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August 2014 Investor Presentation – Chesapeake Energy Corp

Chesapeake Energy Corp · Aug 6, 2014 · 39 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 1
    INVESTOR PRESENTATION LAST UPDATED AUGUST 6, 2014
  2. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 2
    2Q14 FINANCIAL RESULTS ADJ. EARNINGS/FDS ADJ. EBITDA PROD. and G&A EXP. 29% YOY 10% YOY 8% YOY 0.36(1) 1.3 billion(1) 5.89/boe(2) LIQUIDITY 1H14 ASSET SALES TOTAL CAPEX 5.4 billion (3) 1.2 billion (4) 27% YOY 1.3…
  3. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 3
    2Q14 OPERATIONAL RESULTS TOTAL ADJ. PROD. LIQUIDS MIX ADJ. OIL PROD. 13% YOY (1) to 28% of Total Production(2) 12% YOY (1) 695 mboe/d 25% in 2Q13 113.4 mbbls/d ADJ. NGL PROD. ADJ. GAS PROD. 72% YOY (1) 7% YOY (1)…
  4. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 4
    2Q14 LEVERAGE REDUCTION 11,965 (1,270) in mm 1,455 (255) 10,085 (1,135) (365) (310) (1) (1) Cash and equivalents increased 460 mm to 1.5 B at 6/30/14 Long-term debt, net of cash and discounts decreased 1.9 B to…
  5. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 5
    RKI ACREAGE SWAP AND UTICA REPURCHASE FUNDED WITH CASH AND ASSET SALE PROCEEDS 1,462 Pro forma cash balance 450 mm in mm 155 (1,260) 250 295 (450) (1) CHK 6/30/14 pro forma unrestricted cash position, including…
  6. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 6
    CAPITAL DISCIPLINE 14.2 in billions 7.6 5.8 5.8 (1) (1) (1) 2014 based on midpoint of company Outlook issued on 8/6/2014; capex includes capitalized interest; 2015 estimate midpoint provided at Analyst Day 7 I…
  7. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 7
    TRANSFORMING OUR BUSINESS Organizational structure Portfolio management and capital allocation process Decision rights Corporate budget process and plan Focus on capital efficiency Performance measurement and Cash cost…
  8. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 8
    APPLYING OUR BUSINESS STRATEGIES Balance capital expenditures with Develop world-class inventory cash flow from operations Target top-quartile operating and Divest noncore assets and financial metrics noncore affiliates Pursue…
  9. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 9
    FOUNDATIONAL ELEMENTS FOR VALUE CREATION CHK 10 I INVESTOR PRESENTATION AUGUST 6, 2014
  10. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 10
    NET ASSET VALUE AND UPSIDE POTENTIAL CHK 40 NAV/share(1) (1) Based on commodity prices of 4.50/mcf and 90.00/bbl for natural gas and oil, respectively, 20,000 risked drilling locations, net debt, NCI and other liabilities…
  11. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 11
    EAGLE FORD ASSET OVERVIEW 449,000 net acres 1.2 bboe of net recoverable resources 61% avg. WI, 46% avg. NRI 2Q14 avg. net production of 91 mboe/d Up 15% YOY, adjusted for asset sales More than 101 mboe/d during last week of July…
  12. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 12
    EAGLE FORD CONTINUOUS IMPROVEMENT Spud to completion ratio of 1:1 Substantial cycle-time improvements Testing new completion designs to lower cost and not impact performance Continuing to upgrade rig fleet 95% Multiwell pad…
  13. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 13
    MID-CONTINENT ASSET OVERVIEW 500 mmboe of net recoverable resources in Miss Lime 195,000 net acres 350 mmboe of net recoverable resources 44% avg. WI, 36% avg. NRI in Granite Wash plays(1) 2Q14 avg. net production of 98 mboe/d…
  14. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 14
    HAYNESVILLE ASSET OVERVIEW 10 tcfe of net recoverable resources 2Q14 avg. net production of 508 mmcfe/d Up 26% YOY, adjusted for asset sales Averaged 8 operated rigs and connected 13 gross wells in 2Q14 8.9 bcfe gross EUR per…
  15. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 15
    HAYNESVILLE ECONOMICS Rate of Return(1) 100% Unburdened ROR in Haynesville Cost control measures and improving natural gas prices drive stronger returns ROR exceeds 100% when considering minimum volume commitment (MVC) and…
  16. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 16
    UTICA ASSET OVERVIEW 4+ bboe of net recoverable resources 2Q14 avg. net production of 67 mboe/d Up 373% YOY and 34% sequentially Averaged 8 operated rigs and connected 48 gross wells in 2Q14 CHK/TOT JV Outline Over 1 million…
  17. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 17
    CORE EXPANSION IN UTICA: UNLOCKING THE OIL WINDOW 500 barrels oil Recent oil IPs (old completion design) Oil Window Test Area 1,000 boe/d Recent full-stream IPs (old completion design) Leveraging proprietary Reservoir…
  18. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 18
    CORE EXPANSION IN UTICA: DRY GAS OPPORTUNITY 6.7 Mmcf/d 6.1 Mmcf/d 5.1 Mmcf/d 7.1 Mmcf/d 330,000 acres 5.1 Q2Mmcf/d 12 Net, dry gas acres in Jefferson County, OH and W.V. 5.9 Mmcf/d 5.9 Mmcf/d Q1 12 6.9 Mmcf/d 6.9 Mmcf/d…
  19. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 19
    MOST EFFICIENT OPERATOR IN UTICA Drill Days (Spud to TD) Days Avg. Capex per Lateral Ft. 11.8 mm/well M / Lateral Ft 6.7 mm/well 7.4 mm/well Rate of Return % CHK Operated Non-Operated CHK Leasehold ROR % Oil…
  20. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 20
    UTICA CONTINUOUS IMPROVEMENT Avg. Well Cost ( in mm) Spud to Spud Cycle Times (days) 1.4 mm in reinvested capital E Focused on continuous improvement in 2014 2.2 miles Record for longest useable lateral drilled Avg.…
  21. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 21
    CASH FLOW GROWTH IN UTICA 400% 300% 30 - 60% YOY production growth YOY production growth YOY production growth (2012 to 2013) (2013 to 2014E) (2014E to 2015E) 120 Key 2014 Milestones NGL 100 2Q14 Avg. Production 67,000 boe/d…
  22. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 22
    NORTHERN MARCELLUS ASSET OVERVIEW 9 tcfe of net recoverable resources 230,000+ net acres(1) 39% avg. WI, 34% avg. NRI 2Q14 avg. net production of 878 mmcfe/d Up 12% YOY Averaged 6 operated rigs and connected 21 gross wells in…
  23. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 23
    NORTHERN MARCELLUS DRIVING VALUE Value Creation, M 1 million 2014 savings reinvested into completions optimization 55% ROR on reinvested capital 16,000 Gross Daily Production Rates 14,000 12,000 10,000 Gas…
  24. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 24
    NORTHERN MARCELLUS IMPACT OF HOLDING PRODUCTION FLAT 300 mm - 5 rigs 4 - 7 billion Net capital required per year to hold gross Cumulative net FCF over production flat at 2.2 bcf/d the next 10 years Assumes 4.00 and 5.00 NYMEX…
  25. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 25
    SOUTHERN MARCELLUS ASSET OVERVIEW 2.7 bboe of net recoverable resources 250,000+ net acres 68% avg. WI, 57% avg. NRI 2Q14 avg. net production of 58 mboe/d Up 67% YOY Averaged 1 operated rig and connected 9 gross wells in 2Q14…
  26. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 26
    SOUTHERN MARCELLUS VALUE AND GROWTH OPPORTUNITY Potential to unlock significant value Combination of dry gas Utica and liquids-rich S. Marcellus acreage Annual organic growth potential 50% Ramp activity into expanding…
  27. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 27
    POWDER RIVER BASIN INCREASING EXPOSURE IN A WORLD CLASS OIL PLAY CHK and RKI Exploration & Production, LLC (RKI) announced an agreement to exchange non operated interests in the Powder River Basin (PRB) Increases CHKs holdings by…
  28. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 28
    POWDER RIVER BASIN RKI ACREAGE EXCHANGE Pre-transaction Post-transaction CHK Avg. Working Interest = 38% CHK Avg. Working Interest = 79% RKI Operated CHK Operated CHK Operated Rigs CHK Leasehold Pre-transaction…
  29. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 29
    SOUTHERN PRB RESOURCE POTENTIAL Gross Recoverable Resources of 2.0 bboe Niobrara 1,500 mmboe % Recoverable Resources by Formation 50% to 70% oil/condensate Estimated 45 - 60 API gravity Upper Cretaceous(1) 28% 325 mmboe 75%…
  30. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 30
    NIOBRARA CONTINUOUSLY IMPROVING ECONOMICS D&C and ROR (%) Cost/Ft. and Lateral Length +20% EUR Targeting avg. rate of return in excess of 40% Cycle times / drilling cost per ft. continue to decline Increasing lateral…
  31. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 31
    SUCCESSFUL SUSSEX DELINEATION AND ADDITIONAL UPPER CRETACEOUS TESTS RKI Operated Near-term activity Sussex III 6 Sussex spuds in 2H14 III Peak 24 Hr. Rate: 877 bbls oil, 35 bbls NGL, 0.5 mmcf 1 Parkman test 4Q14 Drilled…
  32. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 32
    SENIOR NOTE PROFILE Sr. Debt: 11.8 billion Convertibles 6/30/2014 WACD 5.0% Other Senior Notes 2,299 Avg. Maturity: 5.4 years 1,800 1,700 1,500 1,500 1,100 1,015 500 396 0 2014 2015 2016 2017 2018 2019 2020 2021…
  33. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 33
    CHKS HEDGING STRATEGY INCREASES CASH FLOW CERTAINTY IN 2014 Natural Gas Oil 69% 65% 41% Swaps 4.09/mcf NYMEX 24% 94.25/bbl Three-Way NYMEX Collars 4.50-5.24/mcf NYMEX 4.10 - 4.37/mcf NYMEX Ensures delivery of…
  34. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 34
    NE MARCELLUS SALES POINTS AND BASIS HEDGES Estimated Apr. - Oct 14 NE Sales Points 1Q14A Apr. Oct. 14 Apr. Oct. 14 Hedged Volumes Diff. to HH Basis Hedges (mmcf/d) 9% Tetco M3/TCO z6 (NYC) Tetco M3/Transco z6 NYC 3.25 (0.62) 240…
  35. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 35
    UTICA AND SOUTHERN MARCELLUS SALES POINTS Estimated Apr. Oct. 14 Sales Points Estimated 2015 Sales Points 6% TGP Zn1 500L (Gulf Coast) 8% TGP Zn1 500L (Gulf Coast) 10% Dominion South Point 13% 30% Tetco WLA (Gulf Coast) 6% 39%…
  36. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 36
    ADJUSTED PRODUCTION GROWTH Asset Sale Adjustments (mmboe) 239 - 246 244 (13.1) (10.9) 220 2013 2013 E&P 2014 E&P 2013 2014E Reported Sales Sales Adjusted Adjusted Production Production Production 2014E 2013 2013…
  37. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 37
    RECONCILIATION ( in mm, except per share data) Three Months Ended: 6/30/2014 6/30/2013 Net income available to common stockholders 145 457 Adjustments, net of tax: Unrealized (gains) losses on derivatives (19) (325) Restructuring…
  38. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 38
    RECONCILIATION ( in mm) Three Months Ended: 6/30/2014 6/30/2013 Cash provided by operating activities 1,352 1,281 Changes in assets and liabilities (83) 85 (1) Operating cash flow 1,269 1,366 Net income 230 625 Interest expense…
  39. August 2014 Investor Presentation – Chesapeake Energy Corp – slide 39
    CORPORATE INFORMATION CHESAPEAKE HEADQUARTERS PUBLICLY TRADED SECURITIES CUSIP TICKER 3.25% Senior Notes due 2016 165167CJ4 CHK16 6100 N. Western Avenue 6.25% Senior Notes due 2017 027393390 N/A Oklahoma City, OK 73118 6.50% Senior…

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