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11
Most of our leases have a three- to five-year primary term, and we manage lease expirations to ensure that we
do not experience unintended material expirations. Our leasehold management efforts include scheduling our drilling
to establish production in paying quantities in order to hold leases by production, timely exercising our contractual
rights to pay delay rentals to extend the terms of leases we value, planning noncore divestitures to high-grade our
lease inventory and letting some leases expire that are no longer part of our development plans. The following table
sets forth as of December 31, 2014 the expiration periods of gross and net undeveloped leasehold acres.
Acres Expiring
Gross
Acres Net
Acres
(in thousands)
Years Ending December 31:
2015 1,820 1,058
2016 1,703 1,105
2017 1,083 722
After 2017 3,341 1,829
Total(a) 7,947 4,714
___________________________________________
(a) Includes 1.873 million gross (976,000 net) held-by-production acres that will remain in force as our production
continues on the subject leases, and other leasehold acreage where management anticipates the lease to remain
in effect past the primary term of the agreement due to our contractual option to extend the lease term.
Marketing, Gathering and Compression
Our marketing activities, along with our midstream gathering and compression operations, constitute a reportable
segment under accounting guidance for disclosure about segments of an enterprise and related information. See Note
21 of the notes to our consolidated financial statements included in Item 8 of Part II of this report.
Marketing
Chesapeake Energy Marketing, L.L.C., one of our wholly owned subsidiaries, provides oil, natural gas and NGL
marketing services, including commodity price structuring, securing and negotiating gathering, hauling, processing
and transportation services, contract administration and nomination services for Chesapeake and other interest owners
in Chesapeake-operated wells. We also perform marketing services for third-party producers in wells in which we do
not have an interest. We attempt to enhance the value of oil and natural gas production by aggregating volumes to be
sold to various intermediary markets, end markets and pipelines. This aggregation allows us to attract larger, more
creditworthy customers that in turn assist in maximizing the prices received. In addition, we periodically enter into a
variety of oil, natural gas and NGL purchase and sale contracts with third parties for various commercial purposes,
including credit risk mitigation and to help meet certain of our pipeline delivery commitments.
Oil production is generally sold under market-sensitive short-term or spot price contracts. Natural gas and NGL
production is sold to purchasers under percentage-of-proceeds contracts, percentage-of-index contracts or spot price
contracts. By the terms of the percentage-of-proceeds contracts, we receive a percentage of the resale price received
from the ultimate purchaser. Under percentage-of-index contracts, the price we receive is tied to published indices.
Sales to ExxonMobil Corporation and Plains Marketing, L.P. constituted approximately 12% and 11%, respectively, of
our total revenues (before the effects of hedging) for the years ended December 31, 2014 and 2012, respectively.
There were no sales to individual customers constituting 10% or more of total revenues (before the effects of hedging)
for the year ended December 31, 2013.
Midstream Gathering Operations
Historically, we invested, directly and through affiliates, in gathering systems and processing facilities to
complement our natural gas operations in regions where we had significant production and additional infrastructure
was required. These systems were designed primarily to gather our production for delivery into major intrastate or
interstate pipelines. In addition, our midstream business provided services to joint working interest owners and other
third-party customers. We generated revenues from our gathering, treating and compression activities through various
gathering rate structures. We also processed a portion of our natural gas at various third-party plants.