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2014 Analyst Day – Chesapeake Energy Corp

Chesapeake Energy Corp · May 16, 2014 · 134 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. 2014 Analyst Day – Chesapeake Energy Corp – slide 1
  2. 2014 Analyst Day – Chesapeake Energy Corp – slide 2
    ORGANIZATIONAL STRUCTURE 3 I Analyst Day 2014
  3. 2014 Analyst Day – Chesapeake Energy Corp – slide 3
    AGENDA 7:00 am Registration and Breakfast 7:30 am Gary Clark: Welcome and Agenda Overview 7:35 am Doug Lawler: Company Overview 8:15 am Nick DellOsso: Financial Overview and Q&A 9:00 am John Reinhart: Capital Efficiency and Technical…
  4. 2014 Analyst Day – Chesapeake Energy Corp – slide 4
    Analyst Day 2014
  5. 2014 Analyst Day – Chesapeake Energy Corp – slide 5
    FOUNDATIONAL ELEMENTS FOR VALUE CREATION CHK 2 I Analyst Day 2014
  6. 2014 Analyst Day – Chesapeake Energy Corp – slide 6
    BUSINESS TRANSFORMATION OVERVIEW Organizational structure Corporate budget process and plan Capital efficiency improvement Portfolio management and capital allocation process Cash cost reduction Performance measurement and…
  7. 2014 Analyst Day – Chesapeake Energy Corp – slide 7
    APPLYING OUR BUSINESS STRATEGIES Balance capital expenditures with Develop world-class inventory cash flow from operations Target top-quartile operating and Divest noncore assets and financial metrics noncore affiliates Pursue…
  8. 2014 Analyst Day – Chesapeake Energy Corp – slide 8
    YARDSTICK TO MEASURE CHK Total shareholder return Operating cash flow growth/ Realized price/boe debt-adjusted share Adjusted ROCE Production expense/boe Production growth/ Adjusted ROE G&A/boe debt-adjusted share Debt/proved…
  9. 2014 Analyst Day – Chesapeake Energy Corp – slide 9
    COMPENSATION IS ALIGNED WITH STRATEGIC GOALS AND METRICS 6 I Analyst Day 2014
  10. 2014 Analyst Day – Chesapeake Energy Corp – slide 10
    2014 FULL YEAR OUTLOOK UPDATE Adjusted Total Operating Total Capital Production Cash Flow Expenditures (mm)(2)(3) (mm) Growth Prior Outlook - 9 12% 5,800 6,000 5,200 5,600 5/7/14 Current Outlook - 5/16/14 9 12%(1) 5,550…
  11. 2014 Analyst Day – Chesapeake Energy Corp – slide 11
    Analyst Day 2014 1
  12. 2014 Analyst Day – Chesapeake Energy Corp – slide 12
    MAXIMIZING SHAREHOLDER VALUE Delivering cash flow growth with balanced spending Competitive capital allocation Optimizing capital structure Reducing complexity and obligations Increasing cash flow certainty 2 I Analyst Day 2014…
  13. 2014 Analyst Day – Chesapeake Energy Corp – slide 13
    1Q14 FINANCIAL RESULTS ADJ. EARNINGS/FDS ADJ. EBITDA PROD. and G&A EXP. 97% YOY 34% YOY 12% YOY 0.59 1.5 billion 5.83/boe(1) LIQUIDITY YTD ASSET SALES TOTAL CAPEX 5.0 billion (2) 925 million (3) 53% YOY 850 million (1)…
  14. 2014 Analyst Day – Chesapeake Energy Corp – slide 14
    1Q14 OPERATIONAL RESULTS TOTAL ADJ. PROD.(1) LIQUIDS MIX (2) ADJ. OIL PROD.(1) 11% YOY to 29% of Total Production 20% YOY 675.2 mboe/d 24% in 1Q13 109.5 mbbls/d (1) (1)) ADJ. NGL PROD. ADJ. NATURAL GAS 63% YOY 4% YOY 84.2…
  15. 2014 Analyst Day – Chesapeake Energy Corp – slide 15
    EXPECTED ASSET DIVESTITURES DRIVE DE-LEVERING We continue to sell noncore assets and focus our resources on highest return opportunities while reducing leverage and complexity Oilfield services Noncore producing asset sales Noncore…
  16. 2014 Analyst Day – Chesapeake Energy Corp – slide 16
    PRO FORMA IMPACT OF EXPECTED ASSET DIVESTITURES Noncore COS Producing Noncore Asset Divestitures ( mm)(1) Spin-Off Assets Acreage Total Reduction(2) Capitalization Impact Debt/preferred reduction 1,115 1,015 - 2,130 Cash proceeds,…
  17. 2014 Analyst Day – Chesapeake Energy Corp – slide 17
    REDUCING OBLIGATIONS AND COMPLEXITY (mm) 12/31/12 12/31/13 3/31/14 12/31/14E Term Loan 2,000 2,000 0 0 Long-Term Bonds 10,666 10,838 12,475 11,825 Credit Facilities 418 405 464 0 Total Debt 13,084 13,243 12,939 11,825 10%…
  18. 2014 Analyst Day – Chesapeake Energy Corp – slide 18
    ANNUAL FINANCING COSTS ARE FALLING 2.0 1.8 1.6 20% reduction since YE12 1.4 Weighted average cost of debt in Billions 1.2 reduced from 5.9% to 5.1% 1.0 0.8 250 MM 0.6 savings Annual decrease in cash 0.4…
  19. 2014 Analyst Day – Chesapeake Energy Corp – slide 19
    CAPITAL ALLOCATION Enhanced returns with competitive capital allocation Capital shift to higher-margin, higher-return programs Cost structure and efficiency remains a focus area 95% of capital allocation is value driven vs.…
  20. 2014 Analyst Day – Chesapeake Energy Corp – slide 20
    DRIVING TOWARDS INVESTMENT GRADE Investment Changes in Management, Governance and Financial Policies Grade Metrics Positive Operating Momentum Liquids 30% of 2014 Credible Actions to Back Up New Philosophy production Growth…
  21. 2014 Analyst Day – Chesapeake Energy Corp – slide 21
    11 I Analyst Day 2014 11
  22. 2014 Analyst Day – Chesapeake Energy Corp – slide 22
    PRO FORMA 2014 OUTLOOK E&P Asset 5/7/14 Outlook COS Spin-off Sales 5/16/14 Outlook Adjusted Production Growth(1): Liquids 25% - 29% 4% 29% - 33% Oil 8% - 12% 3% 11% - 15% NGL(2) 58% - 63% 5% 63% - 68% Natural Gas 4% -6% 0% 4% -…
  23. 2014 Analyst Day – Chesapeake Energy Corp – slide 23
    ADJUSTED PRODUCTION GROWTH Asset Sale Adjustments (mmboe) 239 - 246 244 (13.1) (12.3) 219 2013 2013 E&P 2014 E&P 2013 2014E Reported Sales Sales Adjusted Adjusted Production Production Production 2014E 2013 2013…
  24. 2014 Analyst Day – Chesapeake Energy Corp – slide 24
    SENIOR NOTE PROFILE 2,305 Debt Targeted for Retirement 12/31/2013 WACD 5.9% Convertibles WACD pro forma for 4/14 issuance 5.1% Notes Issued April 2014 115 mm in annual cash savings Other Senior Notes As of 3/31/2014 pro forma…
  25. 2014 Analyst Day – Chesapeake Energy Corp – slide 25
    10K/Q COMMITMENTS ( mm) 12/31/2012 12/31/2013 3/31/2014 Chesapeake commitments Compressor leases 405 260 63 Rig leases 307 76 20 Drilling contracts 202 41 109 Other operating leases 56 39 35 Investments 90 - - Net acreage…
  26. 2014 Analyst Day – Chesapeake Energy Corp – slide 26
    SUMMARY OF MIDSTREAM AND MARKETING COMMITMENTS AS OF 3/31/14 2014 2015 2016 2017 2018 2019 Thereafter Total Dollar commitments (mm) NGL transportation 55 96 118 139 171 171 1,464 2,214 Oil transportation 138 207 226 260 250 257…
  27. 2014 Analyst Day – Chesapeake Energy Corp – slide 27
    CHKS HEDGING STRATEGY INCREASES CASH FLOW CERTAINTY IN 2014 Natural Gas Oil 64% 70% 40% Swaps 4.08/mcf NYMEX 22% 94.32/bbl Three-way NYMEX Collars 4.51-5.25/mcf NYMEX 4.10 - 4.38/mcf NYMEX % of Total 2014 Northeast…
  28. 2014 Analyst Day – Chesapeake Energy Corp – slide 28
    REDUCING OBLIGATIONS AND COMPLEXITY (mm) 12/31/12 12/31/13 3/31/14(1) 12/31/14E(2) Senior Note Refinancing TTerm LLoan 2,000 2,000 0 0 (3) completed in April and May 2014 Long-Term Bonds 10,666 10,838 12,475 11,825 Credit Facility…
  29. 2014 Analyst Day – Chesapeake Energy Corp – slide 29
    RECONCILIATION ( in mm, except per share data) Three Months Ended: 3/31/2014 3/31/2013 Net income available to common stockholders 374 15 Adjustments, net of tax: Unrealized losses on derivatives 80 94 Restructuring and other…
  30. 2014 Analyst Day – Chesapeake Energy Corp – slide 30
    RECONCILIATION ( in mm) Three Months Ended: 3/31/2014 3/31/2013 Cash provided by operating activities 1,291 924 Changes in assets and liabilities 323 255 Operating cash flow(1) 1,614 1,179 Net income 466 102 Interest expense 39…
  31. 2014 Analyst Day – Chesapeake Energy Corp – slide 31
    Analyst Day 2014 1
  32. 2014 Analyst Day – Chesapeake Energy Corp – slide 32
    FOCUSED ON VALUE Value Maximization Focus Previously focused on opportunity capture at very rapid pace HBP efforts were inefficient Refocus on value maximization Operational Operational efficiencies Efficiencies Production…
  33. 2014 Analyst Day – Chesapeake Energy Corp – slide 33
    REALIZING IMPACT OF STRATEGY SHIFTS 2012 2013 1Q14 30% 15% 54% 46% 70% 85% HBP Focus Pad Drilling Focus Value and Right-sized Maximization Drilling Program Focus Negative PV-10 Positive PV-10 20% Improvement of…
  34. 2014 Analyst Day – Chesapeake Energy Corp – slide 34
    OPERATIONAL EFFICIENCIES: DRILLING FOCUS 90% Planned Pad 41 wells Annualized equiv. wells Drilling in 2014E 1Q14 vs. 2013 avg. LL 1 rig yr. 6.3 rig yrs. Annualized rig-skid savings 1Q14 vs. 2013 Projected time saved 2014E…
  35. 2014 Analyst Day – Chesapeake Energy Corp – slide 35
    DRILLING EFFICIENCY IMPACT 470 mm Total annualized avg. gross drilling capital savings 1Q14 vs. 2013(1) (1) Assumes 1,200 total wells drilled in 2014E 5 I Analyst Day 2014 5
  36. 2014 Analyst Day – Chesapeake Energy Corp – slide 36
    6 I Analyst Day 2014 6
  37. 2014 Analyst Day – Chesapeake Energy Corp – slide 37
    DRILLING OPERATIONS CENTER BETTER GEOSTEERING Projected to drill 7 million lateral feet in 2014 Increased lateral length in-target zone 3% in 1Q14 vs. 2013 8.8 wells 1Q14 incremental well equivalent 26 mmboe Annualized…
  38. 2014 Analyst Day – Chesapeake Energy Corp – slide 38
    AND SIDETRACK EVENT REDUCTION Increased monitoring and focus on geosteering has significantly reduced rate of sidetrack events Projecting to drill 16 mm ft. in 2014 Estimated avg. cost of 500,000 per sidetrack event 44%…
  39. 2014 Analyst Day – Chesapeake Energy Corp – slide 39
    PRODUCTION ACCELERATION: REDUCING NON-PRODUCTIVE TIME (NPT) NPT is a major source of value leakage Leveraging existing infrastructure Minimizes NPT Accelerates production cash flow Increases per well rates of return 30%…
  40. 2014 Analyst Day – Chesapeake Energy Corp – slide 40
    PRODUCTION ACCELERATION: OPTIMIZING THE BASE Targeting improvement in base decline rate 4 mmboe Incremental production from 30% to 27% Decreases capital intensity of existing portfolio 85 mm Incremental ebitda Opportunity to…
  41. 2014 Analyst Day – Chesapeake Energy Corp – slide 41
    PRODUCTION ACCELERATION: ARTIFICIAL LIFT FOCUS South Texas Artificial Lift(1) Efforts to optimize base production in Eagle Ford Shale underway 370 installations planned in 2014 20 mboe/well Incremental production in year 1 post…
  42. 2014 Analyst Day – Chesapeake Energy Corp – slide 42
    SUPPLY CHAIN INITIATIVES Strategic Sourcing Consolidation / leverage of enterprise spend Value focused price / quality Process Consistency Product / service standardized specifications Supplier pre-qualification Planning…
  43. 2014 Analyst Day – Chesapeake Energy Corp – slide 43
    DELIVERING SUPPLY CHAIN VALUE Demand Strategic Forecast Partnerships 350 mm 2014E projected annualized gross cost savings 200 mm 2014E projected annualized net cost savings Standardization Value Capture 13 I…
  44. 2014 Analyst Day – Chesapeake Energy Corp – slide 44
    DELIVERING VALUE 14 I Analyst Day 2014 14
  45. 2014 Analyst Day – Chesapeake Energy Corp – slide 45
    Analyst Day 2014 1
  46. 2014 Analyst Day – Chesapeake Energy Corp – slide 46
    SOUTHERN DIVISION OVERVIEW KS OK LA TX Note: data above assumes E&P capex only, excludes corporate Ebitda adjustment 2 I Analyst Day 2014 2
  47. 2014 Analyst Day – Chesapeake Energy Corp – slide 47
    3 I Analyst Day 2014 3
  48. 2014 Analyst Day – Chesapeake Energy Corp – slide 48
    HAYNESVILLE ASSET OVERVIEW 10 tcfe of net recoverable resources 387,000 net acres 71% avg. WI, 57% avg. NRI Net production of 495 mmcfe/d(1) 7 - 9 operated rigs in 2014 7.5 mm well cost target achieved in 1Q14 Best well to date =…
  49. 2014 Analyst Day – Chesapeake Energy Corp – slide 49
    HAYNESVILLE ECONOMICS Rate of Return(1) 100% Unburdened ROR in Haynesville Cost control measures and improving natural gas prices drive stronger returns ROR exceeds 100% when considering minimum volume commitment (MVC) and…
  50. 2014 Analyst Day – Chesapeake Energy Corp – slide 50
    HAYNESVILLE ENHANCING EUR WITH FLOWBACK MANAGEMENT yp Curve Type 65% EUR improvement vs. industry peer 8.9 bcfe gross EUR type curve Restricted rate flow backs enhances EUR by 65% Development for 2014 on 160 acre…
  51. 2014 Analyst Day – Chesapeake Energy Corp – slide 51
    HAYNESVILLE FOCUSED ON STIMULATIONS Stimulation Cost & Sand Volume New organizational structure includes dedicated completions teams Design optimization Decreasing completion chemical usage 27% Decrease in stimulation Alternate…
  52. 2014 Analyst Day – Chesapeake Energy Corp – slide 52
    HAYNESVILLE BENEFITS FROM HISTORICAL INVESTMENT Single Rig Movement Pads & pipelines in place 2014 Planned Drilling Historical Drilling Return-driven drilling vs. acreage capture CHK Leasehold Substantial incremental revenue…
  53. 2014 Analyst Day – Chesapeake Energy Corp – slide 53
    HAYNESVILLE PRODUCTION ACCELERATION Single Rig Drilling Results(1) 60 PlannedCUM Cumulative Production (multi-well pad drilling) PLANNED HistoricalCUM HISTORICAL Cumulative Production (single well pad drilling) + 22 bcf After…
  54. 2014 Analyst Day – Chesapeake Energy Corp – slide 54
    HAYNESVILLE MIDSTREAM ADVANTAGE Haynesville System Capacity and Production Significant available capacity in place Quick rig ramp up capability 1 bcf/d Projected additional capacity YE14 AR MS TX Cameron LA Lake Charles…
  55. 2014 Analyst Day – Chesapeake Energy Corp – slide 55
    11 I Analyst Day 2014 11
  56. 2014 Analyst Day – Chesapeake Energy Corp – slide 56
    MID-CONTINENT ASSET OVERVIEW 286,000 net acres actively being developed in aggregate 195,000 net acres Mississippian Lime 44% avg. WI, 36% avg. NRI More than 500 mmboe of net recoverable resources 91,000 net acres (1) Granite…
  57. 2014 Analyst Day – Chesapeake Energy Corp – slide 57
    MID-CONTINENT STACKED OIL PAY DEVELOPMENT Multiple growth opportunities in the Oswego/Marmaton, Atoka Lime, Chester, Middle/Lower Mississippi, Woodford, and Hunton Actively monitoring third-party activity Ability to leverage…
  58. 2014 Analyst Day – Chesapeake Energy Corp – slide 58
    MID-CONTINENT PREMIER MISSISSIPPIAN LIME POSITION 160,000 high-graded operated net acres 3D coverage provides competitive advantage Generating higher ROR and more consistent results Shiloh 1H Boyce 1H Peak Oil = 624 bo/d Peak…
  59. 2014 Analyst Day – Chesapeake Energy Corp – slide 59
    MID-CONTINENT MISSISSIPPIAN LIME PRODUCTION IMPROVES Mississippian Lime Production Mississippian Lime ROR (%)(1) 3Q13 4Q13 1Q14 Integrated teams are increasing project returns Improved EURs and performance from 31% Increased…
  60. 2014 Analyst Day – Chesapeake Energy Corp – slide 60
    MID-CONTINENT CORE EXPANSION FROM CAPITAL EFFICIENCY Mississippian Lime Efficiencies Drillable Inventory Increase from Efficiencies(1) 20% decrease in well cost from 2013 to YE14 target 15% decrease in spud-to-spud cycle time…
  61. 2014 Analyst Day – Chesapeake Energy Corp – slide 61
    MID-CONTINENT INFRASTRUCTURE ADVANTAGE Salt Water Disposal Initiative Capacity of 350,000 barrels of salt water per day Recycling produced water for completions Generating 2.5 mm/year in 3rd party revenue 98 mm/year…
  62. 2014 Analyst Day – Chesapeake Energy Corp – slide 62
    MID-CONTINENT GRANITE WASH PLAYS ROR (%)(1) 1Q14 Stateline 4H Peak Rate: 13.3 mmcf/d 410 bo/d, 875 NGL bbls/d 1Q14: Davis 19H Peak Rate: 7.4mmcf/d, 285 bo/d, 610 NGL bbls/d 1Q14: Atherton 23H Peak Rate: 11.4 mmcf/d, 550…
  63. 2014 Analyst Day – Chesapeake Energy Corp – slide 63
    19 I Analyst Day 2014 19
  64. 2014 Analyst Day – Chesapeake Energy Corp – slide 64
    EAGLE FORD ASSET OVERVIEW 449,000 net acres 61% avg. WI, 46% avg. NRI 1.2 bboe of net recoverable resources Current net production of 95 mboe/d 15 - 20 operated rigs in 2014 35% of 2014 estimated E&P capex CHK Operated Rigs CHK…
  65. 2014 Analyst Day – Chesapeake Energy Corp – slide 65
    EAGLE FORD CONTINUOUS IMPROVEMENT Conversion to multi-well pad drilling Substantial cycle-time improvements Testing new completion designs to lower cost and not impact performance Continuing to upgrade rig fleet 95% Multi-well…
  66. 2014 Analyst Day – Chesapeake Energy Corp – slide 66
    EAGLE FORD FAITH RANCH DRILLING Chesapeake Faith Ranch Zone Leases New fit for purpose rigs making major advances in both drilling time and cost Implementation of best composite well system setting the new standard 30% Decrease…
  67. 2014 Analyst Day – Chesapeake Energy Corp – slide 67
    EAGLE FORD GROWTH Production Profile Avg. Oil Production per Well 27% Net Production CAGR 2012 - 2014E Ramped rig count to 20 rigs Targeting best quality rock Improved completion efficiency by reducing Realizing consistent…
  68. 2014 Analyst Day – Chesapeake Energy Corp – slide 68
    EAGLE FORD DEVELOPMENT 2014 Program 660 spacing in wet gas areas 500 spacing in volatile oil areas Infill Evaluation of Black Oil Areas Wet Gas Spacing Test Down spacing tests in multiple black oil areas Optimizing on total…
  69. 2014 Analyst Day – Chesapeake Energy Corp – slide 69
    25 I Analyst Day 2014 25
  70. 2014 Analyst Day – Chesapeake Energy Corp – slide 70
    SOUTHERN DIVISION UNBURDENED ECONOMICS Unburdened Rates of Return by Play(1) Granite Wash Haynesville Eagle Ford Miss. Lime Barnett Plays 2014E Well Cost ( in mm) 7.9 6.6 3.0 8.8 2.5 3.50/mcf; 85/bbl oil; 34/bbl NGL 103% 67%…
  71. 2014 Analyst Day – Chesapeake Energy Corp – slide 71
    MID-CONTINENT ECONOMICS Mississippian Lime Granite Washes 288 mboe gross EUR type curve 805 mboe gross EUR type curve Year Year Mississippian Lime(1) Granite Washes(1) (1) Assumes differentials to NYMEX natural gas and…
  72. 2014 Analyst Day – Chesapeake Energy Corp – slide 72
    HAYNESVILLE STIMULATION OPTIMIZATION Recently Optimized Completions Legacy Completions Stimulation optimization efforts have resulted in no degradation of performance 28 I Analyst Day 2014 28
  73. 2014 Analyst Day – Chesapeake Energy Corp – slide 73
    BARNETT SHALE ASSET OVERVIEW 215,000 net acres 68% avg. WI, 52% avg. NRI 6 tcfe of net recoverable resources Net production of 429 mmcfe/d(1) 1 - 2 operated rigs in…
  74. 2014 Analyst Day – Chesapeake Energy Corp – slide 74
    BARNETT SHALE CONTINUOUS IMPROVEMENT Avg. Well Cost ( in mm) Spud to Spud Cycle Times (days) Targeting year-end D&C cost/well of 2.0 mm Targeting spud to TIL cycle time improvement of 50% 100% Multi-well pad drilling Current avg.…
  75. 2014 Analyst Day – Chesapeake Energy Corp – slide 75
    BARNETT SHALE ECONOMICS Type Curve Rate of Return(1) 3.85 bcfe gross EUR type curve Year First month avg: 3.24 mmcfe/d Well cost: 2.5 mm and improving Unburdened ROR of 24% at 4/90(1) (1) Assumes midstream volume…
  76. 2014 Analyst Day – Chesapeake Energy Corp – slide 76
    BARNETT SHALE PRODUCTION Field maturity now entering period of low base decline rate Production stable and predictable(1) YTD Barnett Production 1.1 gross bcf/d operated production VPP contract terminates Fall 2015 6% decline…
  77. 2014 Analyst Day – Chesapeake Energy Corp – slide 77
    BARNETT SHALE BETTER RESULTS IN TARRANT CO. Cumulative Production by County Improving cash deliverability Top performance in Tarrant Co. 1,200 remaining locations Existing infrastructure to accelerate cycle times Improving cost…
  78. 2014 Analyst Day – Chesapeake Energy Corp – slide 78
    EAGLE FORD ECONOMICS Type Curve Rate of Return(1) 610 mboe gross EUR type curve Year First month avg: 635 boe/d Well cost: 6.6 mm ROR of 45% at 4/90(1) Optimizing ratio of wells TIL vs. spud (1) Assumes differentials…
  79. 2014 Analyst Day – Chesapeake Energy Corp – slide 79
    Analyst Day 2014
  80. 2014 Analyst Day – Chesapeake Energy Corp – slide 80
    NORTHERN DIVISION OVERVIEW PA OH WV Note: data above assumes E&P capex only, excludes corporate Ebitda adjustment 2 I Analyst Day 2014
  81. 2014 Analyst Day – Chesapeake Energy Corp – slide 81
    3 I Analyst Day 2014
  82. 2014 Analyst Day – Chesapeake Energy Corp – slide 82
    UTICA ASSET OVERVIEW Over 1 million net acres 250,000+ net acres in wet gas window 300,000+ net acres in oil window 540,000+(1) net acres in dry gas window 66% avg. WI, 53% avg. NRI CHK/TOT JV Outline 4+ bboe of net…
  83. 2014 Analyst Day – Chesapeake Energy Corp – slide 83
    UTICA ECONOMICS Type Curve(1) Rate of Return(2) 1,325 mboe gross EUR type curve Year First month avg: 1,360 boe/d 40% Finding cost: 6.71/boe HBP activity in 2014 Well cost: 7.4 mm ROR of 45% at 4/90/36(1) 60% 2015…
  84. 2014 Analyst Day – Chesapeake Energy Corp – slide 84
    UTICA CONTINUOUS IMPROVEMENT Avg. Well Cost ( in mm) Spud to Spud Cyc Cycle e Times es (days) 1.4 mm in reinvested capital E Focused on continuous improvement in 2014 2.2 miles Record for longest useable lateral…
  85. 2014 Analyst Day – Chesapeake Energy Corp – slide 85
    UTICA PRODUCTION RAMP 400% 300% 30 - 60% YOY Production Growth YOY Production Growth YOY Production Growth (2012 to 2013) (2013 to 2014E) (2014E to 2015E) 120 Key 2014 Milestones NGL 100 1Q14 Avg. Production 50,000 boe/d net…
  86. 2014 Analyst Day – Chesapeake Energy Corp – slide 86
    UTICA BEST-IN-CLASS KNOWLEDGE % of Wells Drilled in the Play Hess Gulfport 04/2012 08/2012 First Well to Prod Recent entrants Chesapeake Antero 06/2011 06/2012 Chesapeake Antero Gulfport 5,300 Hess Core to understand…
  87. 2014 Analyst Day – Chesapeake Energy Corp – slide 87
    UTICA WET RECENT WELL RESULTS 4Q13 Operated Peak Rates, boe/d 0 500 1,000 1,500 2,000 2,500 CHK Operated Non-Operated CHK Leasehold Oil Window Wet Gas Window Dry Gas Window 1,280 boe/d 1,290 boe/d Average peak rate of 4Q…
  88. 2014 Analyst Day – Chesapeake Energy Corp – slide 88
    UTICA WET BEST-IN-CLASS RESULTS Drill Days (Spud to TD) Avg. Capex per Lateral Ft. 11.8 mm/well M / Lateral Ft Days 6.7 mm/well 7.4 mm/well Rate of Return % Extensive basin knowledge through non-op position…
  89. 2014 Analyst Day – Chesapeake Energy Corp – slide 89
    UTICA UNLOCKING THE OIL WINDOW 500 barrels oil Recent oil IPs (old completion design) 1,000 boe/d Recent full-stream IPs Oil Window ndow (old completion design) Test Area Leveraging proprietary Reservoir Technology Center…
  90. 2014 Analyst Day – Chesapeake Energy Corp – slide 90
    UTICA OPPORTUNITIES DRY POTENTIAL 6.7 Mmcf/d 6.1 Mmcf/d 5.1 Mmcf/d 7.1 Mmcf/d 330,000 acres 5.1 Q2Mmcf/d 12 Net, dry gas acres in Jefferson County, OH and W. Virginia 5.9 Mmcf/d 5.9 Mmcf/d Q1 12 6.9 Mmcf/d 6.9 Mmcf/d Q4…
  91. 2014 Analyst Day – Chesapeake Energy Corp – slide 91
    13 I Analyst Day 2014
  92. 2014 Analyst Day – Chesapeake Energy Corp – slide 92
    POWDER RIVER BASIN NIOBRARA ASSET OVERVIEW 450 mmboe of net recoverable resources 320,000+ net acres 38% avg. WI, 30% avg. NRI Net production of 9 mboe/d(1) Three operated rigs in 2014 Buckinghorse Plant (4Q'14) to add 120…
  93. 2014 Analyst Day – Chesapeake Energy Corp – slide 93
    POWDER RIVER BASIN RECENT RESULTS Recent Operated Peak Rates, boe/d 0 500 1,000 1,500 2,000 2,500 3,000 1,740 boe/d Avg. recent Niobrara peak rate (50% oil) 2,025 boe/d Avg. recent Sussex peak rate (60% oil) 1,105 boe/d…
  94. 2014 Analyst Day – Chesapeake Energy Corp – slide 94
    POWDER RIVER BASIN ECONOMICS Type Curve(1) Rate of Return(2) 900 mboe gross EUR type curve Year 40% First month avg: 1,056 boe/d 2014 expected program ROR net of carry(2) Finding cost: 12.79/bbl Well cost: 8.9 mm…
  95. 2014 Analyst Day – Chesapeake Energy Corp – slide 95
    POWDER RIVER BASIN CONTINUOUS IMPROVEMENT Avg. Niobrara Well Cost ( in mm) Spud to Spud Cycle y Times ((days) y ) E E Focused on continuous improvement in 2014 7.6 mm Record D&C well cost Avg. lateral length of 5,800 ft. and…
  96. 2014 Analyst Day – Chesapeake Energy Corp – slide 96
    POWDER RIVER BASIN THE PRIZE Gross Operated Powder River Basin Recoverable Resources Fort Union 49% 51% Lance Niobrara Upper Cretaceous / Frontier Fox Hills Teckla Teapot Parkman 1.3 billion boe Gross…
  97. 2014 Analyst Day – Chesapeake Energy Corp – slide 97
    19 I Analyst Day 2014
  98. 2014 Analyst Day – Chesapeake Energy Corp – slide 98
    NORTHERN MARCELLUS ASSET OVERVIEW 9 tcfe of net recoverable resources 230,000+ net acres(1) 39% avg. WI, 34% avg. NRI Net production of 910 mmcfe/d(2) 5 - 7 operated rigs in 2014 CHK Operated Rigs Industry Rigs CHK…
  99. 2014 Analyst Day – Chesapeake Energy Corp – slide 99
    NORTHERN MARCELLUS ECONOMICS Type Curve Rate of Return(1) 10 bcfe gross EUR type curve Year First month avg: 10.8 mmcfe/d 50% Finding cost: 0.85/mcf Decrease in spud to TIL cycle time from 2013 to 2014E Well cost: 7.3…
  100. 2014 Analyst Day – Chesapeake Energy Corp – slide 100
    NORTHERN MARCELLUS CONTINUOUS IMPROVEMENT Avg. Well Cost ( in mm) Spud to Spud Cycle Times (days) E Focused on continuous improvement in 2014 95% 2014E multi-well pad drilling utilization YTD well costs already below 2014…

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