Derivative and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2016

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 March 31, 2016 and December 31, 2015 are provided below. 

	March 31, 2016				December 31, 2015
	Volume	Fair Value			Volume	Fair Value
		($ in millions)				($ in millions)
Oil (mmbbl):
Fixed-price swaps	21.2	$	78		13.5	$	144
Call options	15.7	(4		)	19.2	(7		)
Total oil	36.9	74			32.7	137
Natural gas (tbtu):
Fixed-price swaps	438	241			500	229
Call options	250	(65		)	295	(99		)
Basis protection swaps	40	(9		)	57	—
Total natural gas	728	167			852	130
Total estimated fair value		$	241			$	267

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 March 31, 2016 and December 31, 2015 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 March 31, 2016
Commodity Contracts:
Short-term derivative asset	$	345		$	(49	)	$	296
Short-term derivative liability	(92		)	49			(43		)
Long-term derivative liability	(12		)	—			(12		)
Total commodity contracts	241			—			241
Foreign Currency Contracts:(a)
Short-term derivative liability	(43		)	—			(43		)
Total foreign currency contracts	(43		)	—			(43		)
Supply Contracts:
Short-term derivative asset	54			—			54
Long-term derivative asset	263			—			263
Total supply contracts	317			—			317
Total derivatives	$	515		$	—		$	515
As of December 31, 2015
Commodity Contracts:
Short-term derivative asset	$	381		$	(66	)	$	315
Short-term derivative liability	(106		)	66			(40		)
Long-term derivative liability	(8		)	—			(8		)
Total commodity contracts	267			—			267
Foreign Currency Contracts:(a)
Long-term derivative liability	(52		)	—			(52		)
Total foreign currency contracts	(52		)	—			(52		)
Supply Contracts:
Short-term derivative asset	51			—			51
Long-term derivative asset	246			—			246
Total supply contracts	297			—			297
Total derivatives	$	512		$	—		$	512

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(a) Designated as cash flow hedging instruments

Schedule of Derivative Instruments, Natural Gas and Oil Sales

The components of oil, natural gas and NGL revenues for the Current Quarter and the Prior Quarter are presented below. 

	Three Months Ended March 31,
	2016			2015
	($ in millions)
Oil, natural gas and NGL revenues	$	812		$	1,382
Gains (losses) on undesignated oil and natural gas derivatives	192			178
Losses on terminated cash flow hedges	(11		)	(17		)
Total oil, natural gas and NGL revenues	$	993		$	1,543

The components of marketing, gathering and compression revenues for the Current Quarter and the Prior Quarter are presented below.

	Three Months Ended March 31,
	2016		2015
	($ in millions)
Marketing, gathering and compression revenues	$	940	$	1,675
Gains on undesignated supply contract derivatives	20		—
Total marketing, gathering and compression revenues	$	960	$	1,675

Schedule of Derivative Instruments, Marketing, Gathering and Compression Sales

The components of oil, natural gas and NGL revenues for the Current Quarter and the Prior Quarter are presented below. 

	Three Months Ended March 31,
	2016			2015
	($ in millions)
Oil, natural gas and NGL revenues	$	812		$	1,382
Gains (losses) on undesignated oil and natural gas derivatives	192			178
Losses on terminated cash flow hedges	(11		)	(17		)
Total oil, natural gas and NGL revenues	$	993		$	1,543

The components of marketing, gathering and compression revenues for the Current Quarter and the Prior Quarter are presented below.

	Three Months Ended March 31,
	2016		2015
	($ in millions)
Marketing, gathering and compression revenues	$	940	$	1,675
Gains on undesignated supply contract derivatives	20		—
Total marketing, gathering and compression revenues	$	960	$	1,675

Interest Income And Interest Expense Disclosure

The components of interest expense for the Current Quarter and the Prior Quarter are presented below. 

	Three Months Ended March 31,
	2016			2015
	($ in millions)
Interest expense on senior notes	$	115		$	171
Amortization of loan discount, issuance costs and other	10			11
Interest expense on credit facilities	5			3
Gains on terminated fair value hedges	—			(1		)
(Gains) losses on undesignated interest rate derivatives	—			(10		)
Capitalized interest	(68		)	(123		)
Total interest expense	$	62		$	51

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 March 31,
	2016						2015
	Before  Tax			After  Tax			Before  Tax			After  Tax
	($ in millions)
Balance, beginning of period	$	(160	)	$	(99	)	$	(231	)	$	(143	)
Net change in fair value	(7		)	(4		)	(2		)	(1		)
Losses reclassified to income	11			4			17			10
Balance, end of period	$	(156	)	$	(99	)	$	(216	)	$	(134	)

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 March 31, 2016 and December 31, 2015:

	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 March 31, 2016
Derivative Assets (Liabilities):
Commodity assets	$	—	$	325		$	20		$	345
Commodity liabilities	—		(36		)	(68		)	(104		)
Foreign currency liabilities	—		(43		)	—			(43		)
Supply contract assets	—		—			317			317
Total derivatives	$	—	$	246		$	269		$	515
As of December 31, 2015
Derivative Assets (Liabilities):
Commodity assets	$	—	$	372		$	9		$	381
Commodity liabilities	—		(14		)	(100		)	(114		)
Foreign currency liabilities	—		(52		)	—			(52		)
Supply contract assets	—		—			297			297
Total derivatives	$	—	$	306		$	206		$	512

A summary of the changes in the fair values of Chesapeake’s financial assets (liabilities) classified as Level 3 during the Current Quarter and the Prior Quarter is presented below.

	Commodity Derivatives			Supply Contracts
	($ in millions)
Beginning balance as of December 31, 2015	$	(91	)	$	297
Total gains (losses) (unrealized):
Included in earnings(a)	25			33
Total purchases, issuances, sales and settlements:
Settlements	18			(13		)
Ending balance as of March 31, 2016	$	(48	)	$	317
Beginning balance as of December 31, 2014	$	(54	)	$	1
Total gains (losses) (unrealized):
Included in earnings(a)	78			—
Total purchases, issuances, sales and settlements:
Settlements	(93		)	—
Transfers(b)	—			—
Ending balance as of March 31, 2015	$	(69	)	$	1

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(a)	Oil, Natural Gas and NGL Sales				Marketing, Gathering and Compression Revenue
	2016		2015		2016		2015
	($ in millions)
Total gains (losses) included in earnings for the period	$	25	$	78	$	20	$	—
Change in unrealized gains (losses) related to assets still held at reporting date	$	21	$	74	$	20	$	—

(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.

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 March 31, 2016 and December 31, 2015:

	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 March 31, 2016
Financial Assets (Liabilities):
Other current assets	$	48		$	—	$	—	$	48
Other current liabilities	(50		)	—		—		(50		)
Total	$	(2	)	$	—	$	—	$	(2	)
As of December 31, 2015
Financial Assets (Liabilities):
Other current assets	$	50		$	—	$	—	$	50
Other current liabilities	(51		)	—		—		(51		)
Total	$	(1	)	$	—	$	—	$	(1	)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table provides information for financial assets (liabilities) measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015:

	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 March 31, 2016
Derivative Assets (Liabilities):
Commodity assets	$	—	$	325		$	20		$	345
Commodity liabilities	—		(36		)	(68		)	(104		)
Foreign currency liabilities	—		(43		)	—			(43		)
Supply contract assets	—		—			317			317
Total derivatives	$	—	$	246		$	269		$	515
As of December 31, 2015
Derivative Assets (Liabilities):
Commodity assets	$	—	$	372		$	9		$	381
Commodity liabilities	—		(14		)	(100		)	(114		)
Foreign currency liabilities	—		(52		)	—			(52		)
Supply contract assets	—		—			297			297
Total derivatives	$	—	$	306		$	206		$	512

A summary of the changes in the fair values of Chesapeake’s financial assets (liabilities) classified as Level 3 during the Current Quarter and the Prior Quarter is presented below.

	Commodity Derivatives			Supply Contracts
	($ in millions)
Beginning balance as of December 31, 2015	$	(91	)	$	297
Total gains (losses) (unrealized):
Included in earnings(a)	25			33
Total purchases, issuances, sales and settlements:
Settlements	18			(13		)
Ending balance as of March 31, 2016	$	(48	)	$	317
Beginning balance as of December 31, 2014	$	(54	)	$	1
Total gains (losses) (unrealized):
Included in earnings(a)	78			—
Total purchases, issuances, sales and settlements:
Settlements	(93		)	—
Transfers(b)	—			—
Ending balance as of March 31, 2015	$	(69	)	$	1

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(a)	Oil, Natural Gas and NGL Sales				Marketing, Gathering and Compression Revenue
	2016		2015		2016		2015
	($ in millions)
Total gains (losses) included in earnings for the period	$	25	$	78	$	20	$	—
Change in unrealized gains (losses) related to assets still held at reporting date	$	21	$	74	$	20	$	—

(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 March 31, 2016:

Instrument Type	Unobservable Input	Range	Weighted Average	Fair Value March 31, 2016
				($ in millions)
Oil trades(a)	Oil price volatility curves	26.58% – 37.92%	33.98%	$	(4	)
Supply contracts(b)	Oil price volatility curves	20.72% – 43.45%	25.61%	$	317
Natural gas trades(a)	Natural gas price volatility curves	19.69% – 47.43%	32.54%	$	(44	)

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(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.