Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 5,400 natural gas and oil wells as of June 30, 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 (both Eagle Ford divestiture transactions have an effective date of October 1, 2022).

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 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 4.0 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 (production associated with assets from the Vine Acquisition remains certified under Project Canary), and we intend to maintain annual certifications. The MiQ certification provides a verified approach to tracking our progress towards 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.

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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 (with an effective date of October 1, 2022) and resulted in the recognition of a gain of approximately $337 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 (with an effective date of October 1, 2022) and resulted in the recognition of a gain of approximately $470 million.

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 Current Period, we have made total capital contributions of $105 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. Since March 2022, through the end of July 2023, we repurchased approximately 14.2 million shares of our common stock pursuant to the share repurchase program and had approximately $725 million available under the share repurchase program, as of July 31, 2023. In addition, we paid dividends of approximately $335 million, in aggregate, on our common stock during the Current Period.

Economic and Market Conditions

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 and increased inventory levels, has resulted in an observed decline in pricing in 2023. Our 2023 estimated cash flow is partially protected from commodity price volatility due to our current hedge positions that cover approximately 65% of our projected natural gas volumes for the remainder of 2023. We believe our cost structure and liquidity position will enable us to successfully navigate continued price volatility.

In addition to the weakening of commodity prices in 2023, the industry has experienced inflationary pressures, including increased demand for oilfield service equipment, rising fuel costs, and labor shortages, which have resulted in observed increases to our operating and capital costs that were not fixed. Uncertainty regarding a potential economic downturn or recession in certain regions, or globally, may introduce new pressures or accelerate or intensify the pressures currently facing the industry. While there has been some moderation in cost pressures in

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certain areas during the Current Quarter, 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.

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 June 30, 2023, we had $2.9 billion of liquidity available, including $903 million of cash on hand and $2.0 billion of aggregate unused borrowing capacity available under the New Credit Facility. As of June 30, 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 $335 million on our common stock during the Current Period. 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 August 1, 2023, we announced a 4.5% increase to our base dividend rate and declared a base quarterly dividend payable of $0.575 per share, which will be paid on September 6, 2023 to stockholders of record at the close of business on August 17, 2023.

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 June 30, 2023, our material contractual obligations include repayment of senior notes, derivative obligations, asset retirement obligations, lease obligations, capital commitments relating to our investments, 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 $2.7 billion as of June 30, 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.

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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.

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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:

						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
Cash provided by operating activities						$	1,404					$	1,762
Proceeds from divestitures of property and equipment						1,963						403
Proceeds from Exit Credit Facility, net						—						775
Funds held for transition services						97						—
Proceeds from warrant exercise						—						3
Capital expenditures						(1,027)						(759)
Business combination, net						—						(2,006)
Contributions to investments						(88)						—
Payments on New Credit Facility, net						(1,050)						—
Cash paid to repurchase and retire common stock						(181)						(558)
Cash paid for common stock dividends						(335)						(508)
Net increase (decrease) in cash, cash equivalents and restricted cash						$	783					$	(888)

Cash Flow from Operating Activities

Cash provided by operating activities was $1,404 million and $1,762 million during the Current Period and Prior Period, respectively. The decrease during the Current Period is primarily due to lower prices for the natural gas, oil and NGL we sold as well as decreased sales volumes related to our Eagle Ford divestitures. 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 Current Period, we sold a portion of our Eagle Ford assets to WildFire Energy I LLC and also sold a portion of our remaining Eagle Ford assets to INEOS Energy (each transaction with an effective date of October 1, 2022). During the Prior Period, 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 Prior Period, we borrowed a net $775 million on the Exit Credit Facility, which was primarily used to fund a portion of the Marcellus Acquisition.

Funds Held for Transition Services

During the Current Period, we held $97 million of funds relating to transition services associated with our Eagle Ford divestitures.

Capital Expenditures

Our capital expenditures increased during the Current Period compared to the Prior Period, 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.

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Business Combination

During the Prior Period, 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 Current Period, contributions to investments primarily consisted of $88 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.

Payments on New Credit Facility, net

During the Current Period, we made net repayments of $1,050 million on the New Credit Facility, utilizing a portion of the divestiture proceeds from the Eagle Ford divestitures 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 Current Period, we repurchased 2.2 million shares for an aggregate price of $181 million, which included shares for which cash settlement occurred in early July 2023. During the Prior Period, we repurchased 6.8 million shares of common stock for an aggregate price of $598 million, which included shares for which cash settlement occurred in early July 2022. 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 dividends of $335 million and $508 million during the Current Period and Prior Period, respectively. 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.

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Results of Operations

Natural Gas, Oil and NGL Production and Average Sales Prices

						Three Months Ended June 30, 2023
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,830						1.51						—						—						—						—						1,830						1.51
Haynesville						1,590						1.77						—						—						—						—						1,590						1.77
Eagle Ford						85						2.32						15						76.39						10						23.67						233						6.73
Total						3,505						1.65						15						76.39						10						23.67						3,653						1.97
Average NYMEX Price												2.10												73.78
Average Realized Price (including realized derivatives)												2.36												84.58												23.67												2.67
						Three Months Ended June 30, 2022
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,957						6.46						—						—						—						—						1,957						6.46
Haynesville						1,643						6.60						—						—						—						—						1,643						6.60
Eagle Ford						130						7.23						50						111.01						16						42.56						525						13.63
Total						3,730						6.55						50						111.01						16						42.56						4,125						7.43
Average NYMEX Price												7.17												108.41
Average Realized Price (including realized derivatives)												4.03												69.46												42.56												4.65

						Six Months Ended June 30, 2023
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,901						2.52						—						—						—						—						1,901						2.52
Haynesville						1,570						2.32						—						—						—						—						1,570						2.32
Eagle Ford						106						2.11						34						76.72						13						25.54						389						8.19
Total						3,577						2.42						34						76.72						13						25.54						3,860						3.01
Average NYMEX Price												2.76												74.96
Average Realized Price (including realized derivatives)												2.55												70.67												25.54												3.08

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						Six Months Ended June 30, 2022
						Natural Gas												Oil												NGL												Total
						MMcf per day						$/Mcf						MBbl per day						$/Bbl						MBbl per day						$/Bbl						MMcfe per day						$/Mcfe
Marcellus						1,706						5.70						—						—						—						—						1,706						5.70
Haynesville						1,634						5.54						—						—						—						—						1,634						5.54
Eagle Ford						129						5.65						51						102.84						16						41.84						531						12.53
Powder River Basin						20						5.45						4						95.18						1						53.96						51						10.66
Total						3,489						5.62						55						102.30						17						42.82						3,922						6.62
Average NYMEX Price												6.06												101.35
Average Realized Price (including realized derivatives)												3.59												67.38												42.82												4.32

Natural Gas, Oil and NGL Sales

						Three Months Ended June 30, 2023
						Natural Gas						Oil						NGL						Total
Marcellus						$	250					$	—					$	—					$	250
Haynesville						256						—						—						256
Eagle Ford						18						104						21						143
Total natural gas, oil and NGL sales						$	524					$	104					$	21					$	649
						Three Months Ended June 30, 2022
						Natural Gas						Oil						NGL						Total
Marcellus						$	1,152					$	—					$	—					$	1,152
Haynesville						988						—						—						988
Eagle Ford						85						503						62						650
Total natural gas, oil and NGL sales						$	2,225					$	503					$	62					$	2,790

						Six Months Ended June 30, 2023
						Natural Gas						Oil						NGL						Total
Marcellus						$	867					$	—					$	—					$	867
Haynesville						658						—						—						658
Eagle Ford						41						477						59						577
Total natural gas, oil and NGL sales						$	1,566					$	477					$	59					$	2,102

						Six Months Ended June 30, 2022
						Natural Gas						Oil						NGL						Total
Marcellus						$	1,761					$	—					$	—					$	1,761
Haynesville						1,640						—						—						1,640
Eagle Ford						132						953						119						1,204
Powder River Basin						20						66						13						99
Total natural gas, oil and NGL sales						$	3,553					$	1,019					$	132					$	4,704

Natural gas, oil and NGL sales during the Current Quarter decreased $2,141 million compared to the Prior Quarter. Lower average prices, which were consistent with the downward trend in index prices for all products, drove a $1,936 million decrease during the Current Quarter. A $180 million decrease in Eagle Ford was primarily

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due to the Eagle Ford divestitures. Additionally, lower sales volumes in Marcellus and Haynesville resulted in an aggregate decrease of $25 million.

Natural gas, oil and NGL sales during the Current Period decreased $2,602 million compared to the Prior Period. Lower average prices, which were consistent with the downward trend in index prices for all products, drove a $2,451 million decrease during the Current Period. A $213 million decrease in Eagle Ford was primarily due to the Eagle Ford divestitures. Additionally, lower sales volumes in Haynesville resulted in a decrease of $27 million. Partially offsetting these decreases was an increase of $89 million due to increased sales volumes in Marcellus, primarily due to the Marcellus Acquisition in March 2022.

Production Expenses

						Three Months Ended June 30, 2023												Three Months Ended June 30, 2022												Six Months Ended June 30, 2023												Six Months Ended June 30, 2022
												$/Mcfe												$/Mcfe												$/Mcfe												$/Mcfe
Marcellus						$	19					0.12						$	19					0.11						$	43					0.13						$	32					0.10
Haynesville						52						0.36						39						0.26						99						0.35						71						0.24
Eagle Ford						18						0.82						60						1.25						78						1.11						115						1.20
Powder River Basin						—						—						—						—						—						—						10						0.94
Total production expenses						$	89					0.27						$	118					0.31						$	220					0.31						$	228					0.32

Production expenses during the Current Quarter decreased $29 million as compared to the Prior Quarter. The decrease was primarily due to the Eagle Ford divestitures, partially offset by an increase in saltwater disposal expenses and a temporary increase in elective workovers in Haynesville.

Production expenses during the Current Period decreased $8 million as compared to the Prior Period. The decrease was primarily due to the Eagle Ford and Powder River Basin divestitures, partially offset by an increase in saltwater disposal expenses and a temporary increase in elective workovers in Haynesville.

Gathering, Processing and Transportation Expenses

						Three Months Ended June 30, 2023												Three Months Ended June 30, 2022												Six Months Ended June 30, 2023												Six Months Ended June 30, 2022
												$/Mcfe												$/Mcfe												$/Mcfe												$/Mcfe
Marcellus						$	108					0.65						$	105					0.59						$	219					0.64						$	176					0.57
Haynesville						65						0.45						86						0.57						133						0.47						151						0.51
Eagle Ford						34						1.58						83						1.75						119						1.69						167						1.74
Powder River Basin						—						—						—						—						—						—						22						2.32
Total GP&T						$	207					0.62						$	274					0.73						$	471					0.67						$	516					0.73

Gathering, processing and transportation expenses during the Current Quarter decreased $67 million as compared to the Prior Quarter. The decrease was primarily related to a $49 million decrease due to the Eagle Ford divestitures. Additionally, Haynesville decreased $21 million, primarily due to lower rates driven by decreased prices.

Gathering, processing and transportation expenses during the Current Period decreased $45 million as compared to the Prior Period. The decrease was primarily related to a $70 million decrease due to divestitures in Eagle Ford and Powder River Basin. Additionally, Haynesville decreased $18 million, primarily due to lower rates driven by decreased prices. These decreases were partially offset by a $43 million increase in Marcellus, primarily due to the Marcellus Acquisition in March 2022.

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Severance and Ad Valorem Taxes

						Three Months Ended June 30, 2023												Three Months Ended June 30, 2022												Six Months Ended June 30, 2023												Six Months Ended June 30, 2022
												$/Mcfe												$/Mcfe												$/Mcfe												$/Mcfe
Marcellus						$	2					0.01						$	4					0.02						$	7					0.02						$	8					0.02
Haynesville						29						0.21						12						0.08						63						0.22						24						0.09
Eagle Ford						9						0.42						41						0.85						39						0.55						77						0.80
Powder River Basin						—						—						—						—						—						—						11						1.09
Total severance and ad valorem taxes						$	40					0.12						$	57					0.15						$	109					0.16						$	120					0.17

Severance and ad valorem taxes during the Current Quarter decreased $17 million as compared to the Prior Quarter. The decrease was primarily related to a $32 million decrease due to the Eagle Ford divestitures, partially offset by an increase of $17 million in the Haynesville due to higher severance and ad valorem tax rates.

Severance and ad valorem taxes during the Current Period decreased $11 million as compared to the Prior Period. The decrease was primarily related to a $49 million decrease due to divestitures in Eagle Ford and Powder River Basin, partially offset by an increase of $39 million in the Haynesville due to legislative action that led to changes in the Haynesville severance and ad valorem tax rates.

Natural Gas and Oil Derivatives

						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
Natural gas derivatives - realized gains (losses)						$	226					$	(857)					$	86					$	(1,285)
Natural gas derivatives - unrealized gains (losses)						(68)						436						953						(936)
Total gains (losses) on natural gas derivatives						$	158					$	(421)					$	1,039					$	(2,221)
Oil derivatives - realized gains (losses)						$	11					$	(189)					$	(38)					$	(348)
Oil derivatives - unrealized gains (losses)						(10)						96						88						(70)
Total gains (losses) on oil derivatives						1						(93)						50						(418)
Total gains (losses) on natural gas and oil derivatives						$	159					$	(514)					$	1,089					$	(2,639)

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 June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
Total G&A, net						$	31					$	36					$	66					$	62
G&A, net per Mcfe						$	0.09					$	0.10					$	0.09					$	0.09

Total general and administrative expenses, net during the Current Quarter decreased $5 million compared to the Prior Quarter, primarily due to a decrease in compensation and other corporate expenses. Total general and administrative expenses, net during the Current Period increased $4 million compared to the Prior Period, primarily due to other corporate expenses.

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Depreciation, Depletion and Amortization

						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
DD&A						$	376					$	451					$	766					$	860
DD&A per Mcfe						$	1.14					$	1.20					$	1.09					$	1.21

The absolute and per unit decreases in depreciation, depletion and amortization for the Current Quarter and Current Period compared to the Prior Quarter and Prior Period, 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 June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
Other operating expense, net						$	9					$	8					$	12					$	31

During the Prior Period, we recognized approximately $33 million of costs related to the Marcellus Acquisition, which included integration costs, 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 June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
Interest expense on debt						$	32					$	44					$	78					$	82
Amortization of premium, issuance costs and other						(3)						—						(5)						(1)
Capitalized interest						(7)						(8)						(14)						(13)
Total interest expense						$	22					$	36					$	59					$	68

The decrease in total interest expense during the Current Quarter and Current Period compared to the Prior Quarter and Prior Period was primarily due to lower average debt outstanding between periods.

Other Income

						Three Months Ended June 30, 2023						Three Months Ended June 30, 2022						Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
Other income						$	23					$	9					$	33					$	25

The increase in other income during the Current Quarter and Current Period compared to the Prior Quarter and Prior Period was primarily due to a $10 million increase in interest income, related to our higher average cash balance during the Current Period, as well as $7 million in deferred consideration amortization.

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Income Taxes

Income tax expense was $531 million for the Current Period. Of this amount, $132 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. Income tax expense of $31 million was recorded during the Prior Period as a result of projecting current federal and state income taxes. Our effective income tax rate was 23.0% and 6.2% during the Current Period and the Prior Period, respectively. The fluctuation in the effective tax rate is mainly because we are no longer maintaining a full valuation allowance against our net deferred tax asset position during the Current Period, as we were during the Prior Period. 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.

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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;

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• 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.

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