CHESAPEAKE ENERGY CORP - FORM 8-K - EX-99.2

Attached files

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EX-99.3 - EX-99.3 - CHESAPEAKE ENERGY CORP	chk-ex_993x20210630x8kxpr.htm
EX-99.1 - EX-99.1 - CHESAPEAKE ENERGY CORP	chk-ex_991x20210630x8kxpr.htm
8-K - 8-K - CHESAPEAKE ENERGY CORP	chk-20210810.htm

Exhibit 99.2


CHESAPEAKE ENERGY CORPORATION - SUPPLEMENTAL TABLES



Table of Contents:			Page

Condensed Consolidated Balance Sheets			2
Condensed Consolidated Statements of Operations			3
Condensed Consolidated Statements of Cash Flows			5
Oil, Natural Gas and NGL Production and Average Sales Prices			7
Gross Margin			9
Capital Expenditures Accrued			11
Oil and Natural Gas Hedging Positions			12
Non-GAAP Financial Measures			13
Reconciliation of Adjusted Net Income (Loss) Attributable to Chesapeake			14
Reconciliation of Adjusted EBITDAX			16
Free Cash Flow			17
Net Debt			17


CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


	Successor		Predecessor
($ in millions)	June 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	612	$	279
Restricted cash	10		—
Accounts receivable, net	674		746
Short-term derivative assets	—		19
Other current assets	58		64
Total current assets	1,354		1,108
Property and equipment:
Oil and natural gas properties, successful efforts method
Proved oil and natural gas properties	4,960		25,734
Unproved properties	442		1,550
Other property and equipment	491		1,754
Total property and equipment	5,893		29,038
Less: accumulated depreciation, depletion and amortization	(346)		(23,806)
Property and equipment held for sale, net	3		10
Total property and equipment, net	5,550		5,242

Other long-term assets	95		234
Total assets	$	6,999	$	6,584

Liabilities and stockholders' equity (deficit)
Current liabilities:
Accounts payable	$	281	$	346
Current maturities of long-term debt	—		1,929
Accrued interest	24		3
Short-term derivative liabilities	780		93
Other current liabilities	781		723
Total current liabilities	1,866		3,094
Long-term debt, net	1,261		—
Long-term derivative liabilities	211		44
Asset retirement obligations, net of current portion	241		139
Other long-term liabilities	7		5
Liabilities subject to compromise	—		8,643
Total liabilities	3,586		11,925
Contingencies and commitments
Stockholders’ equity (deficit):
Predecessor preferred stock, $0.01 par value, 20,000,000 shares authorized: 0 and 5,563,458 shares outstanding	—		1,631
Predecessor common stock, $0.01 par value, 22,500,000 shares authorized: 0 and 9,780,547 shares issued	—		—
Predecessor additional paid-in capital	—		16,937
Predecessor accumulated other comprehensive income	—		45
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 97,954,037 and 0 shares issued	1		—
Successor additional paid-in capital	3,590		—
Accumulated deficit	(178)		(23,954)
Total stockholders’ equity (deficit)	3,413		(5,341)
Total liabilities and stockholders’ equity (deficit)	$	6,999	$	6,584


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)


	Successor		Predecessor
	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
($ in millions except per share data)
Revenues and other:
Oil, natural gas and NGL	$	892	$	440
Marketing	539		240
Oil and natural gas derivatives	(740)		(173)
Gains on sales of assets	2		—
Total revenues and other	693		507
Operating expenses:
Production	74		91
Gathering, processing and transportation	211		270
Severance and ad valorem taxes	41		25
Exploration	1		130
Marketing	535		242
General and administrative	24		112
Separation and other termination costs	11		22
Depreciation, depletion and amortization	229		158
Impairments	1		—
Other operating income, net	(4)		(2)
Total operating expenses	1,123		1,048
Loss from operations	(430)		(541)
Other income (expense):
Interest expense	(18)		(137)
Gains on purchases or exchanges of debt	—		2
Other income	9		6
Reorganization items, net	—		394
Total other income (expense)	(9)		265
Loss before income taxes	(439)		(276)
Income tax benefit	—		—
Net loss	(439)		(276)
Net loss attributable to noncontrolling interests	—		—
Net loss attributable to Chesapeake	(439)		(276)
Preferred stock dividends	—		—


Net loss available to common stockholders	$	(439)	$	(276)
Loss per common share:
Basic	$	(4.48)	$	(28.22)
Diluted	$	(4.48)	$	(28.22)
Weighted average common shares outstanding (in thousands):
Basic	97,931		9,779
Diluted	97,931		9,779


	Successor		Predecessor
	Period from February 10, 2021 through June 30, 2021		Period from January 1, 2021 through February 9, 2021		Six Months Ended June 30, 2020
($ in millions except per share data)
Revenues and other:
Oil, natural gas and NGL	$	1,445	$	398	$	1,334
Marketing	816		239		964
Oil and natural gas derivatives	(694)		(382)		734
Gains on sales of assets	6		5		—
Total revenues and other	1,573		260		3,032
Operating expenses:
Production	114		32		213
Gathering, processing and transportation	322		102		555
Severance and ad valorem taxes	65		18		79
Exploration	2		2		412
Marketing	815		237		988
General and administrative	39		21		177
Separation and other termination costs	11		22		27
Depreciation, depletion and amortization	351		72		761
Impairments	1		—		8,522
Other operating expense (income), net	(2)		(12)		66
Total operating expenses	1,718		494		11,800
Loss from operations	(145)		(234)		(8,768)
Other income (expense):
Interest expense	(30)		(11)		(282)
Gains on purchases or exchanges of debt	—		—		65
Other income (expense)	31		2		(11)
Reorganization items, net	—		5,569		394
Total other income	1		5,560		166
Income (loss) before income taxes	(144)		5,326		(8,602)
Income tax benefit	—		(57)		(13)
Net income (loss)	(144)		5,383		(8,589)
Net loss attributable to noncontrolling interests	—		—		16
Net income (loss) attributable to Chesapeake	(144)		5,383		(8,573)
Preferred stock dividends	—		—		(22)


Net income (loss) available to common stockholders	$	(144)	$	5,383	$	(8,595)
Earnings (loss) per common share:
Basic	$	(1.47)	$	550.35	$	(880.18)
Diluted	$	(1.47)	$	534.51	$	(880.18)
Weighted average common shares outstanding (in thousands):
Basic	97,922		9,781		9,765
Diluted	97,922		10,071		9,765


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Successor		Predecessor
	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
($ in millions)
Cash flows from operating activities:
Net loss	$	(439)	$	(276)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation, depletion and amortization	229		158

Derivative losses, net	740		173
Cash receipts (payments) on derivative settlements, net	(113)		791
Stock-based compensation	3		4
Gains on sales of assets	(2)		—
Impairments	1		—
Non-cash reorganization items, net	—		(449)
Exploration	1		127

Gains on purchases or exchanges of debt	—		(2)
Other	(7)		(30)
Changes in assets and liabilities	(19)		(120)
Net cash provided by operating activities	394		376
Cash flows from investing activities:
Capital expenditures	(149)		(349)
Proceeds from divestitures of property and equipment	2		4
Net cash used in investing activities	(147)		(345)
Cash flows from financing activities:


Proceeds from pre-petition revolving credit facility borrowings	—		1,475
Payments on pre-petition revolving credit facility borrowings	—		(1,446)




Proceeds from warrant exercise	2		—
Debt issuance and other financing costs	—		(55)
Cash paid to purchase debt	—		(2)
Cash paid for common stock dividends	(34)		—

Other	(1)		(3)
Net cash used in financing activities	(33)		(31)
Net increase in cash, cash equivalents and restricted cash	214		—
Cash, cash equivalents and restricted cash, beginning of period	408		82
Cash, cash equivalents and restricted cash, end of period	$	622	$	82

Cash and cash equivalents	$	612	$	82
Restricted cash	10		—
Total cash, cash equivalents and restricted cash	$	622	$	82


	Successor		Predecessor
	Period from February 10, 2021 through June 30, 2021		Period from January 1, 2021 through February 9, 2021		Six Months Ended June 30, 2020
($ in millions)
Cash flows from operating activities:
Net income (loss)	$	(144)	$	5,383	$	(8,589)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation, depletion and amortization	351		72		761
Deferred income tax benefit	—		(57)		(10)
Derivative (gains) losses, net	694		382		(734)
Cash receipts (payments) on derivative settlements, net	(145)		(17)		880
Stock-based compensation	3		3		9
Gains on sales of assets	(6)		(5)		—
Impairments	1		—		8,522
Non-cash reorganization items, net	—		(6,680)		(449)
Exploration	1		2		406
Gains on purchases or exchanges of debt	—		—		(65)
Other	(3)		45		1
Changes in assets and liabilities	51		851		41
Net cash provided by (used in) operating activities	803		(21)		773
Cash flows from investing activities:
Capital expenditures	(226)		(66)		(867)
Proceeds from divestitures of property and equipment	6		—		11

Net cash used in investing activities	(220)		(66)		(856)
Cash flows from financing activities:
Proceeds from Exit Credit Facility - Tranche A Loans	30		—		—
Payments on Exit Credit Facility - Tranche A Loans	(80)		(479)		—
Proceeds from pre-petition revolving credit facility borrowings	—		—		3,806
Payments on pre-petition revolving credit facility borrowings	—		—		(3,467)

Payments on DIP Facility borrowings	—		(1,179)		—
Proceeds from issuance of senior notes, net	—		1,000		—
Proceeds from issuance of common stock	—		600		—
Proceeds from warrant exercise	2		—		—
Debt issuance and other financing costs	(3)		(8)		(55)
Cash paid to purchase debt	—		—		(95)
Cash paid for common stock dividends	(34)		—		—
Cash paid for preferred stock dividends	—		—		(22)
Other	(2)		—		(8)
Net cash provided by (used in) financing activities	(87)		(66)		159
Net increase (decrease) in cash, cash equivalents and restricted cash	496		(153)		76
Cash, cash equivalents and restricted cash, beginning of period	126		279		6
Cash, cash equivalents and restricted cash, end of period	$	622	$	126	$	82

Cash and cash equivalents	$	612	$	40	$	82
Restricted cash	10		86		—
Total cash, cash equivalents and restricted cash	$	622	$	126	$	82


OIL, NATURAL GAS AND NGL PRODUCTION AND AVERAGE SALES PRICES (unaudited)


	Successor
	Three Months Ended June 30, 2021
	Oil		Natural Gas		NGL		Total
	MBbl per day	$/Bbl	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBoe per day	$/Boe
Appalachia	—	—	1,279	1.94	—	—	213	11.67
Gulf Coast	—	—	531	2.57	—	—	88	15.40
South Texas	37	66.13	108	2.55	16	23.86	72	43.73
Brazos Valley	27	64.83	35	1.81	4	17.95	37	51.63
Powder River Basin	10	64.27	57	3.10	3	30.39	23	40.13
Total	74	65.41	2,010	2.17	23	23.90	433	22.64

Average Realized Price		48.64		2.12		23.89		19.51

	Predecessor
	Three Months Ended June 30, 2020
	Oil		Natural Gas		NGL		Total
	MBbl per day	$/Bbl	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBoe per day	$/Boe
Appalachia	—	—	1,051	1.38	—	—	175	8.26
Gulf Coast	—	—	502	1.46	—	—	84	8.75
South Texas	40	20.15	117	1.95	16	9.68	75	15.76
Brazos Valley	36	23.42	49	0.69	6	1.93	50	17.58
Powder River Basin	13	23.80	52	1.44	3	10.59	25	16.96

Mid-Continent	4	24.41	35	1.50	3	8.03	12	13.39
Total	93	22.06	1,806	1.42	28	7.86	421	11.46

Average Realized Price		89.51		2.17		7.86		29.51


	Successor
	Period from February 10, 2021 through June 30, 2021
	Oil		Natural Gas		NGL		Total
	MBbl per day	$/Bbl	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBoe per day	$/Boe
Appalachia	—	—	1,280	2.15	—	—	213	12.93
Gulf Coast	—	—	529	2.61	—	—	88	15.65
South Texas	37	64.70	108	3.46	15	25.29	71	44.93
Brazos Valley	28	63.32	35	4.32	4	17.44	37	52.92
Powder River Basin	10	62.42	57	3.71	4	31.98	23	41.00
Total	75	63.89	2,009	2.43	23	24.99	432	23.68

	Predecessor
	Period from January 1, 2021 through February 9, 2021
	Oil		Natural Gas		NGL		Total
	MBbl per day	$/Bbl	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBoe per day	$/Boe
Appalachia	—	—	1,233	2.42	—	—	206	14.49
Gulf Coast	—	—	543	2.44	—	—	90	14.62
South Texas	42	54.12	127	3.00	14	26.04	78	39.20
Brazos Valley	32	52.37	38	1.14	4	16.09	42	42.23
Powder River Basin	10	51.96	61	2.92	4	34.31	24	34.25
Total	84	53.21	2,002	2.45	22	25.92	440	22.63

	Non-GAAP Combined
	Six Months Ended June 30, 2021
	Oil		Natural Gas		NGL		Total
	MBbl per day	$/Bbl	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBoe per day	$/Boe
Appalachia	—	—	1,270	2.21	—	—	212	13.26
Gulf Coast	—	—	532	2.57	—	—	88	15.41
South Texas	39	62.12	112	3.35	15	25.45	72	43.57
Brazos Valley	28	60.63	36	3.56	4	17.15	39	50.33
Powder River Basin	10	60.15	58	3.53	4	32.56	23	39.44
Total	77	61.31	2,008	2.43	23	25.19	434	23.44

Average Realized Price		47.40		2.41		25.19		20.85

	Predecessor
	Six Months Ended June 30, 2020
	Oil		Natural Gas		NGL		Total
	MBbl per day	$/Bbl	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBoe per day	$/Boe
Appalachia	—	—	1,013	1.66	—	—	168	9.99
Gulf Coast	—	—	529	1.58	—	—	88	9.46
South Texas	52	37.49	138	2.08	18	10.79	92	26.17
Brazos Valley	38	35.62	59	0.63	7	3.82	56	25.77
Powder River Basin	15	34.71	71	1.69	4	12.37	32	22.40

Mid-Continent	4	36.35	42	1.93	3	11.37	14	19.14
Total	109	36.39	1,852	1.64	32	9.48	450	16.28

Average Realized Price		71.35		2.16		9.48		26.89


GROSS MARGIN (unaudited)


	Successor				Predecessor
	Three Months Ended June 30,				Three Months Ended June 30,
	2021				2020
($ in millions, except per unit)	$		$/Boe		$		$/Boe
Appalachia
Oil, natural gas and NGL sales	$	226	$	11.67	$	131	$	8.26
Production expenses	9		$	0.44	7		$	0.46
Gathering, processing and transportation expenses	79		$	4.07	73		$	4.61
Severance and ad valorem taxes	3		$	0.14	1		$	0.07
Gross margin	$	135	$	7.02	$	50	$	3.12

Gulf Coast
Oil, natural gas and NGL sales	$	124	$	15.40	$	67	$	8.75
Production expenses	11		$	1.30	11		$	1.41
Gathering, processing and transportation expenses	25		$	3.15	40		$	5.20
Severance and ad valorem taxes	5		$	0.54	4		$	0.63
Gross margin	$	83	$	10.41	$	12	$	1.51

South Texas
Oil, natural gas and NGL sales	$	285	$	43.73	$	108	$	15.77
Production expenses	29		$	4.46	25		$	3.72
Gathering, processing and transportation expenses	79		$	12.11	123		$	17.94
Severance and ad valorem taxes	16		$	2.38	8		$	1.15
Gross margin	$	161	$	24.78	$	(48)	$	(7.04)

Brazos Valley
Oil, natural gas and NGL sales	$	173	$	51.63	$	80	$	17.51
Production expenses	18		$	5.41	22		$	4.91
Gathering, processing and transportation expenses	3		$	1.06	5		$	1.13
Severance and ad valorem taxes	10		$	3.01	7		$	1.49
Gross margin	$	142	$	42.15	$	46	$	9.98

Powder River Basin
Oil, natural gas and NGL sales	$	84	$	40.13	$	39	$	16.91
Production expenses	7		$	3.61	10		$	4.13
Gathering, processing and transportation expenses	25		$	11.69	23		$	10.05
Severance and ad valorem taxes	7		$	3.86	4		$	1.56
Gross margin	$	45	$	20.97	$	2	$	1.17

Mid-Continent
Oil, natural gas and NGL sales	$	—	$	—	$	15	$	13.35
Production expenses	—		$	—	16		$	13.94
Gathering, processing and transportation expenses	—		$	—	6		$	5.70
Severance and ad valorem taxes	—		$	—	1		$	1.10
Gross margin	$	—	$	—	$	(8)	$	(7.39)


	Successor				Predecessor				Non-GAAP Combined				Predecessor
	Period from February 10, 2021 through June 30,				Period from January 1, 2021 through February 9,				Six Months Ended June 30,				Six Months Ended June 30,
	2021				2021				2021				2020
($ in millions, except per unit)	$		$/Boe		$		$/Boe		$		$/Boe		$		$/Boe
Appalachia
Oil, natural gas and NGL sales	$	389	$	12.93	$	119	$	14.49	$	508	$	13.26	$	306	$	9.99
Production expenses	14		$	0.46	4		$	0.50	18		$	0.47	16		$	0.52
Gathering, processing and transportation expenses	121		$	4.02	34		$	4.17	155		$	4.06	144		$	4.72
Severance and ad valorem taxes	4		$	0.12	1		$	0.07	5		$	0.11	3		$	0.09
Gross margin	$	250	$	8.33	$	80	$	9.75	$	330	$	8.62	$	143	$	4.66

Gulf Coast
Oil, natural gas and NGL sales	$	194	$	15.65	$	53	$	14.62	$	247	$	15.41	$	151	$	9.46
Production expenses	17		$	1.37	4		$	1.12	21		$	1.31	22		$	1.36
Gathering, processing and transportation expenses	36		$	2.90	11		$	2.93	47		$	2.91	91		$	5.68
Severance and ad valorem taxes	7		$	0.55	2		$	0.54	9		$	0.54	10		$	0.65
Gross margin	$	134	$	10.83	$	36	$	10.03	$	170	$	10.65	$	28	$	1.77

South Texas
Oil, natural gas and NGL sales	$	449	$	44.93	$	122	$	39.20	$	571	$	43.57	$	436	$	26.17
Production expenses	43		$	4.32	12		$	3.90	55		$	4.22	61		$	3.66
Gathering, processing and transportation expenses	121		$	12.06	42		$	13.35	163		$	12.37	232		$	13.90
Severance and ad valorem taxes	25		$	2.46	8		$	2.53	33		$	2.48	27		$	1.61
Gross margin	$	260	$	26.09	$	60	$	19.42	$	320	$	24.50	$	116	$	7.00

Brazos Valley
Oil, natural gas and NGL sales	$	281	$	52.92	$	71	$	42.23	$	352	$	50.33	$	260	$	25.74
Production expenses	28		$	5.26	9		$	4.85	37		$	5.16	50		$	4.95
Gathering, processing and transportation expenses	5		$	1.06	3		$	1.92	8		$	1.26	14		$	1.37
Severance and ad valorem taxes	17		$	3.27	5		$	2.99	22		$	3.20	23		$	2.31
Gross margin	$	231	$	43.33	$	54	$	32.47	$	285	$	40.71	$	173	$	17.11

Powder River Basin
Oil, natural gas and NGL sales	$	132	$	41.00	$	33	$	34.25	$	165	$	39.44	$	130	$	22.38
Production expenses	12		$	3.88	3		$	3.37	15		$	3.76	28		$	4.81
Gathering, processing and transportation expenses	39		$	12.03	12		$	12.53	51		$	12.15	58		$	10.05
Severance and ad valorem taxes	12		$	3.88	2		$	2.88	14		$	3.64	13		$	2.27
Gross margin	$	69	$	21.21	$	16	$	15.47	$	85	$	19.89	$	31	$	5.25

Mid-Continent
Oil, natural gas and NGL sales	$	—	$	—	$	—	$	—	$	—	$	—	$	51	$	19.27
Production expenses	—		$	—	—		$	—	—		$	—	36		$	13.94
Gathering, processing and transportation expenses	—		$	—	—		$	—	—		$	—	16		$	6.14
Severance and ad valorem taxes	—		$	—	—		$	—	—		$	—	3		$	1.06
Gross margin	$	—	$	—	$	—	$	—	$	—	$	—	$	(4)	$	(1.87)


CAPITAL EXPENDITURES ACCRUED (unaudited)


	Successor		Predecessor
	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
($ in millions)
Drilling and completion capital expenditures:
Appalachia	$	65	$	57
Gulf Coast	63		33
South Texas	21		22
Brazos Valley	13		22
Powder River Basin	4		6


Total drilling and completion capital expenditures	166		140
Leasehold and additions to other PP&E	2		6
Capitalized interest	2		5
Total capital expenditures	$	170	$	151


	Successor		Predecessor		Non-GAAP Combined		Predecessor
	Period from February 10, 2021 through June 30, 2021		Period from January 1, 2021 through February 9, 2021		Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
($ in millions)
Drilling and completion capital expenditures:
Appalachia	$	104	$	30	$	134	$	120
Gulf Coast	74		22		96		62
South Texas	25		4		29		156
Brazos Valley	17		5		22		176
Powder River Basin	5		—		5		89
Retained assets	225		61		286		603
Mid-Continent	—		—		—		2
Total drilling and completion capital expenditures	225		61		286		605
Leasehold and additions to other PP&E	3		—		3		19
Capitalized interest	3		1		4		11
Total capital expenditures	$	231	$	62	$	293	$	635


OIL AND NATURAL GAS HEDGING POSITIONS AS OF JULY 30, 2021


Crude Oil Swaps
	Volume (MMBbls)	Avg. NYMEX Price of Swaps
Q3 2021(a)	4.6	$	42.62
Q4 2021	4.3	$	42.62
Total 2021	8.9	$	42.62

Total 2022	11.2	$	44.30

Total 2023	1.9	$	47.17


Oil Basis Protection Swaps
	Volume (MMBbls)	Avg. NYMEX plus/(minus)
Q3 2021(a)	3.5	$	0.50
Q4 2021	3.5	$	0.50
Total 2021	7.0	$	0.50

Total 2022	6.0	$	0.34


Natural Gas Swaps
	Volume (Bcf)	Avg. NYMEX Price of Swaps
Q3 2021(a)	127	$	2.66
Q4 2021	115	$	2.67
Total 2021	242	$	2.67

Total 2022	249	$	2.55

Total 2023	45	$	2.75


Natural Gas Two-Way Collars
	Volume (Bcf)	Avg. NYMEX Bought Put Price		Avg. NYMEX Sold Call Price
Q3 2021(a)	8	$	2.80	$	3.29
Q4 2021	8	$	2.80	$	3.29
Total 2021	16	$	2.80	$	3.29

Total 2022	96	$	2.45	$	2.88


Natural Gas Basis Protection Swaps
	Volume (Bcf)	Avg. NYMEX plus/(minus)
Q3 2021(a)	58	$	(0.75)
Q4 2021	34	$	(0.34)
Total 2021	92	$	(0.60)

Total 2022	66	$	0.43

Total 2023	23	$	0.76

____________________________________________

(a)Includes amounts settled in July and August 2021.


NON-GAAP FINANCIAL MEASURES

As a supplement to the financial results prepared in accordance with U.S. GAAP, Chesapeake’s quarterly earnings releases contain certain financial measures that are not prepared or presented in accordance with U.S. GAAP. These non-GAAP financial measures include Adjusted Net Income (Loss) Attributable to Chesapeake, Adjusted EBITDAX, Free Cash Flow and Net Debt. A reconciliation of each financial measure to its most directly comparable GAAP financial measure is included in the tables below.

These financial measures are non-GAAP and should not be considered as an alternative to, or more meaningful than, net income (loss), earnings (loss) per common share or cash flow provided by operating activities prepared in accordance with GAAP.

Chesapeake believes that the non-GAAP measures presented, when viewed in combination with its financial measures prepared in accordance with GAAP, provide useful information as they exclude certain items management believes affects the comparability of operating results. Management believes these adjusted financial measures are a meaningful adjunct to earnings and cash flows calculated in accordance with GAAP because (a) management uses these financial measures to evaluate the company’s trends and performance relative to other oil and natural gas producing companies, (b) these financial measures are comparable to estimates provided by securities analysts, and (c) items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provide by the company generally excludes information regarding these types of items.

Because not all companies use identical calculations, Chesapeake’s non-GAAP measures may not be comparable to similar titled measures of other companies.


RECONCILIATION OF ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE (unaudited)


	Successor				Predecessor
	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	$		$/Share		$		$/Share
($ in millions, except per share data)
Net loss available to common stockholders (GAAP)	$	(439)	$	(4.48)	$	(276)	$	(28.22)
Effect of dilutive securities	—		—		—		—
Diluted loss available to common stockholders (GAAP)	$	(439)	$	(4.48)	$	(276)	$	(28.22)

Adjustments:
Unrealized losses on oil, natural gas and NGL derivatives	617		6.30		864		88.35
Separation and other termination costs	11		0.11		22		2.25
Gains on sales of assets	(2)		(0.02)		—		—
Other operating income	(4)		(0.04)		(2)		(0.20)
Impairments	1		0.01		—		—
Gains on purchases or exchanges of debt	—		—		(2)		(0.20)
G&A reorganization expenses	—		—		43		4.40
Reorganization items, net	—		—		(394)		(40.29)
Other	(3)		(0.03)		(1)		(0.10)


Effect of dilutive securities	—		(0.21)		—		(2.23)
Adjusted net income attributable to common stockholders (Non-GAAP)	$	181	$	1.64	$	254	$	23.76


	Successor				Predecessor
	Period from February 10, 2021 through June 30, 2021				Period from January 1, 2021 through February 9, 2021				Six Months Ended June 30, 2020
	$		$/Share		$		$/Share		$		$/Share
($ in millions, except per share data)
Net income (loss) available to common stockholders (GAAP)	$	(144)	$	(1.47)	$	5,383	$	550.35	$	(8,595)	$	(880.18)
Effect of dilutive securities	—		—		—		(14.84)		—		—
Diluted income (loss) available to common stockholders (GAAP)	$	(144)	$	(1.47)	$	5,383	$	534.51	$	(8,595)	$	(880.18)

Adjustments:
Unrealized losses on oil, natural gas and NGL derivatives	504		5.15		369		36.64		135		13.82
Separation and other termination costs	11		0.11		22		2.18		27		2.76
Gains on sales of assets	(6)		(0.06)		(5)		(0.50)		—		—
Other operating expense (income)	(2)		(0.02)		(12)		(1.19)		66		6.76
Impairments	1		0.01		—		—		8,522		872.71
Exploration expense - impairment of unproved properties	—		—		—		—		272		27.85
Noncontrolling interests - impairment of unproved properties	—		—		—		—		(16)		(1.64)
Gains on purchases or exchanges of debt	—		—		—		—		(65)		(6.66)
G&A reorganization expenses	—		—		—		—		43		4.40
Reorganization items, net	—		—		(5,569)		(552.97)		(394)		(40.35)
Other	(24)		(0.25)		—		—		22		2.25

Tax effect of adjustments(a)	—		—		(57)		(5.66)		(11)		(1.13)
Effect of dilutive securities	—		(0.36)		—		—		—		(0.03)
Adjusted net income available to common stockholders (Non-GAAP)	340		3.11		131		13.01		6		0.56

Preferred stock dividends	—		—		—		—		22		2.06
Adjusted net income attributable to Chesapeake (Non-GAAP)	$	340	$	3.11	$	131	$	13.01	$	28	$	2.62


(a)			2021 Predecessor Period includes an income tax benefit of $57 million attributed to deferred income tax effects associated with predecessor accumulated other comprehensive income, eliminated in fresh start accounting. 2020 Predecessor Period includes a deferred tax benefit attributed to the reconciling adjustments using a 0.14% effective tax rate.


RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDAX (unaudited)


	Successor		Predecessor
	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
($ in millions)
Net loss (GAAP)	$	(439)	$	(276)

Adjustments:
Interest expense	18		137

Depreciation, depletion and amortization	229		158
Exploration	1		130
Unrealized losses on oil, natural gas and NGL derivatives	617		864
Separation and other termination costs	11		22
Gains on sales of assets	(2)		—
Other operating income	(4)		(2)
Impairments	1		—
Gains on purchases or exchanges of debt	—		(2)
G&A reorganization expenses	—		43
Reorganization items, net	—		(394)
Other	(3)		(1)
Adjusted EBITDAX (Non-GAAP)	$	429	$	679


	Successor		Predecessor		Non-GAAP Combined		Predecessor
	Period from February 10, 2021 through June 30, 2021		Period from January 1, 2021 through February 9, 2021		Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
($ in millions)
Net income (loss) (GAAP)	$	(144)	$	5,383	$	5,239	$	(8,589)

Adjustments:
Interest expense	30		11		41		282
Income tax benefit	—		(57)		(57)		(13)
Depreciation, depletion and amortization	351		72		423		761
Exploration	2		2		4		412
Unrealized losses on oil, natural gas and NGL derivatives	504		369		873		135
Separation and other termination costs	11		22		33		27
Gains on sales of assets	(6)		(5)		(11)		—
Other operating expense (income)	(2)		(12)		(14)		66
Impairments	1		—		1		8,522
Gains on purchases or exchanges of debt	—		—		—		(65)
G&A reorganization expenses	—		—		—		43
Reorganization items, net	—		(5,569)		(5,569)		(394)
Other	(24)		—		(24)		22
Adjusted EBITDAX (Non-GAAP)	$	723	$	216	$	939	$	1,209


FREE CASH FLOW


	Successor		Predecessor
	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
($ in millions)
Net cash provided by operating activities (GAAP)	$	394	$	376

Cash paid for reorganization items, net	47		55
Capital expenditures	(149)		(349)
Free cash flow (Non-GAAP)	$	292	$	82


	Successor		Predecessor		Non-GAAP Combined		Predecessor
	Period from February 10, 2021 through June 30, 2021		Period from January 1, 2021 through February 9, 2021		Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
($ in millions)
Net cash provided by (used in) operating activities (GAAP)	$	803	$	(21)	$	782	$	773
Cash paid for reorganization items, net	65		66		131		55
Capital expenditures	(226)		(66)		(292)		(867)
Free cash flow (Non-GAAP)	$	642	$	(21)	$	621	$	(39)


NET DEBT


	Successor
	June 30, 2021
($ in millions)
Total debt (GAAP)	$	1,261
Premiums and issuance costs on debt	(40)
Principal amount of debt	1,221

Cash and cash equivalents	(612)
Net debt (Non-GAAP)	$	609

CHESAPEAKE ENERGY CORP - FORM 8-K - EX-99.2 - August 10, 2021

Attached files

CHESAPEAKE ENERGY CORP Reports