Chesapeake Energy 2014 Annual Report Download - page 56

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In 2013, we used a portion of the net proceeds of $2.274 billion from senior notes offerings to repay outstanding
indebtedness under our revolving credit facility and purchase certain senior notes. We purchased $217 million in
aggregate principal amount of our 7.625% Senior Notes due 2013 for $221 million and $377 million in aggregate
principal amount of our 6.875% Senior Notes due 2018 for $405 million pursuant to tender offers during 2013. During
2013, we also redeemed $1.3 billion in aggregate principal amount of our 6.775% Senior Notes due 2019 (the 2019
Notes) at par pursuant to notice of special early redemption. This redemption is subject to litigation. See Note 3 of the
notes to our consolidated financial statements included in Item 8 of this report for discussion of the litigation. On July
15, 2013, we retired at maturity the remaining $247 million aggregate principal amount outstanding of our 7.625%
Senior Notes due 2013.
In late 2012, we fully repaid the $4.0 billion term loan that we established in May 2012 with cash proceeds from
asset sales and proceeds from the issuance of the $2.0 billion term loan that we established in November 2012.
In 2014, 2013 and 2012, we purchased rigs and compressors previously sold under long-term lease arrangements
for approximately $499 million, $240 million and $36 million, respectively, as part of a strategic initiative to reduce
complexity and future commitments as well as to facilitate asset sales and the spin-off of SSE.
We paid dividends on our common stock of $234 million, $233 million and $227 million in 2014, 2013 and 2012,
respectively. We paid dividends on our preferred stock of $171 million in each of 2014, 2013 and 2012.
Revolving Credit Facility
In December 2014, we entered into a new $4.0 billion senior unsecured revolving credit facility that matures in
December 2019. As of December 31, 2014, we had no outstanding borrowings under the facility and utilized $15 million
of the facility for various letters of credit. Borrowings under the facility bear interest at a variable rate. The applicable
interest rates under the facility fluctuate based on our credit ratings. We would be required to post collateral in the
event of a downgrade of our credit ratings to specified levels. The financial covenants require us to maintain, as of the
last day of each fiscal quarter, (i) a net debt to capitalization ratio (as defined in the credit agreement) that does not
exceed 65%, and (ii) a leverage ratio (net debt to consolidated EBITDA, as defined in the credit agreement) that does
not exceed 4.0 to 1.0; provided, however, that the leverage ratio will not apply during any period in which our credit
ratings, as determined by either Moody’s Investors Services, Inc. or Standard & Poor’s Ratings Services, meet and
continue to meet certain investment grade thresholds, as defined in the credit agreement. As of December 31, 2014,
our net debt to capitalization ratio was approximately 0.31 to 1.0, and our leverage ratio was approximately 1.55 to
1.0. We were in compliance with all financial covenants under the credit agreement as of December 31, 2014. See
Note 3 of the notes to our consolidated financial statements included in Item 8 of this report for further discussion of
the terms of the credit facility.
Hedging Facility
We have a multi-counterparty secured hedging facility with 17 counterparties that have committed to provide
approximately 1.031 bboe of hedging capacity for oil, natural gas and NGL price derivatives and 1.031 bboe for basis
derivatives with an aggregate mark-to-market capacity of $16.5 billion. For further discussion of the terms of the hedging
facility, see Note 11 of the notes to our consolidated financial statements included in Item 8 of this report.