Expand Energy (EXE) 10-K risk factor changes: FY2021 vs FY2020

*There are numerous factors that affect our business and [removed: operating results,] [added: results of operations,] many of which are beyond our control.

If any of these risks actually occur, our business, financial position, [removed: operating results,] [added: results of operations,] cash flows, reserves and/or our ability to pay our debts and other liabilities could suffer, the trading price and liquidity of our securities could decline and you may lose all or part of your investment in our securities.*

[added: |] Risks Related to our Emergence from Bankruptcy [added: | | |]

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

[added: |] Risks Related to Operating [removed: Our] [added: our] Business [added: | | |]

Our revenues, [removed: operating results,] [added: results of operations,] profitability, liquidity, leverage ratio and ability to grow and invest in capital expenditures depend primarily upon the prices we receive for the oil, natural gas and NGL we sell.

[removed: Wide fluctuations] [added: Volatility] in oil, natural gas and NGL prices may result from factors that are beyond our control, including:

- changes in the level of consumer and industrial demand, including impacts from global or national health epidemics and concerns, such as the [removed: recent coronavirus;][added: COVID-19 pandemic;]

- domestic and global economic [added: and political] conditions.

In addition, [removed: a] [added: any] prolonged [removed: extension] [added: period] of lower prices could reduce the quantities of reserves that we may economically produce.

[removed: The] [added: - The] ongoing coronavirus (COVID-19) pandemic and related economic turmoil have affected and could continue to adversely affect our business, financial condition, results of operations and cash [removed: flows.][added: flows.]

The global spread of COVID-19 created significant volatility, uncertainty, and economic disruption during [removed: 2020.][added: 2020 and 2021, and threatens to do the same in 2022.]

The ongoing COVID-19 pandemic has reached more than 200 countries and [removed: has continued] [added: continues] to [removed: be a] [added: present] rapidly evolving economic and public health [removed: situation.][added: risks.]

The pandemic has adversely impacted the entire global economy, and there is considerable uncertainty regarding how long the pandemic and related market conditions will persist and the extent and duration of governmental and other measures implemented to try to slow the spread of the virus, such as quarantines, shelter-in-place [removed: orders and] [added: orders,] business and government [removed: shutdowns.][added: shutdowns and restrictions on operations.]

In certain cases, states that had begun taking steps to reopen their economies experienced a subsequent surge in cases of COVID-19, causing these states to cease [added: or dramatically scale back] such reopening measures in some cases and reinstitute restrictions in others.

In addition, actions by our customers and derivative contract counterparties in response to COVID-19 and its economic [removed: impacts] [added: impacts, including potential non-performance or delays,] may also have an adverse impact on our business.

Furthermore, the impact of the pandemic, including [removed: a] [added: the initial] resulting reduction in demand for oil and natural gas, coupled with the sharp decline in commodity prices following the announcement of price reductions and production increases in March 2020 by members of OPEC+ has led to significant global economic contraction generally and in our industry in particular.

[removed: Although OPEC+ agreed in April 2020 to cut oil production and has extended such production cuts through] March 2021, crude oil prices have remained depressed as a result of the oversupply of oil, an increasingly utilized global storage network and the decrease in crude oil demand due to COVID-19.

The ultimate impact of COVID-19 will depend on future developments that cannot be anticipated, including, among others, the ultimate severity of the [removed: virus,] [added: virus and its rapidly evolving and spreading variants,] the consequences of governmental and other measures designed to mitigate the spread of the virus, the development and availability of treatments and vaccines and the extent to which these treatments and vaccines may remain effective as [removed: potential] new strains of the virus emerge, the duration of the pandemic, any further actions taken by members of OPEC+, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability, and the timing and extent of any return to normal economic and operating conditions.

[removed: If] [added: - If] commodity prices [removed: remain depressed] [added: fall] or drilling efforts are unsuccessful, we may be required to record write downs of the carrying value of our oil and natural gas [removed: properties.][added: properties.]

We have been required to write down the carrying value of certain of our oil and natural gas properties in the [removed: past] [added: past,] and there is a risk that we will be required to take additional writedowns in the future.

Our forecasted [removed: 2021] [added: 2022] capital expenditures, inclusive of capitalized interest, are [removed: $670] [added: $1.5] - [removed: $740 million] [added: $1.8 billion] compared to our [removed: 2020] [added: 2021] capital spending level of [removed: $920] [added: $746] million.

Management continues to review operational plans for [removed: 2021] [added: 2022] and beyond, which could result in changes to projected capital expenditures and projected revenues from sales of oil, natural gas and NGL.

As of December 31, [removed: 2020,] [added: 2021,] approximately [removed: 7%] [added: 41%] of our estimated proved reserves (by volume) were undeveloped.

The December 31, [removed: 2020] [added: 2021] present value is based on a [removed: $39.57] [added: $66.56] per bbl of oil price and a [removed: $1.98] [added: $3.60] per mcf of natural gas price, before considering basis differential adjustments.

[removed: Drilling and completion operations may be curtailed, delayed or canceled as a] result of unexpected drilling conditions, title problems, equipment failures or accidents, shortages of midstream transportation, equipment or personnel, environmental issues, state or local bans or moratoriums on hydraulic fracturing and produced water disposal, federal restrictions on oil and gas leasing and permitting, and a decline in commodity prices, among others.

Our decision to mitigate cash flow volatility through derivative arrangements, if any, is based in part on our view of current and future market conditions and our desire to stabilize cash flows necessary for the [added: development of our proved reserves.]

Under a majority of our arrangements, the collateral provided for our obligations is secured by the same hydrocarbon interests that secure our [removed: senior secured revolving credit facility.][added: Exit Credit Facility.]

Although the counterparties to our hedging arrangements are required to secure their obligations to us under certain scenarios, if any of our counterparties were to default on [removed: its] [added: their] obligations to us under the derivative contracts or seek bankruptcy protection, it could have an adverse effect on our ability to fund our planned activities and could result in a larger percentage of our future cash flows being exposed to commodity price changes.

[removed: Drilling for oil, natural gas and NGLs can be unprofitable, not only from] dry holes, but from productive wells that do not return a profit because of insufficient revenue from production or high costs.

[removed: While] [added: Although] both exploratory and developmental drilling activities involve these risks, exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons.

[removed: While] [added: Although] we may maintain insurance against some, but not all, of the risks described above, our insurance may not be adequate to cover casualty losses or liabilities, and our insurance does not cover penalties or fines that may be assessed by a governmental authority.

[removed: The] [added: - The] oil and gas exploration and production industry is very [removed: competitive, and] [added: competitive;] some of our competitors have greater financial and other resources than we [removed: do.][added: do, and there is competition to attract and retain talent, and competition over access to certain industry equipment.]

As a result, these competitors may be able to address [removed: these competitive factors] [added: industry challenges] more effectively or weather industry downturns more easily than we can.

- any acquisition [removed: would] [added: will] be successfully integrated into our operations and internal controls;

- the due diligence conducted prior to an acquisition [removed: would] [added: will] uncover situations that could result in financial or legal exposure, such as title defects and potential environmental and other liabilities;

- our assumptions about, among other things, reserves, estimated production, revenues, capital expenditures, operating, operating expenses and costs [removed: would] [added: will] be accurate;

- any investment, acquisition, disposition or integration [removed: would] [added: will] not divert management resources from the operation of our business; and

- any investment, acquisition, or disposition or integration [removed: would] [added: will] not have a material adverse effect on our financial condition, results of operations, cash flows or reserves.

Negative public perception regarding us or our industry resulting from, among other things, concerns raised by advocacy groups about hydraulic fracturing, waste disposal, oil spills, seismic activity, climate change, explosions of natural gas transmission lines and the development and operation of pipelines and other midstream facilities may lead to [added: generally] increased [added: political pressure and] regulatory scrutiny, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines and enforcement interpretations.

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| Summary Risk Factors | | |

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| --- | --- | --- |

- We recently emerged from bankruptcy, which may adversely affect our business and relationships.

- Our actual financial results after emergence from bankruptcy may not be comparable to our historical financial information as a result of the implementation of the Plan and the transactions contemplated thereby.

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- Conservation measures and technological advances could reduce demand for natural gas and oil.

- Negative public perception regarding us or our industry could have an adverse effect on our operations.

- Oil, natural gas and NGL prices fluctuate widely, and lower prices for an extended period of time are likely to have a material adverse effect on our business.

- Significant capital expenditures are required to replace our reserves and conduct our business.

- If we are not able to replace reserves, we may not be able to sustain production.

- The actual quantities of and future net revenues from our proved reserves may be less than our estimates.

- Our development and exploratory drilling efforts and our well operations may not be profitable or achieve our targeted returns.

- Certain of our undeveloped properties are subject to leases that will expire over the next several years unless production is established on units containing the acreage or the leases are renewed.

- Our commodity price risk management activities may limit the benefit we would receive from increases in commodity prices, may require us to provide collateral for derivative liabilities and involve risk that our counterparties may be unable to satisfy their obligations to us.

- Oil and natural gas operations are uncertain and involve substantial costs and risks.

- Our ability to produce oil, natural gas and NGL economically and in commercial quantities could be impaired if we are unable to acquire adequate supplies of water for our operations or are unable to dispose of or recycle the water we use economically and in an environmentally safe manner.

- Risks related to potential acquisitions or dispositions may adversely affect our business.

- Our operations may be adversely affected by pipeline, trucking and gathering system capacity constraints and may be subject to interruptions that could adversely affect our cash flow.

- Our operations could be disrupted by natural or human causes beyond our control.

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- We have significant capital needs, and our ability to access the capital and credit markets to raise capital on favorable terms is limited by industry conditions.

- Restrictive covenants in certain of our debt agreements could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests.

- Changes in the method of determining the London Interbank Offered Rate (LIBOR), or the replacement of LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt.

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| Risks Related to Recent and Pending Acquisitions | | |

- The Chief Acquisition may not be completed.

Failure to complete the Chief Acquisition could negatively impact the price of shares of our common stock, as well as our future business and financial results.

- The synergies attributable to the Vine Acquisition, or Chief Acquisition, if consummated, may vary from expectations, and we will be subject to business uncertainties for a period of time after the closing of the Vine Acquisition and Chief Acquisition, if consummated, which could adversely affect the combined company after these acquisitions.

These uncertainties could include, but may not be limited to, loss of key personnel, retention of customer or supplier contracts or relationships, and litigation in connection with the Chief Acquisition.

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- We are subject to extensive governmental regulation, which can change and could adversely impact our business.

- Environmental and regulatory matters and related costs can be significant.

- The taxation of independent producers is subject to change, and changes in tax law could increase our cost of doing business.

Upon emergence from bankruptcy, the composition of our board of directors changed significantly.

The composition of our board of directors changed significantly upon emergence from bankruptcy.

Our new board is comprised of the following members appointed by our new stockholders.

Robert D.

Lawler, Michael Wichterich, Timothy S.

Duncan, Benjamin C.

Duster, IV, Sarah Emerson, Matthew M.

Gallagher and Brian Steck.

While we expect to engage in an orderly transition process as we integrate newly appointed board members, our new board of directors may change views on strategic initiatives and a range of issues that will determine the future of the Company.

As a result, the future strategy and plans of the Company may differ materially from those of the past.

We have taken

certain precautionary measures intended to help minimize the risk to our employees, our business and the communities in which we operate, and we are actively assessing and planning for various operational contingencies in the event one or more of our operational employees experiences any symptoms consistent with COVID-19.

However, we cannot guarantee that any actions taken by us will be effective in preventing future disruptions to our business.

We continue to regularly monitor the credit worthiness of such customers and derivative contract counterparties.

Although we have not received notices from our customers or counterparties regarding non-performance issues or delays resulting from the pandemic, we may have to temporarily shut down or further reduce production, which could result in significant downtime and have significant adverse consequences for our business, financial condition, results of operations, and cash flows.

As a result of our entry into Chapter 11 bankruptcy and the limited duration of our DIP Credit Facility at December 31, 2020, these reserve estimates reflect our plans for capital expenditures to convert PUDs into proved developed reserves, including approximately $126 million, that can be funded within the maturity of our then-current financing.

development of our proved reserves.

An interruption in operations at our headquarters could adversely affect our business.

For example, on December 1, 2020, the Bank of Montreal announced its intention to wind down its investments in non-Canadian energy businesses and to cease all investment banking and corporate lending in the sector.

debt.

It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021.

While the Credit Agreement provides a framework for a transition to an alternative rate, some uncertainty remains due to the current unavailability of SOFR and the inherent open-endedness of the amendment mechanism in the absence of SOFR.

property and the imposition of taxes, and tribal laws for a minor portion of our acreage.

To the extent that the review results in the development of additional restrictions on drilling, limitations on the availability of leases, or restrictions on the ability to obtain required permits, it could have a material adverse impact on our operations.

Similarly, in September 2019, EPA published a rule proposing to reconsider certain aspects of its regulations for the control of methane emissions.

programs.

Unfavorable ESG ratings may lead to

Increased restriction of these items reduces their ability to offset future taxable income, which may result in an increase to income tax liabilities.

Based on current estimates, we believe the Company was in a net unrealized built-in gain position at the time of the First Ownership Change.

This is due in large part to currently existing rules allowing a taxpayer to compare its tax basis to the face value of pre-emergence debt.

Should the Company’s final calculations confirm that it was, in fact, in a net unrealized built-in gain position at such time, the annual limitation will be increased by each year’s recognized built-in gains, if any, occurring within a five-year period following the First Ownership Change, but only to the extent of the net unrealized built-in gain which existed at the time of the First Ownership Change.

In the event a second ownership change occurs and the Company is in a net unrealized built-in loss position at the time of the second ownership change, then a new and potentially more restrictive annual limitation would apply.

Upon a second ownership change, the Company would likely have significantly less debt and as such a determination of its net unrealized built-in gain or loss position will likely not utilize its debt level and will be based solely upon the comparison of its tax basis to the fair market value of its assets.

and limit the potential increases to the annual limitation amount for certain built-in gains existing at the time of an ownership change, (unless the transition relief provisions of the Proposed Regulations are applicable), thereby possibly reducing the ability to utilize tax attributes significantly.

This information is intended to provide investors with an understanding of our past performance, current financial condition and outlook for the future and should be read in conjunction with Item 8 of [added: Part II of] this report.

[added: |] Introduction [added: | | |]

We are an independent exploration and production company engaged in the acquisition, exploration and development of properties to produce oil, natural gas and [removed: NGLs] [added: NGL] from underground reservoirs.

We own a large and geographically diverse portfolio of onshore U.S. unconventional natural gas and liquids assets, including interests in approximately [removed: 7,400] [added: 8,200] oil and natural gas wells.

[added: |] Recent Developments [added: | | |]

On [removed: June 28, 2020,] the [added: Petition Date, the] Debtors filed [removed: voluntary petitions for relief] [added: the Chapter 11 Cases] under [added: Chapter 11 of] the Bankruptcy Code in the Bankruptcy Court.

On June 29, 2020, the Bankruptcy Court entered an order authorizing the joint administration of the Chapter 11 Cases under the caption *In re Chesapeake Energy Corporation*, Case No. [removed: 20-33233 (DRJ).][added: 20-33233.]

Subsidiaries with noncontrolling interests, consolidated variable interest entities and certain de minimis subsidiaries (collectively, the “Non-Filing Entities”) were not part of the [removed: Chapter 11 Cases.][added: bankruptcy filing.]

The [removed: Debtors and the] Non-Filing Entities continued to operate in the ordinary course of [removed: business during the Chapter 11 Cases.][added: business.]

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

[removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations] [added: See [Note 2](#i56d3efaf87e44ef19c39e9891c0aff07_148)] and [removed: [Note](#i95c607e4b20b4cc39273cc5a1e5634ef_160) [2](#i95c607e4b20b4cc39273cc5a1e5634ef_160)] [added: [Note 3](#i56d3efaf87e44ef19c39e9891c0aff07_2330)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for a discussion of [removed: our] [added: the] Chapter 11 [removed: proceedings.][added: Cases and for discussion of adoption of fresh start accounting.]

The global spread of [removed: COVID-19 created] [added: COVID-19, created, and continues to create,] significant volatility, uncertainty, and economic disruption during [removed: 2020.][added: 2020 through 2021.]

To date, we have experienced limited operational impacts as a result of COVID-19 or [removed: the] related governmental restrictions.

[removed: We] [added: While we] cannot predict the full impact that COVID-19 or the [removed: current] [added: related] significant disruption and volatility in the oil and natural gas markets will have on our business, cash flows, liquidity, financial condition and results of [removed: operations.][added: operations, we believe demand is recovering and prices will continue to be positively impacted in the near term.]

For additional discussion regarding risks associated with the COVID-19 pandemic, see Item 1A [removed: “Risk Factors”] [added: Risk Factors] in this report.

[added: |] Liquidity and Capital Resources [added: | | |]

[removed: Our] [added: Historically, our] primary sources of capital resources and liquidity have [removed: historically] consisted of internally generated cash flows from operations, borrowings under certain credit [removed: agreements,] [added: agreements and] dispositions of non-core [removed: assets and the capital markets when conditions are favorable.][added: assets.]

Accordingly, our liquidity [added: in the 2021 and 2020 Predecessor Periods] depended mainly on cash generated from [removed: operating activities] [added: operations] and available funds under [added: certain credit agreements including] the DIP [removed: Credit] Facility [removed: discussed below.][added: in the 2021 Predecessor Period and revolving credit facility in the 2020 Predecessor Period.]

See [removed: [Note](#i95c607e4b20b4cc39273cc5a1e5634ef_160) [2](#i95c607e4b20b4cc39273cc5a1e5634ef_160)] [added: [Note 4](#i56d3efaf87e44ef19c39e9891c0aff07_151)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for further discussion of [removed: our DIP Credit Facility.][added: these acquisitions.]

See [removed: [Note 5](#i95c607e4b20b4cc39273cc5a1e5634ef_169)] [added: [Note](#i56d3efaf87e44ef19c39e9891c0aff07_157) [6](#i56d3efaf87e44ef19c39e9891c0aff07_157)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for further discussion of our debt obligations, including principal and carrying amounts of our [added: senior] notes.

The Bankruptcy Court confirmed the Plan [removed: in a bench ruling on January 13, 2021] and [added: the Debtors] entered the Confirmation Order on January 16, 2021.

The Debtors emerged from bankruptcy on [removed: February 9, 2021.][added: the Effective Date.]

On the Effective Date, pursuant to the terms of the Plan, the Company, as borrower, entered into a reserve-based credit agreement (the “Credit Agreement”) providing for [removed: a reserve-based credit facility (the “Exit] [added: the Exit] Credit [removed: Facility”) with] [added: Facility which features] an initial borrowing base of $2.5 billion.

The borrowing base will be redetermined semiannually on or around May 1 and November 1 of each [removed: year and the next scheduled redetermination will be on or about October 1, 2021.][added: year.]

The aggregate initial elected commitments of the lenders under the Exit Credit Facility [removed: will be] [added: were] $1.75 billion of revolving Tranche A Loans [removed: (the “Tranche A Loans”)] and [removed: $220] [added: $221] million of fully funded Tranche B [removed: Loans (the “Tranche B Loans”).][added: Loans.]

The Exit Credit Facility provides for a [removed: $200.0] [added: $200] million sublimit of the aggregate commitments that are available for the issuance of letters of credit.

The Tranche B Loans can be repaid if no Tranche A Loans are [removed: outstanding][added: outstanding.]

On February 2, 2021, the [removed: Company,] [added: Company] issued $500 million aggregate principal amount of its [removed: 5.5%] [added: 5.50%] Senior Notes due 2026 (the “2026 Notes”) and $500 million aggregate principal amount of its 5.875% Senior Notes due 2029 (the “2029 [removed: Notes”] [added: Notes] and, together with the 2026 Notes, the “Notes”).

The offering of the Notes was part of a series of exit financing transactions [removed: being] undertaken in connection with the Debtors’ Chapter 11 Cases and meant to provide the exit financing originally intended to be provided by the Exit Term Loan Facility pursuant to the Commitment Letter.

[removed: | Oil Derivatives(a) | | | | | | | | | | | | | | | | | | | | |][added: *Oil and Natural Gas Derivatives*]

See [removed: [Note 14](#i95c607e4b20b4cc39273cc5a1e5634ef_214)] [added: [Note](#i56d3efaf87e44ef19c39e9891c0aff07_151) [4](#i56d3efaf87e44ef19c39e9891c0aff07_151)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for further [removed: discussion of derivatives and hedging activities.][added: discussion.]

| Other | | | | | | [removed: 12 | | |] [added: 1] | | | [removed: 6] | | | | | | [removed: 6] [added: —] | | | | | | [removed: —] [added: 13] | | | | | | [removed: —] [added: 36] | | |

See [Note [removed: 5](#i95c607e4b20b4cc39273cc5a1e5634ef_169)] [added: 20](#i56d3efaf87e44ef19c39e9891c0aff07_202)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for [removed: a description of our long-term debt.][added: further discussion.]

[removed: (b)] See [Note [removed: 8](#i95c607e4b20b4cc39273cc5a1e5634ef_184)] [added: 3](#i56d3efaf87e44ef19c39e9891c0aff07_2330)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for [removed: a description of our finance lease obligation.][added: further discussion.]

[removed: (c)] See [Note [removed: 8](#i95c607e4b20b4cc39273cc5a1e5634ef_184)] [added: 19](#i56d3efaf87e44ef19c39e9891c0aff07_199)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for [removed: a description of our operating lease obligations.][added: further discussion.]

[removed: (d)] See [removed: [Note 6](#i95c607e4b20b4cc39273cc5a1e5634ef_178)] [added: [Note](#i56d3efaf87e44ef19c39e9891c0aff07_157) [6](#i56d3efaf87e44ef19c39e9891c0aff07_157)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for [removed: a description of our gathering, processing and transportation agreements and service contract commitments.][added: further discussion.]

See [removed: [Notes 14](#i95c607e4b20b4cc39273cc5a1e5634ef_214) and [22](#i95c607e4b20b4cc39273cc5a1e5634ef_244), respectively,] [added: [Note 2](#i56d3efaf87e44ef19c39e9891c0aff07_148)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for [removed: more] [added: additional] information [removed: on our derivatives and asset retirement obligations.][added: about the Chapter 11 Cases.]

For the year ending December 31, [removed: 2021,] [added: 2022,] we currently expect to bring or have online approximately [removed: 110] [added: 190] to [removed: 125] [added: 220] gross wells across [removed: five] [added: 11] to [removed: six] [added: 14] rigs and plan to invest between approximately [removed: $670] [added: $1.5] – [removed: $740 million] [added: $1.8 billion] in capital [removed: expenditures.][added: expenditures, approximately $150 – $200 million of which is contingent upon the closing of the proposed Chief Acquisition.]

We expect that approximately [removed: 80%] [added: 75%] of our [removed: 2021] [added: 2022] capital expenditures will be directed toward our natural gas assets.

We currently plan to fund our [removed: 2021] [added: 2022] capital program through cash on hand, expected cash flow from our operations and borrowings under our Exit [removed: Revolver.][added: Credit Facility.]

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Upon closing of the Chief Acquisition and divestiture of our assets in the Powder River Basin in Wyoming, our portfolio will be focused on three operating areas including the natural gas resource plays in the Marcellus Shale in the northern Appalachian Basin in Pennsylvania (“Marcellus”) and the Haynesville/Bossier Shales in northwestern Louisiana (“Haynesville”) and the liquids-rich resource play in the Eagle Ford Shale in South Texas (“Eagle Ford”).

Our strategy is to create shareholder value by generating sustainable Free Cash Flow from our oil and natural gas development and production activities.

We continue to focus on improving margins through operating efficiencies and financial discipline and improving our Environmental, Social, and Governance (“ESG”) performance.

To accomplish these goals, we intend to allocate our human resources and capital expenditures to projects we believe offer the highest cash return on capital invested, to deploy leading drilling and completion technology throughout our portfolio, and to take advantage of acquisition and divestiture opportunities to strengthen our portfolio.

We also intend to continue to dedicate capital to projects that reduce the environmental impact of our oil and natural gas producing activities.

We continue to seek opportunities to reduce cash costs (production, gathering, processing and transportation and general and administrative) per barrel of oil equivalent production through operational efficiencies by, among other things, improving our production volumes from existing wells.

Leading a responsible energy future is foundational to Chesapeake's success.

Our core values and culture demand we continuously evaluate the environmental impact of our operations and work diligently to improve our ESG performance across all facets of our Company.

Our path to leading a responsible energy future begins with our initiative to achieve net-zero direct greenhouse gas emissions by 2035, which we announced in February 2021.

To meet this challenge, we have set meaningful initial goals including:

- Eliminate routine flaring from all new wells completed from 2021 forward, and enterprise-wide by 2025;

- Reduce our methane intensity to 0.09% by 2025 (achieved 0.08% in 2021); and

- Reduce our GHG intensity to 5.5 by 2025 (achieved 5.0 in 2021).

In July 2021, we announced our plan to receive independent certification of our natural gas production under the MiQ methane standard and EO100 Standard for Responsible Energy Development.

Certified natural gas was available in our Haynesville assets as of the end of 2021, and we expect it to be available in our legacy Marcellus assets by the end of the second quarter of 2022.

The MiQ certification will provide a verified approach to tracking our commitment to reduce our methane intensity to 0.09% by 2025, as well as support our overall objective of achieving net-zero direct greenhouse gas emissions by 2035.

Our results of operations as reported in our consolidated financial statements for the 2021 Successor Period, 2021 Predecessor Period, 2020 Predecessor Period and 2019 Predecessor Period are in accordance with GAAP.

Although GAAP requires that we report on our results for the periods January 1, 2021 through February 9, 2021 and February 10, 2021 through December 31, 2021 separately, management views our operating results for the year ended December 31, 2021 by combining the results of the 2021 Predecessor Period and the 2021 Successor Period because management believes such presentation provides the most meaningful comparison of our results to prior periods.

We are not able to compare the 40 days from January 1, 2021 through February 9, 2021 operating results to any of the previous periods reported in the consolidated financial statements and do not believe reviewing this period in isolation would be useful in identifying any trends in, or reaching any conclusions regarding, our overall operating performance.

We believe the key performance indicators such as operating revenues and expenses for the 2021 Successor Period combined with the 2021 Predecessor Period provide more meaningful comparisons to other periods and are useful in understanding operational trends.

Additionally, there were no changes in policies between the periods, and any material impacts as a result of fresh start accounting were included within the discussion of these changes.

These combined results do not comply with GAAP and have not been prepared as pro forma results under applicable regulations, but are presented because we believe they provide the most meaningful comparison of our results to prior periods.

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*Vine Acquisition*

On November 1, 2021, we completed our acquisition of Vine pursuant to a definitive agreement with Vine dated August 10, 2021.

The transaction strengthens Chesapeake’s competitive position, meaningfully increasing our Free Cash Flow outlook and deepening our inventory of premium natural gas locations, while preserving the strength of our balance sheet.

*Chief Acquisition and Powder River Basin Divestiture*

On January 25, 2022, we announced our planned Chief Acquisition and the planned divestiture of our Powder River Basin assets.

These transactions, which are subject to certain customary closing conditions, including certain regulatory approvals, are expected to close in the first quarter of 2022.

In conjunction with the Vine Acquisition, these transactions simplify and refocus our asset portfolio, concentrating on three operating areas and advancing our highest-return assets in the Marcellus and Haynesville gas basins.

*Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer*

On April 27, 2021, we announced the departure of Doug Lawler from his positions as Chief Executive Officer and Director of Chesapeake, effective April 30, 2021.

Michael A.

Wichterich, the Chairman of our Board of Directors, served as Interim Chief Executive Officer while the Board of Directors conducted a search for a new Chief Executive Officer.

On October 11, 2021, we announced that the Board of Directors appointed Domenic “Nick” Dell’Osso Jr. as President and Chief Executive Officer and as member of the Board of Directors, effective October 11, 2021.

Additionally, on October 11, 2021, the Board of Directors appointed Michael A.

Wichterich, who resigned as Interim Chief Executive Officer upon the appointment of Mr. Dell’Osso, as Executive Chairman of the Company.

Our natural gas resource plays are the Marcellus Shale in the northern Appalachian Basin in Pennsylvania and the Haynesville/Bossier Shales in northwestern Louisiana.

Our liquids-rich resource plays are the Eagle Ford Shale in South Texas and the stacked pay in the Powder River Basin in Wyoming.

*Voluntary Reorganization Under Chapter 11*

During the Chapter 11 Cases, the Debtors operated as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code.

The Bankruptcy Court granted first day motions filed by us that were designed primarily to mitigate the impact of the Chapter 11 Cases on our operations, customers and employees.

As a result, we were able to conduct normal business activities and pay all associated obligations for the period following the Bankruptcy filing and were authorized to pay owner royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided.

During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of business required the prior approval of the Bankruptcy Court.

For the duration of the Chapter 11 Cases, our operations and ability to develop and execute our business plan were subject to the risks and uncertainties associated with the Chapter 11 process as described in Item 1A.

“Risk Factors.” As a result of these risks and uncertainties, the number of our shares of common stock and stockholders, assets, liabilities, officers and/or directors could be significantly different following the outcome of the Chapter 11 Cases, and the description of our operations, properties and capital plans included in this Form 10-Q may not accurately reflect our operations, properties and capital plans following the Chapter 11 Cases.

During the Chapter 11 Cases, we expected our financial results to continue to be volatile as Restructuring activities and expenses, contract terminations and rejections, and claims assessments significantly impact our consolidated financial statements.

As a result, our historical financial performance is likely not indicative of our financial performance after the date of the Petition Date.

In addition, we incurred significant professional fees and other costs in connection with preparation for the Chapter 11 Cases.

On October 13, 2020, we filed a notice with the Bankruptcy Court that we reached an agreement with Tapstone Energy, LLC (“Tapstone Energy”) as the “Stalking Horse” bidder to sell our Mid-Continent asset for $85 million in a Section 363 transaction under the Bankruptcy Code.

An auction supervised by the Bankruptcy Court was held on November 10, 2020, in which other pre-qualified buyers submitted bids for the asset.

We presented the results of the auction process to the Bankruptcy Court and the sale was approved on November 13, 2020.

On December 11, 2020, we closed the transaction with Tapstone Energy for $130 million, subject to post-closing adjustments which resulted in the recognition of a gain of approximately $27 million.

On November 22, 2020, we filed notice with the Bankruptcy Court that we had reached an agreement with The Williams Companies, Inc. (“Williams”) to transfer certain Haynesville assets, including interests in 144 producing wells and approximately 50,000 net acres, in exchange for improved midstream contract terms with respect to assets we retained.

On December 15, 2020, the Court approved the transaction with Williams and the exchange resulted in the recognition of loss of approximately $128 million based on the difference between the carrying value of the assets and the fair value of the assets surrendered.

The exchange was executed to obtain sufficient savings on midstream obligations as required by the Plan.

Therefore, the loss was recorded to reorganization items, net in our consolidated statements of operations.

See Item 1.

Business, Item 7.

There remains considerable uncertainty regarding how long the pandemic and related market conditions will persist.

In certain cases, states that had begun taking steps to reopen their economies experienced a subsequent surge in cases of COVID-19, causing these states to cease such reopening measures in some cases and reinstitute restrictions in others.

As an essential business under the guidelines issued by each of the states in which we operate, we have been allowed to continue operations.

As a result, in mid-March of 2020, we restricted access to all of our offices and for a period of time directed employees to work remotely to the extent possible.

We began to re-open our offices in phases beginning in mid-May of 2020, and we have implemented special precautions to minimize the risk to our employees of exposure.

These actions have allowed us to maintain the engagement and connectivity of our personnel.

However, due to severe impacts from the COVID-19 pandemic on the global demand for oil and natural gas, financial results may not necessarily be indicative of operating results for the 2020 fiscal year or for any other future period.

Moreover, future operations could be negatively affected if a significant number of our employees are quarantined as a result of exposure to the virus.

Our first priority in our response to this crisis has been the health and safety of our employees and those of our other business counterparties.

We have implemented preventative measures and developed corporate and regional response plans to minimize unnecessary risk of exposure and prevent infection, while supporting our employees, contractors and vendors to the best of our ability.

We have a business continuity team tasked with responding to health, safety and environmental matters and personnel issues, and we have activated this business continuity team to address the impacts of the pandemic on our business as they develop.

We also have modified certain business practices (including those related to employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences) to protect the health and safety of our employees and contractors and the communities in which we operate by conforming to government restrictions and best practices encouraged by the Centers for Disease Control and Prevention, the World Health Organization and other governmental and regulatory authorities.

There is considerable uncertainty regarding how long the pandemic and related market conditions will persist and the extent and duration of governmental and other measures implemented to try to slow the spread of the virus, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders and business and government shutdowns.

One of the largest impacts of the pandemic has been a significant reduction in global demand for oil and, to a lesser extent, natural gas.

In addition, in the first half of 2020, oil prices declined significantly due to an increase in supply emanating from a disagreement on production cuts among members of OPEC+ and certain non-OPEC oil-producing countries.

The resulting oversupply and the reduced demand in response to COVID-19 have together caused prices in the oil and gas market to remain depressed.

Oil and natural gas prices are expected to continue to be volatile as a result of the near-term production instability and the ongoing COVID-19 pandemic and as changes in oil and natural gas inventories, industry demand and global and national economic performance are reported.

The supply and demand imbalance has disrupted the oil and natural gas exploration and production industry and other industries that serve exploration and production companies.

See [Note [removed: 14](#i95c607e4b20b4cc39273cc5a1e5634ef_214)] [added: 1](#i56d3efaf87e44ef19c39e9891c0aff07_187)[5](#i56d3efaf87e44ef19c39e9891c0aff07_187)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for further discussion of the fair value measurements associated with our derivatives.

For the [removed: year ended December 31, 2020,] [added: combined 2021 Successor and Predecessor Periods,] oil, natural gas, and NGL [removed: revenue,] [added: revenues,] excluding any effect of our derivative instruments, were [removed: $1.4] [added: $1.735] billion, [removed: $1.2] [added: $2.818] billion, and [removed: $130] [added: $246] million, respectively.

Based on [removed: 2020] production, oil, natural gas, and NGL revenue for the [removed: year ended December 31, 2020] [added: combined 2021 Successor and Predecessor Periods] would have increased or decreased by approximately [removed: $140] [added: $173] million, [removed: $120] [added: $282] million, and [removed: $13] [added: $25] million, respectively, for each 10% increase or decrease in prices.

As of December 31, [removed: 2020,] [added: 2021,] the fair values of our oil and [added: natural] gas derivatives were net [removed: assets] [added: liabilities] of [removed: $19] [added: $358] million and net liabilities of [removed: $137] [added: $785] million, respectively.

A 10% increase in forward oil prices would decrease the valuation of oil derivatives by [removed: $187] [added: $95] million while a 10% decrease would increase the valuation by [removed: $185] [added: $95] million.

A 10% increase in forward [added: natural] gas prices would decrease the valuation of [added: natural] gas derivatives by approximately [removed: $129] [added: $270] million while a 10% decrease would increase the valuation by [removed: $129] [added: $269] million.

This fair value change assumes volatility based on prevailing market parameters at December 31, [removed: 2020.][added: 2021.]

See [Note [removed: 14](#i95c607e4b20b4cc39273cc5a1e5634ef_214)] [added: 1](#i56d3efaf87e44ef19c39e9891c0aff07_187)[5](#i56d3efaf87e44ef19c39e9891c0aff07_187)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for further information on our open derivative positions.

Our exposure to interest rate changes relates primarily to borrowings under our [added: Exit Credit Facility for the 2021 Successor Period and] pre-petition revolving credit facility and DIP [removed: Credit Facility.][added: Facility for the 2021, 2020 and 2019 Predecessor Periods.]

Interest [removed: was] [added: is] payable on borrowings under the [added: Exit Credit Facility,] pre-petition revolving credit facility and DIP Credit Facility based on a floating rate.

See [removed: [Note 5](#i95c607e4b20b4cc39273cc5a1e5634ef_169)] [added: [Note](#i56d3efaf87e44ef19c39e9891c0aff07_157) [6](#i56d3efaf87e44ef19c39e9891c0aff07_157)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for additional information.

A 1.0% increase in interest rates based on the variable borrowings as of December 31, [removed: 2020] [added: 2021] would result in an increase in our interest expense of approximately [removed: $19] [added: $2] million per year.

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

As of December 31, 2021, we had no outstanding borrowings under our Exit Credit Facility - Tranche A Loans, and $221 million under our Exit Credit Facility - Tranche B Loans.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

As of December 31, 2020, we had $1.929 billion in borrowings outstanding under our pre-petition revolving credit facility and no outstanding borrowings under our DIP Credit Facility.

Unless the context otherwise requires, references to [removed: “Chesapeake”,] [added: “Chesapeake,”] the [removed: “Company”, “us”,] [added: “Company,” “us,”] “we” and “our” in this report are to Chesapeake Energy Corporation together with its subsidiaries.

[added: |] Our Business [added: | | |]

We are an independent exploration and production company engaged in the acquisition, exploration and development of properties to produce oil, natural gas and [removed: NGLs] [added: NGL] from underground reservoirs.

We own a large and geographically diverse portfolio of onshore U.S. unconventional natural gas and liquids assets, including interests in approximately [removed: 7,400] [added: 8,200 gross] oil and natural gas wells.

To facilitate our discussion in this report, we refer to the post-emergence reorganized company as the “Successor” and the pre-emergence company as the “Predecessor.” See [removed: [Note](#i95c607e4b20b4cc39273cc5a1e5634ef_160) [](#i95c607e4b20b4cc39273cc5a1e5634ef_160)[2](#i95c607e4b20b4cc39273cc5a1e5634ef_160)] [added: [Note 2](#i56d3efaf87e44ef19c39e9891c0aff07_148) and [Note 3](#i56d3efaf87e44ef19c39e9891c0aff07_2330)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for further discussion of our [removed: bankruptcy and] [added: bankruptcy, the] resulting [removed: reorganization.][added: reorganization and fresh start accounting.]

[added: |] Information About Us [added: | | |]

[added: |] Business Strategy [added: | | |]

[added: *Consistent returns, sustainable future.*] Our strategy is to create shareholder value by generating [removed: cash flow] [added: sustainable Free Cash Flow] from our oil and natural gas development and production activities.

We [added: continue to] focus on improving margins through operating efficiencies and financial discipline and [removed: further] improving our Environmental, [removed: Social] [added: Social,] and [removed: Corporate] Governance [removed: (ESG)] [added: (“ESG”)] performance.

To accomplish these goals, we intend to allocate our human resources and capital expenditures to projects we believe offer the highest cash return on capital invested, to deploy leading drilling and completion technology throughout our [removed: portfolio,] [added: portfolio] and to take advantage of acquisition and divestiture opportunities to strengthen our portfolio.

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

[removed: We] [added: *Maintain low leverage and strong liquidity.* Subsequent to our emergence from Chapter 11 bankruptcy, we] believe that maintaining low net leverage is integral to our business strategy and will allow us to maintain lower fixed costs, improve our margins and maintain the flexibility of our capital program.

We expect our maintenance capital program to yield in excess of annual production of [removed: 400 thousand barrels of oil equivalent] [added: 700 mboe] per day and generate significant [removed: free cash flow] [added: Free Cash Flow] at today’s prevailing commodity market prices.

We [removed: plan to eliminate] [added: eliminated] routine flaring on all new wells completed in [removed: 2021 and beyond,] [added: 2021,] and [added: plan to] accomplish the same on all [removed: wells,] [added: wells] enterprise-wide by 2025.

Additionally, as of February [removed: 25, 2021,] [added: 21, 2022,] we have hedged [removed: 11] [added: 6] mmbbl and [removed: 273] [added: 467] bcf of expected [removed: 2022] [added: 2023] oil and natural gas production at prices of [removed: $44.30/bbl] [added: $47.17/bbl] and [removed: $2.53/mcf, respectively.][added: $2.69/mcf, respectively, for swaps and $65.00/bbl to $79.09/bbl and $3.03/mcf to $4.02/mcf, respectively, for collars.]

[added: |] Operating Areas [added: | | |]

We focus our acquisition, exploration, development and production efforts in the [removed: five] geographic operating areas described below.

*Eagle Ford -* [added: Eagle Ford Shale in] South Texas.

[removed: *Powder] [added: | Powder] River Basin [removed: -* Stacked pay in Wyoming.][added: | | | | | | 4 | | | | | | 3 | | | | | | 12 | | | | | | 9 | | | | | | 75 | | | | | | 57 | | |]

[added: |] Well Data [added: | | |]

As of December 31, [removed: 2020,] [added: 2021,] we held an interest in approximately [removed: 7,400] [added: 8,200] gross productive wells, including [removed: 5,900 properties] [added: 6,500 wells] in which we held a working interest and [removed: 1,500 properties] [added: 1,700 wells] in which we held an overriding or royalty interest.

Of the [removed: 5,900 (3,700] [added: 6,500 (4,100] net) [removed: properties] [added: wells] in which we held a working interest, [removed: 2,500 (1,400] [added: 3,000 (1,700] net) [removed: properties] [added: wells] were classified as productive natural gas wells and [removed: 3,400 (2,300] [added: 3,500 (2,400] net) [removed: properties] [added: wells] were classified as productive oil wells.

During [removed: 2020] [added: 2021,] excluding sold properties, we operated [removed: 5,200] [added: 5,700] gross wells and held a non-operating working interest in [removed: 700] [added: 800] gross wells.

We also [removed: drilled or participated in 188] [added: completed 126] gross [removed: (128] [added: (74] net) wells as operator and participated in another [removed: 17] [added: 13] gross [removed: (nominal] [added: (1] net) wells completed by other operators.

We operate approximately [removed: 97%] [added: 98%] of our current daily production volumes.

[added: |] Drilling Activity [added: | | |]

The following table sets forth the wells we [removed: drilled] [added: completed] or participated in during the periods indicated.

| | | | | | | [removed: 2020] [added: 2021] | | | | | | | | | | | | | | | | | | | | | | | | [removed: 2019] [added: 2020] | | | | | | | | | | | | | | | | | | | | | | | | [removed: 2018] [added: 2019] | | | | | | | | | | | | | | | | | | | | |

| Productive | | | | | | [removed: 203] [added: 137] | | | | | | 100 | | | | | | [removed: 126] [added: 74] | | | | | | 100 | | | | | | [removed: 414] [added: 203] | | | | | | 100 | | | | | | [removed: 271] [added: 126] | | | | | | 100 | | | | | | [removed: 363] [added: 414] | | | | | | [removed: 99] [added: 100] | | | | | | [removed: 227] [added: 271] | | | | | | [removed: 99] [added: 100] | | |

| Dry | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | [removed: 2] [added: —] | | | | | | [removed: 1] [added: —] | | | | | | [removed: 1] [added: —] | | | | | | [removed: 1] [added: —] | | |

| Total | | | | | | [removed: 203] [added: 137] | | | | | | 100 | | | | | | [removed: 126] [added: 74] | | | | | | 100 | | | | | | [removed: 414] [added: 203] | | | | | | 100 | | | | | | [removed: 271] [added: 126] | | | | | | 100 | | | | | | [removed: 365] [added: 414] | | | | | | 100 | | | | | | [removed: 228] [added: 271] | | | | | | 100 | | |

| Productive | | | | | | [removed: —] [added: 2] | | | | | | [removed: —] [added: 100] | | | | | | [removed: —] [added: 1] | | | | | | [removed: —] [added: 100] | | | | | | [removed: 1] [added: —] | | | | | | [removed: 20] [added: —] | | | | | | [removed: 1] [added: —] | | | | | | [removed: 20] [added: —] | | | | | | [removed: 10] [added: 1] | | | | | | [removed: 83] [added: 20] | | | | | | [removed: 9] [added: 1] | | | | | | [removed: 82] [added: 20] | | |

| Dry | | | | | | [removed: 2] [added: —] | | | | | | [removed: 100] [added: —] | | | | | | [removed: 2] [added: —] | | | | | | [removed: 100] [added: —] | | | | | | [removed: 4] [added: 2] | | | | | | [removed: 80] [added: 100] | | | | | | [removed: 4] [added: 2] | | | | | | [removed: 80] [added: 100] | | | | | | [removed: 2] [added: 4] | | | | | | [removed: 17] [added: 80] | | | | | | [removed: 2] [added: 4] | | | | | | [removed: 18] [added: 80] | | |

| Total | | | | | | 2 | | | | | | 100 | | | | | | [removed: 2] [added: 1] | | | | | | 100 | | | | | | [removed: 5] [added: 2] | | | | | | 100 | | | | | | [removed: 5] [added: 2] | | | | | | 100 | | | | | | [removed: 12] [added: 5] | | | | | | 100 | | | | | | [removed: 11] [added: 5] | | | | | | 100 | | |

The following table shows the wells we [removed: drilled] [added: completed] or participated in by operating area:

| | | | | | | [removed: 2020] [added: 2021] | | | | | | | | | | | | [removed: 2019] [added: 2020] | | | | | | | | | | | | [removed: 2018] [added: 2019] | | | | | | | | |

| Marcellus | | | | | | [removed: 79] [added: 83] | | | | | | [removed: 33] [added: 34] | | | | | | [removed: 44] [added: 79] | | | | | | [removed: 22] [added: 33] | | | | | | [removed: 52] [added: 44] | | | | | | [removed: 23] [added: 22] | | |

| Haynesville | | | | | | [removed: 21] [added: 40] | | | | | | [removed: 19] [added: 31] | | | | | | [removed: 22] [added: 21] | | | | | | [removed: 16] [added: 19] | | | | | | [removed: 30] [added: 22] | | | | | | [removed: 21] [added: 16] | | |

| Powder River Basin | | | | | | [removed: 12] [added: 106] | | | | | | [removed: 9] [added: 86] | | | | | | [removed: 75] [added: 126] | | | | | | [removed: 57] [added: 95] | | | | | | [removed: 41] [added: 232] | | | | | | [removed: 34] [added: 181] | | |

| Mid-Continent | | | | | | [removed: 5] [added: —] | | | | | | — | | | | | | [removed: 40] [added: 5] | | | | | | [removed: 12] [added: —] | | | | | | [removed: 52] [added: 40] | | | | | | [removed: 32] [added: 12] | | |

| | | |

| --- | --- | --- |

Upon emergence from bankruptcy, we adopted fresh start accounting, which resulted in us becoming a new entity for financial reporting purposes.

Accordingly, the consolidated financial statements on or after February 9, 2021 are not comparable to the consolidated financial statements prior to that date.

On November 1, 2021, we completed our acquisition of Vine, an energy company focused on the development of natural gas properties in the over-pressured stacked Haynesville and Mid-Bossier shale plays in Northwest Louisiana.

The Vine Acquisition strengthens Chesapeake’s competitive position, meaningfully increasing our Free Cash Flow outlook and deepening our inventory of premium natural gas locations, while preserving the strength of our balance sheet.

On January 24, 2022, we entered into a definitive agreement to acquire Chief and associated non-operated interests held by affiliates of Tug Hill, Inc. (“Tug Hill”), for $2.0 billion in cash and approximately 9.44 million common shares.

Chief and Tug Hill hold producing assets and an inventory of premium drilling locations in the Marcellus Shale in Northeast Pennsylvania.

The cash portion of the Chief Acquisition will be financed with cash on hand and the use of our Exit Credit Facility.

The Chief Acquisition, which is subject to customary closing conditions, including certain regulatory approvals, is expected to close by the end of the first quarter of 2022.

On January 24, 2022, we entered into an agreement to sell our Powder River Basin assets in Wyoming to Continental Resources, Inc. for approximately $450 million in cash.

The transaction, which is subject to certain customary closing conditions, is expected to close in the first quarter of 2022.

The completion of these transactions will clarify and strengthen our asset portfolio, concentrating on three operating areas and advancing our highest-return assets in the Marcellus and Haynesville gas basins.

| | | |

| --- | --- | --- |

| | | |

| --- | --- | --- |

We expect to continue to focus on our cost optimization initiatives.

We reduced our methane loss rate to 0.08% and our GHG intensity to 5.0 as of December 31, 2021.

As of February 21, 2022, we have 11 mmbbls and 899 bcf of expected 2022 production, representing 58% and 68% of 2022 forecasted oil and natural gas production, hedged at prices of $44.30/bbl and $2.69/mcf, respectively, for swaps and $3.21/mcf to $4.26/mcf, respectively, for collars.

Metrics include hedges that are contingent upon the closing of the Chief Acquisition.

| | | |

| --- | --- | --- |

*Haynesville -* Haynesville/Bossier Shales in Northwestern Louisiana.

[TABLE OF CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)

*Powder River Basin -* Stacked pay in Wyoming (purchase and sale agreement to divest executed on January 24, 2022, and which, subject to the satisfaction or waiver of certain closing conditions, is expected to close in the first quarter of 2022).

| | | |

| --- | --- | --- |

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| --- | --- | --- |

| Eagle Ford | | | | | | 12 | | | | | | 7 | | | | | | 86 | | | | | | 65 | | | | | | 233 | | | | | | 164 | | |

[TABLE OF CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)

| | | |

| --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Successor | | | | | | | | | Predecessor | | | | | | | | | | | | | | |

| | | | | | | Period from February 10, 2021 through December 31, 2021 | | | | | | | | | Period from January 1, 2021 through February 9, 2021 | | | | | | Year Ended December 31, 2020 | | | | | | Year Ended December 31, 2019 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Our natural gas resource plays are the Marcellus Shale in the northern Appalachian Basin in Pennsylvania and the Haynesville/Bossier Shales in northwestern Louisiana.

Our liquids-rich resource plays are the Eagle Ford Shale in South Texas and the stacked pay in the Powder River Basin in Wyoming.

*Consistent Returns, Sustainable Future*

*Maintain low leverage and strong liquidity.* Now that we have emerged from Chapter 11 bankruptcy, we expect to target a net leverage ratio, which is measured as our net debt as a ratio of trailing 12-month EBITDAX, of less

than 1x.

As a result, we will target a long-term disciplined capital reinvestment rate, which we define as annual capital expenditures as a percentage of trailing 12-month EBITDAX, of 60% to 70%.

We believe this level of reinvestment will be adequate to support our target long-term annual maintenance capital expenditure level, excluding capitalized interest, of $700 million to $750 million.

We expect to continue to focus on our cost reduction initiatives, targeting a long-term annual free cash flow yield of 30% to 40% of annual EBITDAX.

Since filing the Chapter 11 Cases in June 2020, we have successfully renegotiated or terminated certain of our midstream contracts and commitments, which resulted in significant reduction to our anticipated gathering, processing and transportation expenses, cumulatively achieving approximately $4 billion in expected lifetime contract savings (or $2 billion discounted to present value, assuming a 10% annual discount rate).

For 2019, our total cash costs, inclusive of gathering, processing and transportation, operating, general and administrative and interest expenses were $2.8 billion.

Now that we have emerged from Chapter 11 bankruptcy, based on the termination or successful renegotiation of many of our gathering, processing and transportation contracts, as well as reductions in expected interest, operating and general and administrative expenses, we expect our annualized cash costs for 2021 to be reduced by approximately $1 billion relative to 2019.

We intend to reduce our methane loss rate to 0.09% and our GHG intensity to 5.5 by 2025, reductions of 47% and 33%, respectively, as compared to 2019.

As of February 25, 2021, and consistent with requirements of our DIP Credit Facility we have 19 mmbbls and 548 bcf of expected 2021, representing 77% and 74% of 2021 forecasted oil and natural gas production hedged at prices of $42.69/bbl and $2.67/mcf, respectively.

*Haynesville -* Northwestern Louisiana (Gulf Coast).

*Brazos Valley* - Southeast Texas.

| Eagle Ford | | | | | | 55 | | | | | | 36 | | | | | | 150 | | | | | | 85 | | | | | | 162 | | | | | | 98 | | |

| Brazos Valley | | | | | | 31 | | | | | | 29 | | | | | | 83 | | | | | | 79 | | | | | | — | | | | | | — | | |

| Utica | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 40 | | | | | | 31 | | |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Years Ended December 31, | | | | | | | | | | | | | | |

| | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |

Oil, Natural Gas and NGL Reserves

| | | | | | | December 31, 2020 | | | | | | | | | | | | | | | | | | | | |

| Proved developed | | | | | | 158 | | | | | | 3,196 | | | | | | 51 | | | | | | 742 | | |

| Total proved(a) | | | | | | 161 | | | | | | 3,530 | | | | | | 52 | | | | | | 802 | | |

| | | | | | | ($ in millions) | | | | | | | | | | | | | | |

___________________________________________

| Developed | | | | | | (128) | | |

As a result of our entry into Chapter 11 bankruptcy and the limited duration of our DIP Credit Facility at December 31, 2020, we could not carry any PUD reserves past the maturity date of our DIP financing and we therefore recorded a downward revision of 539 mmboe of our previously reported PUD reserves.

Given our liquidity and financial position post-emergence we expect to record more PUD reserves as of March 31, 2021.

These values were calculated assuming that we will expend approximately $126 million to develop these reserves during the first quarter of 2021.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Marcellus | | | | | | 555 | | | | | | 353 | | | | | | 245 | | | | | | 168 | | | | | | 16 | | | | | | 16 | | | | | | 816 | | | | | | 537 | | |

| Haynesville | | | | | | 230 | | | | | | 203 | | | | | | 30 | | | | | | 22 | | | | | | 1 | | | | | | 1 | | | | | | 261 | | | | | | 226 | | |

| Eagle Ford | | | | | | 316 | | | | | | 188 | | | | | | 45 | | | | | | 31 | | | | | | — | | | | | | — | | | | | | 361 | | | | | | 219 | | |

| Brazos Valley | | | | | | 360 | | | | | | 298 | | | | | | 222 | | | | | | 126 | | | | | | — | | | | | | — | | | | | | 582 | | | | | | 424 | | |

| Powder River Basin | | | | | | 105 | | | | | | 85 | | | | | | 137 | | | | | | 104 | | | | | | 1 | | | | | | 1 | | | | | | 243 | | | | | | 190 | | |

| Other(a) | | | | | | 157 | | | | | | 126 | | | | | | 918 | | | | | | 868 | | | | | | 431 | | | | | | 427 | | | | | | 1,506 | | | | | | 1,421 | | |

Commencement of the Chapter 11 Cases automatically stayed the proceedings and actions against us that are [removed: described] [added: referenced] below, in addition to actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company’s bankruptcy estates.

See [Note [removed: 2](#i95c607e4b20b4cc39273cc5a1e5634ef_160)] [added: 2](#i56d3efaf87e44ef19c39e9891c0aff07_148)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for additional information.

See [Note [removed: 6](#i95c607e4b20b4cc39273cc5a1e5634ef_175)] [added: 7](#i56d3efaf87e44ef19c39e9891c0aff07_160)] of the notes to our consolidated financial statements included in Item 8 of [added: Part II of] this report for information regarding our estimation and provision for potential losses related to litigation and regulatory proceedings.

The majority of these prepetition legal [removed: proceedings, including the matters below, have been] [added: proceedings were] settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process before the Bankruptcy Court.

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

We [removed: are named as a defendant in] [added: were recently dismissed from] numerous lawsuits in Oklahoma alleging that we and other companies [removed: have] engaged in activities that have caused earthquakes.

[removed: These] [added: The] lawsuits [removed: seek] [added: sought] compensation for injury to real and personal property, diminution of property value, economic losses due to business interruption, interference with the use and enjoyment of property, annoyance and inconvenience, personal injury and emotional distress.

In addition, they [removed: seek] [added: sought] the reimbursement of insurance premiums and the award of punitive damages, attorneys’ fees, costs, expenses and interest.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan.

We and other natural gas producers have been named in various lawsuits alleging underpayment of royalties and other shares of the proceeds of production.

The lawsuits against us allege, among other things, that we used below-market prices, made improper deductions, utilized improper measurement techniques, entered into arrangements with affiliates that resulted in underpayment of amounts owed in connection with the production and sale of natural gas and NGL, or similar theories.

These lawsuits include cases filed by individual royalty owners and putative class actions, some of which seek to certify a statewide class.

The lawsuits seek compensatory, consequential, treble, and punitive damages, restitution and disgorgement of profits, declaratory and injunctive relief regarding our payment practices, pre-and post-judgment interest, and attorney’s fees and costs.

Royalty plaintiffs have varying provisions in their respective leases, oil and gas law varies from state to state, and royalty owners and producers differ in their interpretation of the legal effect of lease provisions governing royalty calculations.

We have resolved a number of these claims through negotiated settlements of past and future royalty obligations and have prevailed in various other lawsuits.

We are currently defending numerous lawsuits seeking damages with respect to underpayment of royalties or other shares of the proceeds of production in multiple states where we have operated, including those discussed below.

On December 9, 2015, the Commonwealth of Pennsylvania, by the Office of Attorney General, filed a lawsuit in the Bradford County Court of Common Pleas related to royalty underpayment and lease acquisition and accounting practices with respect to properties in Pennsylvania.

The lawsuit, which primarily relates to the Marcellus Shale and Utica Shale, alleges that we violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) by making improper deductions and entering into arrangements with affiliates that resulted in underpayment of royalties.

The lawsuit includes other UTPCPL claims and antitrust claims, including that a joint exploration agreement to which we are a party established unlawful market allocation for the acquisition of leases.

The lawsuit seeks statutory restitution, civil penalties and costs, as well as a temporary injunction from exploration and drilling activities in Pennsylvania until restitution, penalties and costs have been paid, and a permanent injunction from further violations of the UTPCPL.

Putative statewide class actions in Pennsylvania and Ohio and purported class arbitrations in Pennsylvania have been filed on behalf of royalty owners asserting various claims for damages related to alleged underpayment of royalties as a result of the divestiture of substantially all of our midstream business and most of our gathering assets in 2012 and 2013.

These cases include claims for violation of and conspiracy to violate the federal Racketeer Influenced and Corrupt Organizations Act and for an unlawful market allocation agreement for mineral rights, intentional interference with contractual relations, and violations of antitrust laws related to purported markets for gas mineral rights, operating rights and gas gathering sources.

These lawsuits seek in aggregate compensatory, consequential, treble, and punitive damages, restitution and disgorgement of profits, declaratory and injunctive relief regarding our royalty payment practices, pre-and post-judgment interest, and attorney’s fees and costs.

On December 20, 2017 and August 9, 2018, we reached tentative settlements to resolve all Pennsylvania civil royalty cases for a total at that time of approximately $36 million.

Subsequent to our Bankruptcy Filing the parties reopened settlement discussions.

We believe losses are reasonably possible in certain of the pending royalty cases for which we have not accrued a loss contingency, but we are currently unable to estimate an amount or range of loss or the impact the actions could have on our future results of operations or cash flows.

Uncertainties in pending royalty cases generally include the complex nature of the claims and defenses, the potential size of the class in class actions, the scope and types of the properties and agreements involved, and the applicable production years.

On July 24, 2018, Healthcare of Ontario Pension Plan (HOOPP) filed a demand for arbitration with the American Arbitration Association regarding HOOPP’s purchase of our interest in Chaparral Energy, Inc. stock for $215 million on January 5, 2014.

HOOPP claims that we engaged in material misrepresentations and fraud, and that we violated the Exchange Act and Oklahoma Uniform Securities Act.

HOOPP seeks either rescission or $215 million in monetary damages, and in either case, interest, attorney’s fees, disgorgement and punitive damages.

We intend to vigorously defend these claims.

On January 29, 2020, a well control incident occurred at one of our wellsites in Burleson County, Texas, causing the deaths of three of our contractors’ employees and injuring a fourth.

In connection with this incident, eleven lawsuits have been brought against us and our contractors alleging negligence, gross negligence, and breach of contract, and seeking wrongful death damages, survival statute damages, exemplary damages, and interest.

Ten of the suits have been filed in Dallas County, Texas.

A joint motion to consolidate filed by all the parties in nine of the ten Dallas County lawsuits is currently pending before the Texas Multidistrict Litigation Panel.

The

eleventh suit is pending in Burleson County, Texas.

The proceedings are in their early stages and are all stayed due to the pending bankruptcy.

Our general and excess liability insurance policies provide coverage for third party bodily injury and wrongful death claims, and the contracts between us and our contractors with respect to the well contain customary cross-indemnification provisions.

We are vigorously defending these claims.

We are in discussions with the Pennsylvania Department of Environmental Protection (PADEP) regarding gas migration in the vicinity of certain of our wells in Wyoming County, Pennsylvania.

We believe we are close to identifying agreed-upon steps to resolve PADEP’s concerns regarding the issue.

In addition to these steps, resolution of the matter may result in monetary sanctions of more than $300,000.

For the Fiscal Year Ended December 31, [removed: 2020][added: 2021]

| Title of Each Class | | | | | | Trading [removed: Symbol] [added: Symbol(s)] | | | | | | Name of Each Exchange on Which Registered | | |

Yes [removed: ☐ No] ☒ [added: No ☐]

Large Accelerated Filer [removed: ☐] [added: ☒] Accelerated Filer ☐ Non-accelerated Filer [removed: ☒][added: ☐]

Smaller Reporting Company [removed: ☒] [added: ☐] Emerging Growth Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the [removed: Exchange] Act).

The aggregate market value of our common stock held by non-affiliates on June 30, [removed: 2020,] [added: 2021,] was approximately [removed: $48 million.][added: $1.6 billion.]

As of February [removed: 25, 2021,] [added: 21, 2022,] there were [removed: 97,907,081] [added: 118,558,307] shares of our $0.01 par value common stock outstanding.

Portions of the proxy statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders are incorporated by reference in Part III.

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[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

[removed: Means title] [added: “Bankruptcy Code” means Title] 11 of the United States Code, 11 U.S.C. §§ 101–1532, as amended.

[removed: *Bankruptcy Court.* The] [added: “Bankruptcy Court” means the] United States Bankruptcy Court for the Southern District of Texas.

[removed: Barrel] [added: “Boe” means barrel] of oil equivalent.

[removed: Natural gas] [added: NGL] proved reserves and production are converted to [removed: boe at 14.73 psia and 60 degrees.][added: Boe on a one-to-one basis with oil.]

[removed: *Chapter] [added: “Chapter] 11 [removed: Cases.* When] [added: Cases” means, when] used with reference to a particular Debtor, the case pending for that Debtor under [removed: chapter] [added: Chapter] 11 of the Bankruptcy Code in the Bankruptcy [removed: Court] [added: Court,] and when used with reference to all the Debtors, the procedurally consolidated [removed: chapter] [added: Chapter] 11 cases pending for the Debtors in the Bankruptcy Court.

[removed: The] [added: “Completion” means the] process of treating a drilled well followed by the installation of permanent equipment for the production of oil, natural gas or natural gas liquids, or in the case of a dry well, the reporting to the appropriate authority that the well has been abandoned.

[removed: The] [added: “Confirmation Order” means the] order confirming the Fifth Amended Joint Chapter 11 Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates, [removed: \[Docket] [added: Docket] No. [removed: 2915\]] [added: 2915,] entered by the Bankruptcy Court on January 16, 2021.

[removed: The] [added: “Debtors” means the] Company, together with all of its direct and indirect subsidiaries that have filed the Chapter 11 Cases.


| | | | [Results of Operations, for the](#i56d3efaf87e44ef19c39e9891c0aff07_109) [Period from February 10, 2021 through December 31, 2021, the Period from January 1, 2021 through February 9, 2021](#i56d3efaf87e44ef19c39e9891c0aff07_109)[,](#i56d3efaf87e44ef19c39e9891c0aff07_109) [and the](#i56d3efaf87e44ef19c39e9891c0aff07_109) [Year](#i56d3efaf87e44ef19c39e9891c0aff07_109) [Ended December 31,](#i56d3efaf87e44ef19c39e9891c0aff07_109) [2020](#i56d3efaf87e44ef19c39e9891c0aff07_109) | | | | | | [58](#i56d3efaf87e44ef19c39e9891c0aff07_109) | | | | | |

| [Item 9](#i56d3efaf87e44ef19c39e9891c0aff07_2395)[C](#i56d3efaf87e44ef19c39e9891c0aff07_2395)[.](#i56d3efaf87e44ef19c39e9891c0aff07_2395) | | | [D](#i56d3efaf87e44ef19c39e9891c0aff07_2395)[isclosure Regarding Foreign](#i56d3efaf87e44ef19c39e9891c0aff07_2395) [Juris](#i56d3efaf87e44ef19c39e9891c0aff07_2395)[dictions that Prevent Inspections](#i56d3efaf87e44ef19c39e9891c0aff07_2395) | | | | | | [147](#i56d3efaf87e44ef19c39e9891c0aff07_2395) | | | | | |

| [Signatures](#i56d3efaf87e44ef19c39e9891c0aff07_268) | | | | | | | | | [153](#i56d3efaf87e44ef19c39e9891c0aff07_268) | | | | | |

| | | |

| --- | --- | --- |

| Definitions | | |

Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Chesapeake,” the “Company” and “Registrant” refer to Chesapeake Energy Corporation and its consolidated subsidiaries.

All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified.

In addition, the following are other abbreviations and definitions of certain terms used within this Annual Report on Form 10-K:

“Adjusted Free Cash Flow” (a non-GAAP measure) means net cash provided by operating activities (GAAP) less cash capital expenditures, adjusted to exclude certain items management believes affect the comparability of operating results.

“ASC” means Accounting Standards Codification.

“Backstop Commitment Agreement” means that certain Backstop Commitment Agreement, dated as of June 28, 2020, by and between Chesapeake and the Backstop Parties, as may be further amended, modified, or supplemented from time to time, in accordance with its terms.

“Backstop Parties” means the members of the FLLO Ad Hoc Group that are signatories to the Backstop Commitment Agreement and Franklin Advisers, Inc., as investment manager on behalf of certain funds and accounts.

“Bbl” or “Bbls” means barrel or barrels.

“Bcf” means billion cubic feet.

Natural gas proved reserves and production are converted to Boe, at the pressure and temperature base standard of each respective state in which the natural gas is produced, at the rate of six Mcf of gas per Bbl of oil, based upon the approximate relative energy content of natural gas and oil.

“Chief” means Chief E&D Holdings, LP.

“Chief Acquisition” means Chesapeake’s planned acquisition of Chief E&D Holdings, LP and associated non-operated interests held by affiliates of Tug Hill, Inc., which, subject to the satisfaction or waiver of certain closing conditions, including certain regulatory approvals, is expected to close in the first quarter of 2022.

“Class A Warrants” means warrants to purchase 10 percent of the New Common Stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan, the Class B Warrants, and the Class C Warrants), at an initial exercise price per share of $27.63.

The Class A Warrants are exercisable from the Effective Date until February 9, 2026.

“Class B Warrants” means warrants to purchase 10 percent of the New Common Stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan and the Class C Warrants), at an initial exercise price per share of $32.13.

The Class B Warrants are exercisable from the Effective Date until February 9, 2026.

“Class C Warrants” means warrants to purchase 10 percent of the New Common Stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan), at an initial exercise price per share of $36.18.

The Class C Warrants are exercisable from the Effective Date until February 9, 2026.

[TABLE OF CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)

“DIP Facility” means that certain debtor-in-possession financing facility documented pursuant to the DIP Documents and DIP Order.

“FLLO Term Loan Facility” means the facility outstanding under the FLLO Term Loan Facility Credit Agreement.

“FLLO Term Loan Facility Credit Agreement” means that certain Term Loan Agreement, dated as of December 19, 2019 ((i) as supplemented by that certain Class A Term Loan Supplement, dated as of December 19, 2019 (as amended, restated or otherwise modified from time to time), by and among Chesapeake, as borrower, the Debtor guarantors party thereto, GLAS USA LLC, as administrative agent, and the lenders party thereto, and (ii) as further amended, restated, or otherwise modified from time to time), by and among Chesapeake, the Debtor guarantors party thereto, GLAS USA LLC, as administrative agent, and the lenders party thereto.

“Free Cash Flow” (a non-GAAP measure) means net cash provided by operating activities (GAAP) less cash capital expenditures.

“GAAP” means U.S. generally accepted accounting principles.

“General Unsecured Claim” means any Claim against any Debtor that is not otherwise paid in full during the Chapter 11 Cases pursuant to an order of the Bankruptcy Court and is not an Administrative Claim, a Priority Tax Claim, an Other Priority Claim, an Other Secured Claim, a Revolving Credit Facility Claim, a FLLO Term Loan Facility Claim, a Second Lien Notes Claim, an Unsecured Notes Claim, an Intercompany Claim, or a Section 510(b) Claim.

“MBbls” means thousand barrels.

“MMBbls” means million barrels.

“MBoe” means thousand Boe.

“MMBoe” means million Boe.

[TABLE OF CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)

“New Common Stock” means the single class of common stock issued by Reorganized Chesapeake on the Effective Date.

“NGL” means natural gas liquids.

“OPEC” means Organization of the Petroleum Exporting Countries.

| | | | [Results of Operations, for the Years Ended December 31, 2019, 2018 and 2017](#i95c607e4b20b4cc39273cc5a1e5634ef_109) | | | | | | [52](#i95c607e4b20b4cc39273cc5a1e5634ef_109) | | | | | |

| [Signatures](#i95c607e4b20b4cc39273cc5a1e5634ef_310) | | | | | | | | | [144](#i95c607e4b20b4cc39273cc5a1e5634ef_310) | | | | | |

Glossary of Oil and Gas Terms

The terms defined in this section are used throughout this report.

*Bankruptcy Code*.

*Bbl.* One stock tank barrel, or 42 U.S. gallons liquid volume, used herein in reference to crude oil or other liquid hydrocarbons.

*Bboe*.

One billion barrels of oil equivalent.

*Bcf.* One billion cubic feet of natural gas.

*Bcfe*.

One billion cubic feet of natural gas equivalent.

*Btu*.

British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water from 58.5 to 59.5 degrees Fahrenheit.

*Boe*.

Boe is based on six mcf of natural gas to one bbl of oil or one bbl of NGL.

This ratio reflects an energy content equivalency and not a price or revenue equivalency.

Despite holding this ratio constant at six mcf to one bbl, prices have historically often been higher or substantially higher for oil than natural gas on an energy equivalent basis, although there have been periods in which they have been lower or substantially lower.

*Completion*.

*Confirmation Order*.

*Debtors*.

*Dry Well*.

The first date, February 9, 2021, upon which all conditions precedent to the effectiveness of the Plan have been satisfied or waived in accordance with the Plan and no stay of the Confirmation Order is in effect.

*GAAP.* Generally Accepted Accounting Principles in the United States.

*Gross Acres or Gross Wells*.

*Mboe.* One thousand barrels of oil equivalent.

*Mcf*.

*Mmbbl*.

One million barrels of crude oil or other liquid hydrocarbons.

*Mmboe*.

One million barrels of oil equivalent.

*Mmbtu*.

One million btus.

*Natural Gas Liquids (NGL).* Hydrocarbons in natural gas that are separated from the gas as liquids through the process of absorption, condensation, adsorption or other methods in gas processing or cycling plants.

Natural gas liquids primarily include ethane, propane, butane, isobutene, pentane, hexane and natural gasoline.

*Net Acres or Net Wells*.

*NYMEX*.

*Play*.

*Present Value of Estimated Future Net Revenues or PV-10 (non-GAAP)*.

*Proved Developed Reserves*.

*Proved Reserves*.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

Business and in the Supplementary Information included in Item 8 of [added: Part II of] this report.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

| | | | | | |

| --- | --- | --- | --- | --- | --- |

[added: |] Common Stock [added: | | |]

[removed: On] [added: In accordance with the Plan confirmed by the Bankruptcy Court on] February 9, 2021, [removed: subsequent to our emergence from Bankruptcy, there were 97,906,968 outstanding] [added: we issued 97,097,081] shares of [removed: common stock] [added: New Common Stock] of the [removed: Successor] [added: Successor, which are] listed on the Nasdaq Stock Market LLC under the symbol CHK.

In addition, on February 9, 2021, we [removed: had] [added: issued] 11,111,111 Class A Warrants, 12,345,679 Class B Warrants and 9,768,527 Class C [removed: Warrants outstanding that] [added: Warrants, each of which] are exercisable for one share of common stock per warrant at the initial exercise prices of $27.63, $32.13 and $36.18 per share, respectively.

[added: |] Dividends [added: | | |]

[removed: Unregistered] [added: | Repurchases of Equity Securities; Unregistered] Sales of Equity Securities and Use of Proceeds [added: | | |]

There were no repurchases or unregistered sales of our common stock during the quarter ended December 31, [removed: 2020.][added: 2021.]

[added: |] Shareholders [added: | | |]

As of February [removed: 25, 2021,] [added: 21, 2022,] there were approximately [removed: 122] [added: 146] holders of record of our common stock.

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

| | | |

| --- | --- | --- |

Upon our emergence from Chapter 11 bankruptcy on February 9, 2021, our then-authorized common stock and preferred stock were canceled and released under the Plan without receiving any recovery on account thereof.

For more information regarding our emergence from Chapter 11 bankruptcy and our Plan of Reorganization, see [Note 2](#i56d3efaf87e44ef19c39e9891c0aff07_148) of the notes to our consolidated financial statements included in Item 8 of Part II of this report.

| | | |

| --- | --- | --- |

We declared the first quarterly dividend on our New Common Stock in the second quarter of 2021 of $0.34375 per share (an initial annual rate of $1.375 per share).

In the third quarter of 2021, we announced an increase in the base quarterly dividend to $0.4375 per share (an annual rate of $1.75 per share) and announced our intent to adopt a variable return program that will result in the payment of an additional variable dividend, payable beginning in March 2022, equal to the sum of Adjusted Free Cash Flow from the prior quarter less the base quarterly dividend, multiplied by 50%.

In January 2022, we announced our intent to increase the base dividend to $0.50 per share (an annual rate of $2.00 per share) beginning in the second quarter of 2022.

| | | |

| --- | --- | --- |

On December 2, 2021, we announced that our Board of Directors authorized the repurchase of up to $1.0 billion in aggregate value of our common stock and/or warrants from time to time.

The repurchase authorization permits repurchases on a discretionary basis as determined by management, subject to market conditions, applicable legal requirements, available liquidity, compliance with the Company’s debt agreements and other appropriate factors.

As of February 21, 2022, no repurchases had occurred.

| | | |

| --- | --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

Our common stock was previously listed on the New York Stock Exchange (the “NYSE”) under the symbol “CHK.” As a result of our failure to satisfy the continued listing requirements of the NYSE, on June 29, 2020, our common stock ceased to trade on the NYSE.

Since June 30, 2020, our common stock has been quoted on the OTC Pink Marketplace maintained by the OTC Markets Group, Inc. under the symbol “CHKAQ.” On July 20, 2020, the NYSE filed a Form 25 with the SEC to delist our common stock, senior notes and cumulative convertible preferred stock from the NYSE.

The delisting was effective 10 days after the Form 25 was filed and our common stock, senior notes and cumulative convertible preferred stock were deregistered under Section 12(b) of the Exchange Act on October 18, 2020.

Our common stock was canceled on February 9, 2021 as a result of our Chapter 11 proceedings.

We ceased paying dividends on our common stock in the third quarter of 2015.

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

We have adopted the SEC’s Disclosure Modernization Final Rule, effective February 10, 2021, for Item 301 of Regulation S-K.

As such, Item 6 Selected Financial Data has not been provided.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

The following table sets forth selected consolidated financial data of Chesapeake as of and for the years ended December 31, 2020, 2019, 2018, 2017 and 2016.

The table below should be read in conjunction with *Management's Discussion and Analysis of Financial Condition and Results of Operations* and our consolidated financial statements, including the notes thereto, appearing in Items 7 and 8, respectively, of this report.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Years Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

| | | | | | | ($ in millions, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| STATEMENT OF OPERATIONS DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total revenues | | | | | | $ | 5,296 | | | | | $ | 8,595 | | | | | $ | 10,030 | | | | | $ | 10,039 | | | | | $ | 8,705 | |

| Net income (loss) available to common stockholders(a) | | | | | | $ | (9,756) | | | | | $ | (416) | | | | | $ | 133 | | | | | $ | (631) | | | | | $ | (4,018) | |

| EARNINGS (LOSS) PER COMMON SHARE:(b) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Basic | | | | | | $ | (998.26) | | | | | $ | (49.97) | | | | | $ | 29.26 | | | | | $ | (139.32) | | | | | $ | (1,051.83) | |

| Diluted | | | | | | $ | (998.26) | | | | | $ | (49.97) | | | | | $ | 29.26 | | | | | $ | (139.32) | | | | | $ | (1,051.83) | |

| CASH DIVIDEND DECLARED PER COMMON SHARE | | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | |

| BALANCE SHEET DATA (AT END OF PERIOD): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total assets | | | | | | $ | 6,584 | | | | | $ | 16,193 | | | | | $ | 12,735 | | | | | $ | 14,925 | | | | | $ | 17,048 | |

| Long-term debt, net of current maturities | | | | | | $ | — | | | | | $ | 9,073 | | | | | $ | 7,341 | | | | | $ | 9,921 | | | | | $ | 9,938 | |

| Total equity (deficit) | | | | | | $ | (5,341) | | | | | $ | 4,401 | | | | | $ | 2,133 | | | | | $ | 1,943 | | | | | $ | 2,565 | |

___________________________________________

(a) Includes $8.535 billion, $11 million, $131 million, $814 million and $563 million of impairments of oil and gas properties and other fixed assets for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, respectively.

(b) Amounts have been retroactively adjusted to reflect a 1-for-200 (1:200) reverse stock split effective April 14, 2020.

See [Note](#i95c607e4b20b4cc39273cc5a1e5634ef_196) [11](#i95c607e4b20b4cc39273cc5a1e5634ef_196) of the notes to our consolidated financial statements included in Item 8 of this report for additional information.

| | | | INDEX TO FINANCIAL STATEMENTS CHESAPEAKE ENERGY [removed: CORPORATION (DEBTOR-IN-POSSESSION)] [added: CORPORATION] | | | | | | | | | | | |

[removed: | [Report] [added: Report] of Independent Registered Public Accounting [removed: Firm](#i95c607e4b20b4cc39273cc5a1e5634ef_127) | | | | | | | | | [66](#i95c607e4b20b4cc39273cc5a1e5634ef_127) | | | | | |][added: Firm]

| | | | [Consolidated Balance [removed: Sheets](#i95c607e4b20b4cc39273cc5a1e5634ef_130)] [added: Sheets](#i56d3efaf87e44ef19c39e9891c0aff07_124)] as of December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] | | | | | | [removed: [69](#i95c607e4b20b4cc39273cc5a1e5634ef_130)] [added: [79](#i56d3efaf87e44ef19c39e9891c0aff07_124)] | | | | | |

| | | | [Consolidated Statements of [removed: Operations](#i95c607e4b20b4cc39273cc5a1e5634ef_136)] [added: Operations](#i56d3efaf87e44ef19c39e9891c0aff07_130)] for the [added: Period from February 10, 2021 through December 31, 2021, the Period from January 1, 2021 through February 9, 2021, and the] Years Ended December 31, [removed: 2020, 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | | | | [removed: [71](#i95c607e4b20b4cc39273cc5a1e5634ef_136)] [added: [81](#i56d3efaf87e44ef19c39e9891c0aff07_130)] | | | | | |

| | | | [Consolidated Statements of Comprehensive Income [removed: (Loss)](#i95c607e4b20b4cc39273cc5a1e5634ef_139)] [added: (Loss)](#i56d3efaf87e44ef19c39e9891c0aff07_133)] for the [added: Period from February 10, 2021 through December 31, 2021, the Period from January 1, 2021 through February 9, 2021, and the] Years Ended December 31, [removed: 2020, 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | | | | [removed: [72](#i95c607e4b20b4cc39273cc5a1e5634ef_139)] [added: [82](#i56d3efaf87e44ef19c39e9891c0aff07_133)] | | | | | |

| | | | [Consolidated Statements of Cash [removed: Flows](#i95c607e4b20b4cc39273cc5a1e5634ef_145)] [added: Flows](#i56d3efaf87e44ef19c39e9891c0aff07_136)] for the [added: Period from February 10, 2021 through December 31, 2021, the Period from January 1, 2021 through February 9, 2021, and the] Years Ended December 31, [removed: 2020, 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | | | | [removed: [73](#i95c607e4b20b4cc39273cc5a1e5634ef_145)] [added: [83](#i56d3efaf87e44ef19c39e9891c0aff07_136)] | | | | | |

| | | | [Consolidated Statements of Stockholders’ [removed: Equity](#i95c607e4b20b4cc39273cc5a1e5634ef_148)] [added: Equity](#i56d3efaf87e44ef19c39e9891c0aff07_139)] for the [added: Period from February 10, 2021 through December 31, 2021, the Period from January 1, 2021 through February 9, 2021, and the] Years Ended December 31, [removed: 2020, 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | | | | [removed: [75](#i95c607e4b20b4cc39273cc5a1e5634ef_148)] [added: [85](#i56d3efaf87e44ef19c39e9891c0aff07_139)] | | | | | |

| [added: 1.] | | | [removed: [Note 1. Basis] [added: Basis] of Presentation and Summary of Significant Accounting [removed: Policies](#i95c607e4b20b4cc39273cc5a1e5634ef_157) | | | | | | [77](#i95c607e4b20b4cc39273cc5a1e5634ef_157) | | |] [added: Policies] | | |

| | | | [Note 2. Chapter 11 [removed: Proceedings](#i95c607e4b20b4cc39273cc5a1e5634ef_160)] [added: Proceedings](#i56d3efaf87e44ef19c39e9891c0aff07_148)] | | | | | | [removed: [82](#i95c607e4b20b4cc39273cc5a1e5634ef_160)] [added: [93](#i56d3efaf87e44ef19c39e9891c0aff07_148)] | | | | | |

| [added: 4.] | | | [removed: [Note 3. Oil] [added: Oil] and Natural Gas Property [removed: Transactions](#i95c607e4b20b4cc39273cc5a1e5634ef_163) | | | | | | [87](#i95c607e4b20b4cc39273cc5a1e5634ef_163) | | |] [added: Transactions] | | |

| [removed: | | | [Note 4. Earnings per Share](#i95c607e4b20b4cc39273cc5a1e5634ef_166) | | | | | | [91](#i95c607e4b20b4cc39273cc5a1e5634ef_166)] [added: 5.] | | | [added: Earnings Per Share] | | |

| [added: Contingencies and commitments ([Note 7](#i56d3efaf87e44ef19c39e9891c0aff07_160))] | | | [removed: [Note 6. Contingencies and Commitments](#i95c607e4b20b4cc39273cc5a1e5634ef_175)] | | | | | | [removed: [99](#i95c607e4b20b4cc39273cc5a1e5634ef_175)] | | | | | | [added: | | |]

| | | | [removed: [Note 14.] [added: [Note](#i56d3efaf87e44ef19c39e9891c0aff07_187) [15](#i56d3efaf87e44ef19c39e9891c0aff07_187)[.] Derivative and Hedging [removed: Activities](#i95c607e4b20b4cc39273cc5a1e5634ef_214)] [added: Activities](#i56d3efaf87e44ef19c39e9891c0aff07_187)] | | | | | | [removed: [118](#i95c607e4b20b4cc39273cc5a1e5634ef_214)] [added: [131](#i56d3efaf87e44ef19c39e9891c0aff07_187)] | | | | | |

| | | | [removed: [Note 15.] [added: [Note](#i56d3efaf87e44ef19c39e9891c0aff07_190) [16](#i56d3efaf87e44ef19c39e9891c0aff07_190)[.] Capitalized Exploratory Well [removed: Costs](#i95c607e4b20b4cc39273cc5a1e5634ef_223)] [added: Costs](#i56d3efaf87e44ef19c39e9891c0aff07_190)] | | | | | | [removed: [123](#i95c607e4b20b4cc39273cc5a1e5634ef_223)] [added: [134](#i56d3efaf87e44ef19c39e9891c0aff07_190)] | | | | | |

| [removed: | | | [Note 16.] Other [removed: Property] [added: property] and [removed: Equipment](#i95c607e4b20b4cc39273cc5a1e5634ef_226) | | | | | | [124](#i95c607e4b20b4cc39273cc5a1e5634ef_226)] [added: equipment] | | | [added: 1] | | |

| [added: Separation and other termination costs] | | | [removed: [Note 21. Separation and Other Termination Costs](#i95c607e4b20b4cc39273cc5a1e5634ef_241)] | | | [added: 11] | | | [removed: [127](#i95c607e4b20b4cc39273cc5a1e5634ef_241)] | | | | | | [added: 22 | | | | | | 44 | | | | | | 12 | | |]

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

| [removed: | | | [Supplemental] [added: Supplemental] Disclosures About Oil, Natural Gas and NGL Producing [removed: Activities](#i95c607e4b20b4cc39273cc5a1e5634ef_271) [(unaudited)](#i95c607e4b20b4cc39273cc5a1e5634ef_271) | | | | | | [133](#i95c607e4b20b4cc39273cc5a1e5634ef_271) | | |] [added: Activities (unaudited)] | | |

[removed: Opinions] [added: Opinion] on the Financial Statements

We have audited the accompanying consolidated balance [removed: sheets] [added: sheet] of Chesapeake Energy Corporation and its subsidiaries [added: (Predecessor)] (the “Company”) as of December 31, [removed: 2020 and 2019,] [added: 2020,] and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for [removed: each of] the [removed: three years in the] period [added: from January 1, 2021 through February 9, 2021 and for the years] ended December 31, [removed: 2020,] [added: 2020 and 2019,] including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020 and 2019,] [added: 2020,] and the results of its operations and its cash flows for [removed: each of] the [removed: three years in the] period [added: from January 1, 2021 through February 9, 2021 and for the years] ended December 31, 2020 [added: and 2019] in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, Chesapeake Energy Corporation and certain of its subsidiaries (collectively the “Debtors”) filed voluntary petitions on June 28, 2020 with the United States Bankruptcy Court for the Southern District of Texas [removed: (“Bankruptcy Court”)] for relief under the provisions of Chapter 11 of the [removed: United States Code] Bankruptcy Code.

The Bankruptcy Court confirmed the [removed: Debtors] [added: Debtors’] joint plan of reorganization on January 16, 2021 and the Debtors emerged from [removed: Bankruptcy] [added: bankruptcy] on February 9, 2021.

As described in Note 1 to the consolidated financial statements, the Company’s property and equipment, net balance was [removed: $5.2] [added: approximately $8.8] billion as of December 31, [removed: 2020,] [added: 2021,] and depreciation, depletion, and amortization (DD&A) expense for the [removed: year ended] [added: period from February 10, 2021 through] December 31, [removed: 2020] [added: 2021] was [removed: $1.1 billion,] [added: approximately $919 million,] both of which substantially related to proved oil and natural gas properties.

The Company follows the successful efforts method of accounting for its oil and natural gas [removed: producing activities.][added: properties.]

The estimates of [added: proved] oil and natural gas reserves have been developed by specialists, specifically petroleum engineers.

[removed: The principal considerations for our determination that performing procedures relating to the impact of proved oil and natural] gas [removed: reserves on proved oil and natural gas properties, net is a critical audit matter are (i) the significant judgment by management, including the use of specialists, when developing the estimates of proved oil and natural gas] reserves, which in turn led to (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence obtained related to the data, methods, and assumptions used by management and its specialists in developing the estimates of proved oil and natural gas reserves volumes and the assumptions applied to the data related to the commodity pricing differentials and future development costs.

The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the proved oil and natural gas [removed: reserve] [added: reserves] volumes.

[removed: *Impairment Assessment] [added: | Impairment] of [removed: Certain Proved Oil] [added: oil] and [removed: Natural Gas Properties*][added: natural gas properties | | | | | | — | | | | | | | | | — | | | | | | (8,446) | | | | | | (8) | | |]

The principal considerations for our determination that performing procedures relating to the [removed: impairment assessment] [added: valuation] of [removed: certain] [added: the acquired Vine] proved [added: and unproved] oil and natural gas properties is a critical audit matter are (i) the significant judgment by management, including the use of specialists, when developing the fair value [removed: measurement] of proved [added: and unproved] oil and natural gas properties; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating [removed: management’s significant] [added: audit evidence obtained related to the data, methods, and] assumptions [added: used by management and its specialists] related to [removed: future] [added: recoverable reserves;] production [removed: volumes,] [added: rates; future operating and development costs; future] commodity [removed: prices,] [added: prices escalated by an inflationary rate after five years, adjusted for differentials;] and [removed: operating costs, as well as the] [added: a market-based] weighted average cost of [removed: capital;] [added: capital by operating area;] and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

These procedures [removed: included] [added: included, among others,] testing the effectiveness of [removed: certain] controls relating to management’s [added: estimates of the fair value of] proved [added: and unproved] oil and natural gas [removed: properties impairment assessment.][added: properties.]

These procedures also included, among [removed: others] [added: others,] (i) testing management’s process for developing the fair value [removed: measurement] of proved [added: and unproved] oil and natural gas properties; (ii) evaluating the appropriateness of the [removed: income approach model;] [added: discounted cash flow models;] (iii) testing the completeness and accuracy of underlying data used in the [removed: model;] [added: models;] and (iv) evaluating the [removed: reasonableness of] [added: data, methods, and] significant assumptions used by management related to [removed: future] [added: recoverable reserves,] production [removed: volumes, commodity prices, and] [added: rates, future] operating [added: and development] costs, [removed: as well as the] [added: future commodity prices escalated by an inflationary rate after five years, adjusted for differentials, and a market-based] weighted average cost of [removed: capital.][added: capital by operating area.]

Evaluating the reasonableness of management’s assumptions related to future commodity prices [added: adjusted for differentials] involved comparing the prices against observable market data and evaluating differentials through inspection of the underlying contracts.

Evaluating future operating costs involved evaluating the reasonableness of the [removed: assumptions] [added: costs] as compared to the past performance of the Company.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s [removed: income approach model] [added: discounted cash flow models] and [added: market-based] weighted average cost of [removed: capital.][added: capital by operating area.]

The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the [removed: proved oil and natural gas reserve volumes as stated in the Critical Audit Matter titled “The Impact of Proved Oil and Natural Gas Reserves on Proved Oil and Natural Gas Properties, Net”] [added: recoverable reserves] and [removed: the reasonableness of the future] production [removed: volumes.][added: rates.]

As a basis for using this work, the specialists’ qualifications were understood [removed: and,] [added: and] the Company’s relationship with the specialists was assessed.

The procedures performed also included evaluation of the [removed: methods] [added: data, methods,] and assumptions used by the specialists, tests of the data used by the [removed: specialists] [added: specialists,] and an evaluation of the specialists’ findings.

CHESAPEAKE ENERGY CORPORATION AND [removed: SUBSIDIARIES (DEBTOR-IN-POSSESSION)][added: SUBSIDIARIES]

| | | | | | | December [removed: 31, | | | | | |] [added: 31, 2021] | | |

| [Reports of Independent Registered Public Accounting Firm (PCAOB ID](#i56d3efaf87e44ef19c39e9891c0aff07_121) 238[)](#i56d3efaf87e44ef19c39e9891c0aff07_121) | | | | | | | | | [73](#i56d3efaf87e44ef19c39e9891c0aff07_121) | | | | | |

| | | | [Note 3. Fresh Start Accounting](#i56d3efaf87e44ef19c39e9891c0aff07_2330) | | | | | | [96](#i56d3efaf87e44ef19c39e9891c0aff07_2330) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_154) [5](#i56d3efaf87e44ef19c39e9891c0aff07_154)[. Earnings per Share](#i56d3efaf87e44ef19c39e9891c0aff07_154) | | | | | | [109](#i56d3efaf87e44ef19c39e9891c0aff07_154) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_157) [6](#i56d3efaf87e44ef19c39e9891c0aff07_157)[. Debt](#i56d3efaf87e44ef19c39e9891c0aff07_157) | | | | | | [110](#i56d3efaf87e44ef19c39e9891c0aff07_157) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_160) [7](#i56d3efaf87e44ef19c39e9891c0aff07_160)[. Contingencies and Commitments](#i56d3efaf87e44ef19c39e9891c0aff07_160) | | | | | | [114](#i56d3efaf87e44ef19c39e9891c0aff07_160) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_166) [8](#i56d3efaf87e44ef19c39e9891c0aff07_166)[. Other Liabilities](#i56d3efaf87e44ef19c39e9891c0aff07_166) | | | | | | [116](#i56d3efaf87e44ef19c39e9891c0aff07_166) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_169) [9](#i56d3efaf87e44ef19c39e9891c0aff07_169)[. Leases](#i56d3efaf87e44ef19c39e9891c0aff07_169) | | | | | | [117](#i56d3efaf87e44ef19c39e9891c0aff07_169) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_172) [10](#i56d3efaf87e44ef19c39e9891c0aff07_172)[. Revenue Recognition](#i56d3efaf87e44ef19c39e9891c0aff07_172) | | | | | | [119](#i56d3efaf87e44ef19c39e9891c0aff07_172) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_175) [11](#i56d3efaf87e44ef19c39e9891c0aff07_175)[. Income Taxes](#i56d3efaf87e44ef19c39e9891c0aff07_175) | | | | | | [121](#i56d3efaf87e44ef19c39e9891c0aff07_175) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_178) [12](#i56d3efaf87e44ef19c39e9891c0aff07_178)[. Equity](#i56d3efaf87e44ef19c39e9891c0aff07_178) | | | | | | [126](#i56d3efaf87e44ef19c39e9891c0aff07_178) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_181) [13](#i56d3efaf87e44ef19c39e9891c0aff07_181)[. Share-Based Compensation](#i56d3efaf87e44ef19c39e9891c0aff07_181) | | | | | | [127](#i56d3efaf87e44ef19c39e9891c0aff07_181) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_184) [14](#i56d3efaf87e44ef19c39e9891c0aff07_184)[. Employee Benefit Plans](#i56d3efaf87e44ef19c39e9891c0aff07_184) | | | | | | [131](#i56d3efaf87e44ef19c39e9891c0aff07_184) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_193) [17](#i56d3efaf87e44ef19c39e9891c0aff07_193)[. Other Property and Equipment](#i56d3efaf87e44ef19c39e9891c0aff07_193) | | | | | | [135](#i56d3efaf87e44ef19c39e9891c0aff07_193) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_196) [18](#i56d3efaf87e44ef19c39e9891c0aff07_196)[. Investments](#i56d3efaf87e44ef19c39e9891c0aff07_196) | | | | | | [135](#i56d3efaf87e44ef19c39e9891c0aff07_196) | | | | | |

| | | | [Note](#i56d3efaf87e44ef19c39e9891c0aff07_199) [19](#i56d3efaf87e44ef19c39e9891c0aff07_199)[. Impairments](#i56d3efaf87e44ef19c39e9891c0aff07_199) | | | | | | [136](#i56d3efaf87e44ef19c39e9891c0aff07_199) | | | | | |

| | | | [Not](#i56d3efaf87e44ef19c39e9891c0aff07_202)[e](#i56d3efaf87e44ef19c39e9891c0aff07_202) [20](#i56d3efaf87e44ef19c39e9891c0aff07_202)[. Exploration Expense](#i56d3efaf87e44ef19c39e9891c0aff07_202) | | | | | | [137](#i56d3efaf87e44ef19c39e9891c0aff07_202) | | | | | |

| | | | [Note 2](#i56d3efaf87e44ef19c39e9891c0aff07_205)[1](#i56d3efaf87e44ef19c39e9891c0aff07_205)[. Other Operating Expense](#i56d3efaf87e44ef19c39e9891c0aff07_205) | | | | | | [137](#i56d3efaf87e44ef19c39e9891c0aff07_205) | | | | | |

| | | | [Note 2](#i56d3efaf87e44ef19c39e9891c0aff07_211)[3](#i56d3efaf87e44ef19c39e9891c0aff07_211)[. Asset Retirement Obligations](#i56d3efaf87e44ef19c39e9891c0aff07_211) | | | | | | [138](#i56d3efaf87e44ef19c39e9891c0aff07_211) | | | | | |

| | | | [Note 2](#i56d3efaf87e44ef19c39e9891c0aff07_214)[4](#i56d3efaf87e44ef19c39e9891c0aff07_214)[. Major Customers](#i56d3efaf87e44ef19c39e9891c0aff07_214) | | | | | | [139](#i56d3efaf87e44ef19c39e9891c0aff07_214) | | | | | |

| | | | [Note 2](#i56d3efaf87e44ef19c39e9891c0aff07_220)[5](#i56d3efaf87e44ef19c39e9891c0aff07_220)[. Subsequent Events](#i56d3efaf87e44ef19c39e9891c0aff07_220) | | | | | | [139](#i56d3efaf87e44ef19c39e9891c0aff07_220) | | | | | |

[TABLE OF CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Chesapeake Energy Corporation and its subsidiaries (Successor) (the “Company”) as of December 31, 2021, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for the period from February 10, 2021 through December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the period from February 10, 2021 through December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

*Basis of Accounting*

In connection with its emergence from bankruptcy, the Company adopted fresh start accounting as of February 9, 2021.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinions.

[TABLE OF CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Vine Energy Inc. from its assessment of internal control over financial reporting as of December 31, 2021, because it was acquired by the Company in a purchase business combination during 2021.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | [Note 5. Debt](#i95c607e4b20b4cc39273cc5a1e5634ef_169) | | | | | | [92](#i95c607e4b20b4cc39273cc5a1e5634ef_169) | | | | | |

| | | | [Note 7. Other Liabilities](#i95c607e4b20b4cc39273cc5a1e5634ef_181) | | | | | | [101](#i95c607e4b20b4cc39273cc5a1e5634ef_181) | | | | | |

| | | | [Note 8. Leases](#i95c607e4b20b4cc39273cc5a1e5634ef_184) | | | | | | [102](#i95c607e4b20b4cc39273cc5a1e5634ef_184) | | | | | |

| | | | [Note 9. Revenue Recognition](#i95c607e4b20b4cc39273cc5a1e5634ef_187) | | | | | | [104](#i95c607e4b20b4cc39273cc5a1e5634ef_187) | | | | | |

| | | | [Note 10. Income Taxes](#i95c607e4b20b4cc39273cc5a1e5634ef_190) | | | | | | [106](#i95c607e4b20b4cc39273cc5a1e5634ef_190) | | | | | |

| | | | [Note 11. Equity](#i95c607e4b20b4cc39273cc5a1e5634ef_196) | | | | | | [110](#i95c607e4b20b4cc39273cc5a1e5634ef_196) | | | | | |

| | | | [Note 12. Share-Based Compensation](#i95c607e4b20b4cc39273cc5a1e5634ef_202) | | | | | | [113](#i95c607e4b20b4cc39273cc5a1e5634ef_202) | | | | | |

| | | | [Note 13. Employee Benefit Plans](#i95c607e4b20b4cc39273cc5a1e5634ef_208) | | | | | | [117](#i95c607e4b20b4cc39273cc5a1e5634ef_208) | | | | | |

| | | | [Note 17. Investments](#i95c607e4b20b4cc39273cc5a1e5634ef_232) | | | | | | [124](#i95c607e4b20b4cc39273cc5a1e5634ef_232) | | | | | |

| | | | [Note 18. Impairments](#i95c607e4b20b4cc39273cc5a1e5634ef_235) | | | | | | [125](#i95c607e4b20b4cc39273cc5a1e5634ef_235) | | | | | |

| | | | [Note 19. Exploration Expense](#i95c607e4b20b4cc39273cc5a1e5634ef_2720) | | | | | | [126](#i95c607e4b20b4cc39273cc5a1e5634ef_2720) | | | | | |

| | | | [Note 20. Other Operating Expense](#i95c607e4b20b4cc39273cc5a1e5634ef_238) | | | | | | [126](#i95c607e4b20b4cc39273cc5a1e5634ef_238) | | | | | |

| | | | [Note 22. Asset Retirement Obligations](#i95c607e4b20b4cc39273cc5a1e5634ef_244) | | | | | | [127](#i95c607e4b20b4cc39273cc5a1e5634ef_244) | | | | | |

| | | | [Note 23. Major Customers](#i95c607e4b20b4cc39273cc5a1e5634ef_247) | | | | | | [127](#i95c607e4b20b4cc39273cc5a1e5634ef_247) | | | | | |

| | | | [Note 24. Condensed Combined Debtor-in-Possession Financial Information](#i95c607e4b20b4cc39273cc5a1e5634ef_259) | | | | | | [128](#i95c607e4b20b4cc39273cc5a1e5634ef_259) | | | | | |

| | | | [Note 2](#i95c607e4b20b4cc39273cc5a1e5634ef_262)[5](#i95c607e4b20b4cc39273cc5a1e5634ef_262)[. Subsequent Events](#i95c607e4b20b4cc39273cc5a1e5634ef_262) | | | | | | [131](#i95c607e4b20b4cc39273cc5a1e5634ef_262) | | | | | |

| | | | [Quarterly Financial Data (unaudited)](#i95c607e4b20b4cc39273cc5a1e5634ef_268) | | | | | | [132](#i95c607e4b20b4cc39273cc5a1e5634ef_268) | | | | | |

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Subsequent Event

As described in Notes 1 and 18 to the consolidated financial statements, the property and equipment, net balance was $5.2 billion as of December 31, 2020, and impairment expense for the year ended December 31, 2020 was $8.5 billion, both of which substantially related to proved oil and natural gas properties.

When circumstances indicate that the carrying value of proved oil and natural gas properties may not be recoverable, management compares unamortized capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets.

If the expected undiscounted pre-tax future cash flows are lower than the unamortized capitalized costs, the capitalized costs are reduced to fair value.

Fair value is generally estimated using an income approach.

The expected future cash flows used for impairment assessment and related fair value measurements are typically based on judgmental assessments of future production volumes, commodity prices, operating costs, weighted average cost of capital and capital investment plans, considering all available information at the date of assessment.

March 1, 2021

| | | | | | | 2020 | | | | | | 2019 | | |

| Less: treasury stock, at cost; 0 and 26,224 common shares(a) | | | | | | — | | | | | | (32) | | |

| Total Equity (Deficit) | | | | | | (5,341) | | | | | | 4,401 | | |

____________________________________________

(a) Amounts and shares have been retroactively adjusted to reflect a 1-for-200 (1:200) reverse stock split effective April 14, 2020.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Years Ended December 31, | | | | | | | | | | | | | | |

| | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |

| | | | | | | ($ in millions except per share data) | | | | | | | | | | | | | | |

| Total Revenues | | | | | | 5,210 | | | | | | 8,489 | | | | | | 10,231 | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of December 31, [removed: 2020] [added: 2021] that our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2020] [added: 2021] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management has performed an assessment of the effectiveness of the Company's internal control over financial reporting and has determined the Company’s internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

Management’s assessment and conclusion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 excludes an assessment of the internal control over financial reporting of Vine Energy, which was acquired in a business combination on November 1, 2021.

Vine Energy represents approximately 20% of our consolidated total assets as of December 31, 2021 and approximately 7% of our consolidated revenues for the period from February 10, 2021 through December 31, 2021.

The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears herein.

| /s/ MOHIT SINGH | | | | | | | | | | | | | | |

| Mohit Singh | | | | | | | | | | | | | | |

| February 24, 2022 | | | | | | | | | | | | | | |

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)

SUPPLEMENTARY INFORMATION - (Continued)

| | | | | | |

| --- | --- | --- | --- | --- | --- |

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

| | | | | | | | | | | | | | | |

| /s/ ROBERT D. LAWLER | | | | | | | | | | | | | | |

| Robert D. Lawler | | | | | | | | | | | | | | |

| March 1, 2021 | | | | | | | | | | | | | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

PART III

Not applicable.

PART III

| | | | | | |

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The names of executive officers [removed: and certain other senior officers] of the Company and their ages, titles and biographies as of the date hereof are incorporated by reference from Item 1 of Part I of this report.

The other information called for by this Item 10 is incorporated herein by reference to the definitive proxy statement to be filed by Chesapeake pursuant to Regulation 14A of the General Rules and Regulations under the Securities Exchange Act of 1934 not later than [removed: April 30, 2021] [added: May 2, 2022] (the [removed: “2021] [added: “2022] Proxy Statement”).

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The information called for by this Item 11 is incorporated herein by reference to the [removed: 2021] [added: 2022] Proxy Statement.

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The information called for by this Item 12 is incorporated herein by reference to the [removed: 2021] [added: 2022] Proxy Statement.

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The information called for by this Item 13 is incorporated herein by reference to the [removed: 2021] [added: 2022] Proxy Statement.

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The information called for by this Item 14 is incorporated herein by reference to the [removed: 2021] [added: 2022] Proxy Statement.

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

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| 3.3 | | | | | | [Certificate of Elimination of Series B Preferred Stock of Chesapeake [removed: Energy.](https://www.sec.gov/Archives/edgar/data/895126/000089512621000078/ex332020x12x31certificateo.htm)] [added: Energy](https://www.sec.gov/Archives/edgar/data/895126/000089512621000078/ex332020x12x31certificateo.htm) [Corporation.](https://www.sec.gov/Archives/edgar/data/895126/000089512621000078/ex332020x12x31certificateo.htm)] | | | | | | [added: 10-K] | | | | | | [added: 001-13726] | | | | | | [added: 3.3] | | | | | | [added: 3/1/2021] | | | | | | [removed: X] | | |

[TABLE OF [removed: CONTENTS](#i95c607e4b20b4cc39273cc5a1e5634ef_7)][added: CONTENTS](#i56d3efaf87e44ef19c39e9891c0aff07_7)]

| 10.10 | | | | | | [Purchase Agreement, dated as of February 2, 2021, by and among Chesapeake Escrow Issuer LLC, and Goldman Sachs & Co. LLC, RBC Capital Markets, LLC, as representatives of the purchasers signatory thereto, with respect to 5.5% Senior Notes due 2026 and 5.875% Senior Notes due 2029.](https://www.sec.gov/Archives/edgar/data/895126/000089512621000078/ex10102020-12x31purchaseag.htm) | | | | | | [added: 10-K] | | | | | | [added: 001-13726] | | | | | | [added: 10.10] | | | | | | [added: 3/1/2021] | | | | | | [removed: X] | | |

| 10.11 | | | | | | [removed: I[ndenture] [added: [In](https://www.sec.gov/Archives/edgar/data/895126/000089512621000078/ex10112020-12x31indenture.htm)[denture] dated as of February 5, 2021, among Chesapeake Escrow Issuer LLC, as issuer, the guarantors signatory thereto, and Deutsche Bank Trust Company Americas, as Trustee, with respect to 5.5% Senior Notes due 2026 and 5.875% Senior Notes due 2029.](https://www.sec.gov/Archives/edgar/data/895126/000089512621000078/ex10112020-12x31indenture.htm) | | | | | | [added: 10-K] | | | | | | [added: 001-13726] | | | | | | [added: 10.11] | | | | | | [added: 3/1/2021] | | | | | | [removed: X] | | |

| [removed: 10.12*] [added: 10.12] | | | | | | [Joinder Agreement, dated as of February 9, 2021, by and among Chesapeake Energy Corporation and the Guarantors party thereto, with respect to 5.5% Senior Notes due 2026 and 5.875% Senior Notes due [removed: 2029.](https://www.sec.gov/Archives/edgar/data/895126/000089512621000078/ex10122020-12x31purchaseag.htm)] [added: 2029.](https://www.sec.gov/Archives/edgar/data/0000895126/000089512621000078/ex10122020-12x31purchaseag.htm)] | | | | | | [added: 10-K] | | | | | | [added: 001-13726] | | | | | | [added: 10.12] | | | | | | [added: 3/1/2021] | | | | | | [removed: X] | | |

| 10.13 | | | | | | [First Supplemental Indenture, dated as of February 9, 2021, by and among Chesapeake Energy Corporation, the Guarantors signatory thereto, and Deutsche Bank Trust Company Americas, as Trustee, with respect to 5.5% Senior Notes due 2026 and 5.875% Senior Notes due [removed: 2029.](https://www.sec.gov/Archives/edgar/data/895126/000089512621000078/ex10132020-12x31firstsuppi.htm)] [added: 2029.](https://www.sec.gov/Archives/edgar/data/0000895126/000089512621000078/ex10132020-12x31firstsuppi.htm)] | | | | | | [added: 10-K] | | | | | | [added: 001-13726] | | | | | | [added: 10.13] | | | | | | [added: 3/1/2021] | | | | | | [removed: X] | | |