Chesapeake Energy 2014 Annual Report Download - page 130

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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2012 Transactions
We sold the vast majority of our Permian Basin assets, representing approximately 6% of our total proved reserves
as of June 30, 2012, in three separate transactions for total net cash proceeds of approximately $3.091 billion. Following
the closing, we received $466 million of additional consideration that was withheld subject to certain title, environmental
and other standard contingencies. Of the total proceeds, we allocated approximately $42 million to our Permian Basin
midstream and other fixed assets. The remaining proceeds were allocated to our Permian Basin oil and natural gas
properties.
We sold approximately 40,000 net acres of noncore leasehold in the Chitwood Knox play in Oklahoma for
approximately $540 million in cash.
We sold approximately 72,000 net acres of noncore leasehold in the Utica Shale play in Ohio to affiliates of
EnerVest, Ltd. for approximately $358 million in cash.
We sold approximately 60,000 net acres of leasehold in the Texoma Woodford play in Oklahoma to XTO Energy
Inc., a subsidiary of Exxon Mobil Corporation, for net proceeds of approximately $572 million.
Joint Ventures
Between July 2008 and June 2013, we entered into eight significant joint ventures with other leading energy
companies including Sinopec International Petroleum Exploration and Production (Sinopec), Total S.A. (Total), CNOOC
Limited, Statoil, BP America and Freeport-McMoRan Copper & Gold (formerly known as Plains Exploration & Production
Company), pursuant to which we sold portions ranging from 20% to 50% of certain leasehold, producing properties
and other assets located in eight different resource plays. In return, we received aggregate cash proceeds of $8.0
billion and commitments by our joint venture partners to pay, in the aggregate, our share of future drilling and completion
costs of $9.0 billion. In each of these joint ventures, Chesapeake serves as the operator and conducts all drilling,
completion and operations, the majority of leasing and, in certain transactions, marketing activities for the project. Each
joint venture partner is responsible for its proportionate share of drilling and completion costs as a working interest
owner and, if applicable, pays a specified percentage of our drilling and completion costs in designated wells. As of
December 31, 2014, we had utilized all drilling carries from our joint venture partners except for Total’s remaining $51
million commitment to pay 60% of our drilling and completion costs for wells drilled in the Utica Shale play. We fully
expect to use this drilling carry commitment prior to its expiration in December 2018.
In 2014, 2013 and 2012, our drilling and completion costs included the benefit of approximately $679 million,
$884 million and $784 million, respectively, in drilling and completion carries paid by our joint venture partners.
In 2013, we entered into a joint venture with Sinopec in which Sinopec purchased a 50% undivided interest in
approximately 850,000 acres in the Mississippian Lime play in northern Oklahoma for $1.11 billion, including $90 million
we received for closing adjustments and $71 million placed in escrow with respect to certain post-closing adjustments.
As of December 31, 2014, we had received $64 million of the $71 million held in escrow. There was no drilling and
completion carry associated with this transaction.
In addition, in 2014, 2013 and 2012, we sold interests in additional leasehold we acquired in the Marcellus,
Barnett, Utica, Eagle Ford and Mid-Continent plays to our joint venture partners for approximately $33 million, $58
million and $272 million, respectively.