INVESTOR PRESENTATION LAST UPDATED AUGUST 6, 2014
FORWARD-LOOKING STATEMENTS • This presentation includes "forward- looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 2 1E of the Securities Exchange Act of 1934. Forward-looking statements are statements other than statements of historical fact that give our current expectations or forecasts of future events. They include production forecasts, estimates of operating costs, assumptions regarding future natural gas and liquids prices, planned drilling activity, estimated future capital expenditures, estimates of recoverable resources, projected rates of return and expected efficiency gains, as well as projected cash flow, business strategy and other plans and objectives for future operations. Although we believe the expectations and forecasts reflected in the forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties. • Factors that could cause actual results to differ materially from expected results include those described under "Risk Factors” in It em 1A of our 2013 annual report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 27, 2014. These risk factors include the volatility of natural gas, oil and NGL prices; the limitations our level of indebtedness may have on our financial flexibility; declines in the prices of natural gas and oil potentially resulting in a write-down of our asset carrying values; the availability of capital on an economic basis, including through planned asset sales, to fund reserve replacement costs; our ability to replace reserves and sustain production; uncertainties inherent in estimating quantities of natural gas, oil and NGL reserves and projecting future rates of production and the amount and timing of development expenditures; our ability to generate profits or achieve targeted results in drilling and well operations; leasehold terms expiring before production can be established; hedging activities resulting in lower prices realized on natural gas, oil and NGL sales; the need to secure hedging liabilities and the inability of hedging counterparties to satisfy their obligations; drilling and operating risks, including potential environmental liabilities; legislative and regulatory changes adversely affecting our industry and our business, including initiatives related to hydraulic fracturing, air emissions and endangered species; a deterioration in general economic, business or industry conditions having a material adverse effect on our results of operations, liquidity and financial condition; oilfield services shortages, gathering system and transportation capacity constraints and various transportation interruptions that could adversely affect our revenues and cash flow; adverse developments and losses in connection with pending or future litigation and regulatory investigations; cyber attacks adversely impacting our operations; and an interruption at our headquarters that adversely affects our business. • Disclosures concerning the estimated contribution of derivative contracts to our future results of operations are based upon market information as of a specific date. These market prices are subject to significant volatility. Our production forecasts are dependent upon many assumptions, including estimates of production decline rates from existing wells and the outcome of future drilling activity. References to “EUR” (e stimated ultimate recovery) and “resources” include estimates of quantities of natural gas, oil and NGL we believe will ultimately be produced, but that are not yet classified as “proved reserves,” as defined in SEC regulations. Estimates of unproved resources are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of actually being realized by Chesapeake. We believe our estimates of unproved resources are reasonable, but our estimates have not been reviewed by independent engineers. Estimates of unproved resources may change significantly as development provides additional data, and actual quantities that are ultimately recovered may differ substantially from prior estimates. • The transaction with RKI is subject to closing conditions, including third-party consents, and may not be completed in the time frame anticipated or at all. Chesapeake’s interest in the properties acquired in the RKI exchange will be reduced if applicable participation rights are exercised and other conditions, including payment to Chesapeake of consideration for such participation, are fulfilled. • We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this presentation, and we undertake no obligation to update any of the information provided in this release, except as required by applicable law. 2 I INVESTOR PRESENTATION – AUGUST 6, 2014
2Q’14 FINANCIAL RESULTS ADJ. EARNINGS/FDS ADJ. EBITDA PROD. and G&A EXP. 8% YOY 10% YOY 29% YOY $5.89/boe (2) $1.3 billion (1) $0.36 (1) LIQUIDITY 1H’14 ASSET SALES TOTAL CAPEX $5.4 billion (3) $1.2 billion (4) 27% YOY $1.3 billion (1) Adjusted earnings per fully diluted share and adjusted EBITDA are non-GAAP financial measures. A reconciliation of non-GAAP financial measures to comparable GAAP financial measures appears on pages 39 – 40 (2) G&A includes expenses associated with share-based compensation (3) Includes unrestricted cash and borrowing availability under revolving credit facility as of 6/30/2014 (4) As of 6/30/2014 3 I INVESTOR PRESENTATION – AUGUST 6, 2014
2 Q’14 OPERATIONAL RESULTS LIQUIDS MIX TOTAL ADJ. PROD. ADJ. OIL PROD. 13% YOY 28% 12% YOY of Total (1) to Production (2) (1) 695 mboe/d 25% in 2Q’13 113.4 mbbls/d ADJ. NGL PROD. ADJ. GAS PROD. 7% YOY 72% YOY (1) (1) 3.0 bcf/d 84.3 mbbls/d (1) Adjusted for asset sales (2) Oil and NGL collectively referred to as “liquids” 4 I INVESTOR PRESENTATION – AUGUST 6, 2014
2Q’14 LEVERAGE REDUCTION $11,965 ($1,270) $ in mm ($255) $1,455 $10,085 ($1,135) ($365) ($310) (1) (1) • Cash and equivalents increased ~$460 mm to ~$1.5 B at 6/30/14 • Long-term debt, net of cash and discounts decreased $1.9 B to ~$10.1 B, or ~15% sequentially (1) Net of unrestricted cash and discounts 5 I INVESTOR PRESENTATION – AUGUST 6, 2014
RKI ACREAGE SWAP AND UTICA REPURCHASE FUNDED WITH CASH AND ASSET SALE PROCEEDS Pro forma $1,462 cash balance >$450 mm $ in mm $155 ($1,260) $250 $295 ($450) (1) • CHK 6/30/14 pro forma unrestricted cash position, including completed and pending transactions, exceeds $450 mm (1) Includes noncore E&P assets in South Central Oklahoma, East Texas and South Texas 6 I INVESTOR PRESENTATION – AUGUST 6, 2014
CAPITAL DISCIPLINE $14.2 $ in billions $7.6 ~$5.8 ~$5.8 (1) (1) (1) 2014 based on midpoint of company Outlook issued on 8/6/2014; capex includes capitalized interest; 2015 estimate midpoint provided at Analyst Day 7 I INVESTOR PRESENTATION – AUGUST 6, 2014
TRANSFORMING OUR BUSINESS • • Organizational structure Portfolio management and capital allocation process • Decision rights • Corporate budget process and plan • Focus on capital efficiency • Performance measurement and • Cash cost reduction compensation program 8 I INVESTOR PRESENTATION – AUGUST 6, 2014
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 continuous improvement • Reduce financial and operational • Drive value leakage out of risk and complexity operations • Achieve investment grade metrics 9 I INVESTOR PRESENTATION – AUGUST 6, 2014
FOUNDATIONAL ELEMENTS FOR VALUE CREATION CHK 10 I INVESTOR PRESENTATION – AUGUST 6, 2014
NET ASSET VALUE AND UPSIDE POTENTIAL CHK $40 NAV/share (1) (1) Based on commodity prices of $4.50/mcf and $90.00/bbl for natural gas and oil, respectively, >20,000 risked drilling locations, net debt, NCI and other liabilities of $13 billion for a total net asset value of $32 billion. 11 I INVESTOR PRESENTATION – AUGUST 6, 2014
APPENDIX 12 I INVESTOR PRESENTATION – AUGUST 6, 2014
EAGLE FORD ASSET OVERVIEW 449,000 net acres • ~1.2 bboe of net recoverable resources 61% avg. WI, 46% avg. NRI • 2Q’14 avg. net production of ~91 mboe/d > Up 15% YOY, adjusted for asset sales > More than 101 mboe/d during last week of July • Averaged 21 operated rigs (2 of which were spudder rigs) and connected 104 gross wells in 2Q’14 CHK Operated Rigs CHK Leasehold Oil Window • ~35% of 2014 estimated E&P capex Wet Gas Window Dry Gas Window • 610 mboe gross EUR per well – 45% ROR (1) Production mix (2) (1) Assumes NYMEX natural gas, oil and NGL prices of $4.00/mcf, $90/bbl and $36/bbl, respectively and ($3.10)/mcf natural gas and ($3.97)/bbl oil for gathering/transportation costs and regional basis differential. Also assumes 115 day spud to TIL cycle time delay. EUR and ROR based on 2014 program 2 Q’14 avg. daily production (2) 13 I INVESTOR PRESENTATION – AUGUST 6, 2014
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