Chesapeake Energy 2014 Annual Report Download - page 75

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67
The table below reconciles the changes in fair value of our oil and natural gas derivatives during the year ended
2014. Of the $721 million fair value asset as of December 31, 2014, an $868 million asset relates to contracts maturing
in the next 12 months and a $147 million liability relates to contracts maturing after 12 months. All open derivative
instruments as of December 31, 2014 are expected to mature by December 31, 2022.
December 31,
2014
($ in millions)
Fair value of contracts outstanding, as of January 1 $ (551)
Change in fair value of contracts 1,054
Fair value of new contracts when entered into —
Contracts realized or otherwise settled 202
Fair value of contracts when closed 16
Fair value of contracts outstanding, as of December 31 $ 721
The change in oil and natural gas prices during the year ended December 31, 2014 decreased the liability related
to our derivative instruments by $1.0 billion. This unrealized gain is recorded in oil, natural gas and NGL sales. We
settled contracts in 2014 that were in a liability position for $202 million. The realized losses will be recorded in oil,
natural gas and NGL sales in the month of related production. We terminated contracts that were in a liability position
for $16 million. The realized gain is recorded in oil, natural gas and NGL sales in the month of related production.
Interest Rate Derivatives
The table below presents principal cash flows and related weighted average interest rates by expected maturity
dates, using the earliest demand repurchase date for contingent convertible senior notes. As of December 31, 2014,
we had total debt of $11.8 billion, including $10.3 billion of fixed rate debt at interest rates averaging 5.24% and $1.5
billion of floating rate debt at an interest rate of 3.48% (three-month LIBOR plus 3.25%).
Years of Maturity
2015 2016 2017 2018 2019 Thereafter Total
($ in millions)
Liabilities:
Debt – fixed rate(a) $ 396 $ 500 $ 2,244 $ 1,016 $ — $ 6,100 $ 10,256
Average interest rate 2.75% 3.25% 4.37% 5.54% —% 5.83% 5.24%
Debt – variable rate $ — $ — $ — $ — $ 1,500 $ — $ 1,500
Average interest rate —% —% —% —% 3.48% —% 3.48%
___________________________________________
(a) This amount does not include the discount included in debt of $231 million and interest rate derivatives of $10
million.
Changes in interest rates affect the amount of interest we earn on our cash, cash equivalents and short-term
investments and the interest rate we pay on borrowings under our revolving credit facility and our floating rate senior
notes. All of our other indebtedness is fixed rate and, therefore, does not expose us to the risk of fluctuations in earnings
or cash flow due to changes in market interest rates. However, changes in interest rates do affect the fair value of our
fixed-rate debt.