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July 2012 Investor Presentation – Chesapeake Energy Corp

Chesapeake Energy Corp · Jul 10, 2012 · 44 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. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 1
    July 2012 Investor Presentation JULY 2012 INVESTOR PRESENTATION
  2. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 2
    July 2012 Investor Presentation ESCAPING GRAVITATIONAL PULL OF WEAK NG PRICES NOT EASY, BUT WE WILL DO IT 150 CHK NYMEX Natural Gas(1) NYMEX Oil(1) Dow Jones Index 120 DJIA Oil Normalized 90 CHK 60 Natural Gas…
  3. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 3
    July 2012 Investor Presentation 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…
  4. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 4
    July 2012 Investor Presentation 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…
  5. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 5
    July 2012 Investor Presentation 2013E E&P CAPEX FLEXIBILITY (1) E&P Capex by Play E&P Capex Allocation 4,500 4,000 3,500 3,000 ( in mm) 2,500 2,000 1,500 1,000 500 0 Estimated Operated Operated Non-Operated…
  6. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 6
    July 2012 Investor Presentation 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…
  7. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 7
    July 2012 Investor Presentation CHK OWNS A PREMIER COLLECTION OF U.S. E&P ASSETS
  8. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 8
    July 2012 Investor Presentation marcellus utica haynesville eagle ford andarko basin powder river basin anadarko basin mississippi lime mississippian lime CHKS OPERATING AREAS Low-risk, U.S. onshore asset base; not exposed to…
  9. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 9
    July 2012 Investor Presentation 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 19.8 tcfe,…
  10. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 10
    July 2012 Investor Presentation 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…
  11. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 11
    July 2012 Investor Presentation 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,…
  12. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 12
    July 2012 Investor Presentation 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 Currently…
  13. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 13
    July 2012 Investor Presentation 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…
  14. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 14
    July 2012 Investor Presentation FINANCIAL SUMMARY
  15. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 15
    July 2012 Investor Presentation 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…
  16. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 16
    July 2012 Investor Presentation 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…
  17. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 17
    July 2012 Investor Presentation 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…
  18. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 18
    July 2012 Investor Presentation 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…
  19. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 19
    July 2012 Investor Presentation 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…
  20. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 20
    July 2012 Investor Presentation 2012 FINANCIAL PLAN UPDATE CHK has announced asset sales of 6.6 billion in 1H 2012 VPP 10 on assets in Anadarko Basin Granite Wash play for proceeds of 745 million (4.68/mcfe) Financial transaction…
  21. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 21
    July 2012 Investor Presentation 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…
  22. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 22
    July 2012 Investor Presentation CHK HEDGING PROGRAM BEST IN INDUSTRY 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…
  23. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 23
    July 2012 Investor Presentation 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 In…
  24. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 24
    July 2012 Investor Presentation 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…
  25. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 25
    July 2012 Investor Presentation 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)…
  26. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 26
    July 2012 Investor Presentation REMARKABLE VALUE OPPORTUNITY FOR TODAYS INVESTORS ( in millions except share price) Price per share 15.00 20.00 25.00 30.00 Fully diluted common shares 3/31/12(1) 769 769 769 769 Market capitalization…
  27. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 27
    July 2012 Investor Presentation SUMMARY
  28. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 28
    July 2012 Investor Presentation 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%…
  29. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 29
    July 2012 Investor Presentation APPENDIX
  30. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 30
    July 2012 Investor Presentation VOLUMETRIC PRODUCTION PAYMENTS (VPP): 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…
  31. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 31
    July 2012 Investor Presentation SAMPLE VPP PRODUCTION PROFILE VPP Start Date VPP End Date VPP Volumes Tail Volumes In above example, 160 Bcfe of total reserves are conveyed to VPP buyer over term of agreement,…
  32. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 32
    July 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 future…
  33. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 33
    July 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…
  34. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 34
    July 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 mm,…
  35. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 35
    July 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 capex (if any)…
  36. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 36
    July 2012 Investor Presentation MIDSTREAM COMMITMENTS OVERVIEW
  37. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 37
    July 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 commitments…
  38. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 38
    July 2012 Investor Presentation TOTAL GROSS MIDSTREAM COMMITMENTS Natural gas plays Liquids plays (1) Total commitments as of: Individual year commitments: (1) Pro forma for 3/31/2012 as found on page 16 of 10-Q filed on…
  39. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 39
    July 2012 Investor Presentation TOTAL GROSS MIDSTREAM COMMITMENTS BREAKDOWN 39
  40. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 40
    July 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…
  41. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 41
    July 2012 Investor Presentation DRILLING RIG AND COMPRESSOR SALE/LEASEBACK COMMITMENTS
  42. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 42
    July 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…
  43. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 43
    July 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…
  44. July 2012 Investor Presentation – Chesapeake Energy Corp – slide 44
    July 2012 Investor Presentation 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…

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