PART I Item 1.
Unless the context otherwise requires, references to “Chesapeake”, the “Company”, “us”, “we” and “our” in this report are to Chesapeake Energy Corporation together with its subsidiaries. Our principal executive offices are located at 6100 North Western Avenue, Oklahoma City, Oklahoma 73118, and our main telephone number at that location is (405) 848-8000. Definitions of oil and gas industry terms appearing in this report can be found under Glossary of Oil and Gas Terms beginning on page 18. Our Business We own interests in approximately 22,700 oil and natural gas wells and produced an average of approximately 575 mboe per day in the 2016 fourth quarter, net to our interest. We have a large and geographically diverse resource base of onshore U.S. unconventional natural gas and liquids assets. We have leading positions in the liquids-rich resource plays of the Eagle Ford Shale in South Texas, the Utica Shale in Ohio, the Anadarko Basin in northwestern Oklahoma and the stacked pay in the Powder River Basin in Wyoming. Our natural gas resource plays are the Haynesville/Bossier Shales in northwestern Louisiana and East Texas and the Marcellus Shale in the northern Appalachian Basin in Pennsylvania. We also own an oil and natural gas marketing business. The Company's estimated proved reserves as of December 31, 2016, were 1.708 bboe, an increase of 204 mmboe or 14%, from 1.504 bboe as of December 31, 2015. The increase in estimated proved reserves included 70 mmboe of downward revisions resulting primarily from lower average oil and natural gas prices offset by 580 mmboe of extensions and discoveries and 113 mmboe of upward revisions resulting from changes to previous estimates as further discussed below in Oil, Natural Gas and NGL Reserves and in Supplemental Disclosures About Oil, Natural Gas and NGL Producing Activities included in Item 8 of Part II of this report. In 2016, we produced 233 mmboe, divested 241 mmboe and acquired 55 mmboe of estimated proved reserves. Before basis differential adjustments, oil and natural gas prices used in estimating proved reserves decreased as of December 31, 2016, compared to December 31, 2015, using the trailing 12-month average prices required by the Securities and Exchange Commission (SEC). Oil prices decreased by $7.53 per bbl or 15%, to $42.75 per bbl from $50.28 per bbl. Natural gas prices decreased $0.09 per mcf, or 3%, to $2.49 per mcf from $2.58 per mcf. Proved developed reserves represented 70% of our proved reserves as of December 31, 2016, compared to 84% as of December 31, 2015. Our daily production for 2016 averaged 635 mboe, a decrease of 44 mboe, or 6%, from the 679 mboe of daily production for 2015, and consisted of approximately 90,800 bbls of oil (14% on an oil equivalent basis), approximately 2.9 bcf of natural gas (75% on an oil equivalent basis) and approximately 66,700 bbls of NGL (11% on an oil equivalent basis). Our average daily oil production decreased by 20% year over year primarily as a result of the sale of certain of our Mid-Continent assets in 2015 and 2016 as well as a significant reduction in drilling activity. Natural gas production decreased by 2% and NGL production decreased by 13%. Information About Us We make available, free of charge on our website at chk.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. From time to time, we also post announcements, updates, events, investor information and presentations on our website in addition to copies of all recent news releases. Documents and information on our website are not incorporated by reference herein.