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October 2012 Investor Presentation – Chesapeake Energy Corp

Chesapeake Energy Corp · Oct 10, 2012 · 45 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. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 1
    October 2012 Investor Presentation OCTOBER 2012 INVESTOR PRESENTATION
  2. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 2
    October 2012 Investor Presentation 2012 = PROFOUND CHANGE AT CHK January 2012: Strategy shift from asset identification and capture to asset harvest; initiated in 2011 now fully under way March 2012: Natural gas prices dropped…
  3. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 3
    October 2012 Investor Presentation BACKGROUND AND BENEFITS OF MOVING TO HARVEST PHASE Over the last seven years CHK has helped lead an unconventional asset revolution, first in natural gas, now in liquids In 2012, CHK moves full…
  4. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 4
    October 2012 Investor Presentation ASSET SALES STRATEGY Goal is to reduce debt and fund conversion of companys asset base from only 10% liquids in 2010 to 35% by 2015 CHK now targeting asset sales of 13-14 billion in 2012 and…
  5. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 5
    October 2012 Investor Presentation AGGRESSIVE SHIFT OF CAPITAL TO LIQUIDS-RICH PLAYS HAS PAID OFF CHK's drilling cap-ex in 2012 is 15%/85% between natural gas plays and liquids-rich plays, respectively Expect to average 100…
  6. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 6
    October 2012 Investor Presentation CHKS FUTURE PRODUCTION GROWTH IS 100% LIQUIDS 130,200 bbls/d in 2Q12 % Liquids 30,000 bbls/d in 1Q09 VPP 8 Curtailments Barnett Fayetteville coming back Total JV Sale and online 2.2…
  7. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 7
    October 2012 Investor Presentation TOP 20 U.S. LIQUIDS PRODUCERS 2011 Reported 2011 Reported Daily U.S. Liquids Proved U.S. Proved U.S. U.S. U.S. U.S. Liquids Rigs Production ( 1) ( 2) 2Q'12 2Q'12 Liquids Liquids Liquids Rigs…
  8. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 8
    October 2012 Investor Presentation TOP 20 U.S. NATURAL GAS PRODUCERS 2011 Reported 2011 Reported Daily U.S. Natural Gas U.S. Net Proved U.S. U.S. U.S. U.S. Gas Rigs Production ( 1) ( 2) 2Q'12 2Q'12 Proved Natural Natural Gas Gas…
  9. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 9
    October 2012 Investor Presentation ONE OF THE BEST LIQUIDS GROWTH STORIES IN THE INDUSTRY U.S. Liquids Growth 2Q11 2Q12 U.S. Liquids Growth 2Q11 2Q12 (mbbls/d) Percentage Growth Absolute Growth Over the past year, CHKs…
  10. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 10
    October 2012 Investor Presentation PREMIER COLLECTION OF U.S. E&P ASSETS
  11. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 11
    October 2012 Investor Presentation CHKS 10 KEY PLAYS Low-risk, U.S. onshore asset base; not exposed to economic, geopolitical or technological risks internationally or in the Gulf of Mexico Once our asset sales are complete we…
  12. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 12
    October 2012 Investor Presentation THE PREMIER COLLECTION OF E&P ASSETS IN THE U.S. During past seven years of Unconventional Resource Revolution in the U.S., CHK captured Americas largest natural gas and liquids resource base 17.4…
  13. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 13
    October 2012 Investor Presentation EAGLE FORD SHALE OVERVIEW CHK is the second-largest leasehold owner in the play with 490,000 net acres CHK has allocated 30% of 2012 and 2013 drilling cap-ex budgets to EFS Net production for…
  14. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 14
    October 2012 Investor Presentation UTICA SHALE OVERVIEW CHK Leasehold Operated Rigs CHKU Outline CHK/TOT JV Outline CHK is largest leasehold owner in the play with more Producing wells Non-operated Rigs Industry Rigs…
  15. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 15
    October 2012 Investor Presentation MISSISSIPPI LIME OVERVIEW CHK Leasehold CHK is largest leasehold owner in the play with 2.0 Operated Rigs mm net acres Non-operated Rigs Industry Rigs Production for 2Q12 averaged 20,000…
  16. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 16
    October 2012 Investor Presentation CLEVELAND, TONKAWA AND HOGSHOOTER OVERVIEW Tonkawa CHK Leasehold Cleveland CHK C-T Operated Rigs CHK owns largest position in combined plays Hogshooter wells Non-operated Rigs Industry Rigs…
  17. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 17
    October 2012 Investor Presentation POWDER RIVER BASIN NIOBRARA OVERVIEW CHK Leasehold Operated Rigs CHK was the early mover and has amassed the largest Industry Rigs leasehold position in the Southern Powder River Basin…
  18. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 18
    October 2012 Investor Presentation FINANCIAL SUMMARY
  19. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 19
    October 2012 Investor Presentation 2012 AND 2013 OUTLOOK SUMMARY 2011 YE 2012E YE 2013E Production Natural gas (bcf) 1,004 1,120 - 1,140 1,030 - 1,070 Oil (mbbls) 16,964 29,000 - 30,000 36,000 - 38,000 NGL (mbbls) 14,712 17,000…
  20. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 20
    October 2012 Investor Presentation 2012 FINANCIAL PROJECTIONS AT VARIOUS NATURAL GAS PRICES As of 08/06/12 Outlook ( in mm; oil at 90 NYMEX) 2.00 3.00 4.00 O/G revenue (unhedged) 1,412 bcfe(1) 4,580 4,950 5,330 Hedging effect(2)…
  21. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 21
    October 2012 Investor Presentation 2013 FINANCIAL PROJECTIONS AT VARIOUS NATURAL GAS PRICES As of 08/06/12 Outlook ( in mm; oil at 90 NYMEX) 3.00 4.00 5.00 O/G revenue (unhedged) 1,422 bcfe(1) 5,640 6,690 7,740 Hedging effect(2)…
  22. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 22
    October 2012 Investor Presentation CASH IN AND OUT SUMMARY YE 2012E YE 2013E Operating cash flow (mm)(1)(2) 3,200 - 3,250 3,750 - 4,750 Well costs on proved and unproved properties (8,000 - 8,500) (5,750 - 6,250) Acquisition…
  23. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 23
    October 2012 Investor Presentation CHK HEDGING PROGRAM BEST IN INDUSTRY We dont hedge just to say were hedged, we hedge to make money. Have successfully done so 24 of the past 26 quarters as realized cash hedging gains since…
  24. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 24
    October 2012 Investor Presentation HEDGING POSITION (1) Natural Gas % of NYMEX Forecasted Natural Gas Production 3Q - 4Q 2012 64% 3.03 2013 --- --- Liquids % of NYMEX Forecasted Oil WTI Production 3Q - 4Q…
  25. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 25
    October 2012 Investor Presentation SUMMARY
  26. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 26
    October 2012 Investor Presentation HISTORICALLY LINKED TO NATURAL GAS, CHK NOW POISED TO BREAK FREE (1) (1) DJIA Oil CHK Natural Gas Source: Bloomberg as of 9/12/2012 (1) Front month prices 27
  27. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 27
    October 2012 Investor Presentation VALUE OPPORTUNITY FOR TODAYS INVESTORS ( in millions except share price) Price per share 15.00 20.00 25.00 (1) Fully diluted common shares 6/30/12 769 769 769 Market capitalization 11,500 15,400…
  28. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 28
    October 2012 Investor Presentation WHY INVEST IN CHK High quality assets CHK has captured Americas largest natural gas and liquids resource base 17.4 tcfe or 2.9 bboe of proved reserves and 15 mm net acres of U.S. onshore…
  29. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 29
    October 2012 Investor Presentation CORPORATE INFORMATION Corporate Contacts: Chesapeake Headquarters Jeffrey L. Mobley, CFA 6100 N. Western Avenue Senior Vice President Oklahoma City, OK 73118 Investor Relations and Research Web…
  30. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 30
    October 2012 Investor Presentation APPENDIX
  31. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 31
    October 2012 Investor Presentation SENIOR NOTE MATURITY SCHEDULE (1) Total Senior Notes: 10.6 billion 2,264 Average Maturity: 6.5 years 1,950 1,800 1,660 1,489 ( in MM) Bank credit facilities with 4.5 billion…
  32. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 32
    October 2012 Investor Presentation VOLUMETRIC PRODUCTION PAYMENTS (VPPS): OVERVIEW
  33. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 33
    October 2012 Investor Presentation VOLUMETRIC PRODUCTION PAYMENTS (VPPS): OVERVIEW A VPP is the sale of an overriding royalty interest in oil and natural gas reserves, carved out of sellers working interest in specified leases, that…
  34. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 34
    October 2012 Investor Presentation SAMPLE VPP PRODUCTION PROFILE VPP Start Date VPP End Date VPP Volumes Tail Volumes In the above example, 160 Bcfe of total reserves are conveyed to VPP buyer over term of…
  35. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 35
    October 2012 Investor Presentation VPPS: BENEFITS TO SELLER/BUYER Seller Buyer Accelerates cash flow from producing Entitled to volumes (revenue) associated with assets at attractive discount rate (low cost generally low-risk…
  36. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 36
    October 2012 Investor Presentation VPPS: RISKS AND RESPONSIBILITIES Seller Buyer Meet prudent operator standard(1) Assumes traditional E&P reserve and Obligated to pay all future operating costs, production risk production taxes…
  37. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 37
    October 2012 Investor Presentation REVIEW OF CHKS VPPS In last 5 years, CHK has completed 10 VPPs raising 6.4 billion at an average implied price of 4.64/mcfe CHK has never had a production shortfall on any of its 10 VPPs ( in…
  38. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 38
    October 2012 Investor Presentation VPP ACCOUNTING CONSIDERATIONS VPP volumes are removed from CHKs PV10 and standardized measure calculations as well as CHKs future production guidance Future operating costs and cap-ex (if any)…
  39. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 39
    October 2012 Investor Presentation MIDSTREAM COMMITMENTS OVERVIEW
  40. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 40
    October 2012 Investor Presentation MIDSTREAM COMMITMENTS CHK has entered into various midstream transportation commitments commensurate with its estimated future production levels and drilling plans Total gross midstream…
  41. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 41
    October 2012 Investor Presentation TOTAL GROSS MIDSTREAM COMMITMENTS Natural gas plays Liquids plays (1) Total commitments as of: Individual year commitments: (1) Pro forma for 6/30/2012 2011-12 Commitments…
  42. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 42
    October 2012 Investor Presentation TOTAL GROSS MIDSTREAM COMMITMENTS BREAKDOWN 43
  43. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 43
    October 2012 Investor Presentation TOTAL COMMITMENTS GROSS VS. NET Gross Commitments(1) Allocation of Gross Commitments Potential excess gathering and transportation capacity may increase CHKs average differential to NYMEX by…
  44. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 44
    October 2012 Investor Presentation DRILLING RIG AND COMPRESSOR SALE/LEASEBACK COMMITMENTS
  45. October 2012 Investor Presentation – Chesapeake Energy Corp – slide 45
    October 2012 Investor Presentation DRILLING RIG AND COMPRESSOR SALE/LEASEBACK COMMITMENTS Simple financing mechanism by which the company sold drilling rigs and compressors to a varied group of financial counter-parties, implied…

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