments related to other property and equipment are not recorded in the accompanying
consolidated balance sheets. The aggregate undiscounted minimum future lease payments are presented below.
December 31,
2014
($ in millions)
2015 $ 5
2016 4
2017 1
2018 1
Total $ 11
Lease expense for the years ended December 31, 2014, 2013 and 2012 was $33 million, $158 million and $185
million, respectively. Lease expense decreased significantly in 2014 primarily due to the repurchase of all rigs and
compressors previously sold under long-term sale-leaseback arrangements.
Gathering, Processing and Transportation Agreements
We have contractual commitments with midstream service companies and pipeline carriers for future gathering,
processing and transportation of natural gas and liquids to move certain of our production to market. Working interest
owners and royalty interest owners, where appropriate, will be responsible for their proportionate share of these costs.
Commitments related to gathering, processing and transportation agreements are not recorded in the accompanying
consolidated balance sheets; however, they are reflected as adjustments to oil, natural gas and NGL sales prices used
in our proved reserves estimates.