Segment Information

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Segment Information

Segment Information

In accordance with accounting guidance for disclosures about segments of an enterprise and related information, we have three reportable operating segments. Our exploration and production operating segment, natural gas, oil and NGL marketing, gathering and compression operating segment and oilfield services operating segment are managed separately because of the nature of their products and services. The exploration and production operating segment is responsible for finding and producing natural gas, oil and NGL. The marketing, gathering and compression operating segment is responsible for marketing, gathering and compression of natural gas, oil and NGL primarily from Chesapeake-operated wells. The oilfield services operating segment is responsible for contract drilling, oilfield trucking, oilfield rentals, hydraulic fracturing and other oilfield services operations for both Chesapeake-operated wells and wells operated by third parties.

COO, a wholly owned subsidiary of COS, is a diversified oilfield services company that we formed in October 2011 to own and operate our oilfield service assets. COO provides a wide range of well site services, primarily to Chesapeake and its working interest partners, including contract drilling, hydraulic fracturing, oilfield rentals, transportation and manufacturing of natural gas compressor packages and related production equipment. In connection with the reorganization of our oilfield services subsidiaries and operations, those subsidiaries were released from the guarantees and other credit support obligations that existed for the benefit of Chesapeake and its other subsidiaries, including Chesapeake’s senior notes and contingent convertible senior notes, its corporate revolving bank credit facility and its multi-counterparty hedging facility. In addition, COO and its subsidiaries entered into agreements with Chesapeake pursuant to which they sublease rigs, provide certain oilfield services and obtain certain administrative services.

As a result of the formal reorganization of our oilfield services business in October 2011, we are recognizing our oilfield services business as a reportable segment. Historically, our oilfield services business was presented as part of other operations. All prior year information has been restated to reflect the addition of our oilfield services business as a new reportable segment.

Management evaluates the performance of our segments based upon income (loss) before income taxes. Revenues from the sale of natural gas, oil and NGL related to Chesapeake’s ownership interests by the marketing, gathering and compression operating segment are reflected as exploration and production revenues. Such amounts totaled $1.541 billion, $1.324 billion, $3.877 billion and $3.739 billion for the Current Quarter, the Prior Quarter, the Current Period and the Prior Period, respectively. The following table presents selected financial information for Chesapeake’s operating segments.

	Exploration and Production			Marketing, Gathering and Compression			Oilfield Services			Other Operations			Intercompany Eliminations			Consolidated  Total
	($ in millions)
For the Three Months Ended September 30, 2012:
Revenues	$	1,437		$	2,922		$	482		$	—		$	(1,871	)	$	2,970
Intersegment revenues	—			(1,541		)	(330		)	—			1,871			—
Total revenues	$	1,437		$	1,381		$	152		$	—		$	—		$	2,970
Income (loss) before income taxes	$	(3,073	)	$	120		$	(2	)	$	(152	)	$	(124	)	$	(3,231	)
For the Three Months Ended September 30, 2011:
Revenues	$	2,402		$	2,746		$	343		$	—		$	(1,514	)	$	3,977
Intersegment revenues	—			(1,324		)	(190		)	—			1,514			—
Total revenues	$	2,402		$	1,422		$	153		$	—		$	—		$	3,977
Income (loss) before income taxes	$	1,552		$	78		$	27		$	(56	)	$	(90	)	$	1,511

For the Nine Months Ended September 30, 2012:
Revenues	$	4,622		$	7,587		$	1,434		$	—		$	(4,865	)	$	8,778
Intersegment revenues	—			(3,877		)	(988		)	—			4,865			—
Total revenues	$	4,622		$	3,710		$	446		$	—		$	—		$	8,778
Income (loss) before income taxes	$	(1,896	)	$	1,279		$	96		$	(654	)	$	(362	)	$	(1,537	)
For the Nine Months Ended September 30, 2011:
Revenues	$	4,688		$	7,583		$	866		$	—		$	(4,229	)	$	8,908
Intersegment revenues	—			(3,739		)	(490		)	—			4,229			—
Total revenues	$	4,688		$	3,844		$	376		$	—		$	—		$	8,908
Income (loss) before income taxes	$	2,138		$	239		$	72		$	(131	)	$	(237	)	$	2,081
As of September 30, 2012:
Total Assets	$	39,485		$	3,951		$	2,067		$	2,476		$	(2,308	)	$	45,671
As of December 31, 2011:
Total Assets	$	35,403		$	4,047		$	1,571		$	2,718		$	(1,904	)	$	41,835