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We currently plan to use cash flow from operations, cash on hand and our revolving credit facility to fund our capital expenditures during 2017. We expect to generate additional liquidity with proceeds from future sales of assets that we determine do not fit our strategic priorities. Prior to June 2014, we also utilized a $500 million oilfield services credit facility. This facility was terminated in June 2014 in connection with the spin-off of our oilfield services business. See Note 13 of the notes to our consolidated financial statements included in Item 8 of this report for further discussion of the spin-off. Under our revolving credit facilities, we borrowed and repaid $5.146 billion in 2016, we had no borrowings or repayments in 2015 and we borrowed $7.406 billion and repaid $7.788 billion in 2014. Uses of Funds The following table presents the uses of our cash and cash equivalents for 2016, 2015 and 2014: Years Ended December 31, 2016 2015 2014 ($ in millions) Oil and Natural Gas Expenditures: Drilling and completion costs(a) .............................................................. Acquisitions of proved and unproved properties ................................... Interest capitalized on unproved leasehold ........................................... Total oil and natural gas expenditures .......................................... Other Uses of Cash and Cash Equivalents: Cash paid to repurchase debt ............................................................... Cash paid for title defects ...................................................................... Cash paid to repurchase noncontrolling interest of CHK C-T(b) ............. Cash paid to purchase leased rigs and compressors ........................... Cash paid to repurchase CHK Utica preferred shares(b) ....................... Cash paid on financing derivatives(c) ..................................................... Payments on credit facility borrowings, net ........................................... Additions to other property and equipment ........................................... Dividends paid ...................................................................................... Distributions to noncontrolling interest owners ...................................... Additions to investments ....................................................................... Other ..................................................................................................... Total other uses of cash and cash equivalents............................ Total uses of cash and cash equivalents..............................

$

$

1,276 571 236 2,083 2,734 69 — — — — — 37 — 10 — 29 2,879 4,962

$

$

3,083 135 410 3,628 508 — 143 — — — — 143 289 85 1 50 1,219 4,847

$

$

4,495 793 604 5,892 3,362 — — 499 1,254 53 382 227 405 173 — 62 6,417 12,309

___________________________________________ (a)

Net of $51 million and $679 million in drilling and completion carries received from our joint venture partners during 2015 and 2014, respectively.

(b)

See Note 8 of the notes to our consolidated financial statements included in Item 8 of this report for discussion of these transactions.

(c)

Reflects derivatives deemed to contain, for accounting purposes, a significant financing element at contract inception.

Our primary use of funds is for drilling and completion costs on our oil and natural gas properties. Our drilling and completion costs decreased in 2016 compared to 2015 and 2014, primarily as a result of significantly decreased activity. During 2016, our average operated rig count was 10 rigs compared to an average operated rig count of 28 rigs in 2015 and 64 rigs in 2014. Our acquisitions of proved and unproved properties increased in 2016 compared to 2015, primarily resulting from purchases of oil and natural gas interests previously sold to third parties in connection with five of our VPP transactions for approximately $387 million. Capital expenditures related to our midstream assets, oilfield services business, and other fixed assets were $37 million in 2016 compared to $143 million in 2015 and $227 million in 2014. The reduction of these expenditures in 2016 and 2015 as compared to 2014 is primarily the result of the spin-off of our oilfield services business in June 2014 and reductions in construction expenditures on our corporate headquarters and field offices. 48

Profile for Chesapeake Energy

2016 Annual Report  

2016 Annual Report