About Chesapeake Energy Corporation
Chesapeake Energy builds hydrocarbon reserves through the acquisition and development of oil and gas assets across the US. The company, one of the biggest natural gas producers in the US and the world, has estimated proved reserves of some 6.5 trillion cu. ft. of natural gas equivalent. Chesapeake has exploration and production assets in Appalachia, the Mid-Continent, the Barnett, Bossier, and Haynesville shale plays, the Permian Basin and the Rockies. The company boasts 22,700 producing oil and natural gas wells that turn out 575,000 barrels of oil equivalent per day. The company was founded in 1989 by fracking pioneer Aubrey McClendon, who died in a car crash in 2016 shortly after being indicted for bid rigging.
The company has two reportable operating segments: marketing, gathering, and compression (MGC); and production and exploration.
MGC, through Chesapeake Energy Marketing, provides oil, natural gas, and NGL marketing services, including commodity price structuring; securing and negotiating gathering, hauling, processing, and transportation services; and marketing services for third party producers in wells in which it does not have an interest. It also conducts gas compression through subsidiary Compass Manufacturing and MidCon Compression. The segment accounts for some 60% of sales.
Production and exploration conducts natural gas, oil, and NGLs (natural gas liquids) mining. Natural gas accounts for about 65% of segment sales; oil 35%; and NGLs 5%.
Chesapeake Energy has natural gas resources in the Haynesville and Bossier Shales in northwestern Louisiana and East Texas; the Marcellus Shale in the northern Appalachian Basin of West Virginia and Pennsylvania; and the Barnett Shale in the Fort Worth Basin of north-central Texas. In addition, it has built leading positions in the liquids-rich resource plays of the Eagle Ford Shale in South Texas; the Utica Shale in Ohio and Pennsylvania; the Granite Wash, Cleveland, Tonkawa and Mississippi Lime plays in the Anadarko Basin in western Oklahoma and the Texas Panhandle; and Utica Shale in the Powder River Basin in Wyoming.
Sales and Marketing
Chesapeake Energy Marketing provides natural gas, oil, and NGL marketing services, including commodity price structuring, contract administration and nomination services for Chesapeake, its partners and other producers. By aggregating volumes it seeks to increase the value of products to be sold to in various intermediary markets, end markets, and pipelines. Chesapeake's oil and NGL production is sold under market sensitive short-term or spot price contracts while its natural gas production is sold to purchasers under spot price contracts or percentage-of-proceeds and percentage-of-index contracts.
The oversupply-related fall in natural gas prices in recent years put a hefty dent in Chesapeake's revenue.
In fiscal 2016, revenue fell a further 38% to $7.9 billion due to lower prices and a 6% fall in total hydrocarbon output relating to asset sales; oil sales fell 20% on prior year.
Chesapeake lost $4.9 billion in 2016, down from the $14.9 billion loss the previous year. The relative improvement was down to a reduction in impairments, although derivative losses of $578 billion (versus gains of $624 million and $1.0 billion the previous two years) weighed heavily on the bottom line.
Cash from operations in 2016 constituted an outflow of $204 million compared to cash provided by operations of $1.2 billion the previous year. The fall was down to lower realized oil prices and lower volumes.
Chesapeake may be one of the top gas producers, but the once $40 billion-dollar company has reduced to one-tenth its original size, due to plummeting heating and power-plant fuel prices. In 2018, saddled with debt, the company sold its Ohio shale assets for about $2 billion to Encino Acquisitions. The company used proceeds from the sale to pay down debt.
The company is also focusing on its gathering and transportation agreements and reducing its production and G&A expenses. It downscaled drilling activities in 2016 from 18 to 10 operating rigs on average.
Mergers and Acquisitions
In October 2018, Chesapeake bought WildHorse Resource for nearly $4 billion, adding 20,000 net acres in the Eagle Ford shale and Austin Chalk formations in Texas. Syngergies will be around $280 million over the first five years, the company said. However, the deal came as a surprise to stockholders who expected further sell-offs to improve profitability. Investors have punished shares of peers like Denbury, Concho Resources and Diamondback after similar merger announcements.
6100 N WESTERN AVE
Oklahoma City, OK 73118-1044
Phone: 1 (405) 848-8000
Employer Type: Publicly Owned
Stock Symbol: CHK
Stock Exchange: , NYSE
President and CEO: Robert D. Lawler
Chairman: R. Brad Martin
EVP Operations and Technical Services: M. Jason Pigott
Employees (This Location): 2,187
Employees (All Locations): 2,350
Oklahoma City, OK
Elkhorn City, KY
Elk City, OK
Jane Lew, WV