Expand Energy 10-Q 2023-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-13726

CHESAPEAKE ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Oklahoma									73-1395733
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)
6100 North Western Avenue,			Oklahoma City,			Oklahoma			73118
(Address of principal executive offices)									(Zip Code)
						(405)			848-8000
(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class						Trading Symbol						Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share						CHK						The Nasdaq Stock Market LLC
Class A Warrants to purchase Common Stock						CHKEW						The Nasdaq Stock Market LLC
Class B Warrants to purchase Common Stock						CHKEZ						The Nasdaq Stock Market LLC
Class C Warrants to purchase Common Stock						CHKEL						The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐

Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of April 28, 2023, there were 133,869,079 shares of our $0.01 par value common stock outstanding.

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

INDEX TO FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2023

			PART I. FINANCIAL INFORMATION
Item 1.			Condensed Consolidated Financial Statements (Unaudited)
			Condensed Consolidated Balance Sheets			6
			Condensed Consolidated Statements of Operations			7
			Condensed Consolidated Statements of Cash Flows			8
			Condensed Consolidated Statements of Stockholders’ Equity			10
			Notes to Condensed Consolidated Financial Statements (Unaudited)
			Note 1. Basis of Presentation and Summary of Significant Accounting Policies			11
			Note 2. Natural Gas and Oil Property Transactions			12
			Note 3. Earnings Per Share			14
			Note 4. Debt			15
			Note 5. Contingencies and Commitments			16
			Note 6. Other Current Liabilities			17
			Note 7. Revenue			17
			Note 8. Income Taxes			18
			Note 9. Equity			19
			Note 10. Share-Based Compensation			19
			Note 11. Derivative and Hedging Activities			21
			Note 12. Investments			23
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
			Liquidity and Capital Resources			26
			Results of Operations			30
			Non-GAAP Measures			34
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			37
Item 4.			Controls and Procedures			38
			PART II. OTHER INFORMATION
Item 1.			Legal Proceedings			39
Item 1A.			Risk Factors			40
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			40
Item 3.			Defaults Upon Senior Securities			40
Item 4.			Mine Safety Disclosures			40
Item 5.			Other Information			40
Item 6.			Exhibits			41
Signatures						43

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 Quarterly Report on Form 10-Q:

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

“ASC” means Accounting Standards Codification.

“Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. §§ 101–1532, as amended.

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Texas.

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

“Bcf” means billion cubic feet.

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

“Chief” means Chief E&D Holdings, LP.

“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.

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

“DD&A” means depreciation, depletion and amortization.

“Debtors” means the Company, together with all of its direct and indirect subsidiaries that have filed the Chapter 11 Cases.

“Effective Date” means February 9, 2021.

“ESG” means environmental, social and governance.

“Exit Credit Facility” means the reserve-based revolving credit facility available upon emergence from bankruptcy.

“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.

“G&A” means general and administrative expenses.

“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.

“LTIP” means the Chesapeake Energy Corporation 2021 Long-Term Incentive Plan.

“LNG” means liquefied natural gas.

“Marcellus Acquisition” means Chesapeake’s acquisition of Chief and associated non-operated interests held by affiliates of Radler and Tug Hill, Inc., which closed on March 9, 2022 with an effective date of January 1, 2022.

“MBbls” means thousand barrels.

“MMBbls” means million barrels.

“Mcf” means thousand cubic feet.

“Mcfe” means one thousand cubic feet of natural gas equivalent, with one barrel of oil or NGL converted to an equivalent volume of natural gas using the ratio of one barrel of oil or NGL to six Mcf of natural gas.

“MMcf” means million cubic feet.

“MMcfe” means million cubic feet of natural gas equivalent.

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

“NGL” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“OPEC+” means Organization of the Petroleum Exporting Countries Plus.

“Petition Date” means June 28, 2020, the date on which the Debtors commenced the Chapter 11 Cases.

“Plan” means the Fifth Amended Joint Chapter 11 Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates, attached as Exhibit A to the Confirmation Order.

“Present Value of Estimated Future Net Revenues or PV-10 (non-GAAP)” means the estimated future gross revenue to be generated from the production of proved reserves, net of estimated production and future development costs, using prices calculated as the average natural gas and oil price during the preceding 12-month period prior to the end of the current reporting period, (determined as the unweighted arithmetic average of prices on the first day of each month within the 12-month period) and costs in effect at the determination date (unless such costs are subject to change pursuant to contractual provisions), without giving effect to non-property related expenses such as general and administrative expenses, debt service and future income tax expense or to depreciation, depletion and amortization, discounted using an annual discount rate of 10%.

“Radler” means Radler 2000 Limited Partnership.

“Rights Offering” means the New Common Stock rights offering for the Rights Offering Amount consummated by the Debtors on the Effective Date.

“SEC” means United States Securities and Exchange Commission.

“Second Lien Notes” means the 11.500% senior notes due 2025 issued by Chesapeake pursuant to the Second Lien Notes Indenture.

“Second Lien Notes Claim” means any Claim on account of the Second Lien Notes.

“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator, the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

“Warrants” means collectively, the Class A Warrants, Class B Warrants and Class C Warrants.

“/Bbl” means per barrel.

“/Mcf” means per Mcf.

“/Mcfe” means per Mcfe.

Table of Contents

PART I. FINANCIAL INFORMATION

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, except per share data)						March 31, 2023						December 31, 2022
Assets
Current assets:
Cash and cash equivalents						$	130					$	130
Restricted cash						67						62
Accounts receivable, net						864						1,438
Short-term derivative assets						464						34
Assets held for sale						862						819
Other current assets						242						215
Total current assets						2,629						2,698
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties						10,793						11,096
Unproved properties						2,002						2,022
Other property and equipment						498						500
Total property and equipment						13,293						13,618
Less: accumulated depreciation, depletion and amortization						(2,770)						(2,431)
Total property and equipment, net						10,523						11,187
Long-term derivative assets						122						47
Deferred income tax assets						973						1,351
Other long-term assets						344						185
Total assets						$	14,591					$	15,468
Liabilities and stockholders' equity
Current liabilities:
Accounts payable						$	631					$	603
Accrued interest						40						42
Short-term derivative liabilities						25						432
Other current liabilities						1,202						1,627
Total current liabilities						1,898						2,704
Long-term debt, net						2,040						3,093
Long-term derivative liabilities						42						174
Asset retirement obligations, net of current portion						279						323
Other long-term liabilities						49						50
Total liabilities						4,308						6,344
Contingencies and commitments (Note 5)
Stockholders' equity:
Common stock, $0.01 par value, 450,000,000 shares authorized: 134,019,253 and 134,715,094 shares issued						1						1
Additional paid-in capital						5,729						5,724
Retained earnings						4,553						3,399
Total stockholders' equity						10,283						9,124
Total liabilities and stockholders' equity						$	14,591					$	15,468

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

($ in millions, except per share data)						Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Revenues and other:
Natural gas, oil and NGL						$	1,453					$	1,914
Marketing						652						867
Natural gas and oil derivatives						930						(2,125)
Gains on sales of assets						335						279
Total revenues and other						3,370						935
Operating expenses:
Production						131						110
Gathering, processing and transportation						264						242
Severance and ad valorem taxes						69						63
Exploration						7						5
Marketing						651						851
General and administrative						35						26
Depreciation, depletion and amortization						390						409
Other operating expense, net						3						23
Total operating expenses						1,550						1,729
Income (loss) from operations						1,820						(794)
Other income (expense):
Interest expense						(37)						(32)
Other income						10						16
Total other income (expense)						(27)						(16)
Income (loss) before income taxes						1,793						(810)
Income tax expense (benefit)						404						(46)
Net income (loss) available to common stockholders						$	1,389					$	(764)
Earnings (loss) per common share:
Basic						$	10.31					$	(6.32)
Diluted						$	9.60					$	(6.32)
Weighted average common shares outstanding (in thousands):
Basic						134,742						120,805
Diluted						144,731						120,805

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

($ in millions)						Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Cash flows from operating activities:
Net income (loss)						$	1,389					$	(764)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization						390						409
Deferred income tax expense						378						—

Showing the first 8K of 73K characters. Open the full section

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with management’s perspective on our financial condition, liquidity, results of operations and certain other factors that may affect our future results. The following discussion should be read together with the condensed consolidated financial statements included in Item 1 of Part I of this report and the consolidated financial statements included in Item 8 of our 2022 Form 10-K.

We are an independent exploration and production company engaged in the acquisition, exploration and development of properties to produce natural gas, oil and NGL from underground reservoirs. We own a large portfolio of onshore U.S. unconventional natural gas and liquids assets, including interests in approximately 7,200 natural gas and oil wells as of March 31, 2023. Our natural gas resource plays are the Marcellus Shale in the northern Appalachian Basin in Pennsylvania (“Marcellus”) and the Haynesville/Bossier Shales in northwestern Louisiana (“Haynesville”). Our liquids-rich resource play is in the Eagle Ford Shale in South Texas (“Eagle Ford”). In August 2022, we announced that we viewed the assets in Eagle Ford as non-core to our future capital allocation strategy. In January 2023, we entered into an agreement to sell a portion of our Eagle Ford assets to WildFire Energy I LLC for $1.425 billion and closed the transaction on March 20, 2023. Additionally, in February 2023, we entered into an agreement to sell a portion of our remaining Eagle Ford assets to INEOS Energy for $1.4 billion and closed the transaction on April 28, 2023.

Our strategy is to create shareholder value through the responsible development of our significant resource plays while continuing to be a leading provider of affordable, reliable, low carbon energy to the United States. We continue to focus on improving margins through operating efficiencies and financial discipline and improving our 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 natural gas and oil producing activities. We continue to seek opportunities to reduce cash costs (production, gathering, processing and transportation and general and administrative), through operational efficiencies and 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 answering the call for affordable, reliable, low carbon energy begins with our goal to achieve net zero greenhouse gas emissions (Scope 1 and 2) by 2035. To meet this challenge, we have set meaningful goals including:

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

• Reduce our methane intensity to 0.02% by 2025 (achieved approximately 0.05% in 2022); and

• Reduce our GHG intensity to 3.0 metric tons CO2 equivalent per thousand barrel of oil equivalent by 2025 (achieved approximately 3.9 in 2022).

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. By the end of 2022, we had received certifications for all our operated gas assets in Haynesville and Marcellus as responsibly sourced gas. The MiQ certification provides a verified approach to tracking our commitment to reduce our methane intensity, as well as supporting our overall objective of achieving net-zero Scope 1 and 2 greenhouse gas emissions by 2035.

As the majority of our production profile consists of natural gas, we have converted the following results of operations, including prior periods, from a per barrel of oil equivalent, to a per one thousand cubic feet of natural gas equivalent, referred to, on such a converted basis, as Mcfe.

Table of Contents

Recent Developments

Acquisition

On March 9, 2022, we closed our Marcellus Acquisition pursuant to definitive agreements with Chief, Radler and Tug Hill, Inc. dated January 24, 2022. This transaction strengthened Chesapeake’s competitive position, meaningfully increasing our operating cash flows and adding high quality producing assets and a deep inventory of premium drilling locations, while preserving the strength of our balance sheet.

Divestitures

On March 25, 2022, we closed the sale of our Powder River Basin assets in Wyoming to Continental Resources, Inc. for $450 million in cash, subject to post-closing adjustments, which resulted in the recognition of a gain of approximately $293 million.

On January 17, 2023, we entered into an agreement to sell a portion of our Eagle Ford assets to WildFire Energy I LLC for $1.425 billion, subject to post-closing adjustments. This transaction closed on March 20, 2023 and resulted in the recognition of a gain of approximately $335 million.

On February 17, 2023, we entered into an agreement to sell a portion of our remaining Eagle Ford assets to INEOS Energy for $1.4 billion, subject to post-closing adjustments. This transaction closed on April 28, 2023, and we received proceeds of approximately $1.055 billion. As of March 31, 2023, the assets and liabilities associated with this transaction were classified as held for sale.

Investments - Momentum Sustainable Ventures LLC

During the fourth quarter of 2022, we entered into an agreement with Momentum Sustainable Ventures LLC to build a new natural gas gathering pipeline and carbon capture and sequestration project, which will gather natural gas produced in the Haynesville Shale for re-delivery to Gulf Coast markets, including LNG export. The pipeline is expected to have an initial capacity of 1.7 Bcf/d expandable to 2.2 Bcf/d. The carbon capture portion of the project anticipates capturing and permanently sequestering up to 2.0 million tons per annum of CO2. The natural gas gathering pipeline in-service is projected for the fourth quarter of 2024, and the carbon sequestration portion of the project is subject to regulatory approvals. Through the end of the first quarter of 2023, we have made total capital contributions of $56 million to the project.

Repurchases of Equity Securities and Dividends

In June 2022, our Board of Directors authorized an increase in the size of our share repurchase program from $1.0 billion to up to $2.0 billion in aggregate value of our common stock and/or warrants. During the three months ended March 31, 2023, we repurchased approximately 0.8 million shares of our common stock pursuant to the share repurchase program and had $867 million available under the share repurchase program, as of March 31, 2023. In addition, we paid dividends of approximately $175 million, in aggregate, on our common stock during the three months ended March 31, 2023.

Russia’s Invasion of Ukraine; Volatility in Natural Gas, Oil and NGL Prices; Inflationary Cost Pressures and Potential Economic Downturns

In late February 2022, Russia launched a military invasion against Ukraine. The Russian invasion has caused, and could intensify, volatility in natural gas, oil and NGL prices, and may have an impact on global growth prospects, which could in turn affect demand for natural gas and oil. This overall uncertainty resulted in stronger commodity prices during much of 2022. Toward the end of 2022, markets began to stabilize, and this, coupled with a milder winter, has resulted in an observed decline in pricing in early 2023. Our 2023 estimated cash flow is partially protected from commodity price volatility due to our current hedge positions that cover approximately 55% to 65% of our projected natural gas volumes for the remainder of 2023.

In addition to the recent weakening in commodity prices, the industry is experiencing inflationary pressure, including increased demand for oilfield service equipment, rising fuel costs, and labor shortages, which could result in increases to our operating and capital costs that are not fixed. Uncertainty regarding a potential economic

Table of Contents

downturn or recession in certain regions, or globally, may introduce new pressures or accelerate or intensify the pressures currently facing the industry. We continue to monitor these situations and assess their impact on our business, including our business partners and customers. For additional discussion regarding risks associated with price volatility and economic deterioration, see Part I, Item 1A “Risk Factors” in our 2022 Form 10-K.

COVID-19 Pandemic and Impact on Global Demand for Natural Gas and Oil

The global spread of COVID-19 created significant volatility, uncertainty, and economic disruption commencing in 2020, and threatens to continue to do so in 2023. While we cannot predict the full impact that COVID-19 and its variants, or the related disruption and volatility in the natural gas and oil markets may have on our business, cash flows, liquidity, financial condition and results of operations, we believe our cost structure and liquidity position us well to address continued price and demand volatility. For additional discussion regarding risks and impacts associated with the COVID-19 pandemic, see Part I, Item 1A “Risk Factors” in our 2022 Form 10-K.

Liquidity and Capital Resources

Liquidity Overview

Our primary sources of capital resources and liquidity are internally generated cash flows from operations and borrowings under our credit agreements, and our primary uses of cash are for the development of our natural gas and oil properties, acquisitions of additional natural gas properties and return of value to stockholders through dividends and equity repurchases. We believe our cash flow from operations, proceeds from our recent Eagle Ford divestitures, cash on hand and borrowing capacity under the New Credit Facility, as discussed below, will provide sufficient liquidity during the next 12 months and the foreseeable future. As of March 31, 2023, we had $2.1 billion of liquidity available, including $130 million of cash on hand and $2.0 billion of aggregate unused borrowing capacity available under the New Credit Facility. As of March 31, 2023, we had no outstanding borrowings under our New Credit Facility. See Note 4 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion of our debt obligations, including the carrying and fair value of our senior notes.

Dividends

We paid dividends of $175 million on our common stock during the first three months of 2023. See Note 9 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

On May 2, 2023, we declared a quarterly dividend payable of $1.18 per share, which will be paid on June 6, 2023 to stockholders of record at the close of business on May 18, 2023. The dividend consists of a base quarterly dividend in the amount of $0.55 per share and a variable quarterly dividend in the amount of $0.63 per share.

The declaration and payment of any future dividend, whether fixed or variable, will remain at the full discretion of the Board and will depend on the Company’s financial results, cash requirements, future prospects and other relevant factors. The Company’s ability to pay dividends to its stockholders is restricted by (i) Oklahoma corporate law, (ii) its Certificate of Incorporation, (iii) the terms and provisions of the credit agreement governing its New Credit Facility and (iv) the terms and provisions of the indentures governing its 5.50% Senior Notes due 2026, 5.875% Senior Notes due 2029 and 6.75% Senior Notes due 2029.

Derivative and Hedging Activities

Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL. We enter into various derivative instruments to mitigate a portion of our exposure to commodity price declines, but these transactions may also limit our cash flows in periods of rising commodity prices. Our natural gas, oil and NGL derivative activities, when combined with our sales of natural gas, oil and NGL, allow us to better predict the total revenue we expect to receive. See Item 3. Quantitative and Qualitative Disclosures About Market Risk included in Part I of this report for further discussion on the impact of commodity price risk on our financial position.

Contractual Obligations and Off-Balance Sheet Arrangements

As of March 31, 2023, our material contractual obligations include repayment of senior notes, derivative obligations, asset retirement obligations, lease obligations, capital commitments relating to our investments,

Table of Contents

undrawn letters of credit and various other commitments we enter into in the ordinary course of business that could result in future cash obligations. In addition, we have contractual commitments with midstream companies and pipeline carriers for future gathering, processing and transportation of natural gas, oil and NGL to move certain of our production to market. The estimated gross undiscounted future commitments under these agreements were approximately $4.2 billion as of March 31, 2023. As discussed above, we believe our existing sources of liquidity will be sufficient to fund our near and long-term contractual obligations. See Notes 4, 5, 11 and 12 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

New Credit Facility

On December 9, 2022, the Company, as borrower, entered into a senior secured reserve-based credit agreement providing for the New Credit Facility which features an initial borrowing base of $3.5 billion and aggregate commitments of $2.0 billion. Subject to certain exceptions, the borrowing base will be redetermined semi-annually in or around April and October of each year. The New Credit Facility provides for a $200 million sublimit available for the issuance of letters of credit and a $50 million sublimit available for swingline loans. Borrowings under the credit agreement may be alternate base rate loans or term SOFR loans, at the Company’s election. The New Credit Facility contains certain features that, upon receipt and maintenance of investment grade ratings from S&P, Moody’s and/or Fitch and the satisfaction of certain other conditions, result in the removal or relaxation of specified negative and financial covenants, among other favorable adjustments. See Note 4 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

Capital Expenditures

For the year ending December 31, 2023, we currently expect to bring or have online approximately 145 to 165 gross wells across 10 to 12 rigs and plan to invest between approximately $1.765 – $1.835 billion in capital expenditures. We expect that approximately 85% of our 2023 capital expenditures will be directed toward our natural gas assets. We currently plan to fund our 2023 capital program through cash on hand, expected cash flow from our operations and borrowings under our New Credit Facility. We may alter or change our plans with respect to our capital program and expected capital expenditures based on developments in our business, our financial position, our industry, or any of the markets in which we operate.

Table of Contents

Sources and (Uses) of Cash and Cash Equivalents

The following table presents the sources and uses of our cash and cash equivalents for the periods presented:

						Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Cash provided by operating activities						$	889					$	853
Proceeds from divestitures of property and equipment						931						403
Proceeds from Exit Credit Facility, net						—						500
Proceeds from warrant exercise						—						1
Capital expenditures						(497)						(344)
Business combination, net						—						(2,006)
Contributions to investments						(39)						—
Payments on New Credit Facility, net						(1,050)						—
Cash paid to repurchase and retire common stock						(54)						(83)
Cash paid for common stock dividends						(175)						(210)
Net increase (decrease) in cash, cash equivalents and restricted cash						$	5					$	(886)

Cash Flow from Operating Activities

Cash provided by operating activities was $889 million and $853 million during the first three months of 2023 and 2022, respectively. The increase during the first three months of 2023 is primarily due to increased sales volumes in Marcellus primarily due to the Marcellus Acquisition and timing of cash receipts, partially offset by lower prices for the natural gas, oil and NGL we sold. Cash flows from operations are largely affected by the same factors that affect our net income, excluding various non-cash items, such as depreciation, depletion and amortization, certain impairments, gains or losses on sales of assets, deferred income taxes and mark-to-market changes in our open derivative instruments. See further discussion below under Results of Operations.

Proceeds from Divestitures of Property and Equipment

During the first three months of 2023, we sold a portion of our Eagle Ford assets to WildFire Energy I LLC. During the first three months of 2022, we sold our Powder River Basin assets to Continental Resources, Inc. See Note 2 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

Proceeds from Exit Credit Facility, net

During the first three months of 2022, we borrowed a net $500 million on the Exit Credit Facility to fund a portion of the Marcellus Acquisition.

Capital Expenditures

Our capital expenditures increased during the first three months of 2023 compared to the first three months of 2022, primarily as a result of increased drilling and completion activity across all operating areas, as well as inflation-related cost increases for goods and services.

Business Combination

During the first three months of 2022, we closed the Marcellus Acquisition for approximately $2 billion and 9.4 million shares of our common stock. See Note 2 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

Contributions to Investments

During the first three months of 2023, contributions to investments primarily consisted of $39 million, which we contributed to our investment with Momentum Sustainable Ventures LLC to build a new natural gas gathering pipeline and carbon capture project. See Note 12 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

Table of Contents

Payments on New Credit Facility, net

During the first three months of 2023, we made net repayments of $1,050 million on the New Credit Facility, utilizing a portion of the divestiture proceeds from the sale of a portion of our Eagle Ford assets and also from internally generated cash provided by operating activities.

Cash Paid to Repurchase and Retire Common Stock

In March 2022, we commenced our share repurchase program. During the first three months of 2023, we repurchased 0.8 million shares for an aggregate price of $60 million, which is inclusive of shares for which cash settlement occurred in early April 2023. During the first three months of 2022, we repurchased 1 million shares of common stock for an aggregate price of $83 million. The repurchased shares of common stock were retired and recorded as a reduction to common stock and retained earnings.

Cash Paid for Common Stock Dividends

As part of our dividend program, we paid common stock base dividends of $75 million and common stock variable dividends of $100 million during the first three months of 2023.

Table of Contents

Results of Operations

Natural Gas, Oil and NGL Production and Average Sales Prices

						Three Months Ended March 31, 2023
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,974						3.47						—						—						—						—						1,974						3.47
Haynesville						1,549						2.88						—						—						—						—						1,549						2.88
Eagle Ford						128						1.97						54						76.82						16						26.71						546						8.82
Total						3,651						3.17						54						76.82						16						26.71						4,069						3.97
Average NYMEX Price												3.42												76.13
Average Realized Price (including realized derivatives)												2.74												66.79												26.71												3.45
						Three Months Ended March 31, 2022
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,452						4.66						—						—						—						—						1,452						4.66
Haynesville						1,625						4.46						—						—						—						—						1,625						4.46
Eagle Ford						129						4.04						52						95.00						16						41.09						540						11.44
Powder River Basin						41						5.45						8						95.18						3						53.96						102						10.66
Total						3,247						4.54						60						95.02						19						43.05						3,719						5.72
Average NYMEX Price												4.95												94.29
Average Realized Price (including realized derivatives)												3.08												65.64												43.05												3.96

Natural Gas, Oil and NGL Sales

						Three Months Ended March 31, 2023
						Natural Gas						Oil						NGL						Total
Marcellus						$	617					$	—					$	—					$	617
Haynesville						402						—						—						402
Eagle Ford						23						373						38						434
Total natural gas, oil and NGL sales						$	1,042					$	373					$	38					$	1,453
						Three Months Ended March 31, 2022
						Natural Gas						Oil						NGL						Total
Marcellus						$	609					$	—					$	—					$	609
Haynesville						652						—						—						652
Eagle Ford						47						450						57						554
Powder River Basin						20						66						13						99
Total natural gas, oil and NGL sales						$	1,328					$	516					$	70					$	1,914

Natural gas, oil and NGL sales during the first three months of 2023 decreased $461 million compared to the first three months of 2022. Lower average prices, which were consistent with the downward trend in index prices for all products, drove a $512 million decrease during the first three months of 2023. Additionally, the Powder River Basin divestiture and lower sales volumes in Haynesville resulted in decreases of $99 million and $19 million, respectively. Partially offsetting these decreases was an increase of $162 million due to increased sales volumes in

Table of Contents

Marcellus, primarily due to the Marcellus Acquisition in March 2022, and an increase of $7 million due to increased Eagle Ford sales volumes.

Production Expenses

						Three Months Ended March 31, 2023												Three Months Ended March 31, 2022
												$/Mcfe												$/Mcfe
Marcellus						$	24					0.13						$	13					0.10
Haynesville						47						0.34						32						0.22
Eagle Ford						60						1.23						55						1.15
Powder River Basin						—						—						10						0.94
Total production expenses						$	131					0.36						$	110					0.33

Production expenses during the first three months of 2023 increased $21 million as compared to the first three months of 2022. The increase was primarily due to an increase in saltwater disposal expenses, workovers and other preventative maintenance in Eagle Ford and Haynesville, as well as the Marcellus Acquisition in March 2022. These increases were partially offset by the divestiture of the Powder River Basin assets in March 2022.

Gathering, Processing and Transportation Expenses

						Three Months Ended March 31, 2023												Three Months Ended March 31, 2022
												$/Mcfe												$/Mcfe
Marcellus						$	111					0.62						$	71					0.54
Haynesville						68						0.49						65						0.45
Eagle Ford						85						1.73						84						1.73
Powder River Basin						—						—						22						2.32
Total GP&T						$	264					0.72						$	242					0.72

Gathering, processing and transportation expenses during the first three months of 2023 increased $22 million as compared to the first three months of 2022. Marcellus increased $40 million, primarily due to the Marcellus Acquisition in March 2022, while the divestiture of the Powder River Basin assets in March 2022 resulted in a decrease of $22 million.

Severance and Ad Valorem Taxes

						Three Months Ended March 31, 2023												Three Months Ended March 31, 2022
												$/Mcfe												$/Mcfe
Marcellus						$	5					0.03						$	4					0.03
Haynesville						34						0.24						12						0.09
Eagle Ford						30						0.60						36						0.75
Powder River Basin						—						—						11						1.09
Total severance and ad valorem taxes						$	69					0.19						$	63					0.19

Severance and ad valorem taxes during the first three months of 2023 increased $6 million as compared to the first three months of 2022. Legislative action led to changes in the Haynesville severance and ad valorem tax rates, which resulted in an increase of $20 million during the first three months of 2023. These increases were partially offset by an $11 million decrease attributable to the divestiture of the Powder River Basin assets.

Table of Contents

Adjusted Gross Margin by Operating Area

The tables below present the adjusted gross margin for each of our operating areas. Adjusted gross margin is defined as natural gas, oil and NGL sales less production expenses, gathering, processing and transportation expenses, and severance and ad valorem taxes. Adjusted gross margin is a non-GAAP measure, and a reconciliation of gross margin to adjusted gross margin is presented within the “Non-GAAP Measures” section of this Item 2.

						Three Months Ended March 31, 2023												Three Months Ended March 31, 2022
												$/Mcfe												$/Mcfe
Marcellus						$	477					2.69						$	521					3.99
Haynesville						253						1.81						543						3.70
Eagle Ford						259						5.26						379						7.81
Powder River Basin						—						—						56						6.31
Adjusted gross margin						$	989					2.70						$	1,499					4.48

Natural Gas and Oil Derivatives

						Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Natural gas derivatives - realized losses						$	(140)					$	(428)
Natural gas derivatives - unrealized gains (losses)						1,021						(1,372)
Total gains (losses) on natural gas derivatives						$	881					$	(1,800)
Oil derivatives - realized losses						$	(49)					$	(159)
Oil derivatives - unrealized gains (losses)						98						(166)
Total gains (losses) on oil derivatives						49						(325)
Total gains (losses) on natural gas and oil derivatives						$	930					$	(2,125)

See Note 11 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for a discussion of our derivative activity.

General and Administrative Expenses

						Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Total G&A, net						$	35					$	26
G&A, net per Mcfe						$	0.09					$	0.08

Total general and administrative expenses, net during the first three months of 2023 increased $9 million compared to the first three months of 2022, primarily due to adjustments in employee benefits and compensation as well as increases in other corporate expenses.

Table of Contents

Depreciation, Depletion and Amortization

						Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
DD&A						$	390					$	409
DD&A per Mcfe						$	1.06					$	1.22

The absolute and per unit decreases in depreciation, depletion and amortization for the first three months of 2023 compared to the first three months of 2022, are primarily related to our Eagle Ford divestitures, partially offset by an increase related to the Marcellus Acquisition in March 2022. We cease recording depreciation on assets that are classified as held for sale.

Other Operating Expense, Net

						Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Other operating expense, net						$	3					$	23

During the first three months of 2022, we recognized approximately $23 million of costs related to our Marcellus Acquisition, which included consulting fees, financial advisory fees, legal fees and change in control expense in accordance with Chief’s existing employment agreements.

Interest Expense

						Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Interest expense on debt						$	46					$	38
Amortization of premium, issuance costs and other						(2)						(1)
Capitalized interest						(7)						(5)
Total interest expense						$	37					$	32

The increase in total interest expense during the first three months of 2023 compared to the first three months of 2022 was primarily due to higher average debt outstanding between periods.

Income Taxes

Income tax expense was $404 million for the first three months of 2023. Of this amount, $26 million was the result of projecting current federal and state income taxes, predominately as a result of taxable gains on closed divestitures, and the remainder is related to projections of deferred federal and state income taxes. An income tax benefit of $46 million was recorded during the first three months of 2022. A tax benefit was recorded during the first three months of 2022 due to the application of our estimated annual effective tax rate to the book net loss before income taxes recorded during the first three months of 2022. Our effective income tax was 22.5% and 5.7% during the first three months of 2023 and 2022, respectively. The fluctuation in the effective tax rate is mainly because we are no longer maintaining a full valuation allowance against our deferred tax assets during the first three months of 2023 as we were during the first three months of 2022. Our effective tax rate can also fluctuate as a result of the impact of discrete items, state income taxes and permanent differences. See Note 8 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for a discussion of income taxes.

Table of Contents

Non-GAAP Measures

Management uses adjusted gross margin to assess our operating results and financial performance across assets and periods. We define adjusted gross margin as natural gas, oil and NGL sales less production expenses, gathering, processing and transportation expenses, and severance and ad valorem taxes.

Adjusted gross margin is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for analysis of our results reported under GAAP. Additionally, adjusted gross margin may not be comparable to similarly titled measures used by other companies. We exclude depreciation, depletion and amortization from the calculation of adjusted gross margin as depreciation, depletion and amortization are non-cash expenses that do not necessarily reflect present-day performance. The table below reconciles gross margin, as defined by GAAP, to adjusted gross margin.

						Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Gross margin (GAAP)
Natural gas, oil and NGL sales						$	1,453					$	1,914
Less:
Production expenses						(131)						(110)
Gathering, processing and transportation expenses						(264)						(242)
Severance and ad valorem taxes						(69)						(63)
Depreciation, depletion and amortization						(390)						(409)
Gross margin (GAAP)						599						1,090
Add back: Depreciation, depletion and amortization						390						409
Adjusted gross margin (Non-GAAP)						$	989					$	1,499

Table of Contents

Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements include our current expectations or forecasts of future events, including matters relating to the continuing effects of the impact of inflation and commodity price volatility resulting from Russia’s invasion of Ukraine, COVID-19 and related supply chain constraints, and the impact of each on our business, financial condition, results of operations and cash flows, the potential effects of the Plan on our operations, management, and employees, actions by, or disputes among or between, members of OPEC+ and other foreign oil-exporting countries, market factors, market prices, our ability to meet debt service requirements, our ability to continue to pay cash dividends, the amount and timing of any cash dividends, and our ESG initiatives. Forward-looking and other statements in this Form 10-Q regarding our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Forward-looking statements often address our expected future business, financial performance and financial condition, and often contain words such as "expect," “could,” “may,” "anticipate," "intend," "plan," “ability,” "believe," "seek," "see," "will," "would," “estimate,” “forecast,” "target," “guidance,” “outlook,” “opportunity” or “strategy.”

Although we believe the expectations and forecasts reflected in our forward-looking statements are reasonable, they are inherently subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. No assurance can be given that such forward-looking statements will be correct or achieved or that the assumptions are accurate or will not change over time. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

• the impact of inflation and commodity price volatility resulting from Russia’s invasion of Ukraine, COVID-19 and related labor and supply chain constraints, along with the effects of the current global economic environment, including impacts from higher interest rates and recent bank closures and liquidity concerns at certain financial institutions, on our business, financial condition, employees, contractors, vendors and the global demand for natural gas and oil and U.S. and on world financial markets;

• our ability to comply with the covenants under the credit agreement for our New Credit Facility and other indebtedness;

• risks related to acquisitions or dispositions, or potential acquisitions or dispositions;

• our ability to realize anticipated cash cost reductions;

• the volatility of natural gas, oil and NGL prices, which are affected by general economic and business conditions, as well as increased demand for (and availability of) alternative fuels and electric vehicles;

• a deterioration in general economic, business or industry conditions;

• uncertainties inherent in estimating quantities of natural gas, oil and NGL reserves and projecting future rates of production and the amount and timing of development expenditures;

• our ability to replace reserves and sustain production;

• drilling and operating risks and resulting liabilities;

• our ability to generate profits or achieve targeted results in drilling and well operations;

• the limitations our level of indebtedness may have on our financial flexibility;

• our ability to achieve and maintain ESG certifications, goals and commitments;

• our inability to access the capital markets on favorable terms;

• the availability of cash flows from operations and other funds to fund cash dividends and repurchases of equity securities, to finance reserve replacement costs and/or satisfy our debt obligations;

• write-downs of our natural gas and oil asset carrying values due to low commodity prices;

• charges incurred in response to market conditions;

• limited control over properties we do not operate;

Table of Contents

• leasehold terms expiring before production can be established;

• commodity derivative activities resulting in lower prices realized on natural gas, oil and NGL sales;

• the need to secure derivative liabilities and the inability of counterparties to satisfy their obligations;

• potential OTC derivatives regulations limiting our ability to hedge against commodity price fluctuations;

• adverse developments or losses from pending or future litigation and regulatory proceedings, including royalty claims;

• our need to secure adequate supplies of water for our drilling operations and to dispose of or recycle the water used;

• pipeline and gathering system capacity constraints and transportation interruptions;

• legislative, regulatory and ESG initiatives, addressing environmental concerns, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring or water disposal;

• terrorist activities and/or cyber-attacks adversely impacting our operations;

• an interruption in operations at our headquarters due to a catastrophic event;

• federal and state tax proposals affecting our industry;

• competition in the natural gas and oil exploration and production industry;

• negative public perceptions of our industry;

• effects of purchase price adjustments and indemnity obligations;

• the ability to execute on our business strategy following emergence from bankruptcy; and

• other factors that are described under Risk Factors in Item 1A of our 2022 Form 10-K.

We caution you not to place undue reliance on the forward-looking statements contained in this report, which speak only as of the filing date, and we undertake no obligation to update this information. We urge you to carefully review and consider the disclosures in this report and our other filings with the SEC that attempt to advise interested parties of the risks and factors that may affect our business.

Information About Us

Investors should note that we make available, free of charge on our website at chk.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also post announcements, updates, events, investor information and presentations on our website in addition to copies of all recent news releases. We may use the Investors section of our website to communicate with investors. It is possible that the financial and other information posted on the Investors section of our website could be deemed to be material information. Documents and information on our website are not incorporated by reference herein.

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including Chesapeake, that file electronically with the SEC.

Table of Contents

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our exposure to market risk. The term market risk relates to our risk of loss arising from adverse changes in natural gas, oil and NGL prices and interest rates. These disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. The forward-looking information provides indicators of how we view and manage our ongoing market risk exposures.

Commodity Price Risk

Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL, which have historically been volatile. To mitigate a portion of our exposure to adverse price changes, we enter into various derivative instruments. Our natural gas, oil and NGL derivative activities, when combined with our sales of natural gas, oil and NGL, allow us to predict with greater certainty the revenue we will receive. We believe our derivative instruments continue to be highly effective in achieving our risk management objectives.

We determine the fair value of our derivative instruments utilizing established index prices, volatility curves and discount factors. These estimates are compared to counterparty valuations for reasonableness. Derivative transactions are also subject to the risk that counterparties will be unable to meet their obligations. This non-performance risk is considered in the valuation of our derivative instruments, but to date has not had a material impact on the values of our derivatives. Future risk related to counterparties not being able to meet their obligations has been partially mitigated under our commodity hedging arrangements that require counterparties to post collateral if their obligations to us are in excess of defined thresholds. The values we report in our financial statements are as of a point in time and subsequently change as these estimates are revised to reflect actual results, changes in market conditions and other factors. See Note 11 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion of the fair value measurements associated with our derivatives.

Our natural gas, oil and NGL revenues during the first three months of 2023, excluding any effect of our derivative instruments, were $1,042 million, $373 million and $38 million, respectively. Based on production, natural gas, oil and NGL revenue for the first three months of 2023 would have increased or decreased by approximately $104 million, $37 million, and $4 million, respectively, for each 10% increase or decrease in prices. As of March 31, 2023, the fair values of our natural gas and oil derivatives were net assets of $508 million and $11 million, respectively. A 10% increase in forward natural gas prices would decrease the valuation of natural gas derivatives by approximately $256 million. A 10% decrease in forward natural gas prices would increase the valuation of natural gas derivatives by approximately $260 million. A 10% increase in forward oil prices would decrease the valuation of oil derivatives by approximately $8 million. A 10% decrease in forward oil prices would increase the valuation of oil derivatives by approximately $9 million. See Note 11 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further information on our open derivative positions.

Interest Rate Risk

Our exposure to interest rate changes relates primarily to borrowings under our New Credit Facility for the first three months of 2023 and the Exit Credit Facility for the first three months of 2022. Interest is payable on borrowings under each respective credit facility based on floating rates. See Note 4 of the notes to our condensed consolidated financial statements included in Item 1 of Part 1 of this report for additional information. As of March 31, 2023, we did not have any outstanding borrowings under our New Credit Facility.

Table of Contents

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of March 31, 2023 that our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Business Operations and Litigation and Regulatory Proceedings

We are involved in various pre-petition lawsuits and disputes incidental to our business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions. The majority of these prepetition legal proceedings were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process before the Bankruptcy Court, together with actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company’s bankruptcy estates. Any allowed claim related to such litigation will be treated in accordance with the Plan. We were involved in a number of litigation and regulatory proceedings as of the Petition Date. Many of these proceedings were in early stages, and many of them sought damages and penalties, the amount of which is currently indeterminate. See Note 5 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for information regarding our estimation and provision for potential losses related to litigation and regulatory proceedings. Commencement of the Chapter 11 Cases automatically stayed the proceedings and actions against us that are referred to above. The Plan in the Chapter 11 Cases, which became effective on February 9, 2021, provided for the treatment of claims against the Company’s bankruptcy estates, including pre-petition liabilities that had not been satisfied or addressed during the Chapter 11 Cases.

Environmental Contingencies

The nature of the natural gas and oil business carries with it certain environmental risks for us and our subsidiaries. We have implemented various policies, programs, procedures, training and audits to reduce and mitigate such environmental risks. We conduct periodic reviews, on a company-wide basis, to assess changes in our environmental risk profile. Environmental reserves are established for environmental liabilities for which economic losses are probable and reasonably estimable. We manage our exposure to environmental liabilities in acquisitions by using an evaluation process that seeks to identify pre-existing contamination or compliance concerns and address the potential liability. Depending on the extent of an identified environmental concern, we may, among other things, exclude a property from the transaction, require the seller to remediate the property to our satisfaction in an acquisition or agree to assume liability for the remediation of the property.

Other Matters

Based on management’s current assessment, we are of the opinion that no pending or threatened lawsuit or dispute relating to our business operations is likely to have a material adverse effect on our future consolidated financial position, results of operations or cash flows. The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates.

Table of Contents

Our business has many risks. Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our common stock are described under “Risk Factors” in Item 1A of our 2022 Form 10-K. This information should be considered carefully, together with other information in this report and other reports and materials we file with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

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. In June 2022, our Board of Directors authorized an increase in the size of the share repurchase program from $1.0 billion to $2.0 billion in aggregate value of our common stock and/or warrants. 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. The share repurchase program expires on December 31, 2023. The following table provides information regarding purchases of our common stock made by us during the quarter ended March 31, 2023.

Period						Total Number of Shares Purchased						Average Price Paid Per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
January 1 - January 31						—						$	—					—						$	927
February 1 - February 28						—						$	—					—						$	927
March 1 - March 31						792,543						$	74.95					792,543						$	867
Total						792,543						$	74.95					792,543

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

The information concerning mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Form 10-Q. On March 20, 2023, we divested our mining assets to WildFire Energy I LLC.

Not applicable.

Table of Contents

The exhibits listed below in the Index of Exhibits are filed, furnished or incorporated by reference pursuant to the requirements of Item 601 of Regulation S-K.

INDEX OF EXHIBITS

												Incorporated by Reference
Exhibit Number						Exhibit Description						Form						SEC File Number						Exhibit						Filing Date						Filed or Furnished Herewith
2.1						Fifth Amended Joint Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (Exhibit A of the Confirmation Order).						8-K						001-13726						2.1						1/19/2021
2.2						Agreement and Plan of Merger, dated as of August 10, 2021, by and among Chesapeake Energy Corporation, Hannibal Merger Sub, Inc., Hannibal Merger Sub, LLC, Vine Energy Inc. and Vine Energy Holdings LLC.						8-K						001-13726						2.1						8/11/2021
2.3						Partnership Interest Purchase Agreement by and among The Jan & Trevor Rees-Jones Revocable Trust, Rees-Jones Family Holdings, LP, Chief E&D Participants, LP, and Chief E&D (GP) LLC (collectively, as Sellers) and Chesapeake Energy Corporation and its affiliates, dated as of January 24, 2022.						10-K						001-13726						10.36						2/24/2022
2.4						Membership Interest Purchase Agreement by and among Radler 2000 Limited Partnership and Tug Hill, Inc., together as Sellers, and Chesapeake Energy Corporation and its affiliates, dated as of January 24, 2022.						10-K						001-13726						10.37						2/24/2022
2.5						Membership Interest Purchase Agreement by and among Radler 2000 Limited Partnership and Tug Hill, Inc., together as Sellers, and Chesapeake Energy Corporation and its affiliates, dated as of January 24, 2022.						10-K						001-13726						10.38						2/24/2022
3.1						Second Amended and Restated Certificate of Incorporation of Chesapeake Energy Corporation.						8-K						001-13726						3.1						2/9/2021
3.2						Second Amended and Restated Bylaws of Chesapeake Energy Corporation.						8-K						001-13726						3.2						2/9/2021
31.1						Domenic J. Dell’Osso, Jr., President and Chief Executive Officer, Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.																														X
31.2						Mohit Singh, Executive Vice President and Chief Financial Officer, Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.																														X
32.1						Domenic J. Dell’Osso Jr., President and Chief Executive Officer, Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.																														X
32.2						Mohit Singh, Executive Vice President and Chief Financial Officer, Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.																														X
95.1						Mine Safety Disclosure.																														X
101 INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.																														X

Table of Contents

												Incorporated by Reference
Exhibit Number						Exhibit Description						Form						SEC File Number						Exhibit						Filing Date						Filed or Furnished Herewith
101 SCH						Inline XBRL Taxonomy Extension Schema Document.																														X
101 CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.																														X
101 DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.																														X
101 LAB						Inline XBRL Taxonomy Extension Labels Linkbase Document.																														X
101 PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.																														X
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).																														X

Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			CHESAPEAKE ENERGY CORPORATION
Date: May 2, 2023			By:						/s/ DOMENIC J. DELL’OSSO, JR.
									Domenic J. Dell’Osso, Jr. President and Chief Executive Officer
Date: May 2, 2023			By:						/s/ MOHIT SINGH
									Mohit Singh Executive Vice President and Chief Financial Officer