August 2012 Investor Presentation AUGUST 2012 INVESTOR PRESENTATION
August 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%…
August 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:…
August 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…
August 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 of…
August 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…
August 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 bcf/d…
August 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…
August 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…
August 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) Over the past year, CHKs liquids production growth is up 65%,…
August 2012 Investor Presentation CHK OWNS THE PREMIER COLLECTION OF U.S. E&P ASSETS
August 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…
August 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…
August 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% of 2012 and 2013 drilling cap-ex budgets to EFS Net production for…
August 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 WOC/WOPL…
August 2012 Investor Presentation MISSISSIPPI LIME OVERVIEW CHK is largest leasehold owner in the play with 2.0 CHK Leasehold Operated Rigs mm net acres Non-operated Rigs Industry Rigs Production for 2Q12 averaged 20,000…
August 2012 Investor Presentation CLEVELAND, TONKAWA AND HOGSHOOTER OVERVIEW Tonkawa CHK Leasehold Cleveland CHK C-T Operated Rigs CHK owns largest position in combined plays Non-operated Rigs Hogshooter wells Industry Rigs…
August 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…
August 2012 Investor Presentation FINANCIAL SUMMARY
August 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 -…
August 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)…
August 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)…
August 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 of…
August 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…
August 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…
August 2012 Investor Presentation SUMMARY
August 2012 Investor Presentation CHK HISTORICALLY LINKED TO NATURAL GAS, NOW PORTFOLIO MORE OIL AND NGL FOCUSED (1) (1) DJIA Oil CHK Natural Gas Source: Bloomberg as of 8/3/2012 (1) Front month prices 28
August 2012 Investor Presentation VALUE OPPORTUNITY FOR TODAYS INVESTORS ( in millions except share price) Price per share 15.00 20.00 25.00 Fully diluted common shares 3/31/12(1) 769 769 769 Market capitalization 11,500 15,400…
August 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…
August 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…
August 2012 Investor Presentation APPENDIX
August 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…
August 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…
August 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,…
August 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…
August 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…
August 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,…
August 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)…
August 2012 Investor Presentation MIDSTREAM COMMITMENTS OVERVIEW
August 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…
August 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 primarily…
August 2012 Investor Presentation TOTAL GROSS MIDSTREAM COMMITMENTS BREAKDOWN 43
August 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…
August 2012 Investor Presentation DRILLING RIG AND COMPRESSOR SALE/LEASEBACK COMMITMENTS
August 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…
August 2012 Investor Presentation 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.…
August 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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