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What changed in Expand Energy's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Expand Energy's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+417 added−292 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in Expand Energy's 2023 10-K

417 paragraphs added · 292 removed · 240 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

72 edited+16 added−13 removed66 unchanged
Biggest changeIn the table, "gross" refers to the total wells in which we had a working interest and "net" refers to gross wells multiplied by our working interest: 2022 2021 2020 Gross % Net % Gross % Net % Gross % Net % Development: Productive 237 100 151 100 137 100 74 100 203 100 126 100 Dry — — — — — — — — — — — — Total 237 100 151 100 137 100 74 100 203 100 126 100 Exploratory: Productive — — — — 2 100 1 100 — — — — Dry 1 100 1 100 — — — — 2 100 2 100 Total 1 100 1 100 2 100 1 100 2 100 2 100 The following table shows the wells we completed or participated in by operating area: 2022 2021 2020 Gross Wells Net Wells Gross Wells Net Wells Gross Wells Net Wells Marcellus 103 59 83 34 79 33 Haynesville 83 61 40 31 21 19 Eagle Ford 52 32 12 7 86 65 Powder River Basin — — 4 3 12 9 Mid-Continent — — — — 5 — Other — — — — 2 2 Total 238 152 139 75 205 128 As of December 31, 2022, we had 91 gross (59 net) wells in the process of being drilled or completed. 13 TABLE OF CONTENTS Production Volumes, Sales Prices, Production Expenses and Gathering, Processing and Transportation Expenses The following tables present information regarding our net production volumes, average sales price received for our production, and production and gathering, processing and transportation expenses per Mcfe for the periods indicated for our significant fields: Production Natural Gas (Bcf) Oil (MMBbl) NGL (MMBbl) Total (Bcfe) 2022 Marcellus 670 — — 670 Haynesville 588 — — 588 Eagle Ford 46 18.7 5.8 193 Total Production 1,308 19.4 6.0 1,461 2021 Marcellus 471 — — 471 Haynesville 265 — — 265 Eagle Ford 51 22.5 6.7 227 Total Production 807 25.9 8.0 1,010 2020 Marcellus 385 — — 385 Haynesville 198 — — 198 Eagle Ford 68 31.3 8.9 309 Total Production 684 37.3 11.3 976 Average Sales Price of Production (a) Expenses ($/Mcfe) Natural Gas ($/Mcf) Oil ($/Bbl) NGL ($/Bbl) Total ($/Mcfe) Production GP&T 2022 Marcellus $ 6.03 $ — $ — $ 6.03 $ 0.11 $ 0.57 Haynesville $ 5.92 $ — $ — $ 5.92 $ 0.26 $ 0.53 Eagle Ford $ 5.64 $ 96.10 $ 36.76 $ 11.76 $ 1.22 $ 1.78 Total $ 5.96 $ 96.07 $ 37.48 $ 6.77 $ 0.33 $ 0.73 2021 Marcellus $ 3.16 $ — $ — $ 3.16 $ 0.08 $ 0.68 Haynesville $ 3.96 $ — $ — $ 3.96 $ 0.24 $ 0.49 Eagle Ford $ 3.84 $ 67.14 $ 29.14 $ 8.40 $ 0.85 $ 1.48 Total $ 3.49 $ 67.01 $ 30.77 $ 4.75 $ 0.33 $ 0.87 2020 Marcellus $ 1.64 $ — $ — $ 1.64 $ 0.08 $ 0.76 Haynesville $ 1.83 $ — $ — $ 1.83 $ 0.21 $ 0.95 Eagle Ford $ 1.90 $ 38.38 $ 10.93 $ 4.62 $ 0.65 $ 1.54 Total $ 1.73 $ 38.16 $ 11.55 $ 2.81 $ 0.38 $ 1.11 ___________________________________________ (a) Excludes the effect of hedging. 14 TABLE OF CONTENTS Natural Gas, Oil and NGL Reserves The tables below set forth information as of December 31, 2022, with respect to our estimated proved reserves, the associated estimated future net revenue, the present value of estimated future net revenue and the standardized measure of discounted future net cash flows.
Biggest changeIn the table, "gross" refers to the total wells in which we had a working interest and "net" refers to gross wells multiplied by our working interest: 2023 2022 2021 Gross % Net % Gross % Net % Gross % Net % Development: Productive 194 100 109 100 237 100 151 100 137 100 74 100 Dry — — — — — — — — — — — — Total 194 100 109 100 237 100 151 100 137 100 74 100 Exploratory: Productive — — — — — — — — 2 100 1 100 Dry — — — — 1 100 1 100 — — — — Total — — — — 1 100 1 100 2 100 1 100 The following table shows the wells we completed or participated in by operating area: 2023 2022 2021 Gross Wells Net Wells Gross Wells Net Wells Gross Wells Net Wells Marcellus 78 37 103 59 83 34 Haynesville 84 51 83 61 40 31 Eagle Ford 32 21 52 32 12 7 Powder River Basin — — — — 4 3 Total 194 109 238 152 139 75 As of December 31, 2023, we had 92 gross (58 net) wells in the process of being drilled or completed. 14 TABLE OF CONTENTS Production Volumes, Sales Prices, Production Expenses and Gathering, Processing and Transportation Expenses The following tables present information regarding our net production volumes, average sales price received for our production, and production and gathering, processing and transportation expenses per Mcfe for the periods indicated for our significant fields: Production Natural Gas (Bcf) Oil (MMBbl) NGL (MMBbl) Total (Bcfe) 2023 Successor Period Marcellus 669 — — 669 Haynesville 566 — — 566 Eagle Ford 31 7.7 3.8 100 Total Production 1,266 7.7 3.8 1,335 2022 Successor Period Marcellus 670 — — 670 Haynesville 588 — — 588 Eagle Ford 46 18.7 5.8 193 Total Production 1,308 19.4 6.0 1,461 2021 Successor Period Marcellus 421 — — 421 Haynesville 243 — — 243 Eagle Ford 44 19.5 6.0 198 Total Production 727 22.5 7.1 905 2021 Predecessor Period Marcellus 50 — — 50 Haynesville 22 — — 22 Eagle Ford 7 3.0 0.7 29 Total Production 80 3.4 0.9 105 15 TABLE OF CONTENTS Average Sales Price of Production (a) Expenses ($/Mcfe) Natural Gas ($/Mcf) Oil ($/Bbl) NGL ($/Bbl) Total ($/Mcfe) Production GP&T 2023 Successor Period Marcellus $ 2.22 $ — $ — $ 2.22 $ 0.12 $ 0.65 Haynesville $ 2.30 $ — $ — $ 2.30 $ 0.33 $ 0.46 Eagle Ford $ 2.25 $ 77.80 $ 25.62 $ 7.64 $ 0.91 $ 1.57 Total $ 2.25 $ 77.80 $ 25.62 $ 2.66 $ 0.27 $ 0.64 2022 Successor Period Marcellus $ 6.03 $ — $ — $ 6.03 $ 0.11 $ 0.57 Haynesville $ 5.92 $ — $ — $ 5.92 $ 0.26 $ 0.53 Eagle Ford $ 5.64 $ 96.10 $ 36.76 $ 11.76 $ 1.22 $ 1.78 Total $ 5.96 $ 96.07 $ 37.48 $ 6.77 $ 0.33 $ 0.73 2021 Successor Period Marcellus $ 3.25 $ — $ — $ 3.25 $ 0.08 $ 0.68 Haynesville $ 4.10 $ — $ — $ 4.10 $ 0.24 $ 0.49 Eagle Ford $ 4.02 $ 69.25 $ 29.76 $ 8.65 $ 0.88 $ 1.46 Total $ 3.61 $ 69.07 $ 31.37 $ 4.87 $ 0.33 $ 0.86 2021 Predecessor Period Marcellus $ 2.42 $ — $ — $ 2.42 $ 0.08 $ 0.70 Haynesville $ 2.44 $ — $ — $ 2.44 $ 0.19 $ 0.49 Eagle Ford $ 2.57 $ 53.37 $ 23.94 $ 6.71 $ 0.71 $ 1.55 Total $ 2.45 $ 53.21 $ 25.92 $ 3.77 $ 0.30 $ 0.96 ___________________________________________ (a) Excludes the effect of hedging. 16 TABLE OF CONTENTS Natural Gas, Oil and NGL Reserves The tables below set forth information as of December 31, 2023, with respect to our estimated proved reserves, the associated estimated future net revenue, the present value of estimated future net revenue and the standardized measure of discounted future net cash flows.
Generally, our natural gas and NGL production are sold to purchasers under percentage-of-index contracts, spot price contracts or percentage-of-proceeds contracts. Under our percentage-of-index contracts, the price we receive is tied to published indices. Under the terms of our percentage-of-proceeds contracts, we receive a percentage of the resale price received from the ultimate purchaser.
Generally, our natural gas and NGL production are sold to purchasers under index contracts, percentage-of-index contracts, spot price contracts or percentage-of-proceeds contracts. Under our index and percentage-of-index contracts, the price we receive is tied to published indices. Under the terms of our percentage-of-proceeds contracts, we receive a percentage of the resale price received from the ultimate purchaser.
These laws and regulations relate to matters that include, but are not limited to, the following: • reporting of workplace injuries and illnesses; • industrial hygiene monitoring; • worker protection and workplace safety; • approval or permits to drill and to conduct operations; • provision of financial assurances (such as bonds) covering drilling and well operations; • calculation and disbursement of royalty payments and production taxes; • seismic operations/data; • location, drilling, cementing and casing of wells; 19 TABLE OF CONTENTS • well design and construction of pad and equipment; • construction and operations activities in sensitive areas, such as wetlands, coastal regions or areas that contain endangered or threatened species, their habitats, or sites of cultural significance; • method of well completion and hydraulic fracturing; • water withdrawal; • well production and operations, including processing and gathering systems; • emergency response, contingency plans and spill prevention plans; • emissions and discharges permitting; • climate change; • use, transportation, storage and disposal of fluids and materials incidental to natural gas and oil operations; • surface usage, maintenance, monitoring and the restoration of properties associated with well pads, pipelines, impoundments and access roads; • plugging and abandoning of wells; and • transportation of production.
These laws and regulations relate to matters that include, but are not limited to, the following: • reporting of workplace injuries and illnesses; • industrial hygiene monitoring; • worker protection and workplace safety; • approval or permits to drill and to conduct operations; • provision of financial assurances (such as bonds) covering drilling and well operations; • calculation and disbursement of royalty payments and production taxes; • seismic operations/data; 21 TABLE OF CONTENTS • location, drilling, cementing and casing of wells; • well design and construction of pad and equipment; • construction and operations activities in sensitive areas, such as wetlands, coastal regions or areas that contain endangered or threatened species, their habitats, or sites of cultural significance; • method of well completion and hydraulic fracturing; • water withdrawal; • well production and operations, including processing and gathering systems; • emergency response, contingency plans and spill prevention plans; • emissions and discharges permitting; • climate change; • use, transportation, storage and disposal of fluids and materials incidental to natural gas and oil operations; • surface usage, maintenance, monitoring and the restoration of properties associated with well pads, pipelines, impoundments and access roads; • plugging and abandoning of wells; and • transportation of production.
To facilitate our discussion in this report, we refer to the post-emergence reorganized company as the “Successor” and the pre-emergence company as the “Predecessor.” See Note 2 and Note 3 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of our bankruptcy, the resulting reorganization and fresh start accounting. 11 TABLE OF CONTENTS Information About Us 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.
To facilitate our discussion in this report, we refer to the post-emergence reorganized company as the “Successor” and the pre-emergence company as the “Predecessor.” See Note 2 and Note 3 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of our bankruptcy, the resulting reorganization and fresh start accounting. 12 TABLE OF CONTENTS Information About Us 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 consider the responsibility and costs of environmental protection and safety and health compliance fundamental, manageable parts of our business. To date, we have been able to plan for and comply with environmental, safety and health laws and regulations without materially altering our operating strategy or incurring significant unreimbursed expenditures.
We consider the responsibility and costs of environmental protection and safety and health compliance fundamental parts of our business. To date, we have been able to plan for and comply with environmental, safety and health laws and regulations without materially altering our operating strategy or incurring significant unreimbursed expenditures.
Our estimated proved reserves and the standardized measure of discounted future net cash flows of the proved reserves as of December 31, 2022, 2021 and 2020, along with the changes in quantities and standardized measure of the reserves for each of the three years then ended, are shown in Supplemental Disclosures About Natural Gas, Oil and NGL Producing Activities included in Item 8 of Part II of this report.
Our estimated proved reserves and the standardized measure of discounted future net cash flows of the proved reserves as of December 31, 2023, 2022 and 2021, along with the changes in quantities and standardized measure of the reserves for each of the three years then ended, are shown in Supplemental Disclosures About Natural Gas, Oil and NGL Producing Activities included in Item 8 of Part II of this report.
Future prices and costs may be materially higher or lower than the prices and costs as of the date of any estimate. See Supplemental Disclosures About Natural Gas, 16 TABLE OF CONTENTS Oil and NGL Producing Activities included in Item 8 of Part II of this report for further discussion of our reserve quantities.
Future prices and costs may be materially higher or lower than the prices and costs as of the date of any estimate. See Supplemental Disclosures About Natural Gas, 18 TABLE OF CONTENTS Oil and NGL Producing Activities included in Item 8 of Part II of this report for further discussion of our reserve quantities.
Shortly thereafter, in November 2021, the Environmental Protection Agency (the “EPA”) proposed new regulations to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound emissions from existing operations in the oil and gas sector, including the exploration and production, transmission, processing, and storage segments.
In November 2021, the Environmental Protection Agency (the “EPA”) proposed new regulations to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound emissions from existing operations in the oil and gas sector, including the exploration and production, transmission, processing, and storage segments.
(b) Estimated future net revenue represents the estimated future revenue to be generated from the production of proved reserves, net of estimated production and future development costs, using pricing differentials and costs under existing economic conditions as of December 31, 2022, and assuming commodity prices as set forth below.
(b) Estimated future net revenue represents the estimated future revenue to be generated from the production of proved reserves, net of estimated production and future development costs, using pricing differentials and costs under existing economic conditions as of December 31, 2023, and assuming commodity prices as set forth below.
Department of the Interior. Such leases require compliance with detailed federal regulations and orders that regulate, among other matters, drilling and operations on lands covered by these leases and calculation and disbursement of royalty payments to the federal government, tribes or tribal members.
Such leases require compliance with detailed federal regulations and orders that regulate, among other matters, drilling and operations on lands covered by these leases and calculation and disbursement of royalty payments to the federal government, tribes or tribal members.
All material changes are reviewed and approved by the Manager – SEC Reserves Engineering. • The Corporate Reserves Department reviews our proved reserves at the close of each quarter. • Each quarter, Reservoir Managers, the Manager – SEC Reserves Engineering, the Senior Resource Manager, the Vice Presidents of each operating area and the Vice President of Corporate and Strategic Planning review all significant reserves changes and all new proved undeveloped reserves additions. • The Corporate Reserves Department reports independently of our operations. • The five-year PUD development plan is reviewed and approved annually by the Manager – SEC Reserves Engineering, the Senior Resource Manager, and the Vice President of Corporate and Strategic Planning. 17 TABLE OF CONTENTS Acreage The following table sets forth our gross and net developed and undeveloped natural gas and oil leasehold and fee mineral acreage as of December 31, 2022.
All material changes are reviewed and approved by the Manager – SEC Reserves Engineering. • The Corporate Reserves Department reviews our proved reserves at the close of each quarter. • Each quarter, Reservoir Managers, the Manager – SEC Reserves Engineering, the Senior Resource Manager, the Vice Presidents of each operating area and the Vice President of Corporate and Strategic Planning review all significant reserves changes and all new proved undeveloped reserves additions. • The Corporate Reserves Department reports independently of our operations. • The five-year PUD development plan is reviewed and approved annually by the Manager – SEC Reserves Engineering, the Senior Resource Manager, and the Vice President of Corporate and Strategic Planning. 19 TABLE OF CONTENTS Acreage The following table sets forth our gross and net developed and undeveloped natural gas and oil leasehold and fee mineral acreage as of December 31, 2023.
These laws and regulations increase the cost of doing business and consequently affect profitability. Additionally, currently unforeseen environmental incidents may occur or past non-compliance with environmental laws or regulations may be discovered. We actively monitor regulatory developments applicable to our industry in order to anticipate, design and implement required compliance activities and systems.
These laws and regulations increase the cost of doing business. Additionally, currently unforeseen environmental incidents may occur or past non-compliance with environmental laws or regulations may be discovered. We actively monitor regulatory developments applicable to our industry in order to anticipate, design and implement required compliance activities and systems.
On March 9, 2022, we completed our acquisition of Chief, Radler and associated non-operated interests held by affiliates of Tug Hill, Inc. (“Tug Hill”). Chief, Radler and Tug Hill held producing assets and an inventory of premium drilling locations in the Marcellus Shale in Northeast Pennsylvania.
On March 9, 2022, we completed our acquisition of Chief, Radler and associated non-operated interests held by affiliates of Tug Hill. Chief, Radler and Tug Hill held producing assets and an inventory of premium drilling locations in the Marcellus Shale in Northeast Pennsylvania.
The foundation of our safety 24 TABLE OF CONTENTS training efforts is our Stay Accident Free Every Day (S.A.F.E.) program, which encourages all workers on our locations to take personal responsibility for their safety and the safety of those around them.
The foundation of our safety training efforts is our Stay Accident Free Every day (S.A.F.E.) program, which encourages all workers on our locations to take personal responsibility for their safety and the safety of those around them.
Working as One CHK defines Chesapeake’s culture and unites our team to achieve shared goals for the benefit of our stakeholders. It is a culture of accountability where innovation, collaboration and calculated risk-taking help us achieve sustainable operational success. We had approximately 1,200 employees as of December 31, 2022.
Working as One CHK defines Chesapeake’s culture and unites our team to achieve shared goals for the benefit of our stakeholders. It is a culture of accountability where innovation, collaboration and calculated risk-taking help us achieve sustainable operational success. We had approximately 1,000 employees as of December 31, 2023.
These executive orders and policy priorities may result in the development of additional regulations or changes to existing regulations, certain of which could negatively impact our financial position, results of operations and cash flows.
These rules and policy priorities may result in the development of additional regulations or changes to existing regulations, certain of which could negatively impact our financial position, results of operations and cash flows.
His qualifications include the following: • Over 15 years of practical experience in the oil and gas industry, with over 13 years in reservoir engineering; • Licensed Professional Engineer (Petroleum) in the State of Oklahoma; • Member in good standing of the Society of Petroleum Evaluation Engineers; • Bachelor of Science in Mechanical Engineering; and • Master’s of Business Administration.
His qualifications include the following: • Over 16 years of practical experience in the oil and gas industry, with over 14 years in reservoir engineering; • Licensed Professional Engineer (Petroleum) in the State of Oklahoma; • Member in good standing of the Society of Petroleum Evaluation Engineers; • Bachelor of Science in Mechanical Engineering; and • Master’s of Business Administration.
The federal government has increased its review in recent years in evaluating and, in some cases, promulgating new rules and regulations regarding competitive lease bidding, venting and flaring, gas and oil measurement and royalty payment obligations for production from federal lands.
The federal government has increased its review in recent years in evaluating and, in some cases, promulgating new rules and regulations regarding competitive lease bidding, venting and flaring, gas and oil measurement and royalty 23 TABLE OF CONTENTS payment obligations for production from federal lands.
Additionally, Chesapeake provides employees and their families access to a confidential Employee Assistance Program (EAP) which connects employees with trained counselors and other support professionals. 25 TABLE OF CONTENTS
Additionally, Chesapeake provides employees and their families access to a confidential Employee Assistance Program, which connects employees with trained counselors and other support professionals. 27 TABLE OF CONTENTS
Risk Factors - “We are subject to extensive governmental regulation, which can change and could adversely impact our business.” The SEC has also indicated plans to propose various other disclosure regulations, including regarding human capital and other ESG matters. We cannot predict with any reasonable degree of certainty our future exposure concerning such matters.
For more information, see Item 1A. Risk Factors - “We are subject to extensive governmental regulation, which can change and could adversely impact our business.” The SEC has also indicated plans to propose various other disclosure regulations, including regarding human capital and other ESG matters. We cannot predict with any reasonable degree of certainty our future exposure concerning such matters.
Our Business 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 8,400 gross natural gas and oil wells.
Our Business 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 assets, including interests in approximately 5,000 gross natural gas wells.
Creating an incident-free work environment starts with setting clear expectations among employees and contractors regarding our safety standards, and working to empower and equip individuals with the skills necessary to promote safety in their areas of work.
Creating an incident-free work environment starts with setting clear expectations among employees and contractors regarding our Safe and Compliant Operations Policy, safety standards, and working to empower and equip individuals with the skills necessary to promote safety in their areas of work.
These delivery commitments vary each year, and we expect to primarily fulfill these commitments with production from our proved developed reserves. 18 TABLE OF CONTENTS Major Customers For the 2022 Successor Period, sales to Shell Energy North America and Valero Energy Corporation accounted for approximately 13% and 10%, respectively, of total revenues (before the effects of hedging).
These delivery commitments vary each year, and we expect to fulfill these commitments primarily with production from our proved developed reserves. 20 TABLE OF CONTENTS Major Customers For the 2023 Successor Period, sales to Valero Energy Corporation and Shell Energy North America accounted for approximately 17% and 10%, respectively, of total revenues (before the effects of hedging).
The qualifications of the technical persons at the firm primarily responsible for overseeing the preparation of our reserve estimates are set forth below. • Over 39 combined years of practical experience in the estimation and evaluation of reserves; • Licensed Professional Engineer in the State of Texas and Bachelor of Science degree in Chemical Engineering; • Licensed Professional Geoscientist in the State of Texas and Bachelor of Science and Master of Science degrees in Geology.
The qualifications of the technical persons at the firm primarily responsible for overseeing the audit of our reserve estimates are set forth below. • Over 43 combined years of practical experience in the estimation and evaluation of reserves; • Licensed Professional Engineer in the State of Texas and Bachelor of Science degree in Chemical Engineering/Engineering and Public Policy; • Licensed Professional Geoscientist in the State of Texas and Bachelor of Science and Master of Science degrees in Geology.
Neither PV-10 nor the standardized measure of discounted future net cash flows purport to represent the fair value of our proved natural gas and oil reserves. 15 TABLE OF CONTENTS As of December 31, 2022, our proved reserve estimates included 4,321 Bcfe of reserves classified as proved undeveloped, compared to 3,963 Bcfe as of December 31, 2021.
Neither PV-10 nor the standardized measure of discounted future net cash flows purport to represent the fair value of our proved natural gas and oil reserves. 17 TABLE OF CONTENTS As of December 31, 2023, our proved reserve estimates included 3,325 Bcfe of reserves classified as proved undeveloped, compared to 4,321 Bcfe as of December 31, 2022.
Our Corporate Reserves Department prepared approximately 8% by volume, and approximately 5% by value, of our estimated proved reserves as of December 31, 2022, disclosed in this report. Those estimates were established utilizing standard geological and engineering technologies, which are generally accepted by the petroleum industry and were based upon the best available production, engineering and geologic data.
Our Corporate Reserves Department prepared our estimated proved reserves as of December 31, 2023 disclosed in this report. Those estimates were established utilizing standard geological and engineering technologies, which are generally accepted by the petroleum industry and were based upon the best available production, engineering and geologic data.
Although the national commitments in the Paris Agreement create no binding requirements on individual companies or facilities, they do provide indications of the current administration’s policy direction and the types of legislative and regulatory requirements—such as the EPA’s proposed methane rules—that may be needed to achieve those commitments.
Although the national commitments in the Paris Agreement create no binding requirements on individual companies or facilities, they do provide indications of the current administration’s policy direction and the types of legislative and regulatory requirements—such as the EPA’s final methane and volatile organic compound rule—that may be needed to achieve those commitments.
For example, in addition to regulations from the EPA and similar agencies, the SEC has issued proposed rules that would mandate extensive disclosure of climate-related risks and other information. For more information, see Item 1A.
For example, in addition to existing regulations from the EPA and similar agencies, the SEC has issued proposed rules that would mandate extensive disclosure of climate-related risks and other information.
Russ received a B.S. in Finance from Oklahoma State University in 1996 and a J.D. from Oklahoma City University in 2004. 23 TABLE OF CONTENTS Human Capital Resources One Team. One Chesapeake. Our “One CHK” culture and company core values promote an inclusive, diverse and productive workplace.
Russ received a B.S. in Finance from Oklahoma State University in 1996 and a J.D. from Oklahoma City University in 2004. 25 TABLE OF CONTENTS Human Capital Resources One Team. One Chesapeake. Our “One CHK” culture and company core values are aimed at promoting an inclusive, diverse and productive workplace.
Executive Officers Domenic J. Dell'Osso, Jr., President, Chief Executive Officer and Director Domenic J. (“Nick”) Dell'Osso, Jr., 46, has served as President and Chief Executive Officer since October 2021. Prior to being named as CEO, Mr. Dell’Osso served as our Executive Vice President and Chief Financial Officer since November 2010. Mr.
(“Nick”) Dell'Osso, Jr., 47, has served as President and Chief Executive Officer since October 2021. Prior to being named as CEO, Mr. Dell’Osso served as our Executive Vice President and Chief Financial Officer since November 2010. Mr.
Business Strategy Our business 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. Superior Capital Returns.
Business Strategy Our business 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, lower carbon energy to markets in need. Superior Capital Returns.
Of our 13,002 bcfe of proved reserves as of December 31, 2022, approximately 190 bcfe, or 1%, were non-producing. Our ownership interest used for calculating proved reserves and the associated estimated future net revenue assumes maximum participation by other parties to our farm-out and participation agreements.
As of December 31, 2023, approximately 222 Bcfe, or 2%, of our total proved reserves were non-producing. Our ownership interest used for calculating proved reserves and the associated estimated future net revenue assumes maximum participation by other parties to our farm-out and participation agreements.
Dell’Osso graduated from Boston College in 1998 and from the University of Texas at Austin in 2003. Mohit Singh, Executive Vice President and Chief Financial Officer Mohit Singh, 46, was appointed Executive Vice President and Chief Financial Officer in December 2021. Prior to joining Chesapeake, Mr.
Dell’Osso graduated from Boston College in 1998 and from the University of Texas at Austin in 2003. Mohit Singh, Executive Vice President and Chief Financial Officer Mohit Singh, 47, has served as Executive Vice President and Chief Financial Officer since December 2021. Prior to joining Chesapeake, Mr.
Risk Factors - Natural gas and oil operations are uncertain and involve substantial costs and risks. Title to Properties Our title to properties is subject to royalty, overriding royalty, carried, net profits, working and other similar interests and contractual arrangements customary in the natural gas and oil industry, to liens for current taxes not yet due and to other encumbrances.
Title to Properties Our title to properties is subject to royalty, overriding royalty, carried, net profits, working and other similar interests and contractual arrangements customary in the natural gas and oil industry, to liens for current taxes not yet due and to other encumbrances.
Such or similar legislation, regulations and initiatives could affect our business and our results of operation by increasing operating and compliance costs. 20 TABLE OF CONTENTS In addition, several states and geographic regions in the United States have also adopted legislation and regulations regarding climate change-related matters, and additional legislation or regulation by these states and regions, U.S. federal agencies, including the EPA, and/or international agreements to which the United States may become a party could result in increased compliance costs for us and our customers.
In addition, several states and geographic regions in the United States have also adopted legislation and regulations regarding climate change-related matters, and additional legislation or regulation by these states and regions, U.S. federal agencies, including the EPA, and/or international agreements to which the United States may become a party could result in increased compliance costs for us and our customers.
The present value of estimated future net revenue typically differs from the standardized measure because the former does not include the effects of estimated future income tax expense of $6.4 billion as of December 31, 2022.
The present value of estimated future net revenue typically differs from the standardized measure because the former does not include the effects of estimated future income tax expense of $94 million as of December 31, 2023.
Viets earned a Bachelor of Science in Petroleum Engineering from Colorado School of Mines in 2001. Benjamin E. Russ, Executive Vice President - General Counsel and Corporate Secretary Benjamin E. (“Ben”) Russ, 48, was appointed Executive Vice President – General Counsel and Corporate Secretary in June 2021.
Viets earned a Bachelor of Science in Petroleum Engineering from Colorado School of Mines in 2001. Benjamin E. Russ, Executive Vice President - General Counsel and Corporate Secretary Benjamin E. (“Ben”) Russ, 49, has served as Executive Vice President – General Counsel and Corporate Secretary since June 2021.
On February 9, 2021, we formed a board committee dedicated to ESG oversight, including our inclusion and diversity efforts. Two of the seven members of our Board of Directors are considered diverse, including one female and one “underrepresented minority” (as defined in Nasdaq’s newly enacted listing rule).
On February 9, 2021, we formed a board committee dedicated to ESG oversight, including our inclusion and diversity efforts. Two of the seven members of our Board of Directors are considered to come from underrepresented backgrounds, including one woman and one “underrepresented minority” (as defined in Nasdaq’s board diversity rule).
Singh earned a PhD in Chemical Engineering from the University of Houston, an MBA from the University of Texas and a BTech in Chemical Engineering from the Indian Institute of Technology. Joshua J. Viets, Executive Vice President and Chief Operating Officer Joshua J. Viets, 44, was appointed Executive Vice President and Chief Operating Officer in February 2022.
Singh earned a PhD in Chemical Engineering from the University of Houston, an MBA from the University of Texas and a BTech in Chemical Engineering from the Indian Institute of Technology. Joshua J. Viets, Executive Vice President and Chief Operating Officer Joshua J. (“Josh”) Viets, 45, has served as Executive Vice President and Chief Operating Officer since February 2022.
Further restrictions of hydraulic fracturing could make it difficult or impossible to conduct our drilling and completion operations, and thereby reduce the amount of natural gas, oil and NGL that we are ultimately able to produce from our properties. Certain of our U.S. natural gas and oil leases are granted or approved by the federal government and administered the U.S.
Further restrictions of hydraulic fracturing could make it difficult or impossible to conduct our drilling and completion operations, and thereby reduce the amount of natural gas, oil and NGL that we are ultimately able to produce from our properties.
Presented below is a summary of changes in our proved undeveloped reserves for 2022: Total (bcfe) Proved undeveloped reserves, beginning of period 3,963 Extensions and discoveries 51 Revisions of previous estimates 866 Conversion to proved developed reserves (1,099) Purchase of reserves-in-place 552 Sales of reserves-in-place (12) Proved undeveloped reserves, end of period 4,321 As of December 31, 2022, all PUDs were planned to be developed within five years of original recording.
Presented below is a summary of changes in our proved undeveloped reserves for 2023: Total (Bcfe) Proved undeveloped reserves, beginning of period 4,321 Extensions and discoveries 301 Revisions of previous estimates 236 Conversion to proved developed reserves (1,125) Purchase of reserves-in-place 40 Sales of reserves-in-place (448) Proved undeveloped reserves, end of period 3,325 As of December 31, 2023, all PUDs were planned to be developed within five years of original recording.
We offer parental leave for the birth or adoption of a child, an adoption assistance program, alternate work schedules, a 401(k) savings plan with company match and discretionary contributions, flexible work hours, generous paid time off and 12 company-paid holidays, tuition reimbursement and access to a child development center and fitness center at market rates.
We offer parental leave for the birth or adoption of a child, an adoption assistance program, alternate work schedules, a 401(k) savings plan with company match and discretionary contributions, flexible work hours, generous paid time off, including a well-being day, where each employee is encouraged to relax and recharge for a day once per calendar year and 12 company-paid holidays, tuition reimbursement and access to a child development center and fitness center at market rates.
For the 2021 Successor Period, sales to Valero Energy Corporation and Energy Transfer Crude Marketing accounted for approximately 14% and 11%, respectively, of total revenues (before the effects of hedging). For the 2021 Predecessor Period and 2020 Predecessor Period, sales to Valero Energy Corporation accounted for approximately 19% and 17%, respectively, of total revenues (before the effects of hedging).
For the 2022 Successor Period, sales to Shell Energy North America and Valero Energy Corporation accounted for approximately 13% and 10%, respectively, of total revenues (before the effects of hedging). For the 2021 Successor Period, sales to Valero Energy Corporation and Energy Transfer Crude Marketing accounted for approximately 14% and 11%, respectively, of total revenues (before the effects of hedging).
Oil production is sold under short-to-long term market-sensitive and spot price contracts. We have entered into long-term gathering, processing, and transportation contracts with various parties that require us to deliver fixed, determinable quantities of production over specified periods of time.
Oil production is sold under short-to-long-term market-sensitive and spot price contracts. We have entered into long-term gathering, processing, and transportation contracts with various parties that require us to deliver fixed, determinable quantities of production over specified periods of time. Certain of our contracts require us to make payments for any shortfalls in delivering or transporting minimum volumes under these commitments.
Reserves Estimation We engaged Netherland, Sewell & Associates, Inc., a third-party engineering firm, to prepare approximately 92% by volume, and approximately 95% by value, of our estimated proved reserves as of December 31, 2022. A copy of the report issued by the engineering firm is filed with this report as Exhibit 99.1.
Reserves Estimation We engaged Netherland, Sewell & Associates, Inc., a third-party engineering firm, to audit our total proved reserves as of December 31, 2023. A copy of the audit letter issued by the engineering firm is filed with this report as Exhibit 99.1.
We design contractor training to align as much as possible with employee training, encouraging synchronized knowledge sharing and understanding, critical to decreasing our cumulative incidents. Ethical Business Conduct Chesapeake works hard to maintain the confidence of our stakeholders. We earn this trust by acting in an ethical manner to protect our people, the environment and the communities where we operate.
We design contractor training to align as much as possible with employee training, encouraging synchronized knowledge sharing and understanding, critical to decreasing our cumulative incidents. Ethical Business Conduct Chesapeake works hard to maintain the confidence of our stakeholders.
We consistently focus on optimizing the development of our large resource base with a prioritization of generating high cash returns on capital invested. Our drive toward continuous improvement through engineering innovation and planning enhances margins for our shareholders. Sustainability Leadership. We are committed to protecting our country’s natural resources and reducing our environmental footprint.
We consistently focus on optimizing the development of our large resource base with a prioritization of generating high cash returns on capital invested. Our drive toward continuous improvement through engineering innovation and planning enhances margins for our shareholders. Deep, Attractive Inventory.
Some of our competitors may have larger financial and other resources than us. Competitive conditions may be affected by future legislation and regulations as the United States develops new energy and climate-related policies.
Competitive conditions may be affected by future legislation and regulations as the United States develops new energy and climate-related policies.
The EPA issued a supplemental proposed rule in November 2022 to update, strengthen and expand its November 2021 proposed rule. The supplemental proposed rule would impose more stringent requirements on the natural gas and oil industry.
The EPA issued a supplemental proposed rule in November 2022 to update, strengthen and expand its November 2021 proposed rule.
In 2022, we invested approximately $851 million to convert 1,099 bcfe of PUDs to proved developed reserves. We added 51 bcfe of PUD reserves through extensions and discoveries primarily due to new PUDs added to emerging plays. Revisions of previous estimates resulted in a net upward revision of 866 bcfe.
In 2023, we invested approximately $674 million to convert 1,125 Bcfe of PUDs to proved developed reserves. We added 301 Bcfe of PUD reserves through extensions and discoveries primarily due to new PUDs added in the Upper Marcellus. We had a net upward revision in previous estimates of 236 Bcfe.
Operating Areas We focus our acquisition, exploration, development and production efforts in the geographic operating areas described below. Marcellus - Northern Appalachian Basin in Pennsylvania. Haynesville - Haynesville/Bossier Shales in Northwestern Louisiana. Eagle Ford - Eagle Ford Shale in South Texas. In January 2023, we entered into an agreement to sell a portion of our Eagle Ford assets.
Operating Areas We focus our acquisition, exploration, development and production efforts in the geographic operating areas described below. Marcellus - Northern Appalachian Basin in Pennsylvania. Haynesville - Haynesville/Bossier Shales in Northwestern Louisiana.
For the purpose of determining prices used in our reserve reports, we used the unweighted arithmetic average of the prices on the first day of each month within the 12-month period ended December 31, 2022.
For the purpose of determining prices used in our reserve reports, we used the unweighted arithmetic average of the prices on the first day of each month within the 12-month period ended December 31, 2023. The price used in our PV-10 measure was $2.64 per Mcf of natural gas, before basis differential adjustments.
Delays in obtaining permits or an inability to obtain new permits or permit renewals could inhibit our ability to execute our drilling and production plans. Failure to comply with applicable regulations or permit requirements could result in revocation of our permits, inability to obtain new permits and the imposition of fines and penalties. For further discussion, see Item 1A.
Failure to comply with applicable regulations or permit requirements could result in revocation of our permits, inability to obtain new permits and the imposition of fines and penalties. For further discussion, see Item 1A. Risk Factors - Natural gas and oil operations are uncertain and involve substantial costs and risks.
Restrictions surrounding onshore drilling, onshore 21 TABLE OF CONTENTS federal lease availability, and restrictions on the ability to obtain required permits could have a material adverse impact on our operations. Permitting activities on federal lands are also subject to frequent delays.
Restrictions surrounding onshore drilling and restrictions on the ability to obtain required permits could have a material adverse impact on our operations. Permitting activities are also subject to frequent delays. Delays in obtaining permits or an inability to obtain new permits or permit renewals could inhibit our ability to execute our drilling and production plans.
We also completed 216 gross (151 net) wells as operator and participated in another 22 gross (1 net) wells completed by other operators. We operate approximately 99% of our current daily production volumes. Drilling Activity The following table sets forth the wells we completed or participated in during the periods indicated.
We operate approximately 98% of our current daily production volumes. 13 TABLE OF CONTENTS Drilling Activity The following table sets forth the wells we completed or participated in during the periods indicated.
These values were calculated assuming that we will expend approximately $4.3 billion to develop these reserves ($1,411 million in 2023, $1,430 million in 2024, $1,184 million in 2025, $165 million in 2026 and $56 million in 2027).
These values were calculated assuming that we will expend approximately $2.0 billion to develop these reserves ($649 million in 2024, $326 million in 2025, $463 million in 2026, $292 million in 2027 and $221 million in 2028).
We added 552 bcfe of PUDs through purchase of reserves-in-place related to the Marcellus Acquisition. The future net revenue attributable to our estimated PUDs was $18.333 billion and the present value was $10.344 billion as of December 31, 2022.
We added 40 Bcfe of PUDs through purchase of reserves-in-place in Haynesville. We divested 448 Bcfe of PUD reserves primarily related to our Eagle Ford divestitures. The future net revenue attributable to our estimated PUDs was $2.36 billion, and the present value was $843 million as of December 31, 2023.
Each Chesapeake director or employee, regardless of position, must abide by Chesapeake’s Code of Business Conduct (the "Code"), which is structured around our core values.
Strong governance practices begin at the top providing our organization with clear guidelines to define standards for ethical behavior at every level. Each Chesapeake director or employee, regardless of position, must abide by Chesapeake’s Code of Business Conduct (the "Code"), which is structured around our core values.
We set and deliver robust safety standards, prioritizing the well-being of our employees and contractors. Our safety culture is championed by our Board of Directors and executive leadership team, owned by every employee and contractor and managed by our Health, Safety, Environmental and Regulatory (HSER) team.
Our safety culture is championed by our Board of Directors and executive leadership team, owned by every employee and contractor and managed by our Health, Safety, Environmental and Regulatory (HSER) team. Maintaining a safe work environment and promoting safe behaviors is a commitment that each of our employees and contractors own together.
No other purchasers accounted for more than 10% of our total revenues during the 2022 Successor Period, 2021 Successor Period, 2021 Predecessor Period or 2020 Predecessor Period. Competition We compete with both major integrated and other independent natural gas and oil companies in all aspects of our business to explore, develop and operate our properties and market our production.
Competition We compete with both major integrated and other independent natural gas and oil companies in all aspects of our business to explore, develop and operate our properties and market our production. Some of our competitors may have larger financial and other resources than us.
Maintaining a safe work environment and promoting safe behaviors is a commitment that each of our employees and contractors own together. We hold each other accountable to keeping our sites, our co-workers and our contractors safe. One program that reinforces this philosophy of personal responsibility is Stop Work Authority.
We hold each other accountable to keeping our sites, our co-workers and our contractors safe. 26 TABLE OF CONTENTS One program that reinforces this philosophy of personal responsibility is Stop Work Authority. Through Stop Work Authority, every employee and contractor has the right, responsibility and authority to stop work if conditions are unsafe or could cause harm to the environment.
In February 2023, we entered into an agreement to sell a portion of our remaining Eagle Ford assets. 12 TABLE OF CONTENTS Well Data As of December 31, 2022, we held an interest in approximately 8,400 gross productive wells, including 6,700 wells in which we held a working interest and 1,700 wells in which we held an overriding or royalty interest.
Well Data As of December 31, 2023, we held an interest in approximately 5,000 gross productive gas wells, including 3,300 (1,900 net) wells in which we held a working interest and 1,700 wells in which we held an overriding or royalty interest.
The amounts shown do not give effect to non-property-related expenses, such as corporate general and administrative expenses and debt service, or to depreciation, depletion and amortization.
This price should not be interpreted as a prediction of future prices, nor does it reflect the value of our commodity derivative instruments in place as of December 31, 2023. The amounts shown do not give effect to non-property-related expenses, such as corporate general and administrative expenses and debt service, or to depreciation, depletion and amortization.
December 31, 2022 Natural Gas Oil NGL Total (bcf) (mmbbl) (mmbbl) (bcfe) Proved developed 7,385 157.2 58.9 8,681 Proved undeveloped 3,984 41.2 15.0 4,321 Total proved (a) 11,369 198.4 73.9 13,002 Proved Developed Proved Undeveloped Total Proved Standardized measure (b) $ 26,305 Estimated future net revenue (b) $ 42,773 $ 18,333 $ 61,106 Present value of estimated future net revenue (PV-10) (b) $ 22,356 $ 10,344 $ 32,700 ___________________________________________ (a) Marcellus, Haynesville and Eagle Ford accounted for approximately 51%, 31%, and 18%, respectively, of our estimated proved reserves by volume as of December 31, 2022.
December 31, 2023 Natural Gas Oil NGL Total (Bcf) (MMBbl) (MMBbl) (Bcfe) Proved developed 6,363 — — 6,363 Proved undeveloped 3,325 — — 3,325 Total proved (a) 9,688 — — 9,688 Proved Developed Proved Undeveloped Total Proved Standardized measure (b) $ 4,477 Estimated future net revenue (b) $ 6,194 $ 2,360 $ 8,554 Present value of estimated future net revenue (PV-10) (b) $ 3,728 $ 843 $ 4,571 ___________________________________________ (a) Marcellus and Haynesville accounted for approximately 73% and 27%, respectively, of our estimated proved reserves by volume as of December 31, 2023.
Our insurance coverage may not be sufficient to cover every claim made against us or may not be commercially available for purchase in the future. 22 TABLE OF CONTENTS Facilities We own an office complex in Oklahoma City and we own or lease various field offices in cities or towns in the areas where we conduct our operations.
Our insurance coverage may not be sufficient to cover every claim made against us or may not be commercially available for purchase in the future.
Each of these branches of our DEI program take part in determining strategic priorities, advancing our culture and supporting internal activities that invite all employees to participate in achieving our DEI vision. Stay Accident Free Everyday (S.A.F.E.) Safety is more than a company metric, it is core to our commitment to leading a responsible energy future.
Each of these branches of our DEI program take part in determining strategic priorities, advancing our culture and supporting internal activities that invite all employees to participate in achieving our DEI vision. For all these reasons, we believe our DEI program helps contribute to our corporate culture and business performance.
This starts by driving accountability through all levels of the company and having systems in place to uphold our high standards for conduct. Strong governance practices begin at the top providing our organization with clear guidelines to define standards for ethical behavior at every level.
We earn this trust by striving to act in an ethical manner to protect our people, the environment and the communities where we operate. This starts by driving accountability through all levels of the company and having systems in place to uphold our high standards for conduct.
As of December 31, 2022, we had delivery commitments for a total of approximately 3,400 bcf over the next 10 years.
See Note 7 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of commitments. As of December 31, 2023, we had delivery commitments for a total of approximately 3,100 Bcf over the next 10 years.
Of the 6,700 (4,300 net) wells in which we held a working interest, 3,500 (2,100 net) wells were classified as productive natural gas wells and 3,200 (2,200 net) wells were classified as productive oil wells. During 2022, we operated 6,000 gross wells and held a non-operating working interest in 700 gross wells.
Of the 3,300 wells in which we held a working interest, we operated 2,800 gross wells and held a non-operating working interest in 500 gross wells. We also completed 166 gross (108 net) wells as operator and participated in another 28 gross (1 net) wells completed by other operators.
Developed Leasehold Undeveloped Leasehold Total Gross Acres Net Acres Gross Acres Net Acres Gross Acres Net Acres (in thousands) Marcellus 566 330 167 135 733 465 Haynesville 359 322 111 56 470 378 Eagle Ford 681 480 213 117 894 597 Other (a) 316 293 1,348 1,275 1,664 1,568 Total 1,922 1,425 1,839 1,583 3,761 3,008 ___________________________________________ (a) Includes 1.2 million net acres retained in the 2016 divestiture of our Devonian Shale assets, in which we retained all rights below the base of the Kope formation.
Developed Leasehold Undeveloped Leasehold Total Gross Acres Net Acres Gross Acres Net Acres Gross Acres Net Acres (in thousands) Marcellus 576 337 182 152 758 489 Haynesville 354 322 100 59 454 381 Other (a) 313 293 1,351 1,276 1,664 1,569 Total 1,243 952 1,633 1,487 2,876 2,439 ___________________________________________ (a) Includes 1.2 million net acres retained in the 2016 divestiture of our Devonian Shale assets, in which we retained all rights below the base of the Kope formation.
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. On March 25, 2022, we sold our Powder River Basin assets in Wyoming to Continental Resources, Inc. for approximately $450 million.
During 2023, we completed our exit from Eagle Ford through three separate divestiture transactions, with aggregate proceeds from these transactions exceeding $3.5 billion, subject to customary post-closing adjustments. On March 25, 2022, we sold our Powder River Basin assets in Wyoming to Continental Resources, Inc. for approximately $450 million.
The net upward revision primarily resulted from development plan optimization through prioritizing longer laterals and multi-well pad development in Haynesville for 834 bcfe, 146 bcfe of upward revisions to existing PUD forecasts in Marcellus and Haynesville, partially offset by a downward revision of 114 bcfe due to development plan changes in Marcellus and Eagle Ford.
The net upward revision primarily consisted of 1,345 Bcfe from PUDs added in areas previously categorized as proved in both Marcellus and Haynesville, and 469 Bcfe of positive revisions on existing PUD locations primarily related to longer expected lateral lengths in both Marcellus and Haynesville, partially offset by 1,131 Bcfe of downward revisions due to lower natural gas, oil and NGL prices in 2023, and a downward revision of 447 Bcfe due to development plan and other changes in Marcellus and Haynesville.
Removed
On August 2, 2022, we announced that our Eagle Ford assets were non-core to our future capital allocation strategy.
Added
On January 10, 2024, Chesapeake and Southwestern entered into an all-stock merger agreement. Southwestern is an independent energy company engaged in development, exploration and production activities, including related marketing activities, within its operating areas in the Marcellus and Haynesville shale plays.
Removed
While continuing to focus our capital on the premium rock, returns and runway of our Marcellus and Haynesville positions, 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.
Added
Pursuant to the terms of the merger agreement, at the effective time of the Southwestern Merger, each eligible share of Southwestern common stock issued and outstanding immediately prior to the effective time will be automatically converted into the right to receive 0.0867 of a share of Chesapeake’s common stock.
Removed
The prices used in our PV-10 measure were $6.36 per mcf of natural gas, $93.67 per bbl of oil and $43.58 per bbl of NGL, before basis differential adjustments. These prices should not be interpreted as a prediction of future prices, nor do they reflect the value of our commodity derivative instruments in place as of December 31, 2022.
Added
Our Board of Directors and the Board of Directors of Southwestern both approved the merger agreement. Subject to the approval of our shareholders and Southwestern shareholders, regulatory approvals and the satisfaction or waiver of other customary closing conditions, the Southwestern Merger is targeted to close in the second quarter of 2024.
Removed
Certain of our contracts require us to make payments for any shortfalls in delivering or transporting minimum volumes under these commitments. See Note 7 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of commitments.
Added
We hold leading positions in each of the two premier natural gas fields in the U.S. offering premium rock, returns and runway. Our prioritization of best-in-class execution further unlocks these resources to the benefit of our stakeholders. Sustainability Leadership. We are committed to protecting our country’s natural resources and reducing our environmental footprint.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

76 edited+126 added−12 removed131 unchanged
Biggest changeRestrictive covenants in certain of our debt agreements could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests. Our debt agreements impose operating and financial restrictions on us.
Biggest changeFinancial Risks Related to our Business • We have significant capital needs, and our ability to access the capital and credit markets to raise capital on favorable terms is limited by industry conditions. • Restrictive covenants in certain of our debt agreements could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests. • Our actual financial results after emergence from bankruptcy may not be comparable to our historical financial information as a result of the implementation of the Plan and the transactions contemplated thereby.
In addition, we may be required to make large, sometimes unexpected, expenditures to comply with applicable governmental laws, rules, regulations, permits or orders. In addition, changes in public policy have affected, and in the future could further affect, our operations.
We may be required to make large, sometimes unexpected, expenditures to comply with applicable governmental laws, rules, regulations, permits or orders. In addition, changes in public policy have affected, and in the future could further affect, our operations.
Further, legislation funding PHMSA through 2023 requires the agency to engage in additional rulemaking to amend the integrity management program, emergency response plan, operation and maintenance manual, and pressure control recordkeeping requirements for gas distribution operators; to create new leak detection and repair program obligations; and to set new minimum federal safety standards for onshore gas gathering lines.
Further, legislation funding the PHMSA through 2023 requires the agency to engage in additional rulemaking to amend the integrity management program, emergency response plan, operation and maintenance manual, and pressure control recordkeeping requirements for gas distribution operators; to create new leak detection and repair program obligations; and to set new minimum federal safety standards for onshore gas gathering lines.
Continued instability in the Middle East and the occurrence or threat of terrorist attacks in the United States or other countries could adversely affect the global economy in unpredictable ways, including the disruption of energy supplies and markets, increased volatility in commodity prices, including petroleum products, or the possibility that the infrastructure on which we rely could be a direct target or an indirect casualty of an act of terrorism, and, in turn, could materially and adversely affect our business and results of operations.
Continued instability in Europe and the Middle East and the occurrence or threat of terrorist attacks in the United States or other countries could adversely affect the global economy in unpredictable ways, including the disruption of energy supplies and markets, increased volatility in commodity prices, including petroleum products, or the possibility that the infrastructure on which we rely could be a direct target or an indirect casualty of an act of terrorism, and, in turn, could materially and adversely affect our business and results of operations.
Military and other armed conflicts, including terrorist activities, and related price volatility and geopolitical instability could materially and adversely affect our business and results of operations. Military and other armed conflicts, terrorist attacks and the threat of both, whether domestic or foreign, could cause instability in the global financial and energy markets.
Military and other armed conflicts, including terrorist activities, and related price volatility and geopolitical instability, could materially and adversely affect our business and results of operations. Military and other armed conflicts, terrorist attacks and the threat of both, whether domestic or foreign, could cause further instability in the global financial and energy markets.
In addition, our gas and oil properties can become damaged, our operations may be curtailed, delayed or canceled and the costs of such operations may increase as a result of a variety of factors, including, but not limited to: • unexpected drilling conditions, pressure conditions or irregularities in reservoir formations; • equipment failures or accidents; • fires, explosions, blowouts, cratering or loss of well control; • the mishandling or underground migration of fluids and chemicals; 31 TABLE OF CONTENTS • adverse weather conditions and natural disasters, such as tornadoes, earthquakes, hurricanes and extreme temperatures; • issues with title or in receiving governmental permits or approvals; • restricted takeaway capacity for our production, including due to inadequate midstream infrastructure or constrained downstream markets; • environmental hazards or liabilities; • restrictions in access to, or disposal of, water used or produced in drilling and completion operations; • shortages or delays in the availability of services or delivery of equipment; and • unexpected or unforeseen changes in regulatory policy, and political or public opinion.
In addition, our gas and oil properties can become damaged, our operations may be curtailed, delayed or canceled and the costs of such operations may increase as a result of a variety of factors, including, but not limited to: • unexpected drilling conditions, pressure conditions or irregularities in reservoir formations; • equipment failures or accidents; • fires, explosions, blowouts, cratering or loss of well control; • the mishandling or underground migration of fluids and chemicals; • adverse weather conditions and natural disasters, such as tornadoes, earthquakes, hurricanes and extreme temperatures; • issues with title or in receiving governmental permits or approvals; • restricted takeaway capacity for our production, including due to inadequate midstream infrastructure or constrained downstream markets; • environmental hazards or liabilities; • restrictions in access to, or disposal of, water used or produced in drilling and completion operations; • shortages or delays in the availability of services or delivery of equipment; and • unexpected or unforeseen changes in regulatory policy, and political or public opinion.
In addition, in the ordinary course, we and our service providers collect, process, transmit, and store proprietary and confidential data, including personal information. We have been the subject of cyber-attacks on our internal systems and through those of third parties in the past.
In addition, in the ordinary course of business, we and our service providers collect, process, transmit, and store proprietary and confidential data, including personal information. We have been the subject of cyber-attacks on our internal systems and through those of third parties in the past.
Our operations are subject to disruption from natural or human causes beyond our control, including risks from extreme weather events, such as hurricanes, severe storms, floods, droughts, heat waves, winter storms, and ambient temperature or precipitation changes, as well as wildfires, war, accidents, civil unrest, political events, earthquakes, system failures, cyber threats, terrorist acts and epidemic or pandemic diseases, such as the COVID-19 pandemic, any of which could result in suspension of operations (including those of our customers or suppliers) or harm to people, our assets or the natural environment.
Our operations are subject to disruption from natural or human causes beyond our control, including risks from extreme weather events, such as hurricanes, severe storms, floods, droughts, heat waves, winter storms, and ambient temperature, water level, or precipitation changes, as well as wildfires, war, accidents, civil unrest, political events, earthquakes, system failures, cyber threats, terrorist acts and epidemic or pandemic diseases, such as the COVID-19 pandemic, any of which could result in suspension of operations (including those of our customers or suppliers) or harm to people, our assets or the natural environment.
Any such acquisition or disposition involves risks and we cannot assure you that: • any acquisition will be successfully integrated into our operations and internal controls; • the due diligence conducted prior to an acquisition will uncover situations that could result in financial or legal exposure, such as title defects and potential environmental and other liabilities; • post-closing purchase price adjustments will be realized in our favor; • our assumptions about, among other things, reserves, estimated production, revenues, capital expenditures, operating expenses and costs will be accurate; • there will not be delays in closing, lower than expected sales proceeds for the disposed assets or business, residual liabilities, or post-closing claims for indemnification; • any investment, acquisition, or disposition will not divert management resources from the operation of our business; and • any investment, acquisition, or disposition will not have a material adverse effect on our financial condition, results of operations, cash flows or reserves.
Any such acquisition or disposition involves risks and we cannot assure you that: • any acquisition will be successfully integrated into our operations and internal controls; • the due diligence conducted prior to an acquisition will uncover situations that could result in financial or legal exposure, such as title defects and potential environmental and other liabilities; • post-closing purchase price adjustments will be realized in our favor; • our assumptions about, among other things, reserves, estimated production, revenues, capital expenditures, operating expenses and costs will be accurate; • there will not be delays in closing, lower than expected sales proceeds for the disposed assets or business, residual liabilities, or post-closing claims for indemnification; 30 TABLE OF CONTENTS • any investment, acquisition, or disposition will not divert management resources from the operation of our business; and • any investment, acquisition, or disposition will not have a material adverse effect on our financial condition, results of operations, cash flows or reserves.
In November 2021, PHMSA issued a final rule that expands certain federal pipeline safety requirements to all onshore gas gathering pipelines, regardless of size or location.
In November 2021, the PHMSA issued a final rule that expands certain federal pipeline safety requirements to all onshore gas gathering pipelines, regardless of size or location.
For example, on November 15, 2021, the EPA proposed new regulations to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound (VOC) emissions from new and existing operations in the gas and oil sector, including the exploration and production, transmission, processing, and storage segments.
For example, in November 2021, the EPA proposed new regulations to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound (VOC) emissions from new and existing operations in the gas and oil sector, including the exploration and production, transmission, processing, and storage segments.
Limitations on greenhouse gas emissions could also adversely affect demand for gas and oil, which could lower the value of our reserves and have a material adverse effect on our profitability, financial condition and liquidity. Environmental matters and related costs can be significant.
Limitations on GHG emissions could also adversely affect demand for gas and oil, which could lower the value of our reserves and have a material adverse effect on our profitability, financial condition and liquidity. Environmental matters and related costs can be significant.
A writedown constitutes a non-cash charge to earnings and does not impact cash or cash flows from operating activities; however, it reflects our long-term ability to recover an investment, reduces our reported earnings and increases certain leverage ratios. See Impairments within Critical Accounting Estimates included in Item 7 of this report for further information.
A write-down constitutes a non-cash charge to earnings and does not impact cash or cash flows from operating activities; however, it reflects our long-term ability to recover an investment, reduces our reported earnings and increases certain leverage ratios. See Impairments within Critical Accounting Estimates included in Item 7 of this report for further information.
Both the frequency and magnitude of cyberattacks is expected to increase and attackers are becoming more sophisticated.
Both the frequency and magnitude of cyberattacks is expected to increase as attackers are becoming more sophisticated.
We have been required to write down the carrying value of certain of our natural gas and oil properties in the past, and there is a risk that we will be required to take additional writedowns in the future.
We have been required to write down the carrying value of certain of our natural gas and oil properties in the past, and there is a risk that we will be required to take additional write-downs in the future.
Upon emergence from bankruptcy on February 9, 2021, the Company experienced an ownership change under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as all of the common stock and preferred stock of the Predecessor, or the old loss corporation, was canceled and replaced with New Common Stock of the Successor, or the new loss corporation (the “First Ownership Change”).
Upon emergence from bankruptcy on February 9, 2021, the Company experienced an ownership change under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code” and such change, a “Section 382 Ownership Change”), as all of the common stock and preferred stock of the Predecessor, or the old loss corporation, was canceled and replaced with New Common Stock of the Successor, or the new loss corporation (the “First Ownership Change”).
Any such accelerated adoption of alternative energy sources or energy efficiency improvements may decrease demand for our products or otherwise adversely impact our business or results of operations. In addition, our headquarters are located in Oklahoma City, Oklahoma, an area that experiences severe weather events, including tornadoes and earthquakes.
Any such accelerated adoption of alternative energy sources or energy efficiency improvements may decrease demand for our products or otherwise adversely impact our business or results of operations. 38 TABLE OF CONTENTS In addition, our headquarters are located in Oklahoma City, Oklahoma, an area that experiences severe weather events, including tornadoes and earthquakes.
Additionally, we may choose to liquidate existing derivative positions prior to the expiration of their contractual maturities to monetize gain positions for the purpose of funding our capital program. Most of our natural gas, oil and NGL derivative contracts are with counterparties under bilateral hedging arrangements.
Additionally, we may choose to liquidate existing derivative positions prior to the expiration of their contractual maturities to monetize gain positions for the purpose of funding our capital program. 34 TABLE OF CONTENTS Most of our natural gas, oil and NGL derivative contracts are with counterparties under bilateral hedging arrangements.
If we are unable to fund our capital expenditures as planned, we could experience a curtailment of our exploration and development activity, a loss of properties and a decline in our natural gas, oil and NGL reserves. If we are not able to replace reserves, we may not be able to sustain production.
If we are 32 TABLE OF CONTENTS unable to fund our capital expenditures as planned, we could experience a curtailment of our exploration and development activity, a loss of properties and a decline in our natural gas, oil and NGL reserves. If we are not able to replace reserves, we may not be able to sustain production.
As a result, we may be unable to anticipate, detect, prevent, or contain future attacks, particularly as the methodologies utilized by attackers change frequently or are not recognized until launched, and we may be unable to investigate or remediate incidents because attackers are increasingly using techniques and tools designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
As a result, we may be unable to anticipate, detect, prevent, investigate or contain future attacks, particularly as the methodologies utilized by attackers change frequently or are not recognized until launched, and we may be unable to investigate or remediate incidents because attackers are increasingly using techniques and 37 TABLE OF CONTENTS tools designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
Environmental laws may impose strict, joint and several liability, and failure to comply with environmental laws and regulations can result in the imposition of administrative, civil or criminal fines and penalties, as well as injunctions limiting operations in affected areas.
Environmental laws may impose strict, joint and several liability, and failure to comply with 48 TABLE OF CONTENTS environmental laws and regulations can result in the imposition of administrative, civil or criminal fines and penalties, as well as injunctions limiting operations in affected areas.
For more information see our risk factor titled “Negative public perception regarding us or our industry could have an adverse effect on our operations.” These various legislative, regulatory and other activities addressing greenhouse gas emissions could adversely affect our business, including by imposing reporting obligations on, or limiting emissions of greenhouse gases from, our equipment and operations, which could require us to incur costs to reduce emissions of greenhouse gases associated with our operations.
For more information see our risk factor titled “Negative public perception regarding us or our industry could have an adverse effect on our operations.” These various legislative, regulatory and other activities addressing GHG emissions could adversely affect our business, including by imposing reporting obligations on, or limiting emissions of GHGs from, our equipment and operations, which could require us to incur costs to reduce emissions of GHGs associated with our operations.
Any failure to comply with investor or customer expectations and standards, which are evolving, or if we are perceived to not have responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, could cause reputational harm to our business, increase our risk of litigation, 38 TABLE OF CONTENTS and could have a material adverse effect on our results of operations.
Any failure to comply with investor, customer or other stakeholder expectations and standards, which are evolving, or if we are perceived to not have responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, could cause reputational harm to our business, increase our risk of litigation, and could have a material adverse effect on our results of operations.
The Pipeline and Hazardous Materials Safety Administration (PHMSA) has established a series of rules that require pipeline operators to develop and implement integrity 36 TABLE OF CONTENTS management programs for gas, NGL and condensate transmission pipelines as well as for certain low stress pipelines and gathering lines transporting hazardous liquids, such as oil, that, in the event of a failure, could affect “high consequence areas.” Recent PHMSA rules have also extended certain requirements for integrity assessments and leak detections beyond high consequence areas and impose a number of reporting and inspection requirements on regulated pipelines.
The PHMSA has established a series of rules that require pipeline operators to develop and implement integrity management programs for gas, NGL and condensate transmission pipelines as well as for certain low stress pipelines and gathering lines transporting hazardous liquids, such as oil, that, in the event of a failure, could affect “high consequence areas.” Recent PHMSA rules have also extended certain requirements for integrity assessments and leak detections beyond high consequence areas and impose a number of reporting and inspection requirements on regulated pipelines.
These reserve estimates reflect our plans for capital expenditures to convert PUDs into proved developed reserves, including approximately $4.3 billion during the next five years. You should be aware that the estimated development costs may not equal our actual costs, development may not occur as scheduled and results may not be as estimated.
These reserve estimates reflect our plans for capital expenditures to convert PUDs into proved developed reserves, including approximately $2.0 billion during the next five years. You should be aware that the estimated development costs may not equal our actual costs, development may not occur as scheduled and results may not be as estimated.
Development and exploratory drilling and production activities are subject to many risks, including the risk that commercially productive reservoirs will not be discovered. We have acquired undeveloped properties that we believe will enhance our growth potential and increase our earnings over time.
We have a substantial inventory of undeveloped properties. Development and exploratory drilling and production activities are subject to many risks, including the risk that commercially productive reservoirs will not be discovered. We have acquired undeveloped properties that we believe will enhance our growth potential and increase our earnings over time.
For example, a portion of tax depreciation, depletion and amortization would also be subject to the annual limitation for a five-year period following the ownership change but only to the extent of the net unrealized built-in loss existing at the time of the second ownership change.
For example, a portion of tax depreciation, depletion and amortization would also be subject to the annual limitation for a five-year period following the Section 382 Ownership Change but only to the extent of the net unrealized built-in loss existing at the time of the additional Section 382 Ownership Change.
Continuing political and social attention to the issue of climate change has resulted in legislative, regulatory and other initiatives to reduce greenhouse gas emissions, such as carbon dioxide and methane.
Continuing political and social attention to the issue of climate change has resulted in legislative, regulatory and other initiatives to reduce GHG emissions, such as carbon dioxide and methane.
The global market is also currently experiencing inflationary pressure, including rising fuel costs, a tightening steel market and labor and supply chain shortages, which could result in increases to our operating and capital costs that are not fixed.
The global market is also continuing to experience inflationary pressure, including rising fuel costs, a tightening steel market and labor and supply chain shortages, which could result in increases to our operating and capital costs that are not fixed.
For example, expectations around management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control.
Separately, expectations around management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control.
In addition, we may adjust estimates of proved reserves to reflect production history, results of exploration and development drilling, prevailing natural gas and oil prices and other factors, many of which are beyond our control. 29 TABLE OF CONTENTS As of December 31, 2022, approximately 33% of our estimated proved reserves (by volume) were undeveloped.
In addition, we may adjust estimates of proved reserves to reflect production history, results of exploration and development drilling, prevailing natural gas and oil prices and other factors, many of which are beyond our control. As of December 31, 2023, approximately 34% of our estimated proved reserves (by volume) were undeveloped.
Writedowns may occur in the future when natural gas and oil prices are low, or if we have downward adjustments to our estimated proved reserves, increases in our estimates of operating or development costs, or due to the anticipated sale of properties.
Write-downs may occur in the future when natural gas and oil prices are low for sustained periods, or if we have downward adjustments to our estimated proved reserves, increases in our estimates of operating or development costs, or due to the anticipated sale of properties.
Whether the new annual limitation would be more restrictive would depend on the value of our stock and the long-term tax-exempt rate in effect at the time of a second ownership change.
Whether the new annual limitation would be more restrictive would depend on the value of our stock and the long-term tax-exempt rate in effect at the time of such Section 382 Ownership Change.
In addition, periods of low natural gas and oil prices may result in a reduction of the carrying value of our natural gas and oil properties due to recognizing impairments in proved and unproved properties. 27 TABLE OF CONTENTS Volatility in natural gas, oil and NGL prices may result from factors that are beyond our control, including: • domestic and worldwide supplies of natural gas, oil and NGL, including U.S. inventories of natural gas and oil reserves; • weather conditions; • changes in the level of consumer and industrial demand, including impacts from global or national health epidemics and concerns, such as the COVID-19 pandemic; • the price and availability of alternative fuels; • technological advances affecting energy consumption; • the effectiveness of worldwide conservation measures; • the availability, proximity and capacity of pipelines, other transportation facilities and processing facilities; • the level and effect of trading in commodity futures markets, including by commodity price speculators and others; • U.S. exports of natural gas, oil, liquefied natural gas and NGL; • the price and level of foreign imports; • the nature and extent of domestic and foreign governmental regulations and taxes; • the ability of the members of the Organization of Petroleum Exporting Countries (OPEC) and others to agree to and maintain oil price and production controls; • increased use of competing energy products, including alternative energy sources; • political instability or armed conflict in natural gas and oil producing regions, including in connection with the ongoing conflict between Russia and Ukraine; • acts of terrorism; and • domestic and global economic and political conditions.
Volatility in natural gas, oil and NGL prices may result from factors that are beyond our control, including: • domestic and worldwide supplies of natural gas, oil and NGL, including U.S. inventories of natural gas and oil reserves; • weather conditions; • changes in the level of consumer and industrial demand, including impacts from global or national health epidemics and concerns, such as the COVID-19 pandemic; • the price and availability of alternative fuels; • technological advances affecting energy consumption; • the effectiveness of worldwide conservation measures; • the availability, proximity and capacity of pipelines, other transportation facilities and processing facilities; • the level and effect of trading in commodity futures markets, including by commodity price speculators and others; • U.S. exports of natural gas, oil, liquefied natural gas and NGL; 31 TABLE OF CONTENTS • the price and level of foreign imports; • the nature and extent of domestic and foreign governmental regulations and taxes; • the ability of the members of the Organization of Petroleum Exporting Countries (OPEC) and others to agree to and maintain oil price and production controls; • increased use of competing energy products, including alternative energy sources; • political instability or armed conflict in natural gas and oil producing regions, including in connection with the continued armed conflict and instability in Europe and the Middle East; • acts of terrorism; and • domestic and global economic and political conditions.
Our forecasted 2023 capital expenditures, inclusive of capitalized interest, are $1.765 - $1.835 billion compared to our 2022 capital spending level of $1.9 billion. Management continues to review operational plans for 2023 and beyond, which could result in changes to projected capital expenditures and projected revenues from sales of natural gas, oil and NGL.
Our forecasted 2024 capital expenditures, inclusive of capitalized interest, are $1.25 - $1.35 billion compared to our 2023 capital spending level of $1.8 billion. Management continues to review operational plans for 2024 and beyond, which could result in changes to projected capital expenditures and projected revenues from sales of natural gas, oil and NGL.
Interest rates in effect from time to time and the risks associated with our business or the gas and oil industry in general will affect the appropriateness of the 10% discount factor. Our development and exploratory drilling efforts and our well operations may not be profitable or achieve our targeted returns. We have a substantial inventory of undeveloped properties.
Interest rates in effect from time to time and the risks associated with our business or the gas and oil industry in general will affect the appropriateness of the 10% discount factor. 33 TABLE OF CONTENTS Our development and exploratory drilling efforts and our well operations may not be profitable or achieve our targeted returns.
Depending on the market conditions and the Company’s tax basis, a second ownership change may result in a net unrealized built-in loss. 39 TABLE OF CONTENTS The annual limitation in such a case would additionally be applied to certain of the Company’s tax items other than just NOL carryforwards, disallowed business interest carryforwards and tax credits.
Depending on the market conditions and our tax basis, an additional Section 382 Ownership Change may result in a net unrealized built-in loss. The annual limitation in such a case would additionally be applied to certain of our tax items other than just NOL carryforwards, disallowed business interest carryforwards and tax credits.
For more information, see our risk factor “Increasing attention to ESG matters and our ability to achieve and maintain ESG certifications, goals and commitments may impact our business, financial results or stock price.” 26 TABLE OF CONTENTS Risks related to potential acquisitions or dispositions may adversely affect our business.
For more information, see our risk factor “Increasing attention to ESG matters and our ability to achieve and maintain ESG certifications, goals and commitments may impact our business, financial results or stock price.” Risks related to potential acquisitions or dispositions may adversely affect our business. From time to time, we evaluate acquisitions and dispositions of assets, businesses and other investments.
From time to time, we evaluate acquisitions and dispositions of assets, businesses and other investments. These transactions may not result in the anticipated benefits or efficiencies. In addition, acquisitions may be financed by borrowings, requiring us to incur more debt, or by the issuance of our common stock.
These transactions may not result in the anticipated benefits or efficiencies. In addition, acquisitions may be financed by borrowings, requiring us to incur more debt, or by the issuance of our common stock.
As a result, we cannot predict the scope of any final methane regulatory requirements or the cost to comply with such requirements. However, given the long-term trend toward increasing regulation, future federal GHG regulations of the gas and oil industry remain a significant possibility.
Because these regulations, and any other similar proposed regulations, are likely to be subject to legal challenge, we cannot predict the scope of any final methane regulatory requirements or the cost to comply with such requirements. However, given the long-term trend toward increasing regulation, additional future federal GHG regulations of the gas and oil industry remain a significant possibility.
Additionally, the Biden administration has called for changes to fiscal and tax policies which could lead to comprehensive tax reform. For example, federal legislation has been proposed that, if enacted, would impact federal income tax law applicable to the deduction of intangible drilling and development costs, percentage depletion and, the expensing of geological, geophysical, exploration and development costs.
For example, federal legislation has been proposed that, if enacted, would impact federal income tax law applicable to the deduction of intangible drilling and development costs, percentage depletion and, the expensing of geological, geophysical, exploration and development costs.
Any losses, costs or liabilities directly or indirectly related to cyberattacks or similar incidents may not be covered by, or may exceed the coverage limits of, any or all of our insurance policies. 33 TABLE OF CONTENTS Our operations could be disrupted by natural or human causes beyond our control .
Any losses, costs or liabilities directly or indirectly related to cyberattacks or similar incidents may not be covered by, or may exceed the coverage limits of, any or all of our insurance policies.
The December 31, 2022 present value is based on prices of $6.36 per mcf of natural gas, $93.67 per bbl of oil and $43.58 per bbl of NGL, before basis differential adjustments. Actual future prices and costs may be materially higher or lower than the prices and costs as of the date of an estimate.
The December 31, 2023 present value is based on the price of $2.64 per Mcf of natural gas, before basis differential adjustments. Actual future prices and costs may be materially higher or lower than the prices and costs as of the date of an estimate.
Further, the COVID-19 pandemic has increased our exposure to potential cybersecurity breaches as a result of global remote working dynamics for our customers, employees and third-party providers that present additional risk that threat actors may seek to engage in social engineering (for example, phishing) and to exploit vulnerabilities in corporate and non-corporate networks.
Further, global remote working dynamics for our customers, employees and third-party providers present additional risk that threat actors may seek to engage in social engineering (for example, phishing) and to exploit vulnerabilities in corporate and non-corporate networks.
Although we do not expect this ruling to impact the availability of onshore federal gas and oil lease sales, the Biden Administration’s increased focus on the climate change impacts of federal projects could result in similar restrictions surrounding onshore drilling, onshore federal lease availability, and restrictions on the ability to obtain required permits, which could have a material adverse impact on our operations.
Moreover, the Biden Administration’s increased focus on the climate change impacts of federal actions could result in additional restrictions surrounding onshore drilling, onshore federal lease availability, and restrictions on the ability to obtain required permits, which could have a material adverse impact on our operations.
The IRA was enacted on August 16, 2022, and includes, among other things, a 15% corporate minimum tax on adjusted financial statement income and a 1% excise tax on stock buybacks. Although we do not believe we will be subject to the corporate minimum tax in 2023, we may become subject to it in future years.
The IRA was enacted on August 16, 2022, and includes, among other things, a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income and a 1% excise tax on stock buybacks. Based on our book income in the past three years, we do not believe we are subject to the CAMT in 2023.
If a substantial amount of our production is interrupted at the same time, it could materially adversely affect our cash flow. 32 TABLE OF CONTENTS Cyber-attacks targeting systems and infrastructure used by the gas and oil industry and related regulations may adversely impact our operations and, if we or our third-party providers are unable to obtain and maintain adequate protection for our key systems and data, our business may be harmed.
Cyber-attacks targeting systems and infrastructure used by the gas and oil industry and related regulations may adversely impact our operations and, if we or our third-party providers are unable to obtain and maintain adequate protection for our key systems and data, our business may be harmed.
The CCPA and the CPRA, among other things, contain new disclosure obligations for businesses that collect personal information about California residents and enhanced consumer protections for those individuals, and provide for statutory fines and penalties for certain data security breaches or other CCPA and CPRA violations.
The CCPA and the CPRA, among other things, contain new disclosure obligations for businesses that collect personal information about California residents, provide such individuals expanded rights to access, delete, and correct their personal information, and opt-out of certain sales or transfers of personal information, and provide for statutory fines and penalties for certain data security breaches or other CCPA and CPRA violations.
Risks Related to Operating our Business Conservation measures and technological advances could reduce demand for natural gas and oil. Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to natural gas and oil, technological advances in fuel economy and energy generation devices could reduce demand for natural gas and oil.
Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to natural gas and oil, technological advances in fuel economy and energy generation devices could reduce demand for natural gas and oil. The impact of the changing demand for natural gas and oil could adversely impact our earnings, cash flows and financial position.
This program requires the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that are already required to report under EPA’s Greenhouse Gas Reporting Program.
This program requires the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that are already required to report under EPA’s Greenhouse Gas Reporting Program. The EPA released its proposed rule in January 2024 to implement the methane emissions fee with a proposed effective date in 2025 for reporting year 2024 emissions.
We are subject to taxation by various governmental authorities at the federal, state and local levels in the jurisdictions in which we do business. New legislation could be enacted by any of these governmental authorities making it more costly for us to produce natural gas and oil by increasing our tax burden.
New legislation could be enacted by any of these governmental authorities making it more costly for us to produce natural gas and oil by increasing our tax burden.
Policy makers at both the U.S. federal and state levels have introduced legislation and proposed new regulations designed to quantify and limit the emission of greenhouse gases through inventories, limitations and/or taxes on greenhouse gas emissions.
Policy makers at both the U.S. federal and state levels have adopted, or are considering adopting, rules designed to quantify and limit the emission of GHGs through inventories, limitations and/or taxes on GHG emissions.
To the extent ESG matters negatively affect our reputation, it may also harm our ability to attract or retain employees or customers.
To the extent ESG matters negatively affect our reputation, it may also harm our ability to attract or retain employees or customers. Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain ESG-related matters.
In the event of a second ownership change, a second annual limitation would be determined at such time which could be more restrictive than the limitation of the First Ownership Change.
In the event of any additional Section 382 Ownership Change, including as a result of the Southwestern Merger, a new annual limitation would be determined at such time that could be more restrictive than the limitation of the First Ownership Change.
If we incur significant expense in acquiring or developing properties that do not produce as expected or at profitable levels, it could have a material adverse effect on our results of operations and financial condition. 30 TABLE OF CONTENTS Certain of our undeveloped properties are subject to leases that will expire over the next several years unless production is established on units containing the acreage or the leases are renewed.
If we incur significant expense in acquiring or developing properties that do not produce as expected or at profitable levels, it could have a material adverse effect on our results of operations and financial condition.
Certain financial institutions, funds and other sources of capital have also elected to restrict or eliminate their investment in certain fossil fuel-related activities.
Certain financial institutions, funds and other sources of capital have also elected to restrict or eliminate their investment in certain fossil fuel-related activities. Even if capital providers have not generally restricted their investment in fossil fuel-related activities, they may still assess various ESG considerations in making voting and capital allocation decisions.
We are vulnerable to malicious attacks by third parties or insiders, social engineering and human error, as well as to bugs and other vulnerabilities that may exist in our or our third-party providers’ systems or technologies.
We face evolving cybersecurity risks that threaten the confidentiality, integrity, and availability of our digital technologies and business data, including malicious attacks by third parties or insiders, social engineering/phishing and human error, as well as bugs, misconfigurations of hardware or software and other vulnerabilities that may exist in our or our third-party providers’ systems or technologies.
Any such volatility, impacts on demand and disruptions may also magnify the impact of other risk factors described in this report. 34 TABLE OF CONTENTS Financial Risks Related to our Business We have significant capital needs, and our ability to access the capital and credit markets to raise capital on favorable terms is limited by industry conditions.
Financial Risks Related to our Business We have significant capital needs, and our ability to access the capital and credit markets to raise capital on favorable terms is limited by industry conditions.
Additionally, challenges in the economy have led and could further lead to reductions in the demand for gas and oil, or further reductions in the prices of gas and oil, or both, which could have a negative impact on our financial position, results of operations and cash flows.
Additionally, challenges in the economy have led and could further lead to reductions in the demand for gas and oil, or further reductions in the prices of gas and oil, or both, which could have a negative impact on our financial position, results of operations and cash flows. 39 TABLE OF CONTENTS Restrictive covenants in certain of our debt agreements could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests.
Our ability to produce natural gas, oil and NGL economically and in commercial quantities could be impaired if we are unable to acquire adequate supplies of water for our operations or are unable to dispose of or recycle the water we use economically and in an environmentally safe manner.
Moreover, certain of these events could result in environmental pollution and impact to third parties, including persons living in proximity to our operations, our employees and employees of our contractors, leading to possible injuries, death, significant damage to property and natural resources, or significant financial liabilities or penalties. 35 TABLE OF CONTENTS Our ability to produce natural gas, oil and NGL economically and in commercial quantities could be impaired if we are unable to acquire adequate supplies of water for our operations or are unable to dispose of or recycle the water we use economically and in an environmentally safe manner.
At the time they were prepared, the projections reflected numerous assumptions concerning our anticipated future performance with respect to prevailing and anticipated market and economic conditions that were and remain beyond our control and that may not materialize. 35 TABLE OF CONTENTS Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections and/or valuation estimates may prove to be incorrect in material respects.
At the time they were prepared, the projections reflected numerous assumptions concerning our anticipated future performance with respect to prevailing and anticipated market and economic conditions that were and remain beyond our control and that may not materialize.
The EPA issued a supplemental proposed rule on November 15, 2022 to update, strengthen and expand its November 2021 proposed rule. The supplemental proposed rule would impose more stringent requirements on the natural gas and oil industry. The rule is expected to be finalized in 2023.
The EPA issued a supplemental proposed rule in November 2022 to update, strengthen and expand its November 2021 proposed rule.
Trading in our New Common Stock, additional issuances of New Common Stock, and certain other stock transactions could lead to a second, potentially more restrictive annual limitation on the utilization of our tax attributes reducing their ability to offset future taxable income, which may result in an increase to income tax liabilities.
The completion of the Southwestern Merger is anticipated to trigger an annual limitation on the utilization of our tax attributes, reducing their ability to offset future taxable income, which may result in an increase to income tax liabilities.
In addition, new laws and regulations governing data privacy and the unauthorized disclosure of confidential information pose increasingly complex compliance challenges and potentially elevate costs as we collect and store personal data related to employees, royalty owners and other parties. Any failure to comply with these laws and regulations could result in significant penalties and legal liability.
We and our vendors are subject to a variety of federal and state data privacy laws, rules, regulations, industry standards and other requirements governing data privacy and the unauthorized disclosure of confidential information, which pose increasingly complex compliance challenges and potentially elevate costs as we collect, process and store personal data related to our past, current and prospective employees, royalty owners and other parties.
Several states have adopted or are considering adopting regulations that could impose more stringent permitting, public disclosure and/or well construction requirements on hydraulic fracturing operations. State and federal regulatory agencies have also recently focused on a possible connection between the operation of injection wells used for natural gas and oil waste disposal and seismic activity.
Several states have adopted or are considering adopting regulations that could impose more stringent permitting, public disclosure and/or well construction requirements on hydraulic fracturing operations.
This annual limitation will restrict the future utilization of our net operating loss (NOL) carryforwards, disallowed business interest carryforwards and tax credits that existed at the time of emergence. Trading in our stock, additional issuances, and other stock transactions occurring subsequent to the emergence from Bankruptcy could lead to a second ownership change.
This annual limitation will restrict the future utilization of our net operating loss (NOL) carryforwards, disallowed business interest carryforwards and tax credits that existed at the time of emergence. We anticipate the completion of the Southwestern Merger will result in a Section 382 Ownership Change for purposes of both Southwestern’s tax attributes as well as for our own.
Actual results may vary significantly from those contemplated by the projections. As a result, investors should not rely on these projections. Legal and Regulatory Risks We are subject to extensive governmental regulation, which can change and could adversely impact our business.
Legal and Regulatory Risks We are subject to extensive governmental regulation, which can change and could adversely impact our business.
The impact of the changing demand for natural gas and oil could adversely impact our earnings, cash flows and financial position. Negative public perception regarding us or our industry could have an adverse effect on our operations.
Negative public perception regarding us or our industry could have an adverse effect on our operations.
In addition, federal or state carbon taxes or fees could directly increase our costs of operation and similarly incentivize consumers to shift away from fossil fuels. 37 TABLE OF CONTENTS In addition, the SEC has issued proposed rules that would mandate extensive disclosure of climate-related risks and other information, including risk management, GHG emissions, financial impacts, and related governance and strategy.
In addition, several policymakers and governmental agencies, including the SEC, have issued proposed rules that would mandate extensive disclosure of climate-related risks and other information, including risk management, GHG emissions, financial impacts, and related governance and strategy.
Additionally, on November 30, 2022, the BLM issued a proposed rule to reduce the methane waste from venting, flaring, and leaks during oil and gas production activities on Federal and Indian leases. Once finalized, these regulations are likely to be subject to legal challenge.
This and other rules may require us to incur additional costs or otherwise impact the economics of certain of our operations. Additionally, in November 2022, the BLM issued a proposed rule to reduce the methane waste from venting, flaring, and leaks during oil and gas production activities on Federal and Indian leases.
The ongoing COVID-19 pandemic and related economic turmoil, including supply chain constraints, have affected, and could continue to adversely affect, our business, financial condition, results of operations and cash flows. The global spread of COVID-19 created significant volatility, uncertainty, and economic disruption, including supply chain constraints, commencing in 2020, and threatens to continue to do so in 2023.
Regional epidemics or pandemics and related economic turmoil, including supply chain constraints, have affected, and could in future adversely affect our business, financial condition, results of operations and cash flows.
In addition, actions by our customers and derivative contract counterparties in response to COVID-19 and its economic impacts, including potential non-performance or delays, may also have an adverse impact on our business.
Actions by our customers and derivative contract counterparties in response to such events and their economic impacts, including potential non-performance or delays, could also have an adverse impact on our business. If commodity prices fall or drilling efforts are unsuccessful, we may be required to record write-downs of the carrying value of our natural gas and oil properties.
If the new annual limitation is more restrictive it would apply to certain of the tax attributes existing at the time of the second ownership change including those remaining from the time of the First Ownership Change. Some states impose similar limitations on tax attribute utilization upon experiencing an ownership change. Item 1B. Unresolved Staff Comments Not applicable.
However, if the value of our common stock or long-term tax-exempt rates have decreased at the time the additional Section 382 Ownership Change occurs, such ownership change may be more restrictive than the First Ownership Change and would apply to certain of the tax attributes existing at the time of the additional Section 382 Ownership Change, including those remaining from the time of the First Ownership Change. 50 TABLE OF CONTENTS Some states impose similar limitations on tax attribute utilization upon experiencing an additional Section 382 Ownership Change.
These activities include increasing attention and demands for action related to climate change, advocating for changes to companies’ boards of directors, and promoting the use of energy saving building materials. These activities may result in demand shifts for natural gas, oil and NGL in addition to potentially impacting our access to, and costs of, capital.
Additionally, such expectations and related activism may result in demand shifts for natural gas, oil and NGL in addition to potentially impacting our access to, and costs of, capital.
Such ESG matters may also impact our suppliers or customers, which could augment existing, or cause additional, impacts to our business or operations. The taxation of independent producers is subject to change, and changes in tax law could increase our cost of doing business .
The taxation of independent producers is subject to change, and changes in tax law could increase our cost of doing business . We are subject to taxation by various governmental authorities at the federal, state and local levels in the jurisdictions in which we do business.
The pandemic has adversely impacted the entire global economy, and there is considerable uncertainty regarding how long the pandemic and related market conditions will persist and the extent and duration of governmental and other measures implemented to try to slow the spread of the virus, such as quarantines, shelter-in-place orders, business and government shutdowns and restrictions on operations.
The COVID-19 pandemic adversely impacted the entire global economy, including creating supply chain constraints, and any future regional epidemics or global pandemics and governmental and other measures implemented to try to address them, such as quarantines, shelter-in-place orders, business and government shutdowns and restrictions on operations, could adversely affect our business, financial condition, results of operations and cash flows.
Removed
For example, many large financial institutions have announced commitments to reduce the emissions associated with their financing activities, such as through the Glasgow Financial Alliance for Net Zero (“GFANZ”), whose members represent over $130 trillion in capital subject to a goal of net zero financed emissions by 2050.
Added
Summary Risk Factors Risks Related to Operating our Business • Conservation measures and technological advances could reduce demand for natural gas and oil. • Negative public perception regarding us or our industry could have an adverse effect on our operations. • Risks related to potential acquisitions or dispositions may adversely affect our business. • The gas and oil exploration and production industry is very competitive; • Natural gas, oil and NGL prices fluctuate widely, and lower prices for an extended period of time are likely to have a material adverse effect on our business. • Regional epidemics or pandemics and related economic turmoil, including supply chain constraints, have affected, and could in future adversely affect us. • If commodity prices fall or drilling efforts are unsuccessful, we may be required to record write-downs of the carrying value of our natural gas and oil properties. • Significant capital expenditures are required to replace our reserves and conduct our business. • If we are not able to replace reserves, we may not be able to sustain production. • The actual quantities of and future net revenues from our proved reserves may be less than our estimates. • Our development and exploratory drilling efforts and our well operations may not be profitable or achieve our targeted returns. • Certain of our undeveloped properties are subject to leases that will expire over the next several years unless production is established on units containing the acreage or the leases are renewed. • Our commodity price risk management activities may limit the benefit we would receive from increases in commodity prices, may require us to provide collateral for derivative liabilities and involve risk that our counterparties may be unable to satisfy their obligations to us. • Natural gas and oil operations are uncertain and involve substantial costs and risks. • Our ability to produce natural gas, oil and NGL economically and in commercial quantities could be impaired if we are unable to acquire adequate supplies of water for our operations or are unable to dispose of or recycle the water we use economically and in an environmentally safe manner. • Our operations may be adversely affected by pipeline, trucking and gathering system capacity constraints and may be subject to interruptions that could adversely affect our cash flow. • Our business strategy is increasingly focused on capitalizing on the growing U.S.
Removed
Ultimately, this could make it more difficult or costly for us to secure funding for exploration and production activities. Members of the investment community have also begun to screen companies such as ours for sustainability performance, including practices related to GHGs and climate change, before investing in our common stock or providing financing.
Added
LNG export market, a highly regulated and capital intensive industry with a number of inherent commercial risks. U.S. LNG exports have helped drive domestic demand for natural gas, and, as a natural-gas producer, we could be materially and adversely impacted by a deterioration in the U.S. LNG export industry, which could in turn reduce demand for natural gas.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeDepending 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. 40 TABLE OF CONTENTS 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.
Biggest changeBased 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.
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 7 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for information regarding our estimation and provision for potential losses related to litigation and regulatory proceedings.
See Note 7 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for information regarding our estimation and provision for potential losses related to litigation and regulatory proceedings.
Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan. 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.
The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates. 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.
Business Operations. We are involved in various 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.
Item 3. Legal Proceedings Litigation and Regulatory Proceedings We are involved in various regulatory proceedings, lawsuits and disputes arising in the ordinary course of our business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions.
Removed
Item 3. Legal Proceedings Chapter 11 Proceedings Commencement of the Chapter 11 Cases automatically stayed the proceedings and actions against us that are referenced below, in addition to actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company’s bankruptcy estates.
Added
The majority of the legal proceedings that were in existence prior to the Petition Date were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process before the Bankruptcy Court. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan.
Removed
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.
Added
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.
Removed
See Note 2 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information. Litigation and Regulatory Proceedings We were involved in a number of litigation and regulatory proceedings as of the Petition Date.
Removed
The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+1 added−0 removed0 unchanged
Biggest changeItem 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 (17CFR 229.104) is included in Exhibit 95.1 to this Form 10-K. 41 TABLE OF CONTENTS PART II
Biggest changeItem 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 (17CFR 229.104) is included in Exhibit 95.1 to this Form 10-K.
Added
On March 20, 2023, we divested our mining assets to WildFire Energy I LLC. 53 TABLE OF CONTENTS PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed7 unchanged
Biggest changeThe following table provides information regarding purchases of our common stock made by us during the quarter ended December 31, 2022. In 2023, our share repurchase program will be subject to a 1% excise tax imposed under the Inflation Reduction Act of 2022.
Biggest changeThe following table provides information regarding purchases of our common stock made by us during the quarter ended December 31, 2023.
In addition, on February 9, 2021, we issued 11,111,111 Class A Warrants, 12,345,679 Class B Warrants and 9,768,527 Class C Warrants, each of which are exercisable for one share of common stock per warrant at the initial exercise prices of $27.63, $32.13 and $36.18 per share, respectively. The warrants are immediately exercisable and will expire on February 9, 2026.
In addition, on February 9, 2021, we issued 11,111,111 Class A Warrants, 12,345,679 Class B Warrants and 9,768,527 Class C Warrants, each of which were exercisable for one share of common stock per warrant at the initial exercise prices of $27.63, $32.13 and $36.18 per share, respectively. The warrants are immediately exercisable and will expire on February 9, 2026.
For additional information on our dividends, see Note 12 of the notes to our consolidated financial statements included in Item 8 of Part II of this report. 42 TABLE OF CONTENTS Repurchases of Equity Securities; Unregistered Sales of Equity Securities and Use of Proceeds 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.
For additional information on our dividends, see Note 12 of the notes to our consolidated financial statements included in Item 8 of Part II of this report. 54 TABLE OF CONTENTS Repurchases of Equity Securities; Unregistered Sales of Equity Securities and Use of Proceeds On December 2, 2021, we announced that our Board of Directors authorized the repurchase of up to $1.0 billion in aggregate value of our common stock and/or warrants from time to time.
The repurchase authorization permits repurchases on a discretionary basis as determined by management, subject to market conditions, applicable legal requirements, available liquidity, compliance with the Company’s debt agreements and other appropriate factors. The share repurchase program expires on December 31, 2023.
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 expired on December 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) October 1 - October 31 4,033,368 $ 98.90 4,033,368 $ 934 November 1 - November 30 72,083 $ 99.09 72,083 $ 927 December 1 - December 31 — $ — — $ 927 Total 4,105,451 $ 98.90 4,105,451 Stockholders As of February 16, 2023, there were approximately 154 holders of record of our common stock.
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) October 1 - October 31 149,050 $ 85.95 149,050 $ 610 November 1 - November 30 348,600 $ 82.54 348,600 $ 581 December 1 - December 31 129,797 $ 76.13 129,797 $ — Total 627,447 $ 82.03 627,447 Stockholders As of February 15, 2024, there were approximately 141 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

76 edited+31 added−21 removed66 unchanged
Biggest changeSuccessor Predecessor Non-GAAP Combined Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Year Ended December 31, 2021 $/Mcfe $/Mcfe $/Mcfe $/Mcfe Marcellus $ 3,567 5.32 $ 1,040 2.47 $ 80 1.63 $ 1,120 2.38 Haynesville 2,938 5.00 799 3.28 36 1.67 835 3.14 Eagle Ford 1,555 8.05 1,153 5.83 114 4.00 1,267 5.59 Powder River Basin 56 6.31 174 4.17 16 2.58 190 3.98 Adjusted gross margin $ 8,116 5.54 $ 3,166 3.51 $ 246 2.34 $ 3,412 3.38 Natural Gas and Oil Derivatives Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Natural gas derivatives - realized gains (losses) $ (2,998) $ (715) $ 6 Natural gas derivatives - unrealized gains (losses) 611 70 (179) Total losses on natural gas derivatives $ (2,387) $ (645) $ (173) Oil derivatives - realized losses $ (576) $ (453) $ (19) Oil derivatives - unrealized gains (losses) 283 (29) (190) Total losses on oil derivatives (293) (482) (209) Total losses on natural gas and oil derivatives $ (2,680) $ (1,127) $ (382) See Note 15 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for a complete discussion of our derivative activity. 57 TABLE OF CONTENTS Marketing Revenues and Expenses Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Marketing revenues $ 4,231 $ 2,263 $ 239 Marketing expenses 4,215 2,257 237 Marketing margin $ 16 $ 6 $ 2 Marketing revenues and expenses increased in the 2022 Successor Period as a result of increased natural gas, oil and NGL prices received in our marketing operation.
Biggest changeNatural Gas and Oil Derivatives Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Natural gas derivatives - realized gains (losses) $ (2,998) $ (715) $ 6 Natural gas derivatives - unrealized gains (losses) 611 70 (179) Total losses on natural gas derivatives $ (2,387) $ (645) $ (173) Oil derivatives - realized losses $ (576) $ (453) $ (19) Oil derivatives - unrealized gains (losses) 283 (29) (190) Total losses on oil derivatives (293) (482) (209) Total losses on natural gas and oil derivatives $ (2,680) $ (1,127) $ (382) See Note 15 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for a complete discussion of our derivative activity.
Interest Expense Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Interest expense on debt $ 181 $ 79 $ 11 Other 13 — — Amortization of premium, issuance costs and other (3) 5 — Capitalized interest (31) (11) — Total interest expense $ 160 $ 73 $ 11 The increase in total interest expense in the 2022 Successor Period compared to the combined 2021 Successor and Predecessor Periods, was primarily due to the increase in outstanding debt obligations between periods.
Interest Expense Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Interest expense on debt $ 181 $ 79 $ 11 Other 13 — — Amortization of premium, issuance costs and other (3) 5 — Capitalized interest (31) (11) — Total interest expense $ 160 $ 73 $ 11 The increase in total interest expense in the 2022 Successor Period compared to the 2021 Successor Period was primarily due to the increase in outstanding debt obligations between periods.
Additionally, $12 million of interest expense was recorded during the 2022 Successor Period pertaining to a tax interest assessment. 59 TABLE OF CONTENTS Reorganization Items, Net Predecessor Period from January 1, 2021 through February 9, 2021 Gains on the settlement of liabilities subject to compromise $ 6,443 Accrual for allowed claims (1,002) Gain on fresh start adjustments 201 Gain from release of commitment liabilities 55 Professional service provider fees and other (60) Success fees for professional service providers (38) Surrender of other receivable (18) FLLO alternative transaction fee (12) Total reorganization items, net $ 5,569 In the 2021 Predecessor Period, we recorded a net gain of $5.569 billion in reorganization items, net related to the Chapter 11 Cases.
Additionally, $12 million of interest expense was recorded during the 2022 Successor Period pertaining to a tax interest assessment. 75 TABLE OF CONTENTS Reorganization Items, Net Predecessor Period from January 1, 2021 through February 9, 2021 Gains on the settlement of liabilities subject to compromise $ 6,443 Accrual for allowed claims (1,002) Gain on fresh start adjustments 201 Gain from release of commitment liabilities 55 Professional service provider fees and other (60) Success fees for professional service providers (38) Surrender of other receivable (18) FLLO alternative transaction fee (12) Total reorganization items, net $ 5,569 In the 2021 Predecessor Period, we recorded a net gain of $5.569 billion in reorganization items, net related to the Chapter 11 Cases.
We believe we have emerged from the Chapter 11 Cases as a fundamentally stronger company, built to generate sustainable Free Cash Flow with a strengthened balance sheet, large portfolio of onshore U.S. unconventional natural gas and liquids assets and improving ESG performance.
We believe we have emerged from the Chapter 11 Cases as a fundamentally stronger company, built to generate sustainable Free Cash Flow with a strengthened balance sheet, large portfolio of onshore U.S. unconventional natural gas assets and improving ESG performance.
The offering of the Notes was part of a series of exit financing transactions undertaken in connection with the Debtors’ Chapter 11 Cases and meant to provide the exit financing originally intended to be provided by the Exit Term Loan Facility pursuant to the Commitment Letter. 48 TABLE OF CONTENTS Assumption and Repayment of Vine Debt In conjunction with the Vine Acquisition, Vine’s Second Lien Term Loan was repaid and terminated for $163 million inclusive of a $13 million make whole premium with cash on hand, due to the agreement containing a change in control provision making the term loan callable upon closing.
The offering of the Notes was part of a series of exit financing transactions undertaken in connection with the Debtors’ Chapter 11 Cases and meant to provide the exit financing originally intended to be provided by the Exit Term Loan Facility pursuant to the Commitment Letter. 60 TABLE OF CONTENTS Assumption and Repayment of Vine Debt In conjunction with the Vine Acquisition, Vine’s Second Lien Term Loan was repaid and terminated for $163 million inclusive of a $13 million make whole premium with cash on hand, due to the agreement containing a change in control provision making the term loan callable upon closing.
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. 47 TABLE OF CONTENTS Derivative and Hedging Activities Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL.
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. 59 TABLE OF CONTENTS Derivative and Hedging Activities Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL.
As discussed above, we believe our existing sources of liquidity will be sufficient to fund our near and long-term contractual obligations. See Notes 6 , 7 , 9 , 15 , 18 and 2 2 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
As discussed above, we believe our existing sources of liquidity will be sufficient to fund our near and long-term contractual obligations. See Notes 6 , 7 , 9 , 15 , 18 and 20 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Divestitures On March 25, 2022, we completed 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.
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.
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”).
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 was in the Eagle Ford Shale in South Texas (“Eagle Ford”).
Higher commodity prices and increases to the Haynesville statutory severance tax rates in the 2022 Successor Period drove $42 million of the increase, and an additional $46 million increase was the result of the Vine Acquisition and Marcellus Acquisition.
Higher commodity prices and increases to the Haynesville statutory severance tax rates in the 2022 Successor Period drove $58 million of the increase, and an additional $46 million increase was the result of the Vine Acquisition and Marcellus Acquisition.
In November 2021, we assumed Vine’s $950 million of senior notes as part of the Vine Acquisition, and during the 2022 Successor Period, we had increased borrowings under our various credit agreements, compared to the combined 2021 Successor and Predecessor Periods. During the 2022 Successor Period, borrowings under our credit agreements had an average interest rate of 8.7%.
In November 2021, we assumed Vine’s $950 million of senior notes as part of the Vine Acquisition, and during the 2022 Successor Period, we had increased borrowings under our various credit agreements, compared to the 2021 Successor Period. During the 2022 Successor Period, borrowings under our credit agreements had an average interest rate of 8.7%.
We are not able to compare the 40 days from January 1, 2021 through February 9, 2021 operating results to any of the previous periods reported in the consolidated financial statements and do not believe reviewing this period in isolation would be useful in identifying any trends in, or reaching any conclusions regarding, our overall operating performance.
However, we are not able to compare the 40 days from January 1, 2021 through February 9, 2021 operating results to any previous periods reported in the consolidated financial statements and do not believe reviewing this period in isolation would be useful in identifying any trend in, or reaching any conclusions regarding, our overall operating performance.
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 currently plan to fund our 2024 capital program through cash on hand, expected cash flow from our operations and borrowings under our New Credit Facility.
After the Effective Date, the accounting and reporting requirements of ASC 852 are no longer applicable and have no impact on the Successor periods. 63 TABLE OF CONTENTS
After the Effective Date, the accounting and reporting requirements of ASC 852 are no longer applicable and have no impact on the Successor periods. 78 TABLE OF CONTENTS
Recent Developments Acquisitions On March 9, 2022, we completed our Marcellus Acquisition pursuant to definitive agreements with Chief, Radler and Tug Hill, Inc. dated January 24, 2022. On November 1, 2021, we completed our Vine Acquisition pursuant to a definitive agreement with Vine dated August 10, 2021.
Acquisitions On March 9, 2022, we completed our Marcellus Acquisition pursuant to definitive agreements with Chief, Radler and Tug Hill, dated January 24, 2022. On November 1, 2021, we completed our Vine Acquisition pursuant to a definitive agreement with Vine dated August 10, 2021.
Capital Expenditures Our capital expenditures significantly increased in the 2022 Successor Period compared to the combined 2021 Successor and Predecessor Periods primarily as a result of increased drilling and completion activity in Haynesville and Marcellus, following the Vine Acquisition and Marcellus Acquisition, respectively.
Our capital expenditures significantly increased in the 2022 Successor Period compared to the 2021 Successor Period, primarily as a result of increased drilling and completion activity in Haynesville and Marcellus, following the Vine Acquisition and Marcellus Acquisition, respectively.
Natural Gas, Oil and NGL Production and Average Sales Prices Successor Year Ended December 31, 2022 Natural Gas Oil NGL Total MMcf per day $/Mcf MBbl per day $/Bbl MBbl per day $/Bbl MMcfe per day $/Mcfe Marcellus 1,836 6.03 — — — — 1,836 6.03 Haynesville 1,611 5.92 — — — — 1,611 5.92 Eagle Ford 127 5.64 51 96.10 16 36.76 529 11.76 Powder River Basin 10 5.45 2 95.18 1 53.96 26 10.66 Total 3,584 5.96 53 96.07 17 37.48 4,002 6.77 Average NYMEX Price 6.64 94.23 Average Realized Price (including realized derivatives) 3.67 66.36 37.48 4.32 Successor Period from February 10, 2021 through December 31, 2021 Natural Gas Oil NGL Total MMcf per day $/Mcf MBbl per day $/Bbl MBbl per day $/Bbl MMcfe per day $/Mcfe Marcellus 1,296 3.25 — — — — 1,296 3.25 Haynesville 750 4.10 — — — — 750 4.10 Eagle Ford 137 4.02 60 69.25 19 29.76 608 8.65 Powder River Basin 53 4.33 9 67.90 3 40.00 129 7.69 Total 2,236 3.61 69 69.07 22 31.37 2,783 4.87 Average NYMEX Price 3.97 69.35 Average Realized Price (including realized derivatives) 2.62 49.06 31.42 3.57 53 TABLE OF CONTENTS Predecessor Period from January 1, 2021 through February 9, 2021 Natural Gas Oil NGL Total MMcf per day $/Mcf MBbl per day $/Bbl MBbl per day $/Bbl MMcfe per day $/Mcfe Marcellus 1,233 2.42 — — — — 1,233 2.42 Haynesville 543 2.44 — — — — 543 2.44 Eagle Ford 165 2.57 74 53.37 18 23.94 721 6.71 Powder River Basin 61 2.92 10 51.96 4 34.31 144 5.71 Total 2,002 2.45 84 53.21 22 25.92 2,641 3.77 Average NYMEX Price 2.47 52.10 Average Realized Price (including realized derivatives) 2.52 46.85 25.55 3.65 Natural Gas, Oil and NGL Sales Successor Year Ended December 31, 2022 Natural Gas Oil NGL Total Marcellus $ 4,041 $ — $ — $ 4,041 Haynesville 3,481 — — 3,481 Eagle Ford 261 1,798 212 2,271 Powder River Basin 20 66 13 99 Total natural gas, oil and NGL sales $ 7,803 $ 1,864 $ 225 $ 9,892 Successor Period from February 10, 2021 through December 31, 2021 Natural Gas Oil NGL Total Marcellus $ 1,370 $ — $ — $ 1,370 Haynesville 998 — — 998 Eagle Ford 179 1,354 179 1,712 Powder River Basin 75 202 44 321 Total natural gas, oil and NGL sales $ 2,622 $ 1,556 $ 223 $ 4,401 Predecessor Period from January 1, 2021 through February 9, 2021 Natural Gas Oil NGL Total Marcellus $ 119 $ — $ — $ 119 Haynesville 53 — — 53 Eagle Ford 17 159 17 193 Powder River Basin 7 20 6 33 Total natural gas, oil and NGL sales $ 196 $ 179 $ 23 $ 398 54 TABLE OF CONTENTS Non-GAAP Combined Year Ended December 31, 2021 Natural Gas Oil NGL Total Marcellus $ 1,489 $ — $ — $ 1,489 Haynesville 1,051 — — 1,051 Eagle Ford 196 1,513 196 1,905 Powder River Basin 82 222 50 354 Total natural gas, oil and NGL sales $ 2,818 $ 1,735 $ 246 $ 4,799 Natural gas, oil and NGL sales in the 2022 Successor Period increased $5.093 billion compared to the combined 2021 Successor and Predecessor Periods.
Natural Gas, Oil and NGL Production and Average Sales Prices Successor Year Ended December 31, 2022 Natural Gas Oil NGL Total MMcf per day $/Mcf MBbl per day $/Bbl MBbl per day $/Bbl MMcfe per day $/Mcfe Marcellus 1,836 6.03 — — — — 1,836 6.03 Haynesville 1,611 5.92 — — — — 1,611 5.92 Eagle Ford 127 5.64 51 96.10 16 36.76 529 11.76 Powder River Basin 10 5.45 2 95.18 1 53.96 26 10.66 Total 3,584 5.96 53 96.07 17 37.48 4,002 6.77 Average NYMEX Price 6.64 94.23 Average Realized Price (including realized derivatives) 3.67 66.36 37.48 4.32 Successor Period from February 10, 2021 through December 31, 2021 Natural Gas Oil NGL Total MMcf per day $/Mcf MBbl per day $/Bbl MBbl per day $/Bbl MMcfe per day $/Mcfe Marcellus 1,296 3.25 — — — — 1,296 3.25 Haynesville 750 4.10 — — — — 750 4.10 Eagle Ford 137 4.02 60 69.25 19 29.76 608 8.65 Powder River Basin 53 4.33 9 67.90 3 40.00 129 7.69 Total 2,236 3.61 69 69.07 22 31.37 2,783 4.87 Average NYMEX Price 3.97 69.35 Average Realized Price (including realized derivatives) 2.62 49.06 31.42 3.57 70 TABLE OF CONTENTS Predecessor Period from January 1, 2021 through February 9, 2021 Natural Gas Oil NGL Total MMcf per day $/Mcf MBbl per day $/Bbl MBbl per day $/Bbl MMcfe per day $/Mcfe Marcellus 1,233 2.42 — — — — 1,233 2.42 Haynesville 543 2.44 — — — — 543 2.44 Eagle Ford 165 2.57 74 53.37 18 23.94 721 6.71 Powder River Basin 61 2.92 10 51.96 4 34.31 144 5.71 Total 2,002 2.45 84 53.21 22 25.92 2,641 3.77 Average NYMEX Price 2.47 52.10 Average Realized Price (including realized derivatives) 2.52 46.85 25.55 3.65 Natural Gas, Oil and NGL Sales Successor Year Ended December 31, 2022 Natural Gas Oil NGL Total Marcellus $ 4,041 $ — $ — $ 4,041 Haynesville 3,481 — — 3,481 Eagle Ford 261 1,798 212 2,271 Powder River Basin 20 66 13 99 Total natural gas, oil and NGL sales $ 7,803 $ 1,864 $ 225 $ 9,892 Successor Period from February 10, 2021 through December 31, 2021 Natural Gas Oil NGL Total Marcellus $ 1,370 $ — $ — $ 1,370 Haynesville 998 — — 998 Eagle Ford 179 1,354 179 1,712 Powder River Basin 75 202 44 321 Total natural gas, oil and NGL sales $ 2,622 $ 1,556 $ 223 $ 4,401 Predecessor Period from January 1, 2021 through February 9, 2021 Natural Gas Oil NGL Total Marcellus $ 119 $ — $ — $ 119 Haynesville 53 — — 53 Eagle Ford 17 159 17 193 Powder River Basin 7 20 6 33 Total natural gas, oil and NGL sales $ 196 $ 179 $ 23 $ 398 71 TABLE OF CONTENTS Natural gas, oil and NGL sales in the 2022 Successor Period increased $5.49 billion compared to the 2021 Successor Period.
Accordingly, our liquidity in the 2021 and 2020 Predecessor Periods depended mainly on cash generated from operations and available funds under certain credit agreements including the DIP Facility in the 2021 Predecessor Period and revolving credit facility in the 2020 Predecessor Period.
Accordingly, our liquidity in the 2021 Predecessor Period depended mainly on cash generated from operations and available funds under certain credit agreements including the DIP Facility.
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.
New Credit Facility On December 9, 2022, we entered into a new senior secured reserve-based revolving 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.
Introduction 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 8,400 natural gas and oil wells as of December 31, 2022.
Introduction 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 assets, including interests in approximately 5,000 natural gas wells as of December 31, 2023.
The increase was attributable to a $2.773 billion increase in revenues from higher average prices received. Additionally, an increase of $2.320 billion was due to increased volumes in Marcellus and Haynesville primarily due to the Marcellus Acquisition and the Vine Acquisition, respectively.
The increase was attributable to a $2.343 billion increase in revenues from higher average prices received. Additionally, an increase of $3.147 billion was due to increased volumes in Marcellus and Haynesville, primarily due to the Marcellus Acquisition and the Vine Acquisition, respectively.
Under this base and variable dividend approach, we paid dividends of $1.2 billion, in aggregate, on our common stock in the 2022 Successor Period. See Note 12 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Under this base and variable dividend approach, we paid dividends of $487 million, in aggregate, on our common stock in the 2023 Successor Period. See Note 12 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Contractual Obligations and Off-Balance Sheet Arrangements As of December 31, 2022, our material contractual obligations include repayment of senior notes, outstanding borrowings and interest payment obligations under the New Credit Facility, 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.
Contractual Obligations and Off-Balance Sheet Arrangements As of December 31, 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 $4.3 billion as of December 31, 2022.
In addition, we have contractual commitments with midstream companies and pipeline carriers for future gathering, processing and transportation of natural gas to move certain of our production to market. The estimated gross undiscounted future commitments under these agreements were approximately $2.1 billion as of December 31, 2023.
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.
Our path to answering the call for affordable, reliable, lower carbon energy begins with our goal to achieve net zero GHG emissions (Scope 1 and 2) by 2035.
Production Expenses Successor Predecessor Non-GAAP Combined Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Year Ended December 31, 2021 $/Mcfe $/Mcfe $/Mcfe $/Mcfe Marcellus $ 76 0.11 $ 34 0.08 $ 4 0.08 $ 38 0.08 Haynesville 155 0.26 59 0.24 4 0.19 63 0.24 Eagle Ford 234 1.22 173 0.88 21 0.71 194 0.85 Powder River Basin 10 0.94 31 0.74 3 0.56 34 0.72 Total production expenses $ 475 0.33 $ 297 0.33 $ 32 0.30 $ 329 0.33 Production expenses in the 2022 Successor Period increased $146 million as compared to the combined 2021 Successor and Predecessor Periods.
Production Expenses Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 $/Mcfe $/Mcfe $/Mcfe Marcellus $ 76 0.11 $ 34 0.08 $ 4 0.08 Haynesville 155 0.26 59 0.24 4 0.19 Eagle Ford 234 1.22 173 0.88 21 0.71 Powder River Basin 10 0.94 31 0.74 3 0.56 Total production expenses $ 475 0.33 $ 297 0.33 $ 32 0.30 Production expenses in the 2022 Successor Period increased $178 million as compared to the 2021 Successor Period.
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).
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 0.02% in 2023 for our natural gas assets); and • Reduce our GHG intensity to 3.0 metric tons CO2 equivalent per thousand barrel of oil equivalent by 2025 (achieved approximately 2.1 in 2023 for our natural gas assets).
General and Administrative Expenses Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Total G&A, net $ 142 $ 97 $ 21 G&A, net per Mcfe $ 0.10 $ 0.11 $ 0.20 Total general and administrative expenses, net during the 2022 Successor Period increased $24 million compared to the combined 2021 Successor and Predecessor Periods primarily due to adjustments in employee benefits and timing of stock award grants, as well as increases in transaction-related fees.
General and Administrative Expenses Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Total G&A, net $ 142 $ 97 $ 21 G&A, net per Mcfe $ 0.10 $ 0.11 $ 0.20 Total general and administrative expenses, net during the 2022 Successor Period increased $45 million compared to the 2021 Successor Period due to adjustments in employee benefits and increases in transaction-related fees, as well as increases in other corporate expenses.
In August 2022, we increased our quarterly base dividend by 10% to $0.55 per share beginning with the dividend that was paid on September 1, 2022. Warrant Exchange Offer In August 2022, we announced exchange offers relating to our outstanding Class A Warrants, Class B Warrants, and Class C Warrants.
In August 2023, we increased our quarterly base dividend rate by 4.5% to $0.575 per share beginning with the dividend that was paid on September 6, 2023. Warrant Exchange Offer In August 2022, we announced exchange offers relating to our outstanding Class A Warrants, Class B Warrants, and Class C Warrants.
See Note 2 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information about the Chapter 11 Cases.
See Note 18 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information.
We completed 216 operated wells in the 2022 Successor Period compared to 127 in the combined 2021 Successor and Predecessor Periods and 188 in the 2020 Predecessor Period. Business Combination, net In the 2022 Successor Period, we completed the Marcellus Acquisition for approximately $2 billion and 9.4 million shares of our common stock.
We completed 166 operated wells in the 2023 Successor Period compared to 216 in the 2022 Successor Period and 112 in the 2021 Successor Period. Business Combination, net In the 2022 Successor Period, we completed the Marcellus Acquisition for approximately $2 billion and 9.4 million shares of our common stock.
As of December 31, 2022, we had $1.0 billion of liquidity available, including $130 million of cash on hand and $0.9 billion of aggregate unused borrowing capacity available under the New Credit Facility. As of December 31, 2022, we had $1.05 billion of outstanding borrowings under our New Credit Facility and $35 million utilized for various letters of credit.
As of December 31, 2023, we had $3.1 billion of liquidity available, including $1.1 billion of cash on hand and $2.0 billion of aggregate unused borrowing capacity available under the New Credit Facility. As of December 31, 2023, we had no outstanding borrowings under our New Credit Facility and $7 million utilized for various letters of credit.
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. As of December 31, 2022, we have received certification for all our operated gas assets in Haynesville and Marcellus as responsibly sourced gas.
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. In 2023, we continued to maintain these independent certifications.
Exploration Expenses During the 2022 Successor Period, exploration expense charges of $23 million were primarily the result of non-cash impairment charges in unproved properties of $8 million, $6 million of charges related to dry hole expense and $6 million of geological and geophysical expense. We did not have material exploration expenses during the 2021 Successor Period or 2021 Predecessor Period.
During the 2022 Successor Period, exploration expense charges of $23 million were primarily the result of non-cash impairment charges in unproved properties of $8 million, $6 million of charges related to dry hole expense and $6 million of geological and geophysical expense.
Other Operating Expense (Income), Net Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Other operating expense (income), net $ 49 $ 84 $ (12) During the 2022 Successor Period, we recognized approximately $41 million of costs related to our 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.
Other Operating Expense , Net Successor Year Ended December 31, 2023 2022 Other operating expense, net $ 18 $ 49 During the 2022 Successor Period, we recognized approximately $41 million of costs related to our 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.
The increase was partially offset by the divestiture of the Powder River Basin in March 2022. 55 TABLE OF CONTENTS Gathering, Processing and Transportation Expenses (“GP&T”) Successor Predecessor Non-GAAP Combined Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Year Ended December 31, 2021 $/Mcfe $/Mcfe $/Mcfe $/Mcfe Marcellus $ 381 0.57 $ 287 0.68 $ 34 0.70 $ 321 0.68 Haynesville 313 0.53 118 0.49 11 0.49 129 0.49 Eagle Ford 343 1.78 290 1.46 45 1.55 335 1.48 Powder River Basin 22 2.32 85 2.03 12 2.09 97 2.04 Total GP&T $ 1,059 0.73 $ 780 0.86 $ 102 0.96 $ 882 0.87 Gathering, processing and transportation expenses in the 2022 Successor Period increased $177 million as compared to the combined 2021 Successor and Predecessor Periods.
Gathering, Processing and Transportation Expenses (“GP&T”) Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 $/Mcfe $/Mcfe $/Mcfe Marcellus $ 381 0.57 $ 287 0.68 $ 34 0.70 Haynesville 313 0.53 118 0.49 11 0.49 Eagle Ford 343 1.78 290 1.46 45 1.55 Powder River Basin 22 2.32 85 2.03 12 2.09 Total GP&T $ 1,059 0.73 $ 780 0.86 $ 102 0.96 Gathering, processing and transportation expenses in the 2022 Successor Period increased $279 million compared to the 2021 Successor Period.
Haynesville increased $184 million primarily due to the Vine Acquisition in November 2021 and increased cost due to higher commodity prices. Marcellus increased $113 million primarily due to the Marcellus Acquisition in March 2022, partially offset by a decrease of $53 million primarily due to lower rates.
Haynesville increased $195 million primarily due to the Vine Acquisition in November 2021. Marcellus increased $141 million, primarily due to the Marcellus Acquisition in March 2022, partially offset by a decrease of $47 million, primarily due to lower rates. Eagle Ford increased $53 million, primarily due to increased rates with higher commodity prices.
Severance and Ad Valorem Taxes Successor Predecessor Non-GAAP Combined Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Year Ended December 31, 2021 $/Mcfe $/Mcfe $/Mcfe $/Mcfe Marcellus $ 17 0.03 $ 9 0.02 $ 1 0.01 $ 10 0.02 Haynesville 75 0.13 22 0.09 2 0.09 24 0.09 Eagle Ford 139 0.71 96 0.48 13 0.45 109 0.48 Powder River Basin 11 1.09 31 0.75 2 0.48 33 0.70 Total severance and ad valorem taxes $ 242 0.17 $ 158 0.17 $ 18 0.17 $ 176 0.17 Severance and ad valorem taxes in the 2022 Successor Period increased $66 million as compared to the combined 2021 Successor and Predecessor Periods.
Powder River Basin decreased by $63 million, primarily due to the divestiture in March 2022. 72 TABLE OF CONTENTS Severance and Ad Valorem Taxes Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 $/Mcfe $/Mcfe $/Mcfe Marcellus $ 17 0.03 $ 9 0.02 $ 1 0.01 Haynesville 75 0.13 22 0.09 2 0.09 Eagle Ford 139 0.71 96 0.48 13 0.45 Powder River Basin 11 1.09 31 0.75 2 0.48 Total severance and ad valorem taxes $ 242 0.17 $ 158 0.17 $ 18 0.17 Severance and ad valorem taxes in the 2022 Successor Period increased $84 million as compared to the 2021 Successor Period.
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. 49 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: Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Year Ended December 31, 2020 Cash provided by (used in) operating activities $ 4,125 $ 1,809 $ (21) $ 1,164 Proceeds from New Credit Facility, net 1,050 — — — Proceeds from issuance of senior notes, net — — 1,000 — Proceeds from issuance of common stock — — 600 — Proceeds from warrant exercise 27 2 — — Proceeds from divestitures of property and equipment 407 13 — 150 Proceeds from pre-petition revolving credit facility borrowings, net — — — 339 Capital expenditures (1,823) (669) (66) (1,142) Business combination, net (1,967) (194) — — Contributions to investments (18) — — — Payments on Exit Credit Facility, net (221) (50) (479) — Payments on DIP Facility borrowings — — (1,179) — Debt issuance and other financing costs (17) (3) (8) (109) Cash paid to purchase debt — — — (94) Cash paid for common stock dividends (1,212) (119) — — Cash paid for preferred stock dividends — — — (22) Cash paid to repurchase and retire common stock (1,073) — — — Other — (1) — (13) Net increase (decrease) in cash, cash equivalents and restricted cash $ (722) $ 788 $ (153) $ 273 Cash Flow from Operating Activities Cash provided by operating activities was $4.12 billion, $1.81 billion and $1.16 billion in the 2022 Successor Period, 2021 Successor Period and 2020 Predecessor Period, respectively.
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: Successor Predecessor Year Ended December 31, 2023 Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Cash provided by (used in) operating activities $ 2,380 $ 4,125 $ 1,809 $ (21) Proceeds from divestitures of property and equipment 2,533 407 13 — Proceeds from New Credit Facility, net — 1,050 — — Proceeds from issuance of senior notes, net — — — 1,000 Proceeds from issuance of common stock — — — 600 Proceeds from warrant exercise — 27 2 — Capital expenditures (1,829) (1,823) (669) (66) Business combination, net — (1,967) (194) — Contributions to investments (231) (18) — — Payments on New Credit Facility, net (1,050) — — — Payments on Exit Credit Facility, net — (221) (50) (479) Payments on DIP Facility borrowings — — — (1,179) Debt issuance and other financing costs — (17) (3) (8) Cash paid to repurchase and retire common stock (355) (1,073) — — Cash paid for common stock dividends (487) (1,212) (119) — Other — — (1) — Net increase (decrease) in cash, cash equivalents and restricted cash $ 961 $ (722) $ 788 $ (153) 61 TABLE OF CONTENTS Cash Flow from Operating Activities Cash provided by operating activities was $2.38 billion, $4.12 billion and $1.81 billion in the 2023 Successor Period, 2022 Successor Period and 2021 Successor Period, respectively.
Cash used in operating activities was $21 million for the 2021 Predecessor Period. The increase in the 2022 Successor Period is primarily due to higher prices for the natural gas, oil and NGL we sold and increased volumes sold due to the Vine Acquisition and Marcellus Acquisition.
The increase in the 2022 Successor Period is primarily due to higher prices for the natural gas, oil and NGL we sold and increased volumes sold due to the Vine Acquisition and Marcellus Acquisition. The cash used in the 2021 Predecessor Period was primarily in connection with the payment of professional fees related to the Chapter 11 Cases.
In the 2022 Successor Period, our average operated rig count was 14 rigs and 217 spud wells, compared to an average operated rig count of 7 rigs and 121 spud wells in the combined 2021 Successor and Predecessor Periods and 8 rigs and 167 spud wells in the 2020 Predecessor Period.
In the 2023 Successor Period, our average operated rig count was 11 rigs and 193 spud wells, compared to an average operated rig count of 14 rigs and 217 spud wells in the 2022 Successor Period and 7 rigs and 110 spud wells in the 2021 Successor Period.
Payments on DIP Facility Borrowings On the Effective Date, the DIP Facility was terminated, and the holders of obligations under the DIP Facility received payment in full in cash; provided that to the extent such lender under the DIP Facility was also a lender under the Exit Credit Facility, such lender’s allowed DIP claims were first reduced dollar-for-dollar and satisfied by the amount of its Exit RBL Loans provided as of the Effective Date. 51 TABLE OF CONTENTS Debt Issuance and Other Financing Costs During the 2022 Successor Period, we paid $17 million of one-time fees to lenders to establish the New Credit Facility.
Payments on DIP Facility Borrowings On the Effective Date, the DIP Facility was terminated, and the holders of obligations under the DIP Facility received payment in full in cash; provided that to the extent such lender under the DIP Facility was also a lender under the Exit Credit Facility, such lender’s allowed DIP claims were first reduced dollar-for-dollar and satisfied by the amount of its Exit RBL Loans provided as of the Effective Date.
Contributions to Investments During the 2022 Successor Period, we made an initial contribution of $18 million to our investment with Momentum Sustainable Ventures LLC to build a new natural gas gathering pipeline and carbon capture project. See Note 18 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information.
See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of these acquisitions. 62 TABLE OF CONTENTS Contributions to Investments During the 2023 Successor Period and 2022 Successor Period, contributions to investments were $231 million and $18 million, respectively, which primarily consisted of contributions to our investment with Momentum Sustainable Ventures LLC to build a new natural gas gathering pipeline and carbon capture project.
The increase was primarily due to the Vine Acquisition in November 2021 and the Marcellus Acquisition in March 2022.
The increase was primarily due to the Vine Acquisition in November 2021 and the Marcellus Acquisition in March 2022. The increase was partially offset by the divestiture of the Powder River Basin in March 2022.
A portion of the borrowings under the New Credit Facility were repaid with internally generated cash provided by operating activities. 50 TABLE OF CONTENTS Proceeds from Issuance of Common Stock and Senior Notes In the 2021 Predecessor Period, we issued $500 million aggregate principal amount of 5.50% 2026 Notes and $500 million aggregate principal amount of 5.875% 2029 Notes for total proceeds of $1.0 billion.
Proceeds from Issuance of Common Stock and Senior Notes In the 2021 Predecessor Period, we issued $500 million aggregate principal amount of 5.50% 2026 Notes and $500 million aggregate principal amount of 5.875% 2029 Notes for total proceeds of $1.0 billion.
Cash Paid for Common Stock Dividends As part of our dividend program, we paid common stock base dividends of $256 million and common stock variable dividends of $956 million in the 2022 Successor Period. During the 2021 Successor Period, we paid common stock base dividends of $119 million.
Cash Paid for Common Stock Dividends As part of our dividend program, we paid common stock dividends of $487 million, $1.2 billion and $119 million during the 2023, 2022 and 2021 Successor Periods, respectively.
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 56% of our projected natural gas volumes for 2023.
In addition, a mild winter in 2023 and historically higher inventory levels have resulted in an observed decline in natural gas pricing in 2023 and at the beginning of 2024. Our 2024 estimated cash flow is partially protected from commodity price volatility due to our current hedge positions that cover approximately 60% of our projected natural gas volumes for 2024.
In the 2020 Predecessor Period, we divested our Mid-Continent asset for $130 million and certain non-core assets for approximately $6 million. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
In the 2021 Successor Period, we divested certain non-core assets for approximately $13 million. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion. Proceeds from New Credit Facility, net In the 2022 Successor Period, we borrowed a net $1.05 billion under the New Credit Facility.
These increases were partially offset by a $22 million decrease attributable to the divestiture of the Powder River Basin in March 2022. 56 TABLE OF CONTENTS Adjusted Gross Margin by Operating Area The table below presents the adjusted gross margin for each of our operating areas.
These increases were partially offset by a $20 million decrease attributable to the divestiture of the Powder River Basin in March 2022.
During 2022, we repurchased approximately 11.7 million shares of our common stock pursuant to the share repurchase program and had $927 million available under the share repurchase program as of December 31, 2022. In addition, we have paid dividends of approximately $1.2 billion, in aggregate, on our common stock during 2022.
From March 2022 through the 2023 Successor Period, we repurchased approximately 16.0 million shares of our common stock pursuant to the share repurchase program. The share repurchase program expired on December 31, 2023. In addition, we have paid dividends of approximately $487 million, in aggregate, on our common stock during the 2023 Successor Period.
See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of these acquisitions.
The repurchased shares of common stock were retired and recorded as a reduction to common stock and retained earnings. See Note 12 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
As of December 31, 2022, the assets and liabilities associated with this transaction were classified as held for sale. 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.
On February 17, 2023, we entered into an agreement to sell a portion of our remaining Eagle Ford assets to INEOS Energy for approximately $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.
As of December 31, 2022, we have made capital contributions of $18 million to the project. 45 TABLE OF CONTENTS New Credit Facility On December 9, 2022, we entered into a new senior secured reserve-based revolving 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.
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.
Borrowings under the credit agreement may be alternate base rate loans or term SOFR loans, at the Company’s election.
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.
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.
Under the SPAs, we will purchase approximately 0.5 million tonnes of LNG per annum from Delfin LNG LLC at a Henry Hub price with a contract targeted start date in 2028, then deliver to Gunvor Group Ltd on a free on board basis with the sales price linked to the Japan Korea Market for a period of 20 years. 57 TABLE OF CONTENTS 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.
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. This transaction, which is subject to certain customary closing conditions, including certain regulatory approvals, is expected to close in the first quarter of 2023.
On January 17, 2023, we entered into an agreement to sell a portion of our Eagle Ford assets to WildFire Energy I LLC for approximately $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.
Separation and Other Termination Costs During the 2022 Successor Period, 2021 Successor Period and 2021 Predecessor Period, we recognized $5 million, $11 million and $22 million, respectively, of separation and other termination costs related to one-time termination benefits for certain employees. 58 TABLE OF CONTENTS Depreciation, Depletion and Amortization Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 DD&A $ 1,753 $ 919 $ 72 DD&A per Mcfe $ 1.20 $ 1.02 $ 0.68 The absolute and per unit increases in depreciation, depletion and amortization for the 2022 Successor Period compared to the combined 2021 Successor and Predecessor Periods, are primarily the result of the Vine Acquisition and Marcellus Acquisition.
Depreciation, Depletion and Amortization Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 DD&A $ 1,753 $ 919 $ 72 DD&A per Mcfe $ 1.20 $ 1.02 $ 0.68 The increase in depreciation, depletion and amortization for the 2022 Successor Period compared to the 2021 Successor Period is primarily the result of the Vine Acquisition and Marcellus Acquisition. 74 TABLE OF CONTENTS Other Operating Expense (Income), Net Successor Predecessor Year Ended December 31, 2022 Period from February 10, 2021 through December 31, 2021 Period from January 1, 2021 through February 9, 2021 Other operating expense (income), net $ 49 $ 84 $ (12) During the 2022 Successor Period, we recognized approximately $41 million of costs related to our 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.
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.
The natural gas gathering pipeline is projected for a potential in-service date in 2025, and the carbon sequestration portion of the project is subject to regulatory approvals. Through the end of the 2023 Successor Period, we have made total capital contributions of $238 million to the project.
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.
Economic and Market Conditions Instability and conflict in Europe and the Middle East has caused, and could intensify, volatility in natural gas, oil and NGL prices, and may further impact on global growth prospects, which could in turn affect supply and demand for natural gas and oil.
Cash Paid to Repurchase and Retire Common Stock In March 2022, we commenced our share repurchase program, and throughout the 2022 Successor Period, we repurchased 11.7 million shares of our common stock for an aggregate price of $1.1 billion.
During the 2023 Successor Period, we repurchased 4.4 million shares of our common stock for an aggregate cost of approximately $355 million. During the 2022 Successor Period, we repurchased 11.7 million shares of our common stock for an aggregate cost of $1.1 billion.
We continue to monitor the situation and assess its impact on our business, including our business partners and customers, as we work to limit our supply chain risk. 46 TABLE OF CONTENTS Liquidity and Capital Resources Liquidity Overview For the 2022 Successor Period, our primary sources of capital resources and liquidity have consisted of internally generated cash flows from operations and borrowings under our credit agreements, and our primary uses of cash have been 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.
For additional discussion regarding risks associated with price volatility and economic deterioration, see Item 1A Risk Factors in this report. 58 TABLE OF CONTENTS Liquidity and Capital Resources Liquidity Overview For the 2023 Successor Period, our primary sources of capital resources and liquidity have consisted of internally generated cash flows from operations, proceeds from the divestitures of our Eagle Ford assets and borrowings under our New Credit Facility, and our primary uses of cash have been for the development of our natural gas and oil properties, and return of value to stockholders through dividends and equity repurchases.
Divestitures of Property and Equipment In the 2022 Successor Period, we sold our Powder River Basin assets to Continental Resources, Inc. for approximately $450 million, subject to post-close adjustments. In the 2021 Successor Period, we divested certain non-core assets for approximately $13 million.
Proceeds from Divestitures of Property and Equipment In the 2023 Successor Period, we sold our Eagle Ford assets through three separate transactions resulting in total cash proceeds of $2.5 billion after customary post-closing adjustments. In the 2022 Successor Period, we sold our Powder River Basin assets to Continental Resources, Inc. for approximately $400 million after customary closing adjustments.
See Note 11 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for a discussion of income tax expense (benefit). 60 TABLE OF CONTENTS Non-GAAP Measures Management uses adjusted gross margin to assess our operating results and financial performance across assets and periods.
See Note 11 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for a discussion of income tax expense (benefit). 76 TABLE OF CONTENTS Critical Accounting Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States require us to make estimates and assumptions.
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.
Capital Expenditures For the year ending December 31, 2024, we currently expect to drill approximately 95 to 115 gross wells across 7 to 9 rigs and plan to invest between approximately $1.25 – $1.35 billion in capital expenditures.
See Note 12 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion. Cash Paid for Preferred Stock Dividends We paid dividends of $22 million on our Predecessor preferred stock during the 2020 Predecessor Period.
See Note 12 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion. 63 TABLE OF CONTENTS Results of Operations Year ended December 31, 2023 compared to the year ended December 31, 2022 Below is a discussion of changes in our results of operations for the 2023 Successor Period compared to the 2022 Successor Period.
Thus, our quarterly income tax expense or benefit can fluctuate throughout the year as a result of changing financial forecasts. 62 TABLE OF CONTENTS We also routinely assess potential uncertain tax positions and, if required, establish accruals for such positions.
Our judgement regarding the realizability of deferred tax assets is thus partially affected by estimates of future financial condition. 77 TABLE OF CONTENTS We also routinely assess potential uncertain tax positions and, if required, establish accruals for such positions.
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. 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.
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, lower carbon energy to markets in need. We continue to focus on improving margins through operating efficiencies and financial discipline and improving our ESG performance.
Eagle Ford increased $70 million due to increased rates with higher commodity prices, which was partially offset by a decrease of $62 million due to reduced volumes primarily due to a natural decline in production. Powder River Basin decreased by $75 million due to the divestiture in March 2022.
The decrease was primarily due to a $208 million decrease due to divestitures in Eagle Ford and Powder River Basin. Additionally, Haynesville decreased $50 million, primarily due to lower rates driven by decreased prices. These decreases were partially offset by a $52 million increase in Marcellus, primarily due to the Marcellus Acquisition in March 2022.
Additionally, during the 2022 Successor Period, marketing revenues and expenses increased due to increased volumes from the Vine Acquisition and Marcellus Acquisition.
Additionally, during the 2022 Successor Period, marketing revenues and expenses increased due to increased volumes from the Vine Acquisition and Marcellus Acquisition. 73 TABLE OF CONTENTS Exploration Expenses During the 2022 Successor Period, exploration expense charges of $23 million were primarily the result of non-cash impairment charges in unproved properties of $8 million, $6 million of charges related to dry hole expense and $6 million of geological and geophysical expense.
The MiQ certification provides a verified approach to tracking our commitment to reduce our methane intensity, as well as support our overall objective of achieving net-zero Scope 1 and 2 greenhouse gas emissions by 2035. 44 TABLE OF CONTENTS Our results of operations as reported in our consolidated financial statements for the 2022 Successor Period, 2021 Successor Period, 2021 Predecessor Period and 2020 Predecessor Period are in accordance with GAAP.
The independent certification of our production as responsibly sourced 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 GHG emissions by 2035. 56 TABLE OF CONTENTS Recent Developments Merger Agreement On January 10, 2024, Chesapeake and Southwestern entered into an all-stock merger agreement.
The shares of common stock that were repurchased during the 2022 Successor Period were retired and recorded as a reduction to common stock and retained earnings. 52 TABLE OF CONTENTS Results of Operations Year ended December 31, 2022 compared to the year ended December 31, 2021 Below is a discussion of changes in our results of operations for the 2022 Successor Period compared to the combined 2021 Successor and Predecessor Periods.
See Note 11 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for a discussion of income tax expense (benefit). 69 TABLE OF CONTENTS Year ended December 31, 2022 compared to the period from February 10, 2021 through December 31, 2021 Below is a discussion of changes in our results of operations for the 2022 Successor Period compared to the 2021 Successor Period.
This transaction, which is subject to certain customary closing conditions, including certain regulatory approvals, is expected to close in the second quarter of 2023.
Our Board of Directors and the Board of Directors of Southwestern both approved the merger agreement. Subject to the approval of our shareholders and Southwestern shareholders, regulatory approvals and the satisfaction or waiver of other customary closing conditions, the Southwestern Merger is targeted to close in the second quarter of 2024.
In the 2020 Predecessor Period, we paid $109 million of one-time fees to lenders to establish our DIP Credit Facility and Exit Credit Facility. Cash Paid to Purchase Debt In the 2020 Predecessor Period, we repurchased approximately $160 million aggregate principal amount of our senior notes for $94 million.
Debt Issuance and Other Financing Costs During the 2022 Successor Period, we paid $17 million of one-time fees to lenders to establish the New Credit Facility. Cash Paid to Repurchase and Retire Common Stock In March 2022, we commenced our share repurchase program.
Our capital expenditures decreased in the combined 2021 Successor and Predecessor Periods compared to the 2020 Predecessor Period primarily as a result of decreased drilling and completion activity mainly in our liquids-rich plays.
Capital Expenditures Our capital expenditures during the 2023 Successor Period were in line with the 2022 Successor Period, primarily as a result of increased drilling and completion activity within our Haynesville operating area, partially offset by reduced activity due to our Eagle Ford divestitures.
Proceeds from New Credit Facility, net In the 2022 Successor Period, we borrowed a net $1.05 billion under the New Credit Facility.
Payments on New Credit Facility, net During the 2023 Successor Period, we made net repayments of $1.05 billion on the New Credit Facility, utilizing a portion of the proceeds from the Eagle Ford divestitures and also internally generated cash provided by operating activities.
The increase in the 2021 Successor Period is primarily the result of higher prices for the natural gas, oil and NGL we sold, coupled with a decrease in cash interest and GP&T costs following our emergence from bankruptcy.
Cash used in operating activities was $21 million for the 2021 Predecessor Period. The decrease in the 2023 Successor 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.
Removed
In August 2022, we announced that we viewed the assets in Eagle Ford as non-core to our future capital allocation strategy, and 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.
Added
During 2023, we completed our exit from Eagle Ford through three separate divestiture transactions, with aggregate proceeds from these three transactions exceeding $3.5 billion, subject to customary post-closing adjustments.
Removed
We continue to focus on improving margins through operating efficiencies and financial discipline and improving our ESG performance.
Added
Southwestern is an independent energy company engaged in development, exploration and production activities, including related marketing activities, within its operating areas in the Marcellus and Haynesville shale plays.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased on production, natural gas, oil and NGL revenue for the 2022 Successor Period would have increased or decreased by approximately $780 million, $186 million, and $23 million, respectively, for each 10% increase or decrease in prices.
Biggest changeBased on production, natural gas, oil and NGL revenue for the 2023 Successor Period would have increased or decreased by approximately $285 million, $60 million, and $10 million, respectively, for each 10% increase or decrease in prices. As of December 31, 2023, the fair value of our natural gas derivatives was a net asset of $687 million.
See Note 15 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further information on our open derivative positions.
See Note 15 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further information on our open derivative positions, including information about the contingent consideration arrangement.
Interest Rate Risk Our exposure to interest rate changes relates primarily to borrowings under our New Credit Facility and Exit Credit Facility for the 2022 Successor Period, the Exit Credit Facility for the 2021 Successor Period and the pre-petition revolving credit facility and DIP Facility for the 2021 and 2020 Predecessor Periods.
Interest Rate Risk Our exposure to interest rate changes relates primarily to borrowings under our New Credit Facility for the 2023 Successor Period, our New Credit Facility and Exit Credit Facility for the 2022 Successor Period, the Exit Credit Facility for the 2021 Successor Period and the DIP Facility for the 2021 Predecessor Period.
See Note 15 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of the fair value measurements associated with our derivatives. For the 2022 Successor Period, natural gas, oil and NGL revenues, excluding any effect of our derivative instruments, were $7.803 billion, $1.864 billion, and $225 million, respectively.
See Note 15 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of the fair value measurements associated with our derivatives. For the 2023 Successor Period, natural gas, oil and NGL revenues, excluding any effect of our derivative instruments, were $2,853 million, $596 million, and $98 million, respectively.
Interest is payable on borrowings under these credit agreements based on a floating rate. See Note 6 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information. As of December 31, 2022, we had $1.05 billion of outstanding borrowings under our New Credit Facility.
Interest is payable on borrowings under each respective credit facility based on floating rates. See Note 6 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information. As of December 31, 2023, we did not have any outstanding borrowings under our New Credit Facility. 79 TABLE OF CONTENTS
As of December 31, 2022, the fair values of our natural gas and oil derivatives were net liabilities of $501 million and $24 million, respectively. A 10% increase in forward natural gas prices would decrease the valuation of natural gas derivatives by approximately $324 million, while a 10% decrease would increase the valuation by $321 million.
As of December 31, 2023, we did not have any open oil or NGL derivative positions. A 10% increase in forward natural gas prices would decrease the valuation of natural gas derivatives by approximately $188 million, while a 10% decrease would increase the valuation by $191 million.
Removed
A 10% increase in forward oil prices would decrease the valuation of oil derivatives by $22 million, while a 10% decrease would increase the valuation by $22 million. This fair value change assumes volatility based on prevailing market parameters at December 31, 2022.
Added
This fair value change assumes volatility based on prevailing market parameters at December 31, 2023. Additionally, should oil prices not meet the average target prices specified with the contingent payment from SilverBow, we may not receive any payment from the up to $50 million contingent consideration arrangement.
Removed
A 1.0% increase in interest rates based on the variable borrowings as of December 31, 2022 would result in an increase in our interest expense of approximately $11 million per year. 64 TABLE OF CONTENTS

Other EXE 10-K year-over-year comparisons