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Deterioration in commodity prices also impacts estimated quantities of proved reserves. In 2015, we recognized negative reserve revisions to our year-end 2014 estimated proved reserves of approximately 44% due to lower commodity prices. Based on first-of-the-month index prices for January and February 2016, as well as the current strip prices for March 2016, we reasonably expect negative price-related revisions to our March 31, 2016 estimated proved reserves of approximately 8%, and if prices continue to decline we expect to have additional negative price-related revisions in the future. We do not expect these negative price-related revisions and 2016 production to be fully offset by reserve additions. Impairments of Fixed Assets and Other. In 2015, 2014 and 2013, we recognized $194 million, $88 million and $546 million, respectively, of fixed asset impairment losses and other charges. The 2015 amount consisted of a $70 million charge for a joint venture net acreage shortfall with Total, a $47 million loss contingency related to contract disputes, a $21 million impairment related to the sale of third-party rental compressors, a $22 million impairment of a note receivable and $18 million of charges incurred for terminating drilling contracts as a result of the decline in oil and natural gas prices. Further contract termination charges in subsequent quarters may occur if commodity prices remain low. The 2014 amount consisted of a $22 million charge for our Barnett Shale joint venture net acreage shortfall with Total and $64 million of impairments related to a gathering system, drilling rigs, natural gas compressors and buildings and land. The 2013 amount relates to impairments of certain of our gathering systems and treating plants, drilling rigs, buildings and land, a gas gathering termination fee and a contract drilling agreement termination fee. See Note 17 of the notes to our consolidated financial statements included in Item 8 of this report for further discussion of our impairments of fixed assets and other. Net (Gains) Losses on Sales of Fixed Assets. In 2015, net losses on sales of fixed assets were $4 million compared to net gains of $199 million and $302 million in 2014 and 2013, respectively. The 2015 amount primarily related to the sale of buildings and land and gathering systems. The 2014 amount primarily related to the sale of natural gas compressors and crude hauling assets. The 2013 amount primarily related to the sale of certain of our midstream gathering systems. See Note 16 of the notes to our consolidated financial statements included in Item 8 of this report for a discussion of our net gains on sales of fixed assets. Interest Expense. Interest expense was $317 million in 2015 compared to $89 million in 2014 and $227 million in 2013 as follows:

Interest expense on senior notes ............................................................. Interest expense on term loan .................................................................. Amortization of loan discount, issuance costs and other .......................... Interest expense on credit facilities .......................................................... Realized gains on interest rate derivatives(a) ............................................ Unrealized gains on interest rate derivatives(b) ......................................... Capitalized interest ................................................................................... Total interest expense ......................................................................

Years Ended December 31, 2015 2014 2013 ($ in millions) $ 682 $ 704 $ 740 — 36 116 59 42 91 12 28 38 (6) (12) (9) (6) (72) 67 (424) (637) (816) $ 317 $ 89 $ 227

Average senior notes borrowings ............................................................. Average term loan borrowings ................................................................. Average credit facilities borrowings ..........................................................

$ $ $

11,705 — —

$ $ $

11,653 625 306

$ $ $

10,991 2,000 678

___________________________________________ (a)

Includes settlements related to the interest accrual for the period and the effect of (gains) losses on early-terminated trades. Settlements of early-terminated trades are reflected in realized (gains) losses over the original life of the hedged item.

(b)

Includes changes in the fair value of open interest rate derivatives offset by amounts reclassified to realized (gains) losses during the period.

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Profile for Chesapeake Energy

2015 Annual Report  

2015 Annual Report