Condensed Consolidating Financial Information (Tables)

9 Months Ended

Sep. 30, 2019

Condensed Financial Information Disclosure [Abstract]

Condensed Consolidated Balance Sheets

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2019

($ in millions) 

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	8	$	1	$	10	$	(5	)	$	14
Other current assets	56		1,231		102		—			1,389
Intercompany receivable, net	6,275		—		—		(6,275		)	—
Total Current Assets	6,339		1,232		112		(6,280		)	1,403
PROPERTY AND EQUIPMENT:
Oil and natural gas properties, at cost based on successful efforts accounting, net	—		9,513		4,221		—			13,734
Other property and equipment, net	—		1,046		86		—			1,132
Property and equipment held for sale, net	—		10		—		—			10
Total Property and Equipment, Net	—		10,569		4,307		—			14,876
LONG-TERM ASSETS:
Other long-term assets	336		231		30		(297		)	300
Investments in subsidiaries and intercompany advances	6,013		2,338		—		(8,351		)	—
TOTAL ASSETS	$	12,688	$	14,370	$	4,449	$	(14,928	)	$	16,579
CURRENT LIABILITIES:
Current liabilities	$	325	$	1,805	$	223	$	(5	)	$	2,348
Intercompany payable, net	—		6,275		—		(6,275		)	—
Total Current Liabilities	325		8,080		223		(6,280		)	2,348
LONG-TERM LIABILITIES:
Long-term debt, net	7,612		—		1,521		—			9,133
Deferred income tax liabilities	—		—		297		(297		)	—
Other long-term liabilities	55		277		31		—			363
Total Long-Term Liabilities	7,667		277		1,849		(297		)	9,496
EQUITY:
Chesapeake stockholders’ equity	4,696		6,013		2,338		(8,351		)	4,696
Noncontrolling interests	—		—		39		—			39
Total Equity	4,696		6,013		2,377		(8,351		)	4,735
TOTAL LIABILITIES AND EQUITY	$	12,688	$	14,370	$	4,449	$	(14,928	)	$	16,579

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2018

($ in millions)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	4	$	1	$	1	$	(2	)	$	4
Other current assets	60		1,532		2		—			1,594
Intercompany receivable, net	6,671		—		—		(6,671		)	—
Total Current Assets	6,735		1,533		3		(6,673		)	1,598
PROPERTY AND EQUIPMENT:
Oil and natural gas properties, at cost based on successful efforts accounting, net	—		9,664		48		—			9,712
Other property and equipment, net	—		1,091		—		—			1,091
Property and equipment held for sale, net	—		15		—		—			15
Total Property and Equipment, Net	—		10,770		48		—			10,818
LONG-TERM ASSETS:
Other long-term assets	26		293		—		—			319
Investments in subsidiaries and intercompany advances	3,248		9		—		(3,257		)	—
TOTAL ASSETS	$	10,009	$	12,605	$	51	$	(9,930	)	$	12,735
CURRENT LIABILITIES:
Current liabilities	$	523	$	2,365	$	1	$	(2	)	$	2,887
Intercompany payable, net	—		6,671		—		(6,671		)	—
Total Current Liabilities	523		9,036		1		(6,673		)	2,887
LONG-TERM LIABILITIES:
Long-term debt, net	7,341		—		—		—			7,341
Other long-term liabilities	53		321		—		—			374
Total Long-Term Liabilities	7,394		321		—		—			7,715
EQUITY:
Chesapeake stockholders’ equity	2,092		3,248		9		(3,257		)	2,092
Noncontrolling interests	—		—		41		—			41
Total Equity	2,092		3,248		50		(3,257		)	2,133
TOTAL LIABILITIES AND EQUITY	$	10,009	$	12,605	$	51	$	(9,930	)	$	12,735

Condensed Consolidated Income Statements

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2019

($ in millions)

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Oil, natural gas and NGL	$	—		$	932		$	238		$	—		$	1,170
Marketing	—			889			—			—			889
Total Revenues	—			1,821			238			—			2,059
Other	—			15			—			—			15
Gains on sales of assets	—			13			—			—			13
Total Revenues and Other	—			1,849			238			—			2,087
OPERATING EXPENSES:
Oil, natural gas and NGL production	—			129			26			—			155
Oil, natural gas and NGL gathering, processing and transportation	—			268			2			—			270
Production taxes	—			25			10			—			35
Exploration	—			17			—			—			17
Marketing	—			901			—			—			901
General and administrative	—			43			23			—			66
Depreciation, depletion and amortization	—			421			152			—			573
Impairments	—			9			—			—			9
Other operating expense	—			15			—			—			15
Total Operating Expenses	—			1,828			213			—			2,041
INCOME FROM OPERATIONS	—			21			25			—			46
OTHER INCOME (EXPENSE):
Interest income (expense)	(161		)	3			(19		)	—			(177		)
Losses on investments	—			(4		)	—			—			(4		)
Gains on purchases or exchanges of debt	64			—			6			—			70
Other income	—			3			—			—			3
Equity in net earnings of subsidiary	25			2			—			(27		)	—
Total Other Income (Expense)	(72		)	4			(13		)	(27		)	(108		)
INCOME (LOSS) BEFORE INCOME TAXES	(72		)	25			12			(27		)	(62		)
INCOME TAX (BENEFIT) EXPENSE	(11		)	—			10			—			(1		)
NET INCOME (LOSS)	(61		)	25			2			(27		)	(61		)
Net loss attributable to noncontrolling interests	—			—			—			—			—
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	(61		)	25			2			(27		)	(61		)
Other comprehensive income	—			8			—			—			8
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	$	(61	)	$	33		$	2		$	(27	)	$	(53	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2018

($ in millions)

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
REVENUES:
Oil, natural gas and NGL	$	—		$	1,194		$	5	$	—		$	1,199
Marketing	—			1,219			—		—			1,219
Total Revenues	—			2,413			5		—			2,418
Other	—			16			—		—			16
Losses on sales of assets	—			(10		)	—		—			(10		)
Total Revenues and Other	—			2,419			5		—			2,424
OPERATING EXPENSES:
Oil, natural gas and NGL production	—			132			—		—			132
Oil, natural gas and NGL gathering, processing and transportation	—			362			2		—			364
Production taxes	—			33			1		—			34
Exploration	—			22			—		—			22
Marketing	—			1,238			—		—			1,238
General and administrative	—			81			—		—			81
Provision for legal contingencies, net	—			8			—		—			8
Depreciation, depletion and amortization	—			403			2		—			405
Impairments	—			58			—		—			58
Total Operating Expenses	—			2,337			5		—			2,342
INCOME FROM OPERATIONS	—			82			—		—			82
OTHER INCOME (EXPENSE):
Interest expense	(163		)	(2		)	—		—			(165		)
Losses on purchases or exchanges of debt	(68		)	—			—		—			(68		)
Other income	—			6			—		—			6
Equity in net earnings of subsidiary	86			—			—		(86		)	—
Total Other Income (Expense)	(145		)	4			—		(86		)	(227		)
INCOME (LOSS) BEFORE INCOME TAXES	(145		)	86			—		(86		)	(145		)
INCOME TAX EXPENSE	1			—			—		—			1
NET INCOME (LOSS)	(146		)	86			—		(86		)	(146		)
Net (income) loss attributable to noncontrolling interests	—			—			—		—			—
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	(146		)	86			—		(86		)	(146		)
Other comprehensive income	—			8			—		—			8
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	$	(146	)	$	94		$	—	$	(86	)	$	(138	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2019

($ in millions)

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Oil, natural gas and NGL	$	—		$	3,000		$	553		$	—		$	3,553
Marketing	—			3,038			—			—			3,038
Total Revenues	—			6,038			553			—			6,591
Other	—			45			—			—			45
Gains on sales of assets	—			33			—			—			33
Total Revenues and Other	—			6,116			553			—			6,669
OPERATING EXPENSES:
Oil, natural gas and NGL production	—			384			69			—			453
Oil, natural gas and NGL gathering, processing and transportation	—			802			13			—			815
Production taxes	—			83			26			—			109
Exploration	—			53			3			—			56
Marketing	—			3,071			—			—			3,071
General and administrative	—			193			65			—			258
Provision for legal contingencies, net	—			3			—			—			3
Depreciation, depletion and amortization	—			1,295			377			—			1,672
Impairments	—			11			—			—			11
Other operating expense	—			41			38			—			79
Total Operating Expenses	—			5,936			591			—			6,527
INCOME (LOSS) FROM OPERATIONS	—			180			(38		)	—			142
OTHER INCOME (EXPENSE):
Interest income (expense)	(475		)	13			(51		)	—			(513		)
Losses on investments	—			(4		)	(24		)	—			(28		)
Gains on purchases or exchanges of debt	64			—			6			—			70
Other income	—			28			2			—			30
Equity in net earnings of subsidiary	129			(88		)	—			(41		)	—
Total Other Expense	(282		)	(51		)	(67		)	(41		)	(441		)
INCOME (LOSS) BEFORE INCOME TAXES	(282		)	129			(105		)	(41		)	(299		)
INCOME TAX BENEFIT	(298		)	—			(17		)	—			(315		)
NET INCOME (LOSS)	16			129			(88		)	(41		)	16
Net loss attributable to noncontrolling interests	—			—			—			—			—
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	16			129			(88		)	(41		)	16
Other comprehensive income	—			26			—			—			26
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	$	16		$	155		$	(88	)	$	(41	)	$	42

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2018

($ in millions)

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Oil, natural gas and NGL	$	—		$	3,410		$	14		$	—		$	3,424
Marketing	—			3,738			—			—			3,738
Total Revenues	—			7,148			14			—			7,162
Other	—			48			—			—			48
Gains on sales of assets	—			27			—			—			27
Total Revenues and Other	—			7,223			14			—			7,237
OPERATING EXPENSES:
Oil, natural gas and NGL production	—			417			—			—			417
Oil, natural gas and NGL gathering, processing and transportation	—			1,055			5			—			1,060
Production taxes	—			90			1			—			91
Exploration	—			123			—			—			123
Marketing	—			3,798			—			—			3,798
General and administrative	—			272			1			—			273
Restructuring and other termination costs	—			38			—			—			38
Provision for legal contingencies, net	—			17			—			—			17
Depreciation, depletion and amortization	—			1,330			5			—			1,335
Impairments	—			122			—			—			122
Other operating income	—			(1		)	—			—			(1		)
Total Operating Expenses	—			7,261			12			—			7,273
INCOME (LOSS) FROM OPERATIONS	—			(38		)	2			—			(36		)
OTHER INCOME (EXPENSE):
Interest expense	(480		)	(2		)	—			—			(482		)
Gains on investments	—			139			—			—			139
Losses on purchases or exchanges of debt	(68		)	—			—			—			(68		)
Other income	—			62			—			—			62
Equity in net earnings of subsidiary	162			1			(1		)	(162		)	—
Total Other Income (Expense)	(386		)	200			(1		)	(162		)	(349		)
INCOME (LOSS) BEFORE INCOME TAXES	(386		)	162			1			(162		)	(385		)
INCOME TAX BENEFIT	(8		)	—			—			—			(8		)
NET INCOME (LOSS)	(378		)	162			1			(162		)	(377		)
Net income attributable to noncontrolling interests	—			(1		)	—			—			(1		)
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	(378		)	161			1			(162		)	(378		)
Other comprehensive income	—			25			—			—			25
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	$	(378	)	$	186		$	1		$	(162	)	$	(353	)

Condensed Consolidated Cash Flow Statements

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2019

($ in millions) 

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Cash Provided By Operating Activities	$	—		$	898		$	287		$	(3	)	$	1,182
CASH FLOWS FROM INVESTING ACTIVITIES:
Drilling and completion costs	—			(1,204		)	(436		)	—			(1,640		)
Business combination, net	—			(381		)	28			—			(353		)
Acquisitions of proved and unproved properties	—			(31		)	—			—			(31		)
Proceeds from divestitures of proved and unproved properties	—			110			—			—			110
Additions to other property and equipment	—			(12		)	(15		)	—			(27		)
Other investing activities	—			6			—			—			6
Net Cash Used In Investing Activities	—			(1,512		)	(423		)	—			(1,935		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility borrowings	8,096			—			709			—			8,805
Payments on revolving credit facility borrowings	(7,011		)	—			(484		)	—			(7,495		)
Cash paid to purchase debt	(381		)	—			(76		)	—			(457		)
Cash paid for preferred stock dividends	(69		)	—			—			—			(69		)
Other financing activities	(13		)	(6		)	(5		)	3			(21		)
Intercompany advances, net	(620		)	620			1			(1		)	—
Net Cash Provided By Financing Activities	2			614			145			2			763
Net increase in cash and cash equivalents	2			—			9			(1		)	10
Cash and cash equivalents, beginning of period	4			1			1			(2		)	4
Cash and cash equivalents, end of period	$	6		$	1		$	10		$	(3	)	$	14

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2018

($ in millions)

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Cash Provided By Operating Activities	$	86		$	1,312		$	7		$	(10	)	$	1,395
CASH FLOWS FROM INVESTING ACTIVITIES:
Drilling and completion costs	—			(1,407		)	—			—			(1,407		)
Acquisitions of proved and unproved properties	—			(118		)	—			—			(118		)
Proceeds from divestitures of proved and unproved properties	—			395			—			—			395
Additions to other property and equipment	—			(11		)	—			—			(11		)
Other investing activities	—			149			—			—			149
Net Cash Used In Investing Activities	—			(992		)	—			—			(992		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility borrowings	9,095			—			—			—			9,095
Payments on revolving credit facility borrowings	(9,231		)	—			—			—			(9,231		)
Proceeds from issuance of senior notes, net	1,237			—			—			—			1,237
Cash paid to purchase debt	(1,285		)	—			—			—			(1,285		)
Cash paid for preferred stock dividends	(69		)	—			—			—			(69		)
Other financing activities	(2		)	(127		)	(9		)	(13		)	(151		)
Intercompany advances, net	170			(193		)	1			22			—
Net Cash Used In Financing Activities	(85		)	(320		)	(8		)	9			(404		)
Net increase (decrease) in cash and cash equivalents	1			—			(1		)	(1		)	(1		)
Cash and cash equivalents, beginning of period	5			1			2			(3		)	5
Cash and cash equivalents, end of period	$	6		$	1		$	1		$	(4	)	$	4