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Derivative and Hedging Activities (Tables)
 6 Months Ended
Jun. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Notional Amounts of Outstanding Derivative Positions
The estimated fair values of our oil and natural gas derivative instrument assets (liabilities) as of June 30, 2015 and December 31, 2014 are provided below. 
 
 
June 30, 2015
 
December 31, 2014
 
 
Volume
 
Fair Value
 
Volume
 
Fair Value
 
 
 
 
($ in millions)  
 
 
 
($ in millions)  
Oil (mmbbl):
 
 
 
 
 
 
 
 
Fixed-price swaps
 
7.4

 
$
196

 
12.5

 
$
471

Three-way collars
 
2.2

 
21

 
4.4

 
40

Call options
 
27.9

 
(26
)
 
35.8

 
(89
)
Basis protection swaps
 
4.5

 
4

 
—

 
—

Total oil
 
42.0

 
$
195

 
52.7

 
$
422

 
 
 
 
 
 
 
 
 
Natural gas (tbtu):
 
 
 
 
 
 
 
 
Fixed-price swaps
 
260

 
$
135

 
275

 
$
281

Three-way collars
 
71

 
51

 
207

 
165

Call options
 
193

 
(128
)
 
193

 
(170
)
Basis protection swaps
 
80

 
5

 
60

 
23

Total natural gas
 
604

 
$
63

 
735

 
$
299

Total estimated fair value
 
 
 
$
258

 
 
 
$
721
Schedule Of Derivative Instruments In Condensed Consolidated Balance Sheets
The following table presents the fair value and location of each classification of derivative instrument included in the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014 on a gross basis and after same-counterparty netting: 
Balance Sheet Classification
 
Gross
Fair Value
 
Amounts Netted
in Condensed Consolidated
Balance Sheet
 
Net Fair Value Presented
in Condensed Consolidated
Balance Sheet
 
 
($ in millions)
As of June 30, 2015
 
 
 
 
 
 
Commodity Contracts:
 
 
 
 
 
 
Short-term derivative asset
 
$
426

 
$
(74
)
 
$
352

Short-term derivative liability
 
(101
)
 
74

 
(27
)
Long-term derivative liability
 
(67
)
 
—

 
(67
)
Total commodity contracts
 
258

 
—

 
258

 
 
 
 
 
 
 
Interest Rate Contracts:
 
 
 
 
 
 
Short-term derivative liability
 
—

 
—

 
—

Total interest rate contracts
 
—

 
—

 
—

 
 
 
 
 
 
 
Foreign Currency Contracts:(a)
 
 
 
 
 
 
Long-term derivative liability
 
(88
)
 
—

 
(88
)
Total foreign currency contracts
 
(88
)
 
—

 
(88
)
 
 
 
 
 
 
 
Supply Contracts:
 
 
 
 
 
 
Short-term derivative asset
 
35

 
—

 
35

Long-term derivative asset
 
186

 
—

 
186

Total supply contracts
 
221

 
—

 
221

 
 
 
 
 
 
 
Total derivatives
 
$
391

 
$
—

 
$
391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Classification
 
Gross
Fair Value
 
Amounts Netted
in Condensed Consolidated
Balance Sheet
 
Net Fair Value Presented
in Condensed Consolidated
Balance Sheet
As of December 31, 2014
 
 
 
 
 
 
Commodity Contracts:
 
 
 
 
 
 
Short-term derivative asset
 
$
974

 
$
(95
)
 
$
879

Long-term derivative asset
 
16

 
(10
)
 
6

Short-term derivative liability
 
(105
)
 
95

 
(10
)
Long-term derivative liability
 
(163
)
 
10

 
(153
)
Total commodity contracts
 
722

 
—

 
722

 
 
 
 
 
 
 
Interest Rate Contracts:
 
 
 
 
 
 
Short-term derivative liability
 
(5
)
 
—

 
(5
)
Long-term derivative liability
 
(12
)
 
—

 
(12
)
Total interest rate contracts
 
(17
)
 
—

 
(17
)
 
 
 
 
 
 
 
Foreign Currency Contracts:(a)
 
 
 
 
 
 
Long-term derivative liability
 
(53
)
 
—

 
(53
)
Total foreign currency contracts
 
(53
)
 
—

 
(53
)
 
 
 
 
 
 
 
Total derivatives
 
$
652

 
$
—

 
$
652

____________________________________________
(a)
Designated as cash flow hedging instruments.
Schedule of Derivative Instruments, Natural Gas and Oil Sales
The components of marketing, gathering and compression sales for the Current Quarter, the Prior Quarter, the Current Period and the Prior Period are presented below.
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
($ in millions)
Marketing, gathering and compression sales(a)
 
$
2,085

 
$
3,167

 
$
3,760

 
$
6,182

Gains on undesignated supply contract derivatives
 
220

 
—

 
220

 
—

Total marketing, gathering and compression sales
 
$
2,305

 
$
3,167

 
$
3,980

 
$
6,182

____________________________________________
(a)
Current Quarter and Current Period settlements of $27 million on supply contracts accounted for as derivatives are reflected in marketing, gathering and compression revenues.
The components of oil, natural gas and NGL sales for the Current Quarter, the Prior Quarter, the Current Period and the Prior Period are presented below. 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
($ in millions)
Oil, natural gas and NGL sales
 
$
776

 
$
1,917

 
$
1,700

 
$
4,065

Gains (losses) on undesignated oil and natural gas derivatives
 
(43
)
 
(210
)
 
135

 
(574
)
Losses on terminated cash flow hedges
 
(5
)
 
(3
)
 
(22
)
 
(20
)
Total oil, natural gas and NGL sales
 
$
728

 
$
1,704

 
$
1,813

 
$
3,471
Schedule of Derivative Instruments, Marketing, Gathering and Compression Sales
The components of marketing, gathering and compression sales for the Current Quarter, the Prior Quarter, the Current Period and the Prior Period are presented below.
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
($ in millions)
Marketing, gathering and compression sales(a)
 
$
2,085

 
$
3,167

 
$
3,760

 
$
6,182

Gains on undesignated supply contract derivatives
 
220

 
—

 
220

 
—

Total marketing, gathering and compression sales
 
$
2,305

 
$
3,167

 
$
3,980

 
$
6,182

____________________________________________
(a)
Current Quarter and Current Period settlements of $27 million on supply contracts accounted for as derivatives are reflected in marketing, gathering and compression revenues.
The components of oil, natural gas and NGL sales for the Current Quarter, the Prior Quarter, the Current Period and the Prior Period are presented below. 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
($ in millions)
Oil, natural gas and NGL sales
 
$
776

 
$
1,917

 
$
1,700

 
$
4,065

Gains (losses) on undesignated oil and natural gas derivatives
 
(43
)
 
(210
)
 
135

 
(574
)
Losses on terminated cash flow hedges
 
(5
)
 
(3
)
 
(22
)
 
(20
)
Total oil, natural gas and NGL sales
 
$
728

 
$
1,704

 
$
1,813

 
$
3,471
Interest Income And Interest Expense Disclosure
The components of interest expense for the Current Quarter, the Prior Quarter, the Current Period and the Prior Period are presented below. 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
($ in millions)
Interest expense on senior notes
 
$
171

 
$
184

 
$
342

 
$
364

Interest expense on term loan
 
—

 
7

 
—

 
36

Amortization of loan discount, issuance costs and other
 
12

 
16

 
23

 
35

Interest expense on credit facilities
 
3

 
9

 
6

 
17

Gains on terminated fair value hedges
 
(1
)
 
(1
)
 
(2
)
 
(2
)
Gains on undesignated interest rate derivatives
 
—

 
(33
)
 
(10
)
 
(51
)
Capitalized interest
 
(114
)
 
(155
)
 
(237
)
 
(333
)
Total interest expense
 
$
71

 
$
27

 
$
122

 
$
66
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)
A reconciliation of the changes in accumulated other comprehensive income (loss) in our condensed consolidated statements of stockholders’ equity related to our cash flow hedges is presented below. 
 
 
Three Months Ended June 30,
 
 
2015
 
2014
 
 
Before 
Tax  
 
After 
Tax  
 
Before 
Tax  
 
After 
Tax  
 
 
($ in millions)
Balance, beginning of period
 
$
(216
)
 
$
(134
)
 
$
(247
)
 
$
(153
)
Net change in fair value
 
—

 
—

 
1

 
—

(Gains) losses reclassified to income
 
5

 
3

 
3

 
(1
)
Balance, end of period
 
$
(211
)
 
$
(131
)
 
$
(243
)
 
$
(154
)
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30,
 
 
2015
 
2014
 
 
Before 
Tax  
 
After 
Tax  
 
Before 
Tax  
 
After 
Tax  
 
 
($ in millions)
Balance, beginning of period
 
$
(231
)
 
$
(143
)
 
$
(269
)
 
$
(167
)
Net change in fair value
 
(2
)
 
(1
)
 
6

 
3

Losses reclassified to income
 
22

 
13

 
20

 
10

Balance, end of period
 
$
(211
)
 
$
(131
)
 
$
(243
)
 
$
(154
)
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table provides information for financial assets (liabilities) measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014: 
 
 
Quoted
Prices in
Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2) 
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Fair Value
 
 
 
 
($ in millions)
 
 
As of June 30, 2015
 
 
 
 
 
 
 
 
Derivative Assets (Liabilities):
 
 
 
 
 
 
 
 
Commodity assets
 
$
—

 
$
353

 
$
73

 
$
426

Commodity liabilities
 
—

 
(13
)
 
(155
)
 
(168
)
Interest rate liabilities
 
—

 
—

 
—

 
—

Foreign currency liabilities
 
—


(88
)
 
—

 
(88
)
Supply contract assets
 
—

 
—

 
221

 
221

Total derivatives
 
$
—

 
$
252

 
$
139

 
$
391

 
 
 
 
 
 
 
 
 
As of December 31, 2014
 
 
 
 
 
 
 
 
Derivative Assets (Liabilities):
 
 
 
 
 
 
 
 
Commodity assets
 
$
—

 
$
784

 
$
205

 
$
989

Commodity liabilities
 
—

 
(9
)
 
(259
)
 
(268
)
Interest rate liabilities
 
—

 
(17
)
 
—

 
(17
)
Foreign currency liabilities
 
—

 
(53
)
 
—

 
(53
)
Supply contract assets
 
—

 
—

 
1

 
1

Total derivatives
 
$
—

 
$
705

 
$
(53
)
 
$
652


The following table provides fair value measurement information for the above-noted financial assets (liabilities) measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014: 
 
 
Quoted
Prices in
Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2) 
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Fair Value
 
 
 
 
($ in millions)
 
 
As of June 30, 2015
 
 
 
 
 
 
 
 
Financial Assets (Liabilities):
 
 
 
 
 
 
 
 
Other current assets
 
$
62

 
$
—

 
$
—

 
$
62

Other current liabilities
 
(63
)
 
—

 
—

 
(63
)
Total
 
$
(1
)
 
$
—

 
$
—

 
$
(1
)
 
 
 
 
 
 
 
 
 
As of December 31, 2014
 
 
 
 
 
 
 
 
Financial Assets (Liabilities):
 
 
 
 
 
 
 
 
Other current assets
 
$
57

 
$
—

 
$
—

 
$
57

Other current liabilities
 
(58
)
 
—

 
—

 
(58
)
Total
 
$
(1
)
 
$
—

 
$
—

 
$
(1
)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation
A summary of the changes in the fair values of Chesapeake’s financial assets (liabilities) classified as Level 3 during the Current Period and the Prior Period is presented below. 
 
 
Commodity
Derivatives
 
Supply
Contracts
 
 
($ in millions)
Beginning balance as of January 1, 2015
 
$
(54
)
 
$
1

Total gains (losses) (realized/unrealized):
 
 
 
 
Included in earnings(a)
 
80

 
220

Total purchases, issuances, sales and settlements:
 
 
 
 
Settlements
 
(108
)
 
—

Ending balance as of June 30, 2015
 
$
(82
)
 
$
221

 
 
 
 
 
Beginning balance as of January 1, 2014
 
$
(478
)
 
$
—

Total gains (losses) (realized/unrealized):
 
 
 
 
Included in earnings(a)
 
(173
)
 
—

Total purchases, issuances, sales and settlements:
 
 
 
 
Settlements
 
105

 
—

Transfers(b)
 
(4
)
 
—

Ending balance as of June 30, 2014
 
$
(550
)
 
$
—

___________________________________________
(a)
 
Oil, Natural Gas
and NGL
Sales
 
Marketing, Gathering and Compression Revenue
 
 
 
2015
 
2014
 
2015
 
2014
 
 
($ in millions)
Total gains (losses) included in earnings for the period
 
$
80

 
$
(173
)
 
$
220

 
$
—

Change in unrealized gains (losses) related to assets still held at reporting date
 
$
69

 
$
(133
)
 
$
220

 
$
—

(b)
The values related to basis swaps were transferred from Level 3 to Level 2 as a result of our ability to begin using data readily available in the public market to corroborate our estimated fair values.
Fair Value Inputs, Assets, Quantitative Information
The following table presents quantitative information about Level 3 inputs used in the fair value measurement of our commodity derivative contracts at fair value as of June 30, 2015:
Instrument
Type
 
Unobservable
Input
 
Range
 
Weighted
Average
 
Fair Value
June 30, 2015
 
 
 
 
 
 
 
 
($ in millions)
Oil trades(a)
 
Oil price volatility curves
 
19.51% – 32.31%
 
26.97%
 
$
(5
)
Supply contracts(b)
 
Oil price volatility curves
 
16.55% – 33.27%
 
20.05%
 
$
221

Natural gas trades(a)
 
Natural gas price volatility
curves
 
20.47% – 56.46%
 
32.19%
 
$
(77
)
___________________________________________
(a)
Fair value is based on an estimate derived from option models.
(b)
Fair value is based on an estimate derived from industry standard methodologies which consider historical relationships among various commodities, modeled market prices, time value and volatility factors.