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February 9 2021 Investor Presentation
Chesapeake Energy is focused on generating sustainable free cash flow from a diverse, low-cost asset base while maintaining a strong balance sheet and leading ESG performance. The company plans to reinvest 60-70% of capital to produce over 400 MBoe/d and $2B in free cash flow over five years. Chesapeake also aims to achieve net-zero direct GHG emissions by 2035 by eliminating routine flaring and reducing methane and GHG intensities. This disciplined strategy targets a leverage ratio under 1x and 30-40% of EBITDAX as sustainable free cash flow yield.
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February 9 2021 Investor Presentation
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- 2. Disclaimers FORWARD-LOOKING STATEMENTS This documentincludes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include the risks discussed in our filings with the SEC and the following: our ability to successfully consummate the restructuring of our existing debt, existing equity interests, and certain other obligations, and emerge from the chapter 11 in bankruptcy court; the impact of the COVID-19 pandemic and its effect on our business, financial condition, employees, contractors and vendors, and on the global demand for oil and natural gas and U.S. and world financial markets; the effects of chapter 11 on our business and the interests of various constituents; risks associated with assumption of contracts in chapter 11, our ability to comply with the covenants under our exit facility and the related impact on our ability to continue as a going concern; the volatility of oil, natural gas and natural gas liquids prices, which are affected by general economic and business conditions, as well as increased demand for (and availability of) alternative fuels and electric vehicles; uncertainties inherent in estimating quantities of oil, natural gas and NGL reserves and projecting future rates of production and the amount and timing of development expenditures; our ability to replace reserves and sustain production; drilling and operating risks and resulting liabilities; our ability to generate profits or achieve targeted results in drilling and well operations; the limitations our level of indebtedness may have on our financial flexibility; our inability to access the capital markets on favorable terms; the availability of cash flows from operations and other funds to finance reserve replacement costs or satisfy our debt obligations; adverse developments or losses from pending or future litigation and regulatory proceedings, including royalty claims; legislative and regulatory initiatives addressing environmental concerns, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring or water disposal; terrorist activities and/or cyber-attacks adversely impacting the our operations; effects of acquisitions and dispositions and our ability to realize related synergies and cost savings; and effects of purchase price adjustments and indemnity obligations. Additional factors that could affect our future results or events are described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 10-K”) and our Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and September 30, 2020, and in other reports we file with the U.S. Securities and Exchange Commission from time to time. Readers are cautioned not to place undue reliance on forward-looking statements. All forward-looking statements set forth in this document are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. Forward-looking statements set forth in this document speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law. NON-GAAP FINANCIAL MEASURES Certain financial information included herein, including Adjusted EBITDA and Adjusted EBITDAX, are not presentations made in accordance with U.S. GAAP, and use of such terms varies from others in the same industry. Non-GAAP financial measures should not be considered as alternatives to net income (loss), total operating expenses or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or cash flows as measures of liquidity. Non-GAAP financial measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for results as reported under U.S. GAAP. See the Appendix to this presentation for a reconciliation of certain non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. GAAP. NATURAL GAS, OIL & NATURAL GAS LIQUIDS RESERVES The Company’s proved reserves and adjusted proved reserves are those quantities of natural gas, oil, and natural gas liquids, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The Company’s estimate of its total proved reserves is based on reports prepared by LaRoche Petroleum Consultants, Ltd., independent petroleum engineers, and internal estimates. Factors affecting ultimate recovery include the scope of the Company’s ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals, actual drilling results, including geological and mechanical factors affecting recovery rates, and other factors. Estimates may change significantly as development of the Company’s natural gas, oil and natural gas liquids assets provide additional data. The Company’s production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases. Consistent Returns, Sustainable Future – February 9, 2021
- 3. Company Overview Consistent Returns,Sustainable Future – February 9, 2021
- 4. Chesapeake Today: AFundamentally Different Company Low-cost operator built to generate sustainable free cash flow from a strong balance sheet, diverse asset base and leading ESG performance. Committed to ESG and safety excellence World-class natural gas assets, oil optionality and scale to win Strong balance sheet with low leverage profile Disciplined capital reinvestment strategy Built to generate sustainable free cash flow Low-cost operator with top-quartile cash costs Consistent Returns, Sustainable Future – February 9, 2021
- 5. Disciplined capital reinvestment ratetargeting 60% – 70% to yield positive FCF and 400+ mboe/d on $700mm – $750mm of annual capex Achieve net-zero direct GHG emissions by 2035 • Eliminate routine flaring on all new wells completed from 2021 forward, and enterprise-wide by 2025 • Reduce methane intensity(4) to 0.09% and GHG intensity(5) to 5.5 by 2025 Our Pledge: Consistent Returns, Sustainable Future Consistent Returns, Sustainable Future – February 9, 2021 5 Focus on cost reduction Targets 30% – 40% of EBITDAX as FCF yield Cash cost leadership ~$1B annual cash costs(3) removed vs. 2019,a permanent reduction >$2B of FCF projected over next five years provides flexibility to enhance returns through debt reduction, dividends, share buybacks, redeployment or M&A (2) Preserve balance sheet strength Targeting <1X long-term leverage(1) (1) Defined as net debt / EBITDAX. Net debt = principal of debt + revolving facility balance - cash on hand. EBITDAX is a non-GAAP financial measure and is defined as earnings before interest, taxes, depreciation and amortization and exploration cost. See the appendix for a reconciliation of Net Cash from Operating Activities to EBITDAX. (2) Free cash flow (FCF) is a non-GAAP financial measure and is defined as net cash flow from all activities excluding financing transactions and restructuring costs. Estimated based on 1/22/2021 strip pricing from 2021 to 2025. (3) Total cash costs = LOE + GP&T + G&A + operating taxes (excluding income taxes) + interest. (4) Defined as volume methane emissions / volume gross gas produced. (5) Defined as tCO2e/gross boe produced.
- 6. Deep Portfolio: DiversifiedPositions Across Multiple Basins Consistent Returns, Sustainable Future – February 9, 2021 6 Note: Net acres and projected WI and NRI estimates as of 12/31/2020. (1) Capex inclusive of D&C, workover, land/G&G, facilities and capitalized G&A but excludes capitalized interest 4Q’20E Production ~435 mboe/d Appalachia: 1,110 mmcf/d Brazos Valley: 41 mboe/d Gulf Coast: 558 mmcf/d Powder River Basin: 22 mboe/d South Texas: 84 mboe/d Mid-Continent: 10 mboe/d Projected $700mm – $750mm Annual Sustaining Capex(1) Divested in Dec. 2020 2021E Asset Development Detail (~$650mm Development Capex) Gulf Coast 40% South Texas 8% Powder River 2% Appalachia 45% Brazos Valley 5% GULF COAST ~225,000 Net acres ~80% WI // 65% NRI ~$260mm Capex (1) 2 – 3 Active Rigs // ~30 Wells Drilled APPALACHIA ~540,000 Net acres ~40% WI // 35% NRI ~$300mm Capex (1) ~3 Active Rigs // ~65 Wells Drilled BRAZOS VALLEY ~420,000 Net acres ~95% WI // 75% NRI ~$30mm Capex (1) 0 Active Rigs // 0 Wells Drilled SOUTH TEXAS ~220,000 Net acres ~60% WI // 45% NRI ~$50mm Capex (1) ~0.5 Active Rigs // ~10 Wells Drilled POWDER RIVER BASIN ~190,000 Net acres ~80% WI // 65% NRI ~$10mm Capex (1) 0 Active Rigs // 0 Wells Drilled MID-CONTINENT Sold December 2020 4Q’20E Production Mix NGL 6% Oil 20% Gas 74%
- 7. Notes Credit Facility $500$500 $50 (3) $221 (4) 2021 2022 2023 2024 2025 2026 2027 2028 2029 Post-petition ($mm) Restored Balance Sheet Significant liquidity • $2.5B borrowing base at exit • $1.7B(1) available at emergence Expected substantial FCF targeted to result in revolver undrawn by year end 2021 Cash flow projections substantially de-risked through robust hedging program (1) Borrowing base currently supporting up to $1.97B of Tranche A and B credit facility commitments assuming. (2) As of 6/28/2020. (3) Current balance upon exit from Ch. 11 proceedings (excludes letters of credit). (4) Represents $221mm of CA-CIB and Natixis Tranche B. Expected to issue 100mm – 138mm of common shares upon emergence • Inclusive of Rights Offerings, Backstop Agreement and Warrants, depending on exercise $0 $500 $1,000 $1,500 $2,000 $2,500 2020 2021 2022 2023 2024 2025 2026 2027 Pre-petition(2) $294 $272 $2,096 $2,124 $2,578 $1,229 $253 $249 7 Consistent Returns, Sustainable Future – February 9, 2021
- 8. Balance Sheet Improvedvs. IG Peers Consistent Returns, Sustainable Future – February 9, 2021 8 Source: Capital IQ, Eikon and Bloomberg; peer estimates per IBES market data as of 1/18/2021. Note: Data based on strip prices as of 1/18/2021. COP and PXD estimates are pro forma for announced mergers. FANG shown pro forma for announced acquisition based on research estimates, exclusive of announced synergies. (1) CHK at emergence calculated as net debt at emergence over LTM Q1 2021 EBITDA. (2) 2019 CHK calculated as YE 2019 net debt over 2019 EBITDA. 0.8x 3.5x 0.0 x 0.5 x 1.0 x 1.5 x 2.0 x 2.5 x 3.0 x 3.5 x 4.0 x EOG PF CHK COG PXD COP XEC DVN MRO CLR SWN FANG EQT OVV AR APA RRC CHK 2019 Significant reduction Targeting <0.5x by YE 2021 (1) Indicates IG Credit Rating CHK 2019(2) CHK at emergence(1)
- 9. Investment-Grade Scale Consistent Returns,Sustainable Future – February 9, 2021 9 Source: Company disclosure and SEC filings 445 0 200 400 600 800 1,000 1,200 COP EOG EQT AR OVV CHK SWN COG APA MRO RRC PXD DVN HES CXO CLR FANG XEC WPX PDCE CRK PE MUR SM CPE LPI Q3 2020 Production (mboe/d) 1 Basin 2 Basins 3+ Basins Chesapeake is one of the largest U.S. independent E&Ps by production, with a geographically diversified, top-tier asset base Indicates IG Credit Rating 445 CHK
- 10. Marketing Contract Negotiations POWDERRIVER BASIN $58mm GP&T reduction No savings in 2021 4-year PDP MVC GULF COAST $980mm GP&T reduction $100mm in 2021 Reduced FT commitments APPALACHIA $196mm GP&T reduction $4mm in 2021 Reduced FT commitments MID-CONTINENT Successful divestment SOUTH TEXAS $525mm GP&T reduction $115mm in 2021 Removed Processing and Crude MVCs BRAZOS VALLEY $337mm GP&T reduction $62mm in 2021 Eliminated all MVCs (1) All figures compared vs Chapter 11 commencement in May 2020 and current as of January 2021. $4B in Contract Savings ($2.2B PV-10, $281mm in 2021) ~$5.15/boe 2021 GP&T (Down >20% from 2020, 40% from 2015) Long term commitments reduced by 55% (~$3.0B)(1) Reduced contracts from over 2,000 to approximately 800 Successfully renegotiated or rejected ~$15B in contracts Consistent Returns, Sustainable Future – February 9, 2021
- 11. Reset, Competitive MidstreamContracts Consistent Returns, Sustainable Future – February 9, 2021 11 Source: Chesapeake Filings, Management Projections Note: 2021E and 2022E excludes Mid-Continent. $ 0.00 $ 1.00 $ 2.00 $ 3.00 $ 4.00 $ 5.00 $ 6.00 $ 7.00 $ 0 $ 200 $ 400 $ 600 $ 800 $ 1,000 $ 1,200 2019 2020E 2021E 2022E $/boe $ mm Appalachia Gulf Coast South Texas Brazos Valley Rockies Other $/Boe Total GP&T ($mm & $/boe) Appalachia Gulf Coast South Texas Brazos Valley Rockies Other $/boe >20% >5%
- 12. Significant Improvement inCost Structure to Support Sustainable Free Cash Flow Generation Source: Public filings, Management Guidance Note: Implied revenue per boe calculated as illustrative 2021E revenues at each price deck and including the effect of hedges in place divided by 2021E projected production. Meaningful Cost Reduction ($/boe) Confirmed Cost Reduction Efforts Rationalized drilling program to target highest return locations At emergence debt burden will be reduced by ~$7.7B from pre-bankruptcy levels Reduction of cash G&A expenses of ~$125mm compared to YE 2019 Successfully renegotiated GP&T agreements in all operating areas Continued efforts to reduce LOE including reducing SWD costs, optimizing repairs and maintenance expense and workover 2021 Cost Guidance $mm per/boe Capex $670 – $740 $4.35 – $4.80 Interest Expense $60 – $70 $0.40 – $0.45 G&A $180 – $200 $1.15 – $1.30 Production Tax $130 – $150 $0.85 – $0.95 GP&T $760 – $830 $4.90 – $5.40 LOE $300 – $330 $1.95 – $2.15 TOTAL $2,100 – $2,320 $13.60 – $15.05 ~50% Reduction Opportunity for Free Cash Flow FY2019 2021E Capex: $12.71 WTI: $50.00; HH: $3.00 WTI: $40.00; HH:$2.50 $ 18.98 $ 17.78 G&A: $1.78 Interest Expense: $3.69 LOE $2.94 GP&T $6.13 Production Tax: $1.27 Implied Revenue / boe (Realized) GP&T: $6.13 LOE: $2.94 $28.52 Consistent Returns, Sustainable Future – February 9, 2021
- 13. $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 COG SWN CRKXEC CHK 2021 EQT FANG PXD CLR RRC CPE EOG APA AR DVN SM MRO OVV COP WPX CHK 2019 Total Cash Costs/boe Top-Quartile Cost Structure Source: Peer figures based on company 2020 Third Quarter 10-Q filings, quarter-to-date (3 month) results only. CHK 2021E based on midpoints of 2021 guidance. Note: Total cash costs = LOE + GP&T + G&A + operating taxes (excluding income taxes) + interest ~40% reduction and still working… CHK 2021 CHK 2021 CHK 2019 484 mboe/d 410 – 420 mboe/d $15.81 $9.75 Consistent Returns, Sustainable Future – February 9, 2021
- 14. Meaningful Shift toDelivering Free Cash Flow Consistent Returns, Sustainable Future – February 9, 2021 14 Source: Capital IQ, Eikon and Bloomberg; peer estimates per IBES, market data as of 1/18/2021. Note: Data based on IBES estimates as adjusted for strip prices as of 1/18/2021. COP and PXD estimates are pro forma for announced mergers. FANG shown pro forma for announced acquisition based on research estimates, exclusive of announced synergies. (1) CHK excludes financing transaction and restructuring cost. 0 % 5 % 10 % 15 % 20 % 25 % 30 % 35 % 40 % 45 % 50 % 55 % COG COP XEC EOG CHK PXD APA DVN MRO CLR RRC EQT FANG OVV AR SWN 2021E FCF (% EBITDA) CHK(1)
- 15. Leading a ResponsibleEnergy Future Our path to achieving net-zero direct GHG emissions by 2035 Environmental Stewardship • Eliminate routine flaring on all wells completed from 2021 forward, and enterprise-wide targeted by 2025 • Targeted reduction of GHG intensity and methane intensity by 2025 • Intend to initiate first electric frac in 2021, opportunity to implement enterprise-wide Social Engagement • One CHK culture and company core values promote a diverse, inclusive and productive workplace • Commitment to increased I&D education and training Governance Reform • Forming Board committee dedicated to ESG oversight Source: Company disclosure 0 20 40 60 MRO APA CPE DVN COP WPX XEC CLR PXD EOG OVV SM FANG AR CHK CNX SWN COG CRK EQT RRC 2019 GHG Emissions Intensity metric tons CO2e/gross mboe produced 8.2 16.1 FLIGHT Peer Avg 2019 0.0% 0.4% 0.8% 1.2% CPE COP APA MRO WPX PXD DVN CLR XEC FANG CHK OVV EOG CNX SM COG CRK EQT AR SWN RRC 2019 Methane Intensity volume methane emissions/volume gross gas produced 0.17% 0.25% 0.20% FLIGHT Peer Avg 2019 2025 OGCI ambition Consistent Returns, Sustainable Future – February 9, 2021
- 16. CHK Scope 1and 2 GHG Metrics 2019 GHG and methane intensity increased due to the WRD acquisition Post-acquisition, CHK initiated a concerted effort to high-grade the BV asset to CHK standards by adding • Emission controls • Emission monitoring programs • Reducing programs We expect 2020 GHG metrics will show that methane intensity decreased compared to 2019 (1) Volume methane emissions/volume gross gas produced. (2) Metric tons methane emissions / gross oil and gas production, mboe. GHG: Greenhouse Gas as carbon dioxide, methane, and nitrous oxide; Scf: Standard cubic feet; MMscf: Million standard cubic feet; mboe: Thousand barrels of crude oil equivalent. 6 thousand scf = 1 boe; CO2e: Carbon dioxide equivalent. 1 metric ton methane = 25 CO2e and 1 metric ton nitrous oxide = 298 CO2e Scope 1 Methane intensity(1) GHG intensity(2) 2019 0.17% 8.2 2018 0.16% 7.2 2017 0.19% 9.1 Total GHG Intensity(2) Scope 1 97% Scope 2 3% Consistent Returns, Sustainable Future – February 9, 2021
- 17. 2019 Emissions byOperator Consistent Returns, Sustainable Future – February 9, 2021 17 Source: Enverus December 2020 Play by Play Conference. PXD and MGY assumes 2018 data.
- 18. Chesapeake Today: AFundamentally Different Company Low-cost operator built to generate sustainable free cash flow from a strong balance sheet, diverse asset base and leading ESG performance. Committed to ESG and safety excellence World-class natural gas assets, oil optionality and scale to win Strong balance sheet with low leverage profile Disciplined capital reinvestment strategy Built to generate sustainable free cash flow Low-cost operator with top-quartile cash costs Consistent Returns, Sustainable Future – February 9, 2021
- 19. Appendix Consistent Returns, SustainableFuture – February 9, 2021
- 20. Board of Directors MICHAELWICHTERICH, Chairman • Founder and CEO of Three Rivers Operating Company LLC • Most recently served as CFO of Texas American Resources • Previous experience includes CFO at New Braunfels Utilities and Mariner Energy, and energy audit at PwC • Currently serving on the boards of Grizzly Energy, Bruin E&P Operating and Extraction Oil and Gas TIMOTHY S. DUNCAN • Founder, President and CEO of Talos Energy Inc. • Served as a director at Talos since April 2012 • Prior to Talos, served as Senior Vice President of Business Development and a founder of Phoenix Exploration Company LP BENJAMIN C. DUSTER, IV • Founder and Chief Executive Officer of Cormorant IV Corporation, LLC, a consulting firm specializing in operational turnarounds and organizational transformations • A 30-year veteran of Wall Street with extensive experience in M&A and Strategic Advisory Services in both developed and emerging markets • Currently serving on the boards of Weatherford International, Plc and Alaska Communications Systems Group, Inc. SARAH EMERSON • President and managing principal at ESAI Energy, LLC, an energy consulting firm • Currently serving as a Senior Associate at the Center for Strategic and International Studies and has been a Senior Fellow at the Kennedy School at Harvard University MATTHEW M. GALLAGHER • Former President and CEO of Parsley Energy Inc. • Prior to serving as CEO, served as Parsley’s COO from 2014 to 2019 • Currently serving on the board of Pioneer Natural Resources ROBERT D. LAWLER • President, CEO and Director of Chesapeake Energy Corporation since 2013 • Prior to Chesapeake, has held multiple engineering and leadership positions at Anadarko Petroleum Corporation and Kerr-McGee BRIAN STECK • Currently the Chairman of Bonanza Creek Energy, Inc. • Previously served as a Partner at Mangrove Partners since 2011 • Currently serving on boards of Bonanza Creek and California Resources Corporation Consistent Returns, Sustainable Future – February 9, 2021
- 21. Hedging Program ReducesRisk, Protects Returns Consistent Returns, Sustainable Future – February 9, 2021 21 Note: Hedged volumes and hedged prices reflect hedges as of 2/4/2021. Average Hedged Price 2021 2022 Gas ($/mcf) $ 2.69 $ 2.53 Oil ($/bbl) $ 42.69 $ 44.30 75% 34% 77% 67% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 2021 2022 % of Gas Vol % of Oil Vol Locked in >75% of forecasted volumes for 2021
- 22. Gas Assets: Appalachiaand Gulf Coast ($0.50)/mcf annual average in-basin to NYMEX pricing Premium realizations in winter months ~40% of 4Q’20E production Marketing fee excluded. Basis based on periods 2021E – 2025E. ($0.18)/mcf annual average in-basin to NYMEX pricing ~20% of 4Q’20E production $0.90 $0.76 $0.74 $0.70 $0.72 $0.66 $0.56 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 2018 2019 2020E 2021E 2022E Appalachia: Gas GP&T ($/mcf) $0.90 $0.95 $0.93 $0.69 $0.72 $0.42 $0.42 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 2018 2019 2020E 2021E 2022E Gulf Coast: Gas GP&T ($/mcf) Pre-Restructuring 4Q’20E Production: 558 mmcf/d Gas 100% 4Q’20E Production: 1,110 mmcf/d Gas 100% Consistent Returns, Sustainable Future – February 9, 2021
- 23. 54% Oil Gas 26% NGL19% South Texas +$0.15/mcf, +$0.30/bbl oil, and +$0.15/bbl NGL annual average in-basin to NYMEX pricing Eliminated processing and crude MVCs, only gas gathering MVCs remain ~20% of 4Q’20E production Marketing fee excluded. Basis based on periods 2021E – 2025E. $5.25 $4.56 $6.37 $6.69 $7.48 $6.29 $7.07 $0.00 $2.00 $4.00 $6.00 $8.00 2018 2019 2020E 2021E 2022E Gas GP&T ($/mcf) $5.09 $5.37 $6.27 $6.42 $6.39 $3.97 $4.15 $0.00 $2.00 $4.00 $6.00 $8.00 2018 2019 2020E 2021E 2022E Oil GP&T ($/bbl) $3.84 $4.16 $3.98 $2.95 $2.98 $1.44 $1.48 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 2018 2019 2020E 2021E 2022E NGL GP&T ($/bbl) 4Q’20E Production: 84 mboe/d Pre-Restructuring Consistent Returns, Sustainable Future – February 9, 2021
- 24. Brazos Valley ($0.50)/mcf, ($0.75)/bbloil, and ($8.30)/bbl NGL annual average in-basin to NYMEX pricing Eliminated all MVCs ~10% of 4Q’20E production Marketing fee excluded. Basis based on periods 2021E – 2025E. $0.03 $0.05 $0.05 $0.05 $0.04 $0.04 $0.00 $0.01 $0.02 $0.03 $0.04 $0.05 $0.06 2018 2019 2020E 2021E 2022E Gas GP&T ($/mcf) $1.14 $1.58 $1.29 $1.33 $0.55 $0.74 $0.00 $0.50 $1.00 $1.50 $2.00 2018 2019 2020E 2021E 2022E Oil GP&T ($/bbl) Pre-Restructuring 4Q’20E Production: 41 mboe/d 74% Oil Gas 16% NGL 10% Consistent Returns, Sustainable Future – February 9, 2021
- 25. Powder River Basin ($0.05)/mcf,($2.25)/bbl oil, and ($4.15)/bbl NGL annual average in-basin to NYMEX pricing MVC/EBITDAX recoupment converted to straight MVC, four years, 90% of PDP ~5% of 4Q’20E production Marketing fee excluded. Basis based on periods 2021E – 2025E. $3.02 $2.58 $3.15 $3.48 $4.22 $3.28 $4.35 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 2018 2019 2020E 2021E 2022E Gas GP&T ($/mcf) $3.26 $1.92 $2.53 $1.67 $1.70 $1.46 $1.54 $0.00 $1.00 $2.00 $3.00 $4.00 2018 2019 2020E 2021E 2022E Oil GP&T ($/bbl) $16.05 $15.00 $17.14 $16.70 $20.17 $14.27 $18.90 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 2018 2019 2020E 2021E 2022E NGL GP&T ($/bbl) Pre-Restructuring 4Q’20E Production: 22 mboe/d 45% Oil Gas 39% NGL 16% Consistent Returns, Sustainable Future – February 9, 2021
- 26. Reconciliation of NetCash from Operating Activities to Adj. EBITDAX CHESAPEAKE ENERGY CORPORATION RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED EBITDAX ($ in millions) (unaudited) Years Ended December 31, 2019 NET CASH PROVIDED BY OPERATING ACTIVITIES (GAAP) $1,623 Adjustments: Changes in assets and liabilities 254 Other revenue (59) Interest expense 651 Exploration 35 Income tax benefit (26) Stock-based compensation (30) Restructuring and other termination costs 12 Losses on investments 7 Losses on purchases or exchanges of debt 5 Net income attributable to noncontrolling interests — Other items 58 Adjusted EBITDAX (a) (Non-GAAP) $2,530 *Financial information for 2018 has been recast to reflect the retrospective application of the successful efforts method of accounting. (a) Adjusted EBITDAX is not a measure of financial performance under GAAP, and should not be considered as an alternative to, or more meaningful than, cash flow provided by operating activities prepared in accordance with GAAP. Adjusted EBITDAX excludes certain items that management believes affect the comparability of operating results. The company believes this non-GAAP financial measure is a useful adjunct to cash flow provided by operating activities because: (i) Management uses adjusted EBITDAX to evaluate the company's operational trends and performance relative to other oil and natural gas producing companies. (ii) Adjusted EBITDAX is more comparable to estimates provided by securities analysts. (iii) Items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the company generally excludes information regarding these types of items. Because adjusted EBITDAX excludes some, but not all, items that affect net income (loss), our calculations of adjusted EBITDAX may not be comparable to similarly titled measures of other companies. Consistent Returns, Sustainable Future – February 9, 2021