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September 2012 Investor Meeting – Chesapeake Energy Corp

Chesapeake Energy Corp · Sep 10, 2012 · 48 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. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 1
    September 2012 Investor Presentation SEPTEMBER 2012 INVESTOR PRESENTATION
  2. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 2
    September 2012 Investor Presentation 2Q 12 EARNINGS SUMMARY Top-tier production growth 2Q 12 total production averaged 3.8 bcfe/d, up 25% YOY and 4% sequentially 2Q 12 liquids production of 130,200 bbls/d, up 65% YOY and 15%…
  3. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 3
    September 2012 Investor Presentation CHK MID-YEAR 2012 UPDATE 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:…
  4. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 4
    September 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…
  5. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 5
    September 2012 Investor Presentation ASSET SALES STRATEGY Goal is to reduce debt to investment grade levels and to fund conversion of companys asset base from only 10% liquids in 2010 to 35% by 2015 CHK now targeting asset sales…
  6. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 6
    September 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…
  7. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 7
    September 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…
  8. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 8
    September 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…
  9. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 9
    September 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…
  10. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 10
    September 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…
  11. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 11
    September 2012 Investor Presentation PREMIER COLLECTION OF U.S. E&P ASSETS
  12. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 12
    September 2012 Investor Presentation marcellus utica haynesville eagle ford andarko basin powder river basin anadarko basin mississippi lime mississippian lime CHKS 10 KEY PLAYS Low-risk, U.S. onshore asset base; not exposed to…
  13. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 13
    September 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…
  14. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 14
    September 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…
  15. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 15
    September 2012 Investor Presentation UTICA SHALE OVERVIEW CHK Leasehold CHKU Outline Operated Rigs CHK/TOT JV Outline Producing wells CHK is largest leasehold owner in the play with more Non-operated Rigs Industry Rigs…
  16. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 16
    September 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…
  17. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 17
    September 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…
  18. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 18
    September 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…
  19. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 19
    September 2012 Investor Presentation FINANCIAL SUMMARY
  20. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 20
    September 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…
  21. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 21
    September 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…
  22. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 22
    September 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…
  23. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 23
    September 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…
  24. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 24
    September 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…
  25. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 25
    September 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…
  26. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 26
    September 2012 Investor Presentation SUMMARY
  27. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 27
    September 2012 Investor Presentation HISTORICALLY LINKED TO NATURAL GAS, CHK NOW POISED TO BREAK FREE (1) (1) DJIA Oil CHK Natural Source: Bloomberg as of 8/29/2012 (1) Front month prices Gas 28
  28. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 28
    September 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…
  29. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 29
    September 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…
  30. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 30
    September 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…
  31. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 31
    September 2012 Investor Presentation APPENDIX
  32. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 32
    September 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…
  33. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 33
    September 2012 Investor Presentation VOLUMETRIC PRODUCTION PAYMENTS (VPPS): OVERVIEW
  34. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 34
    September 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,…
  35. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 35
    September 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…
  36. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 36
    September 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…
  37. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 37
    September 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…
  38. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 38
    September 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…
  39. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 39
    September 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)…
  40. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 40
    September 2012 Investor Presentation MIDSTREAM COMMITMENTS OVERVIEW
  41. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 41
    September 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…
  42. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 42
    September 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…
  43. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 43
    September 2012 Investor Presentation TOTAL GROSS MIDSTREAM COMMITMENTS BREAKDOWN 44
  44. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 44
    September 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…
  45. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 45
    September 2012 Investor Presentation DRILLING RIG AND COMPRESSOR SALE/LEASEBACK COMMITMENTS
  46. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 46
    September 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…
  47. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 47
    September 2012 Investor Presentation RECONCILIATION OF OPERATING CASH FLOW AND EBITDA ( in millions)(unaudited) (a) Operating cash flow represents net cash provided by operating activities before changes in assets and…
  48. September 2012 Investor Meeting – Chesapeake Energy Corp – slide 48
    September 2012 Investor Presentation RECONCILIATION OF ADJUSTED EBITDA ( in millions)(unaudited) (a) Adjusted ebitda excludes certain items that management believes affect the comparability of operating results. The company…

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