1Q 12 EARNINGS RESULTS Top-tier production growth 1Q 12 total production averaged 3.7 bcfe/d, up 18% YOY and 2% sequentially despite voluntary average net daily curtailments of 330 mmcf 1Q 12 liquids production of 113,600 bbls/d; up…
CHK HAS DELIVERED STRONG OPERATIONAL AND FINANCIAL RESULTS FOR YEARS... (1) Production Proved Reserves 1,500 30,000 1,000 20,000 Bcfe Bcfe 500 10,000 0 0 Adjusted Ebitda(2) (4) Operating Cash Flow (3) (4)…
AND ALSO STRONG PER SHARE RESULTS WHILE ALSO DECREASING DEBT (1) Production/Weighted Average Fully Diluted Share Proved Reserves/Fully Diluted Share 2.0 40 mcfe/weighted avg. fully diluted share mcfe/fully diluted share 1.5…
NATURAL GAS: A BRIGHT FUTURE AHEAD
TIME TO GET BULLISH ON OUT YEAR NATURAL GAS YES, WE ARE SERIOUS Yes, many reasons to be bullish on intermediate and long-term natural gas prices despite warm winter and overwhelmingly negative consensus on natural gas: U.S. natural gas…
WHAT IS CHK DOING GENERALLY TO INCREASE NATURAL GAS DEMAND As a producer of 9% of America's gross natural gas supply, CHK is deeply engaged in the effort to increase natural gas demand. The general steps we are taking are listed…
WHAT IS CHK DOING SPECIFICALLY TO INCREASE NATURAL GAS DEMAND With 160 mm commitment from CHK, led a total 400 mm investment in Clean Energy Fuels (NYSE: CLNE) to help build out Americas Natural Gas Highway System by adding natural gas…
CHK OWNS THE BEST COLLECTION OF E&P ASSETS IN THE U.S.
CHKS OPERATING AREAS marcellus utica haynesville eagle ford andarko basin powder river basin anadarko basin mississippi lime mississippian lime Low-risk, U.S. onshore asset base; not exposed to economic, geopolitical or technological…
BEST 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 19.8 tcfe, or 3.3 Bboe of proved reserves(1)…
EAGLE FORD SHALE OVERVIEW CHK is the second-largest leasehold owner in the play with 475,000 net acres CHK has allocated 30% and 40% of 2012 and 2013 drilling budgets, respectively YTD gross operated oil has more than doubled from…
MISSISSIPPI LIME OVERVIEW CHK Leasehold Operated Rigs CHK is largest leasehold owner in the play with 2.0 Non-operated Rigs Industry Rigs mm net acres Production for 1Q12 averaged 12,800 boe/d, up 22% sequentially 40% of total…
UTICA SHALE OVERVIEW CHK Leasehold Operated Rigs CHKU Outline CHK/TOT JV CHK is largest leasehold owner in the play with 1.3 Outline Non-operated Rigs Industry Rigs mm net acres Oil Window Wet Gas Window Currently operating 10…
CLEVELAND AND TONKAWA OVERVIEW Tonkawa Cleveland CHK Leasehold Operated Rigs CHK owns 520,000 net acres of leasehold CHK C-T Non-operated Rigs Industry Rigs in the Cleveland play and 285,000 net acres in the Tonkawa play…
AGGRESSIVELY SHIFTING CAPITAL TO LIQUIDS-RICH PLAYS Total Dry Gas Capex Total Liquids Capex During 2011, CHK substantially reduced 100% 8% % of CHK Operated Drilling and Completion Capex drilling on dry gas plays and is further…
CHKS PROJECTED FUTURE GROWTH IS 100% LIQUIDS 800,000 40% NGL Oil 700,000 Associated natural gas from liquids plays 150,000 bbls/d average in 2013 Natural gas from shale plays 115,000 bbls/d average in 2012 600,000 30% Base natural…
RESPONSIBLE FOR 25% OF U.S. NG GROWTH OVER PAST 5 YEARS, FUTURE VERY DIFFERENT U.S. Lower 48 marketed natural gas production has increased 15 bcf/d from 52.8 bcf/d in Feb. 2007 to 67.7 bcf/d in Feb. 2012 CHKs gross operated gas…
FINANCIAL SUMMARY
2012 AND 2013 OUTLOOK SUMMARY 2011 YE 2012E YE 2013E Production Liquids (mbbls) 31,676 41,000 - 43,000 55,000 - 59,000 Natural gas (bcf) 1,004 1,040 - 1,060 970 - 1,010 Natural gas equivalent (bcfe) 1,194 1,286 - 1,318 1,300 -…
2012 FINANCIAL PROJECTIONS AT VARIOUS NATURAL GAS PRICES As of 05/01/12 Outlook ( in mm; oil at 100 NYMEX) 2.00 3.00 4.00 O/G revenue (unhedged) 1,302 bcfe (1) 4,180 4,800 5,410 (2) Hedging effect 210 210 210 Marketing and other…
2013 FINANCIAL PROJECTIONS AT VARIOUS NATURAL GAS PRICES As of 05/01/12 Outlook ( in mm; oil at 100 NYMEX) 3.00 4.00 5.00 O/G revenue (unhedged) 1,332 bcfe (1) 6,160 7,150 8,140 (2) Hedging effect (30) (30) (30) Marketing and…
2012 FINANCIAL PLAN UPDATE CHK recently announced three monetizations in April 2012 for 2.6 billion VPP 10 on assets in Anadarko Basin Granite Wash play for proceeds of 745 million or 4.68/mcfe Financial transaction (similar to recent…
CASH IN AND OUT SUMMARY YE 2012E YE 2013E Operating cash flow (mm) (1)(2) 2,700 - 3,000 4,400 - 5,300 Well costs on proved properties (6,500 - 7,000) (5,500 - 6,000) Well costs on unproved properties (1,000) (1,000) Acquisition of…
CHK HEDGING PROGRAM BEST IN INDUSTRY, BY FAR Quarterly Realized Gains and Losses 1Q '06 - 1Q '12 800 4.00 Realized Gains/Losses ( in millions) 600 3.00 per mcfe of production 400 2.00 200 1.00 - 0.00 (200) -1.00…
HEDGING POSITION (1) Natural Gas Liquids % of % of NYMEX NYMEX Forecasted Forecasted Natural Gas Oil WTI Production Production 2Q - 4Q 2012 --- --- 60% 103.02 2013 --- --- 9% 102.86 Forecasted Gains/ Forecasted Gains/…
SENIOR NOTE MATURITY SCHEDULE (1) 2,500 Total Senior Notes: 10.6 billion 2,287(2) Average Maturity: 6.4 years 2,000 1,950 1,800 1,660(2) 1,489(2) 1,500 Bank credit facilities with 1,000 1,000 5 billion capacity…
STRONG HISTORICAL NAV PER SHARE GROWTH SHOULD CONTINUE IN 2012 (Based on constant pricing) ( in mm except per share data) 2006 2007 2008 2009 2010 2011 Proved reserves at PV10 (4.50/mcf & 100/bbl) 11,700 11,900 14,000 15,200 17,800…
REMARKABLE VALUE OPPORTUNITY FOR TODAYS INVESTORS ( in millions except share price) Price per share 20.00 25.00 30.00 35.00 (1) Fully diluted common shares 3/31/12 769 769 769 769 Market capitalization 15,400 19,200 23,100 26,900…
SUMMARY
ESCAPING GRAVITATIONAL PULL OF WEAK NG PRICES NOT EASY, BUT WE WILL DO IT 150 CHK NYMEX Natural Gas (1) (1) NYMEX Oil Dow Jones Index Oil 120 DJIA Normalized 90 CHK 60 Source: Bloomberg (1) Front month prices…
LIQUIDS GROWTH WILL PROVIDE THE LIFTOFF CHK has 2nd best liquids production growth story in the U.S., and one of the best in the world 30,000 bbls/d in 4Q09 to 114,000 bbls/day in 1Q 12, increase of 84,000 bbls/d or 275% in just 2…
SUMMARY 25/25 Plan for 2011 - 2012 Increase production by 25% (net of asset sales) and reduce long-term debt by 25% Inflection Point on Natural Gas to Liquids Transition Rapidly shifting from 90% natural gas production in 10 to more…
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 site: www.chk.com (405) 767-4763…
RECONCILIATION TO OPERATING CASH FLOW AND EBITDA ( in millions)(unaudited) (a) Operating cash flow represents net cash provided by operating activities before changes in assets and liabilities. Operating cash flow is presented…
RECONCILIATION OF ADJUSTED EBITDA ( in millions)(unaudited) (a) Adjusted ebitda excludes certain items that management believes affect the comparability of operating results. The company discloses these non-GAAP financial measures…
RECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS ( in millions, except per-share data)(unaudited) (a) Adjusted net income available to common stockholders and adjusted earnings per share assuming dilution…
CERTAIN RESERVE & PRODUCTION INFORMATION The Securities and Exchange Commission requires natural gas and oil companies, in filings made with the SEC, to disclose proved reserves, which are those quantities of natural gas and oil that…
APPENDIX: INCREASING NATURAL GAS DEMAND
4 CORNERSTONES OF INCREASED NATURAL GAS DEMAND Industrial Power Generation Transportation Exports Increased and diversified demand will help balance the U.S. natural gas market and create sustainable, affordable prices that will…
INDUSTRIAL DEMAND Rapidly increasing, domestic natural gas, natural gas liquids and oil production is a powerful lever for increasing American jobs An increased focus on natural gas liquids (NGL) extraction is providing a…
POWER DEMAND: BIG OPPORTUNITY FOR FUEL SWITCHING Increase utilization of natural gas in the power generation sector 300,000 MWs of coal generation capacity 40,000 70,000 MWs likely retired by 2020 that means 6-12 Bcf/d of…
TRANSPORTATION DEMAND: AMERICA MUST GET OFF THE OIL BOTTLE U.S. consumes 23% of the worlds oil, 19 mm bbls/day, of which 11 mm bbls/day is imported By 2020, the IEA predicts world oil consumption will increase 60% This does not…
CAN AMERICA DEAL WITH 5/GALLON GASOLINE OR DIESEL Current domestic and international challenges will likely keep upward pressure on the price of diesel in 2012 and beyond Will Israel Attack Iran Refinery constraints in 2012 2015…
NATURAL GAS VEHICLES ARE AN ANSWER TO RISING FUEL PRICES Price of Oil vs. Natural Gas If NYMEX is 4.00/mcf Forward Spread CNG will be 1.50/dge Pre-2005 Historical Spread 2005-2010 Avg. Spread /bbl 1:1 Btu ratio 1.5:1 Btu ratio 7:1…
THE MARKET IS MOVING EVEN IF FEDERAL GOVERNMENT IS NOT New bi-fuel trucks and vans to be introduced by Ford, Chrysler (Dodge), and General Motors in 2012 New natural gas HD truck engines by Cummins- Westport, Navistar, and…
TRANSPORTATION INFRASTRUCTURE IS GROWING Current and Potential CHK Partners Cody Bakken Gammon Mowry Baxter/Mancos Antrim Marcellus Utica Niobrara Mancos New Albany Mulky Granite Wash Lewis Cleveland/Tonkawa…
AMERICAS NATURAL GAS HIGHWAY COMPLETE IN 2013 LNG truck fueling coast-to-coast and border-to-border 49
CNG IN A BOX CHK working with GE to deploy more than 250 of GEs ecomagination- qualified CNG In A Box fueling systems across the U.S. through 2015 through CHKs affiliate, Peake Fuel Solutions Trying to on CNG In A Box takes natural…
TOP 10 REASONS WHY NATURAL GAS WILL COMPETE IN TRANSPORTATION SECTOR 1. Price of oil vs. price of natural gas is simply too huge to ignore 2. Pricing fundamentals for CNG and LNG in relation to a Mcf of natural gas (8:1 and 7:1 ratio)…
TRANSPORTATION: LOTS OF OPPORTUNITIES FOR NATURAL GAS ACROSS THE BOARD Transportation Market Daily Demand Market Size (Bcf) Market Opportunities LD Vehicles 45 General Motors, Chrysler, Honda, Ford offering NGVs, ANGA funding 6 new…
EXPORTS: NORTH AMERICAN LNG REGAS FACILITIES CONSIDERING LIQUEFACTION Kitimat British Columbia, Canada Contemplated LNG export volumes are 10 bcf/day (Approved by Canadas National Energy Board) (does not include incremental fuel needed…
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