Chesapeake Energy 2014 Annual Report Download - page 6
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4CHESAPEAKE ENERGY CORPORATION
Q: Why was the southern Marcellus and eastern Utica divestiture such an important
step for Chesapeake?
A: This was one of the largest and most signicant transactions in company history.
It provided us with approximately $5 billion in cash and substantial exibility for
the future. At the time, the divested assets comprised just 8% of total proved
reserves, and the proceeds equaled 40% of Chesapeake’s market capitalization,
further demonstrating the strength of our industry-leading, high-quality portfolio.
Q: How will the additional working interest in the Powder River Basin benet operations?
A: Our acquisition of RKI’s acreage in the Powder River Basin’s southern portion con-
solidated our position, doubled our working interest and immediately added net
incremental production of approximately 4,500 boe per day. In addition to increasing
the Niobrara oil potential, the transaction offered incremental access to ve stacked
oil pay zones, or Upper Cretaceous formations, which increased our potentially recov-
erable gross resources to more than 2 billion boe in Wyoming’s Powder River Basin.
Q: What was the signicance of achieving the $4 billion unsecured credit facility in
December?
A: For the rst time in company history, Chesapeake entered into an unsecured credit
facility with investment grade-like terms. Previously, we had to provide proved reserves
as security, which tied up assets, added complexity to our business and involved rigid,
inexible terms. Closing on this type of facility could not have happened without our
employees’ outstanding commitment to nancial discipline, which resulted in a dra-
matically improved balance sheet by the end of 2014. Combined with the proceeds
from our southern Marcellus and eastern Utica divestiture and our $5.5 billion re-
duction in leverage since 2012, the new credit facility provides us with a signicant
amount of liquidity and exibility.
Q: What has the spin-off of Seventy Seven Energy allowed Chesapeake to accomplish?
A: Spinning off Seventy Seven Energy into its own company allowed us to focus our
resources on our core E&P operations, support our business strategy of reducing
leverage and complexity, and unlock shareholder value that was tied to our oileld
services business. Since the spin-off, Chesapeake has become a much more efcient
and less complex organization.
2014 was a foundational year for Chesapeake, with record achievements across the
company. CEO Doug Lawler discusses the significance of these key accomplishments.
One of our
most significant
asset sales in
company history
provided us
with ~$5 billion
in cash and
substantial
flexibility for
the future.
Q&A WITH CEO DOUG LAWLER