Chesapeake Energy 2014 Annual Report Download - page 39

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Negative public perception regarding us and/or our industry could have an adverse effect on our
operations.
Negative public perception regarding us and/or our industry resulting from, among other things, concerns raised
by advocacy groups about hydraulic fracturing, oil spills, and explosions of natural gas transmission lines may lead to
increased regulatory scrutiny, which may, in turn, lead to new state and federal safety and environmental laws,
regulations, guidelines and enforcement interpretations. These actions may cause operational delays or restrictions,
increased operating costs, additional regulatory burdens and increased risk of litigation. Moreover, governmental
authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in
the permitting process, including through intervention in the courts. Negative public perception could cause the permits
we need to conduct our operations to be withheld, delayed, or burdened by requirements that restrict our ability to
profitably conduct our business.
We have limited control over the activities on properties we do not operate.
Other companies operate some of the properties in which we have an interest. For the year ended December
31, 2014, we did not operate approximately 10% of our daily production volumes. We have limited ability to influence
or control the operation or future development of these non-operated properties, including compliance with
environmental, safety and other regulations, or the amount of capital expenditures that we are required to fund with
respect to them. The failure of an operator of our wells to adequately perform operations, an operator's breach of the
applicable agreements or an operator's failure to act in ways that are in our best interest could reduce our production
and revenues. Our dependence on the operator and other working interest owners for these projects and our limited
ability to influence or control the operation and future development of these properties could materially adversely affect
the realization of our targeted returns on capital in drilling or acquisition activities and lead to unexpected future costs.
Our operations may be adversely affected by pipeline and gathering system capacity constraints and
various transportation interruptions.
In certain shale plays, the capacity of gathering systems and transportation pipelines is insufficient to accommodate
potential production from existing and new wells. We rely heavily on third parties to meet our oil, natural gas and NGL
gathering needs. Capital constraints could limit the construction of new pipelines and gathering systems by third parties,
and we may experience delays in building intrastate gathering systems necessary to transport our natural gas to
interstate pipelines. Until this new capacity is available, we may experience delays in producing and selling our oil,
natural gas and NGL. In such event, we might have to shut in our wells awaiting a pipeline connection or capacity and/
or sell oil, natural gas or NGL production at significantly lower prices than those quoted on NYMEX or than we currently
project, which would adversely affect our results of operations.
A portion of our oil, natural gas and NGL production in any region may be interrupted, or shut in, from time to time
for numerous reasons, including weather conditions, accidents, loss of pipeline or gathering system access, field labor
issues or strikes, or we might voluntarily curtail production in response to market conditions. If a substantial amount
of our production is interrupted at the same time, it could adversely affect our cash flow.
Cyber attacks targeting systems and infrastructure used by the oil and gas industry may adversely impact
our operations.
Our business has become increasingly dependent on digital technologies to conduct certain exploration,
development and production activities. We depend on digital technology to estimate quantities of oil, natural gas and
NGL reserves, process and record financial and operating data, analyze seismic and drilling information, and
communicate with our employees and third-party partners. We have been the subject of cyber attacks on our internal
systems and through those of third parties, but these incidents did not have a material adverse impact on our results
of operations. Nevertheless, unauthorized access to our seismic data, reserves information or other proprietary or
commercially sensitive information could lead to data corruption, communication interruption, or other disruptions in
our exploration or production operations or planned business transactions, any of which could have a material adverse
impact on our results of operations. Further, as cyber attacks continue to evolve, we may be required to expend
significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate
any vulnerabilities to cyber attacks.