Chesapeake Energy 2015 Annual Report Download - page 34

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Oil and natural gas drilling and producing operations can be hazardous and may expose us to liabilities.
Oil and natural gas operations are subject to many risks, including well blowouts, cratering and explosions, pipe
failures, fires, formations with abnormal pressures, uncontrollable flows of oil, natural gas, brine or well fluids, oil spills,
severe weather, natural disasters, groundwater contamination and other environmental hazards and risks. Some of
these risks or hazards could materially and adversely affect our revenues and expenses by reducing or shutting in
production from wells, loss of equipment or otherwise negatively impacting the projected economic performance of
our prospects. If any of these risks occurs, we could sustain substantial losses as a result of:
• injury or loss of life;
• severe damage to or destruction of property, natural resources or equipment;
• pollution or other environmental damage;
• clean-up responsibilities;
• regulatory investigations and administrative, civil and criminal penalties; and
• injunctions resulting in limitation or suspension of operations.
For our non-operated properties, we are dependent on the operator for operational and regulatory compliance.
Our midstream and compression operations are subject to all of the risks and operational hazards inherent in
transporting oil and natural gas and natural gas compression, including:
• damages to pipelines, facilities and surrounding properties caused by third parties, severe weather, natural
disasters, including hurricanes, and acts of terrorism;
• maintenance, repairs, mechanical or structural failures;
• damages to, loss of availability of and delays in gaining access to interconnecting third-party pipeline;
• disruption or failure of information technology systems and network infrastructure due to various causes,
including unauthorized access or attack; and
• leaks of oil or natural gas as a result of the malfunction of equipment or facilities.
A material event such as those described above could expose us to liabilities, monetary penalties or interruptions in
our business operations. While we may maintain insurance against some, but not all, of the risks described above,
our insurance may not be adequate to cover casualty losses or liabilities, and our insurance does not cover penalties
or fines that may be assessed by a governmental authority. For certain risks, such as political risk, business interruption,
war, terrorism and piracy, we have limited or no insurance coverage. Also, in the future we may not be able to obtain
insurance at premium levels that justify its purchase. The occurrence of a significant event against which we are not
fully insured may expose us to liabilities.
We are subject to complex laws and regulations relating to environmental protection that can adversely
affect the cost, manner and feasibility of doing business, and further regulation in the future could increase
costs, impose additional operating restrictions and cause delays.
Our operations and properties are subject to numerous federal, regional, state and local laws and regulations
governing the release of pollutants or otherwise relating to environmental protection. These laws and regulations govern
the following, among other things:
• conduct of our exploration, drilling, completion, production and midstream activities;
• amounts and types of emissions and discharges;
• generation, management, and disposition of hazardous substances and waste materials;
• reclamation and abandonment of wells and facility sites; and
• remediation of contaminated sites.
In addition, these laws and regulations may impose substantial liabilities for our failure to comply or for any
contamination resulting from our operations, including the assessment of administrative, civil and criminal penalties;
the imposition of investigatory, remedial, and corrective action obligations or the incurrence of capital expenditures;
the occurrence of delays in the development of projects; and the issuance of injunctions restricting or prohibiting some
or all of the Company’s activities in a particular area. Future environmental laws and regulations imposing further
restrictions on the emission of pollutants into the air, discharges into state or U.S. waters and hydraulic fracturing, or