Acquisitions and Divestitures

Fayetteville Shale Asset Sale

In March 2011, we sold all of our Fayetteville Shale assets in central Arkansas to BHP Billiton Petroleum, a wholly owned subsidiary of BHP Billiton Limited (NYSE:BHP; ASX:BHP), for net proceeds of approximately $4.65 billion in cash. The properties sold consisted of approximately 487,000 net acres of leasehold, net production at closing of approximately 415 million cubic feet of natural gas equivalent per day and midstream assets consisting of approximately 420 miles of pipeline. Of the total proceeds received, $350 million was allocated to our Fayetteville Shale midstream assets and a $7 million gain was recorded for the divestiture of those assets. The remainder of the proceeds was allocated to our Fayetteville Shale natural gas and oil properties. Under full cost accounting rules, we accounted for the sale of our Fayetteville Shale natural gas and oil properties as an adjustment to capitalized costs, with no recognition of gain or loss.

Joint Ventures

As of March 31, 2012, we had entered into seven significant joint ventures with other leading energy companies pursuant to which we sold a portion of our leasehold, producing properties and other assets located in seven different resource plays and received cash of $7.1 billion and commitments for future drilling and completion cost sharing totaling $9.0 billion. In each of these joint ventures, Chesapeake serves as the operator and conducts all leasing, drilling, completion, operations and marketing activities for the project. These transactions have allowed us to recover much or all of our initial leasehold investments and reduce our ongoing capital costs in these plays. For accounting purposes, initial cash proceeds from these joint venture transactions were reflected as a reduction of natural gas and oil properties with no gain or loss recognized. The transactions are detailed below.


Primary Play	Joint Venture Partner^(a)	Joint Venture Date	Interest Sold	Cash Proceeds Received at Closing		Total Drilling Carries			Total Cash and Drilling Carry Proceeds		Drilling Carries Remaining^(b)
				($ in millions)

Utica	TOT	December 2011	25.0%	$	610	$	1,422		$	2,032	$	1,372
Niobrara	CNOOC	February 2011	33.3%		570		697			1,267		544
Eagle Ford & Pearsall	CNOOC	November 2010	33.3%		1,120		1,080			2,200		—
Barnett	TOT	January 2010	25.0%		800		1,404	^(c)		2,204		—
Marcellus	STO	November 2008	32.5%		1,250		2,125			3,375		—
Fayetteville	BP	September 2008	25.0%		1,100		800			1,900		—
Haynesville & Bossier	PXP	July 2008	20.0%		1,650		1,508	^(d)		3,158		—

				$	7,100	$	9,036		$	16,136	$	1,916

(a)	Joint venture partners include Total S.A. (TOT), CNOOC Limited (CNOOC), Statoil (STO), BP America (BP) and Plains Exploration & Production Company (PXP).

(b)	As of March 31, 2012. The Utica carry must be used by January 2018 and the Niobrara carry must be used by December 2014. We expect to fully utilize these drilling carry commitments prior to expiration. See Note 4 for further discussion.

(c)

In conjunction with an agreement requiring us to maintain our operated rig count at no less than 12 rigs in the Barnett Shale through December 31, 2012, TOT accelerated the payment of its remaining joint venture drilling carry in exchange for an approximate 9% reduction in the total amount of drilling carry obligation owed to us at that time. As a result, in October 2011, we received $471 million in cash from TOT, which included $46 million of carry obligation billed and $425 million for the remaining carry obligation. In January 2012, Chesapeake and TOT agreed to reduce the minimum rig count from 12 to six rigs. In May 2012, Chesapeake and TOT agreed to reduce the minimum rig count from six to two rigs.

(d)	In September 2009, PXP accelerated the payment of its remaining carry in exchange for an approximate 12% reduction to the remaining drilling carry obligation owed to us at that time.

During the Current Quarter and the Prior Quarter, our drilling and completion costs included the benefit of approximately $448 million and $527 million, respectively, in drilling and completion carries paid by our joint venture partners, CNOOC, TOT and STO.

During the Current Quarter, as part of our joint venture agreement with TOT, we sold interests in additional leasehold in the Barnett and Utica shale plays to TOT for approximately $18 million. In the Prior Quarter, as part of our joint venture agreements with CNOOC, TOT, STO and PXP, we sold interests in additional leasehold in the Eagle Ford and Pearsall, Barnett, Marcellus and Haynesville and Bossier shale plays to our joint venture partners for approximately $224 million.

Volumetric Production Payments

From time to time, we have monetized certain of our producing assets which are located in more mature producing regions through the sale of volumetric production payments (VPPs). A VPP is a limited-term overriding royalty interest in natural gas and oil reserves that (i) entitles the purchaser to receive scheduled production volumes over a period of time from specific lease interests; (ii) is free and clear of all associated future production costs and capital expenditures; (iii) is nonrecourse to the seller (i.e., the purchaser's only recourse is to the reserves acquired); (iv) transfers title of the reserves to the purchaser; and (v) allows the seller to retain the remaining reserves, if any, after the scheduled production volumes have been delivered. We retain drilling rights on the properties below currently producing intervals and outside of producing well bores. We also retain all production beyond the specified volumes sold in the transaction.

We have completed the following VPP transactions since 2007:


Date of VPP	Division	Proceeds			Proved Reserves (at time of sale)		$ / mcfe			Original Term
		($ in millions)			(bcfe)					(years)

March 2012	Anadarko Basin Granite Wash		$	744		160		$	4.68		10

May 2011	Mid-Continent			853		177		$	4.82		10

September 2010	Barnett Shale			1,150		390		$	2.93		5

June 2010	Permian Basin			335		38		$	8.73		10

February 2010	East Texas and Texas Gulf Coast			180		46		$	3.95		10

August 2009	South Texas			370		68		$	5.46		7.5

December 2008	Anadarko and Arkoma Basins			412		98		$	4.19		8

August 2008	Anadarko Basin			600		93		$	6.38		11

May 2008	Texas, Oklahoma and Kansas			622		94		$	6.53		11

December 2007	Kentucky and West Virginia			1,100		208		$	5.29		15

			$	6,366		1,372		$	4.64

For accounting purposes, cash proceeds from these transactions were reflected as a reduction of natural gas and oil properties with no gain or loss recognized, and our proved reserves were reduced accordingly.