Chesapeake Energy 2015 Annual Report Download - page 46

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Overview
For an overview of our business and strategy, please see Our Business and Business Strategy in Item 1 of this
report.
Operating Results
Our 2015 production of 248 mmboe consisted of 42 mmbbls of oil (17% on an oil equivalent basis), 1.1 tcf of
natural gas (72% on an oil equivalent basis), and 28 mmbbls of NGL (11% on an oil equivalent basis). Our daily
production for 2015 averaged approximately 679 mboe, a decrease of 4% from 2014. Compared to 2014, average
daily oil production decreased by 2%, or approximately 2 mbbls per day; average daily natural gas production decreased
by 2%, or approximately 69 mmcf per day; and average daily NGL production decreased by 15%, or approximately
14 mbbls per day. Our natural gas and NGL production decreased primarily as a result of the sales of certain of our
Cleveland and Tonkawa assets in August 2015 and southern Marcellus Shale and Utica Shale assets in December
2014. In addition, our natural gas production decreased due to shut-in volume from our curtailment in the Marcellus
and Utica Shales. Adjusted for asset sales, our total daily production increased 8% in 2015 compared to 2014. Our
oil, natural gas and NGL revenues (excluding gains or losses on oil and natural gas derivatives) decreased approximately
$4.570 billion to $4.767 billion in 2015 compared to $9.336 billion in 2014, primarily due to significant decreases in the
prices received for oil, natural gas and NGL sold. See Results of Operations below for additional details.
Capital Expenditures
Our drilling and completion capital expenditures during 2015 were approximately $3.0 billion and capital
expenditures for the acquisition of unproved properties, geological and geophysical costs and other property and
equipment were approximately $231 million, for a total of approximately $3.2 billion. In 2015, we operated an average
of 28 rigs, a decrease of 36 rigs, or 56%, compared to 2014. As a result of lower drilling and completion activity, partially
offset by a reduction in drilling carries received from our joint venture partners, drilling and completion expenditures
decreased approximately $1.5 billion in 2015 compared to 2014. The level of capital expenditures for the acquisition
of unproved properties, geological and geophysical costs and other property and equipment decreased approximately
$438 million compared to 2014. The reduction is primarily the result of the elimination of capital expenditures for our
former oilfield services business which was spun off in June 2014. In 2014, we also purchased rigs and compressors
previously sold under long-term lease arrangements for approximately $499 million as part of a strategic initiative to
reduce complexity and future commitments as well as to facilitate asset sales and the spin-off of our oilfield services
business. In 2014, we also invested approximately $450 million in our Powder River Basin Property exchange. See
Note 12 of the notes to our consolidated financial statements included in Item 8 of this report for details regarding the
transaction.
Our capitalized interest was approximately $424 million and $637 million in 2015 and 2014, respectively. Including
capitalized interest, total capital investments were approximately $3.6 billion in 2015 compared to $6.7 billion for 2014,
a decrease of 46%.
Based on planned activity levels for 2016, we project that capital expenditures for drilling and completion, leasehold,
geological and geophysical and other property and equipment will be $1.3 billion to $1.8 billion, inclusive of capitalized
interest. The decrease from the $3.6 billion spent in 2015 is primarily driven by reduced activity as a result of continued
lower forecasted oil and natural gas prices in 2016. See Liquidity and Capital Resources for additional information on
how we plan to fund our capital budget.