EX-99.2 3 chk-ex_992x20230630x8kxpr.htm EX-99.2

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			4
Natural Gas, Oil and NGL Production and Average Sales Prices			5
Capital Expenditures Accrued			6
Non-GAAP Financial Measures			7
Reconciliation of Adjusted Net Income			8
Reconciliation of Adjusted Diluted Earnings Per Common Share			8
Reconciliation of Adjusted EBITDAX			9
Reconciliation of Adjusted Free Cash Flow			9
Reconciliation of Net Debt			9

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

($ in millions, except per share data)			June 30, 2023						December 31, 2022
Assets
Current assets:
Cash and cash equivalents			$	903					$	130
Restricted cash			72						62
Accounts receivable, net			671						1,438
Short-term derivative assets			417						34
Assets held for sale			—						819
Other current assets			157						215
Total current assets			2,220						2,698
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties			11,201						11,096
Unproved properties			2,000						2,022
Other property and equipment			501						500
Total property and equipment			13,702						13,618
Less: accumulated depreciation, depletion and amortization			(3,049)						(2,431)
Total property and equipment, net			10,653						11,187
Long-term derivative assets			78						47
Deferred income tax assets			952						1,351
Other long-term assets			526						185
Total assets			$	14,429					$	15,468
Liabilities and stockholders' equity
Current liabilities:
Accounts payable			$	642					$	603
Accrued interest			39						42
Short-term derivative liabilities			26						432
Other current liabilities			944						1,627
Total current liabilities			1,651						2,704
Long-term debt, net			2,036						3,093
Long-term derivative liabilities			29						174
Asset retirement obligations, net of current portion			277						323
Other long-term liabilities			40						50
Total liabilities			4,033						6,344
Contingencies and commitments
Stockholders' equity:
Common stock, $0.01 par value, 450,000,000 shares authorized:   132,684,741 and 134,715,094 shares issued			1						1
Additional paid-in capital			5,726						5,724
Retained earnings			4,669						3,399
Total stockholders' equity			10,396						9,124
Total liabilities and stockholders' equity			$	14,429					$	15,468

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
($ in millions, except per share data)
Revenues and other:
Natural gas, oil and NGL						$	649					$	2,790					$	2,102					$	4,704
Marketing						611						1,223						1,263						2,090
Natural gas and oil derivatives						159						(514)						1,089						(2,639)
Gains on sales of assets						472						21						807						300
Total revenues and other						1,891						3,520						5,261						4,455
Operating expenses:
Production						89						118						220						228
Gathering, processing and transportation						207						274						471						516
Severance and ad valorem taxes						40						57						109						120
Exploration						8						7						15						12
Marketing						611						1,228						1,262						2,079
General and administrative						31						36						66						62
Separation and other termination costs						3						—						3						—
Depreciation, depletion and amortization						376						451						766						860
Other operating expense, net						9						8						12						31
Total operating expenses						1,374						2,179						2,924						3,908
Income from operations						517						1,341						2,337						547
Other income (expense):
Interest expense						(22)						(36)						(59)						(68)
Other income						23						9						33						25
Total other income (expense)						1						(27)						(26)						(43)
Income before income taxes						518						1,314						2,311						504
Income tax expense						127						77						531						31
Net income available to common stockholders						$	391					$	1,237					$	1,780					$	473
Earnings per common share:
Basic						$	2.93					$	9.75					$	13.27					$	3.82
Diluted						$	2.73					$	8.27					$	12.36					$	3.25
Weighted average common shares outstanding (in thousands):
Basic						133,514						126,814						134,125						123,826
Diluted						143,267						149,532						144,007						145,534

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

($ in millions)						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
Cash flows from operating activities:
Net income						$	391					$	1,237					$	1,780					$	473
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization						376						451						766						860
Deferred income tax expense						21						—						399						—
Derivative (gains) losses, net						(159)						514						(1,089)						2,639
Cash receipts (payments) on derivative settlements, net						236						(1,043)						(49)						(1,611)
Share-based compensation						9						6						16						10
Gains on sales of assets						(472)						(21)						(807)						(300)
Exploration						5						6						8						10
Other						12						13						21						5
Changes in assets and liabilities						96						(254)						359						(324)
Net cash provided by operating activities						515						909						1,404						1,762
Cash flows from investing activities:
Capital expenditures						(530)						(415)						(1,027)						(759)
Business combination, net						—						—						—						(2,006)
Contributions to investments						(49)						—						(88)						—
Proceeds from divestitures of property and equipment						1,032						—						1,963						403
Net cash provided by (used in) investing activities						453						(415)						848						(2,362)
Cash flows from financing activities:
Proceeds from New Credit Facility						125						—						1,125						—
Payments on New Credit Facility						(125)						—						(2,175)						—
Proceeds from Exit Credit Facility						—						2,985						—						4,550
Payments on Exit Credit Facility						—						(2,710)						—						(3,775)
Funds held for transition services						97						—						97						—
Proceeds from warrant exercise						—						2						—						3
Cash paid to repurchase and retire common stock						(127)						(475)						(181)						(558)
Cash paid for common stock dividends						(160)						(298)						(335)						(508)
Net cash used in financing activities						(190)						(496)						(1,469)						(288)
Net increase (decrease) in cash, cash equivalents and restricted cash						778						(2)						783						(888)
Cash, cash equivalents and restricted cash, beginning of period						197						28						192						914
Cash, cash equivalents and restricted cash, end of period						$	975					$	26					$	975					$	26
Cash and cash equivalents						$	903					$	17					$	903					$	17
Restricted cash						72						9						72						9
Total cash, cash equivalents and restricted cash						$	975					$	26					$	975					$	26

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

						Three Months Ended June 30, 2023
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,830						1.51						—						—						—						—						1,830						1.51
Haynesville						1,590						1.77						—						—						—						—						1,590						1.77
Eagle Ford						85						2.32						15						76.39						10						23.67						233						6.73
Total						3,505						1.65						15						76.39						10						23.67						3,653						1.97
Average NYMEX Price												2.10												73.78
Average Realized Price   (including realized derivatives)												2.36												84.58												23.67												2.67
						Three Months Ended June 30, 2022
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,957						6.46						—						—						—						—						1,957						6.46
Haynesville						1,643						6.60						—						—						—						—						1,643						6.60
Eagle Ford						130						7.23						50						111.01						16						42.56						525						13.63
Total						3,730						6.55						50						111.01						16						42.56						4,125						7.43
Average NYMEX Price												7.17												108.41
Average Realized Price   (including realized derivatives)												4.03												69.46												42.56												4.65
						Six Months Ended June 30, 2023
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,901						2.52						—						—						—						—						1,901						2.52
Haynesville						1,570						2.32						—						—						—						—						1,570						2.32
Eagle Ford						106						2.11						34						76.72						13						25.54						389						8.19
Total						3,577						2.42						34						76.72						13						25.54						3,860						3.01
Average NYMEX Price												2.76												74.96
Average Realized Price   (including realized derivatives)												2.55												70.67												25.54												3.08
						Six Months Ended June 30, 2022
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,706						5.70						—						—						—						—						1,706						5.70
Haynesville						1,634						5.54						—						—						—						—						1,634						5.54
Eagle Ford						129						5.65						51						102.84						16						41.84						531						12.53
Powder River Basin						20						5.45						4						95.18						1						53.96						51						10.66
Total						3,489						5.62						55						102.30						17						42.82						3,922						6.62
Average NYMEX Price												6.06												101.35
Average Realized Price   (including realized derivatives)												3.59												67.38												42.82												4.32

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CAPITAL EXPENDITURES ACCRUED (unaudited)

						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
($ in millions)
Drilling and completion capital expenditures:
Marcellus						$	115					$	129					$	233					$	186
Haynesville						254						197						513						380
Eagle Ford						90						136						213						179
Powder River Basin						—						—						—						22
Total drilling and completion capital expenditures						459						462						959						767
Non-drilling and completion - field						28						29						52						41
Non-drilling and completion - corporate						18						20						38						42
Total capital expenditures						$	505					$	511					$	1,049					$	850

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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, Adjusted Diluted Earnings Per Common Share, Adjusted EBITDAX, Free Cash Flow, Adjusted 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. 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, (b) these financial measures are comparable to estimates provided by certain securities analysts, and (c) items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the company generally excludes information regarding these types of items.

Chesapeake's definitions of each non-GAAP measure presented herein are provided below. Because not all companies use identical calculations, Chesapeake’s non-GAAP measures may not be comparable to similarly titled measures of other companies.

Adjusted Net Income: Adjusted Net Income is defined as net income (loss) available to common stockholders adjusted to exclude unrealized (gains) losses on natural gas and oil derivatives, gains on sales of assets, and certain items management believes affect the comparability of operating results, less a tax effect using applicable rates. Chesapeake believes that Adjusted Net Income facilitates comparisons of the company's period-over-period performance, which many investors use in making investment decisions and evaluating operational trends and performance. Adjusted Net Income should not be considered an alternative to, or more meaningful than, net income (loss) available to common stockholders as presented in accordance with GAAP.

Adjusted Diluted Earnings Per Common Share: Adjusted Diluted Earnings Per Common Share is defined as diluted earnings (loss) per common share adjusted to exclude the per diluted share amounts attributed to unrealized (gains) losses on natural gas and oil derivatives, gains on sales of assets, and certain items management believes affect the comparability of operating results, less a tax effect using applicable rates. Chesapeake believes that Adjusted Diluted Earnings Per Common Share facilitates comparisons of the company's period-over-period performance, which many investors use in making investment decisions and evaluating operational trends and performance. Adjusted Diluted Earnings Per Common Share should not be considered an alternative to, or more meaningful than, earnings (loss) per common share as presented in accordance with GAAP.

Adjusted EBITDAX: Adjusted EBITDAX is defined as net income (loss) before interest expense, income tax expense (benefit), depreciation, depletion and amortization expense, exploration expense, unrealized (gains) losses on natural gas and oil derivatives, separation and other termination costs, (gains) losses on sales of assets, and certain items management believes affect the comparability of operating results. Adjusted EBITDAX is presented as it provides investors an indication of the company's ability to internally fund exploration and development activities and service or incur debt. Adjusted EBITDAX should not be considered an alternative to, or more meaningful than, net income (loss) as presented in accordance with GAAP.

Free Cash Flow: Free Cash Flow is defined as net cash provided by (used in) operating activities less cash capital expenditures. Free Cash Flow is a liquidity measure that provides investors additional information regarding the company's ability to service or incur debt and return cash to shareholders. Free Cash Flow should not be considered an alternative to, or more meaningful than, net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP.

Adjusted Free Cash Flow: Adjusted Free Cash Flow is defined as net cash provided by (used in) operating activities less cash capital expenditures and cash contributions to investments, adjusted to exclude certain items management believes affect the comparability of operating results. Adjusted Free Cash Flow is a liquidity measure that provides investors additional information regarding the company's ability to service or incur debt and return cash to shareholders and is used to determine Chesapeake's quarterly variable dividend. Adjusted Free Cash Flow should not be considered an alternative to, or more meaningful than, net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP.

Net Debt: Net Debt is defined as GAAP total debt excluding premiums, discounts, and deferred issuance costs less cash and cash equivalents. Net Debt is useful to investors as a widely understood measure of liquidity and leverage, but this measure should not be considered as an alternative to, or more meaningful than, total debt presented in accordance with GAAP.

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RECONCILIATION OF NET INCOME AVAILABLE TO COMMON STOCKHOLDERS TO ADJUSTED NET INCOME (unaudited)

($ in millions)						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
Net income available to common stockholders (GAAP)						$	391					$	1,237					$	1,780					$	473
Adjustments:
Unrealized (gains) losses on natural gas and oil derivatives						78						(532)						(1,041)						1,006
Separation and other termination costs						3						—						3						—
Gains on sales of assets						(472)						(21)						(807)						(300)
Other operating expense, net						8						16						15						47
Other						(9)						(2)						(15)						(15)
Tax effect of adjustments(a)						93						31						427						(46)
Adjusted net income (Non-GAAP)						$	92					$	729					$	362					$	1,165

(a)			The Current Quarter and Current Period include a tax effect attributed to the reconciling adjustments using a statutory rate of 23%. The Prior Quarter and Prior Period include a tax effect attributed to the reconciling adjustments using blended rates of 5.8% and 6.2%, respectively.

RECONCILIATION OF EARNINGS PER COMMON SHARE TO ADJUSTED DILUTED EARNINGS PER COMMON SHARE (unaudited)

						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
						$/Share						$/Share						$/Share						$/Share
Earnings per common share (GAAP)						$	2.93					$	9.75					$	13.27					$	3.82
Effect of dilutive securities						(0.20)						(1.48)						(0.91)						(0.57)
Diluted earnings per common share (GAAP)						$	2.73					$	8.27					$	12.36					$	3.25
Adjustments:
Unrealized (gains) losses on natural gas and oil derivatives						0.54						(3.57)						(7.24)						6.91
Separation and other termination costs						0.02						—						0.02						—
Gains on sales of assets						(3.30)						(0.14)						(5.60)						(2.06)
Other operating expense, net						0.06						0.11						0.11						0.32
Other						(0.06)						(0.01)						(0.11)						(0.10)
Tax effect of adjustments(a)						0.65						0.21						2.97						(0.32)
Adjusted diluted earnings per common share (Non-GAAP)						$	0.64					$	4.87					$	2.51					$	8.00

(a)			The Current Quarter and Current Period include a tax effect attributed to the reconciling adjustments using a statutory rate of 23%. The Prior Quarter and Prior Period include a tax effect attributed to the reconciling adjustments using blended rates of 5.8% and 6.2%, respectively.

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RECONCILIATION OF NET INCOME TO ADJUSTED EBITDAX (unaudited)

						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
($ in millions)
Net income (GAAP)						$	391					$	1,237					$	1,780					$	473
Adjustments:
Interest expense						22						36						59						68
Income tax expense						127						77						531						31
Depreciation, depletion and amortization						376						451						766						860
Exploration						8						7						15						12
Unrealized (gains) losses on natural gas and oil derivatives						78						(532)						(1,041)						1,006
Separation and other termination costs						3						—						3						—
Gains on sales of assets						(472)						(21)						(807)						(300)
Other operating expense, net						8						16						15						47
Other						(17)						(2)						(23)						(15)
Adjusted EBITDAX (Non-GAAP)						$	524					$	1,269					$	1,298					$	2,182

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW (unaudited)

						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
($ in millions)
Net cash provided by operating activities (GAAP)						$	515					$	909					$	1,404					$	1,762
Cash capital expenditures						(530)						(415)						(1,027)						(759)
Free cash flow (Non-GAAP)						(15)						494						377						1,003
Cash paid for acquisition costs						—						—						—						23
Cash contributions to investments						(49)						—						(88)						—
Free cash flow associated with divested assets(a)						(26)						—						(138)						—
Adjusted free cash flow (Non-GAAP)						$	(90)					$	494					$	151					$	1,026

(a)			In March and April of 2023, we closed two divestitures of certain Eagle Ford assets. Due to the structure of these transactions, both of which had an effective date of October 1, 2022, the cash generated by these assets was delivered to the respective buyers through a reduction in the proceeds we received at the closing of each transaction.

RECONCILIATION OF TOTAL DEBT TO NET DEBT (unaudited)

($ in millions)			June 30, 2023
Total debt (GAAP)			$	2,036
Premiums and issuance costs on debt			(86)
Principal amount of debt			1,950
Cash and cash equivalents			(903)
Net debt (Non-GAAP)			$	1,047

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