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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) Deferred income taxes are provided to reflect temporary differences in the basis of net assets for income tax and financial reporting purposes. The tax-effected temporary differences and tax loss carryforwards which comprise deferred taxes are as follows: Years Ended December 31, 2016 2015 ($ in millions) Deferred tax liabilities: Volumetric production payments ........................................................................... Derivative instruments ........................................................................................... Other ..................................................................................................................... Deferred tax liabilities ...................................................................................... Deferred tax assets: Property, plant and equipment ............................................................................. Net operating loss carryforwards ......................................................................... Carrying value of debt ......................................................................................... Asset retirement obligations ................................................................................ Investments ......................................................................................................... Derivative instruments ......................................................................................... Accrued liabilities ................................................................................................. Other ................................................................................................................... Deferred tax assets ......................................................................................... Valuation allowance ............................................................................................. Net deferred tax assets ................................................................................... Net deferred tax assets(a) ..........................................................................

$

$

(223) — (62) (285)

593 2,587 539 98 275 161 319 118 4,690 (4,389) 301 16

$

$

(802) (300) (71) (1,173)

1,144 1,556 532 174 260 — 333 123 4,122 (2,949) 1,173 —

___________________________________________ (a)

The net deferred tax assets are included in other long-term assets in the accompanying balance sheets.

As of December 31, 2016, Chesapeake had federal income tax NOL carryforwards of approximately $6.2 billion and state NOL carryforwards of approximately $9.5 billion which excludes the NOL carryforwards related to unrecognized tax benefits. The associated deferred tax assets related to these NOL carryforwards were $2.161 billion and $426 million, respectively. The NOL carryforwards expire between 2031 and 2036. The value of these carryforwards depends on the ability of Chesapeake to generate taxable income. As of December 31, 2016 and 2015, we had deferred tax assets of $4.690 billion and $4.122 billion upon which we had a valuation allowance of $4.389 billion and $2.949 billion, respectively. Of the net change in the valuation allowance of $1.440 billion for both federal and state deferred tax assets, $1.423 billion is reflected as a component of income tax expense in the consolidated statement of operations and $17 million is reflected as a component of equity.

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Profile for Chesapeake Energy

2016 Annual Report  

2016 Annual Report