Variable Interest Entities (Note)

6 Months Ended

Jun. 30, 2016

Variable Interest Entity, Not Primary Beneficiary, Disclosures [Abstract]

Variable Interest Entities Disclosure

Variable Interest Entities

The Trust is considered a VIE due to the lack of voting or similar decision-making rights by its equity holders regarding activities that have a significant effect on the economic success of the Trust and because the royalty interest owners, other than Chesapeake, do not have the ability to exercise substantial liquidation rights. Our ownership in the Trust and our previous obligations under the development agreement constitute variable interests. We have determined that we are the primary beneficiary of the Trust because (i) we have the power to direct the activities that most significantly impact the economic performance of the Trust via our obligations to perform under the development agreement, and (ii) as a result of the subordination and incentive thresholds applicable to the subordinated units we hold in the Trust, we have the obligation to absorb losses and the right to receive residual returns that potentially could be significant to the Trust. As a result, we consolidate the Trust in our financial statements, and the common units of the Trust owned by third parties are reflected as a noncontrolling interest. As of June 30, 2016 and December 31, 2015, we had $261 million and $259 million, respectively, of noncontrolling interests on our condensed consolidated balance sheets attributable to the Trust. Net loss attributable to the Trust’s noncontrolling interests is presented in our condensed consolidated statements of operations as a nominal amount in the Current Quarter, a loss of approximately $1 million in the Prior Quarter, a nominal amount in the Current Period and a loss of approximately $1 million in the Prior Period.

The Trust is a consolidated entity whose legal existence is separate from Chesapeake and our other consolidated subsidiaries, and the Trust is not a guarantor of any of Chesapeake’s debt. The creditors or beneficial holders of the Trust have no recourse to the general credit of Chesapeake. In consolidation, as of June 30, 2016, $1 million of cash and cash equivalents, $488 million of proved oil and natural gas properties and $456 million of accumulated depreciation, depletion and amortization were attributable to the Trust. We have presented parenthetically on the face of the condensed consolidated balance sheets the assets of the Trust that can be used only to settle obligations of the Trust and the liabilities of the Trust for which creditors do not have recourse to the general credit of Chesapeake.