Chesapeake Energy Corporation Reports 2018 First Quarter Financial And Operational Results

Three Months EndedMarch 31,

2018

2017

Operated activity comparison

Average rig count

15

16

Gross wells spud

77

87

Gross wells completed

76

99

Gross wells connected

57

76

Type of cost ($ in millions)

Drilling and completion capital expenditures

$

539

$

506

Exploration costs, leasehold and additions to other PP&E

29

19

Subtotal capital expenditures

$

568

$

525

Capitalized interest

43

51

Total capital expenditures

$

611

$

576

Three Months Ended March 31, 2018

Oil

Natural Gas

NGL

Total

mbbl

per day

$/bbl

mmcf

per day

$/mcf

mbbl

per day

$/bbl

mboe

per day

%

$/boe

Marcellus

—

—

873

3.74

—

—

146

26

22.46

Haynesville

—

—

833

2.80

—

—

139

25

16.86

Eagle Ford

61

66.16

141

3.30

18

24.72

102

19

48.22

Utica

11

59.82

440

2.94

23

25.03

107

19

23.39

Mid-Continent

9

62.04

87

2.70

5

26.15

28

5

32.46

Powder River Basin

7

62.86

47

2.82

3

28.77

18

3

37.68

Retained assets(a)

88

64.66

2,421

3.19

49

25.24

540

97

27.10

Divested assets

4

63.60

45

2.81

2

30.07

14

3

33.53

Total

92

64.61

2,466

3.18

51

25.45

554

100

%

27.27

Three Months Ended March 31, 2017

Oil

Natural Gas

NGL

Total

mbbl

per day

$/bbl

mmcf

per day

$/mcf

mbbl

per day

$/bbl

mboe

per day

%

$/boe

Marcellus

—

—

837

3.01

—

—

139

27

18.04

Haynesville

—

—

682

2.98

—

—

114

22

17.86

Eagle Ford

56

50.90

135

3.40

17

21.38

96

18

38.52

Utica

8

45.42

380

3.50

25

25.65

96

18

24.16

Mid-Continent

7

49.64

92

3.04

6

22.45

28

5

26.73

Powder River Basin

5

49.70

29

3.33

2

25.58

12

2

32.67

Retained assets(a)

76

50.16

2,155

3.11

50

23.81

485

92

24.13

Divested assets

8

50.96

187

2.88

4

23.43

43

8

24.06

Total

84

50.24

2,342

3.10

54

23.78

528

100

%

24.13

(a)

Includes assets retained as of March 31, 2018.

Three Months Ended March 31,

2018

2017

Barrels of oil equivalent production (in mboe)

49,879

47,516

Barrels of oil equivalent production (mboe/d)

554

528

Oil production (in mbbl/d)

92

84

Average realized oil price ($/bbl)(a)

56.89

51.72

Natural gas production (in mmcf/d)

2,466

2,342

Average realized natural gas price ($/mcf)(a)

3.49

3.02

NGL production (in mbbl/d)

51

54

Average realized NGL price ($/bbl)(a)

25.36

24.04

Production expenses ($/boe)

2.94

2.84

Gathering, processing and transportation expenses ($/boe)

7.15

7.47

Oil - ($/bbl)

4.18

3.85

Natural Gas - ($/mcf)

1.27

1.35

NGL - ($/bbl)

8.83

8.47

Production taxes ($/boe)

0.62

0.47

General and administrative expenses ($/boe)(b)

1.30

1.18

General and administrative expenses (stock-based compensation) (non-cash) ($/boe)

0.14

0.17

DD&A of oil and natural gas properties ($/boe)

5.38

4.15

DD&A of other assets ($/boe)

0.36

0.44

Interest expense ($/boe)(a)

2.45

1.97

Marketing net margin ($ in millions)

(22)

(44)

Net cash provided by operating activities ($ in millions)

656

99

Net cash provided by operating activities ($/boe)

13.15

2.06

Operating cash flow ($ in millions)(c)

552

(14)

Operating cash flow ($/boe)

11.07

(0.29)

Net income ($ in millions)

294

141

Net income available to common stockholders ($ in millions)

268

75

Net income per share available to common stockholders – diluted ($)

0.29

0.08

Adjusted EBITDA ($ in millions)(d)

733

525

Adjusted EBITDA ($/boe)

14.70

11.05

Adjusted net income attributable to Chesapeake ($ in millions)(e)

361

212

Adjusted net income attributable to Chesapeake per share - diluted ($ in millions)(f)

0.34

0.23

(a)

Includes the effects of realized gains (losses) from hedging, but excludes the effects of unrealized gains (losses) from hedging.

(b)

Excludes expenses associated with stock-based compensation, which are recorded in general and administrative expenses in Chesapeake's Condensed Consolidated Statement of Operations.

(c)

Defined as cash flow provided by operating activities before changes in components of working capital and other assets and liabilities. This is a non-GAAP measure. See reconciliation to cash provided by (used in) operating activities on page 12.

(d)

Defined as net income (loss) before interest expense, income taxes and depreciation, depletion and amortization expense, as adjusted to remove the effects of certain items detailed on page 13. This is a non-GAAP measure. See reconciliation of net income (loss) to EBITDA on page 12 and reconciliation of EBITDA to adjusted EBITDA on page 13.

(e)

Defined as net income (loss) attributable to Chesapeake, as adjusted to remove the effects of certain items detailed on page 11.  This is a non-GAAP measure. See reconciliation of net income to adjusted net income (loss) available to Chesapeake on page 11.

(f)

Our presentation of diluted adjusted net income (loss) attributable to Chesapeake per share excludes 60 million and 208 million shares for the three months ended March 31, 2018 and 2017, respectively, considered antidilutive when calculating diluted earnings per share.

INVESTOR CONTACT:

MEDIA CONTACT:

Brad Sylvester, CFA

(405) 935-8870

[email protected]

Gordon Pennoyer

(405) 935-8878

[email protected]

CHESAPEAKE ENERGY CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS($ in millions except per share data)(unaudited)

Three Months EndedMarch 31,

2018

2017

REVENUES:

Oil, natural gas and NGL

$

1,243

$

1,469

Marketing

1,246

1,284

Total Revenues

2,489

2,753

OPERATING EXPENSES:

Oil, natural gas and NGL production

147

135

Oil, natural gas and NGL gathering, processing and transportation

356

355

Production taxes

31

22

Marketing

1,268

1,328

General and administrative

72

65

Restructuring and other termination costs

38

—

Provision for legal contingencies, net

5

(2)

Oil, natural gas and NGL depreciation, depletion and amortization

268

197

Depreciation and amortization of other assets

18

21

Other operating expense

—

391

Net losses on sales of fixed assets

8

—

Total Operating Expenses

2,211

2,512

INCOME FROM OPERATIONS

278

241

OTHER INCOME (EXPENSE):

Interest expense

(123)

(95)

Gains on investments

139

—

Losses on purchases or exchanges of debt

—

(7)

Other income

—

3

Total Other Income (Expense)

16

(99)

INCOME BEFORE INCOME TAXES

294

142

Income tax expense

—

1

NET INCOME

294

141

Net income attributable to noncontrolling interests

(1)

(1)

NET INCOME ATTRIBUTABLE TO CHESAPEAKE

293

140

Preferred stock dividends

(23)

(23)

Loss on exchange of preferred stock

—

(41)

Earnings allocated to participating securities

(2)

(1)

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS

$

268

$

75

EARNINGS PER COMMON SHARE:

Basic

$

0.30

$

0.08

Diluted

$

0.29

$

0.08

WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):

Basic

907

906

Diluted

1,053

907

CHESAPEAKE ENERGY CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS($ in millions)(unaudited)

March 31, 2018

December 31,2017

Cash and cash equivalents

$

4

$

5

Other current assets

1,220

1,520

Total Current Assets

1,224

1,525

Property and equipment, net

10,592

10,680

Other long-term assets

270

220

Total Assets

$

12,086

$

12,425

Current liabilities

$

2,354

$

2,356

Long-term debt, net

9,325

9,921

Other long-term liabilities

504

520

Total Liabilities

12,183

12,797

Preferred stock

1,671

1,671

Noncontrolling interests

123

124

Common stock and other stockholders' equity (deficit)

(1,891)

(2,167)

Total Equity (Deficit)

(97)

(372)

Total Liabilities and Equity

$

12,086

$

12,425

Common shares outstanding (in millions)

912

909

Principal amount of debt outstanding

$

9,400

$

9,981

CHESAPEAKE ENERGY CORPORATIONSUPPLEMENTAL DATA – OIL, NATURAL GAS AND NGL PRODUCTION, SALES AND INTEREST EXPENSE(unaudited)

Three Months Ended March 31,

2018

2017

Net Production:

Oil (mmbbl)

8

8

Natural gas (bcf)

222

211

NGL (mmbbl)

5

5

Oil equivalent (mmboe)

50

48

Average daily production (mboe)

554

528

Oil, natural gas and NGL Sales ($ in millions):

Oil sales

$

537

$

378

Natural gas sales

706

653

NGL sales

117

116

Total oil, natural gas and NGL sales

$

1,360

$

1,147

Financial Derivatives:

Oil derivatives – realized gains (losses)(a)

$

(64)

11

Natural gas derivatives – realized gains (losses)(a)

67

(16)

NGL derivatives – realized gains (losses)(a)

(1)

1

Total realized gains (losses) on financial derivatives

$

2

$

(4)

Oil derivatives – unrealized gains (losses)(a)

(22)

94

Natural gas derivatives – unrealized gains (losses)(a)

(99)

231

NGL derivatives – unrealized gains(a)

2

1

Total unrealized gains (losses) on financial derivatives

$

(119)

$

326

Total financial derivatives

$

(117)

$

322

Total oil, natural gas and NGL sales

$

1,243

$

1,469

Average Sales Price (excluding gains (losses) on derivatives):

Oil ($ per bbl)

$

64.61

$

50.24

Natural gas ($ per mcf)

$

3.18

$

3.10

NGL ($ per bbl)

$

25.45

$

23.78

Oil equivalent ($ per boe)

$

27.27

$

24.13

Average Sales Price (excluding unrealized gains (losses) on derivatives):

Oil ($ per bbl)

$

56.89

$

51.72

Natural gas ($ per mcf)

$

3.49

$

3.02

NGL ($ per bbl)

$

25.36

$

24.04

Oil equivalent ($ per boe)

$

27.31

$

24.06

Interest Expense ($ in millions):

Interest expense(b)

$

123

$

94

Interest rate derivatives – realized gains(c)

(1)

(1)

Interest rate derivatives – unrealized losses(c)

1

2

Total Interest Expense

$

123

$

95

(a)

Realized gains (losses) include the following items: (i) settlements and accruals for settlements of undesignated derivatives related to current period production revenues, (ii) prior period settlements for option premiums and for early-terminated derivatives originally scheduled to settle against current period production revenues, and (iii) gains (losses) related to de-designated cash flow hedges originally designated to settle against current period production revenues. Unrealized gains (losses) include the change in fair value of open derivatives scheduled to settle against future period production revenues (including current period settlements for option premiums and early terminated derivatives) offset by amounts reclassified as realized gains (losses) during the period. Although we no longer designate our derivatives as cash flow hedges for accounting purposes, we believe these definitions are useful to management and investors in determining the effectiveness of our price risk management program.

(b)

Net of amounts capitalized.

(c)

Realized (gains) losses include interest rate derivative settlements related to current period interest and the effect of (gains) losses on early-terminated trades. Settlements of early-terminated trades are reflected in realized (gains) losses over the original life of the hedged item. Unrealized (gains) losses include changes in the fair value of open interest rate derivatives offset by amounts reclassified to realized (gains) losses during the period.

CHESAPEAKE ENERGY CORPORATIONCONDENSED CONSOLIDATED CASH FLOW DATA($ in millions)(unaudited)

Three Months EndedMarch 31,

2018

2017

Beginning cash and cash equivalents

$

5

$

882

Net cash provided by operating activities

656

99

Cash flows from investing activities:

Drilling and completion costs(a)

(442)

(433)

Acquisitions of proved and unproved properties(b)

(63)

(95)

Proceeds from divestitures of proved and unproved properties

319

892

Additions to other property and equipment

(3)

(3)

Proceeds from sales of other property and equipment

68

19

Proceeds from sales of investments

74

—

Net cash provided by (used in) investing activities

(47)

380

Net cash used in financing activities

(610)

(1,112)

Change in cash and cash equivalents

(1)

(633)

Ending cash and cash equivalents

$

4

$

249

(a)

Includes capitalized interest of $2 million and $2 million for the three months ended March 31, 2018 and 2017, respectively.

(b)

Includes capitalized interest of $41 million and $49 million for the three months ended March 31, 2018 and 2017, respectively.

CHESAPEAKE ENERGY CORPORATIONRECONCILIATION OF ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS($ in millions except per share data)(unaudited)

Three Months Ended March 31,

2018

2017

$

$/Share(b)(c)

$

$/Share(b)(c)

Net income available to common stockholders (GAAP)

$

268

$

0.30

$

75

$

0.08

Effect of dilutive securities

36

—

Diluted earnings per common stockholder (GAAP)

$

304

$

0.29

$

75

$

0.08

Adjustments:

Unrealized (gains) losses on oil, natural gas and NGL derivatives

119

0.11

(326)

(0.36)

Restructuring and other termination costs

38

0.04

—

—

Provision for legal contingencies, net

5

—

(2)

—

Other operating expense

—

—

391

0.43

Net losses on sales of fixed assets

8

0.01

—

—

Gains on investments

(139)

(0.13)

—

—

Losses on purchases or exchanges of debt

—

—

7

0.01

Loss on exchange of preferred stock

—

—

41

0.05

Other

1

—

2

—

Adjusted net income available to common stockholders(b) (Non-GAAP)

336

0.32

188

0.21

Preferred stock dividends

23

0.02

23

0.02

Earnings allocated to participating securities

2

—

1

—

Total adjusted net income attributable to Chesapeake(b) (c) (Non-GAAP)

$

361

$

0.34

$

212

$

0.23

(a)

Our effective tax rate in the three months ended March 31, 2018 was 0%. Due to our valuation allowance position, no income tax effect from the adjustments has been included in determining adjusted net income for the three months ended March 31, 2017.

(b)

Adjusted net income (loss) available to common stockholders and total adjusted net income (loss) attributable to Chesapeake, both in the aggregate and per dilutive share, are not measures of financial performance under GAAP, and should not be considered as an alternative to, or more meaningful than, net income (loss) available to common stockholders or earnings (loss) per share. Adjusted net income (loss) available to common stockholders and adjusted earnings (loss) per share exclude certain items that management believes affect the comparability of operating results. The company believes these adjusted financial measures are a useful adjunct to earnings calculated in accordance with GAAP because:

(i)

Management uses adjusted net income (loss) available to common stockholders to evaluate the company's operational trends and performance relative to other oil and natural gas producing companies.

(ii)

Adjusted net income (loss) available to common stockholders is more comparable to earnings estimates provided by securities analysts.

(iii)

Items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated.  Accordingly, any guidance provided by the company generally excludes information regarding these types of items.

Because adjusted net income (loss) available to common stockholders and total adjusted net income (loss) attributable to Chesapeake exclude some, but not all, items that affect net income (loss) available to common stockholders and total adjusted net income (loss) attributable to Chesapeake may vary among companies, our calculation of adjusted net income (loss) available to common stockholders and total adjusted net income (loss) attributable to Chesapeake may not be comparable to similarly titled financial measures of other companies.

(c)

Our presentation of diluted net income (loss) available to common stockholders and diluted adjusted net income (loss) per share excludes 60 million and 208 million shares considered antidilutive for the three months ended March 31, 2018 and 2017, respectively. The number of shares used for the non-GAAP calculation was determined in a manner consistent with GAAP.

(a)

Operating cash flow represents net cash provided by operating activities before changes in components of working capital and other. Operating cash flow is presented because management believes it is a useful adjunct to net cash provided by operating activities under GAAP and provides useful information to investors for analysis of the Company's ability to generate cash to fund exploration and development, and to service debt. Operating cash flow is widely accepted as a financial indicator of an oil and natural gas company's ability to generate cash that is used to internally fund exploration and development activities and to service debt. This measure is widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies within the oil and natural gas exploration and production industry. Operating cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities as an indicator of cash flows, or as a measure of liquidity. Because operating cash flow excludes some, but not all, items that affect net cash provided by operating activities and may vary among companies, our calculation of operating cash flow may not be comparable to similarly titled measures of other companies. The increase in operating cash flow for the three months ended March 31, 2018 is mainly due to an increase in prices and volumes.

(b)

EBITDA represents net income before interest expense, income tax expense, and depreciation, depletion and amortization expense. EBITDA is presented as a supplemental financial measurement in the evaluation of our business. We believe that it provides additional information regarding our ability to meet our future debt service, capital expenditures and working capital requirements. This measure is widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies. EBITDA is also a financial measurement that, with certain negotiated adjustments, is reported to our lenders pursuant to our bank credit agreements and is used in the financial covenants in our bank credit agreements. EBITDA is not a measure of financial performance (or liquidity) under GAAP. Accordingly, it should not be considered as a substitute for net income, income from operations or cash flows from operating activities prepared in accordance with GAAP.

CHESAPEAKE ENERGY CORPORATIONRECONCILIATION OF ADJUSTED EBITDA($ in millions)(unaudited)

Three Months Ended March 31,

2018

2017

EBITDA (Non-GAAP)

$

703

$

455

Adjustments:

Unrealized losses (gains) on oil, natural gas and NGL derivatives

119

(326)

Restructuring and other termination costs

38

—

Provision for legal contingencies, net

5

(2)

Other operating expense

—

391

Net losses on sales of fixed assets

8

—

Gains on investments

(139)

—

Losses on purchases or exchanges of debt

—

7

Net income attributable to noncontrolling interests

(1)

(1)

Other

—

1

Adjusted EBITDA (Non-GAAP)(a)

$

733

$

525

(a)

Adjusted EBITDA excludes certain items that management believes affect the comparability of operating results. The company believes these non-GAAP financial measures are a useful adjunct to EBITDA because:

(i)

Management uses adjusted EBITDA to evaluate the company's operational trends and performance relative to other oil and natural gas producing companies.

(ii)

Adjusted EBITDA is more comparable to estimates provided by securities analysts.

(iii)

Items excluded generally are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the company generally excludes information regarding these types of items.

CHESAPEAKE ENERGY CORPORATION

MANAGEMENT'S OUTLOOK AS OF MAY 1, 2018

Chesapeake periodically provides guidance on certain factors that affect the company's future financial performance. New information or changes from the company's February 22, 2018 outlook are italicized bold below.

Year Ending

12/31/2018

Production Growth adjusted for asset sales(a)

1% to 5%

Absolute Production

Liquids - mmbbls

51.0 - 55.0

Oil - mmbbls

31.0 - 33.0

NGL - mmbbls

20.0 - 22.0

Natural gas - bcf

825 - 875

Total absolute production - mmboe

190 - 200

Absolute daily rate - mboe

515 - 550

Estimated Realized Hedging Effects(b) (based on 4/27/18 strip prices):

Oil - $/bbl

($10.20)

Natural gas - $/mcf

$0.13

NGL - $/bbl

$(0.13)

Estimated Basis to NYMEX Prices:

Oil - $/bbl

$1.00 - $1.20

Natural gas - $/mcf

($0.10) - ($0.20)

NGL - $/bbl

($5.20) - ($5.60)

Operating Costs per Boe of Projected Production:

Production expense

$2.60 - $2.80

Gathering, processing and transportation expenses

$6.95 - $7.65

Oil - $/bbl

$3.90 - $4.10

Natural Gas - $/mcf

$1.25 - $1.40

NGL - $/bbl

$7.85 - $8.25

Production taxes

$0.50 - $0.60

General and administrative(c)

$1.25 - $1.35

Stock-based compensation (noncash)

$0.10 - $0.20

DD&A of natural gas and liquids assets

$5.00 - $6.00

Depreciation of other assets

$0.35 - $0.45

Interest expense(d)

$2.40 - $2.60

Marketing net margin(e)

($60) - ($40)

Book Tax Rate

0%

Adjusted EBITDA, based on 4/27/18 strip prices ($ in millions)(f)

$2,250 - $2,450

Capital Expenditures ($ in millions)(g)

$1,800 - $2,200

Capitalized Interest ($ in millions)

$175

Total Capital Expenditures ($ in millions)

$1,975 - $2,375

(a)

Based on 2017 production of 514 mboe per day, adjusted for 2017 asset sales and 2018 asset sales signed to date.

(b)

Includes expected settlements for oil, natural gas and NGL derivatives adjusted for option premiums. For derivatives closed early, settlements are reflected in the period of original contract expiration.

(c)

Excludes expenses associated with stock-based compensation, which are recorded in general and administrative expenses in Chesapeake's Consolidated Statement of Operations.

(d)

Excludes unrealized gains (losses) on interest rate derivatives.

(e)

Excludes non-cash amortization of approximately $19 million.

(f)

Adjusted EBITDA is a non-GAAP measure used by management to evaluate the company's operational trends and performance relative to other oil and natural gas producing companies. Adjusted EBITDA excludes certain items that management believes affect the comparability of operating results. The most directly comparable GAAP measure is net income but, it is not possible, without unreasonable efforts, to identify the amount or significance of events or transactions that may be included in future GAAP net income but that management does not believe to be representative of underlying business performance. The company further believes that providing estimates of the amounts that would be required to reconcile forecasted adjusted EBITDA to forecasted GAAP net income would imply a degree of precision that may be confusing or misleading to investors. Items excluded from net income to arrive at adjusted EBITDA include interest expense, income taxes, and depreciation, depletion and amortization expense as well as one-time items or items whose timing or amount cannot be reasonably estimated.

(g)

Includes capital expenditures for drilling and completion, leasehold, geological and geophysical costs, rig termination payments and other property, plant and equipment. Excludes any additional proved property acquisitions.

Crude Oil Swaps

Gains (Losses) from Closed Crude Oil Trades

Swaps

(mbbls)

Avg. NYMEX

Price of

Swaps

Gains/Losses from ClosedTrades

($ in millions)

Q2 2018

5,886

$

52.80

$

(1)

Q3 2018

5,612

$

54.30

(1)

Q4 2018

5,612

$

54.30

(1)

Total 2018

17,110

$

53.78

$

(3)

Total 2019

11,661

$

57.87

$

(8)

Crude Oil Net Written Call Options

Call Options

(mbbls)

Avg. NYMEX

Strike Price

Q3 2018

920

$

52.87

Q4 2018

920

$

52.87

Total 2018

1,840

$

52.87

Crude Oil Three-Way Collars

Collars(mbbls)

Avg. NYMEXSold Put Price

Avg. NYMEXBought Put Price

Avg. NYMEXSold Call Price

Q2 2018

455

$

39.15

$

47.00

$

55.00

Q3 2018

460

$

39.15

$

47.00

$

55.00

Q4 2018

460

$

39.15

$

47.00

$

55.00

Total 2018

1,375

$

39.15

$

47.00

$

55.00

Oil Basis Protection Swaps

Volume

(mbbls)

Avg. NYMEX

plus/(minus)

Q2 2018

2,639

$

3.21

Q3 2018

2,760

$

3.42

Q4 2018

2,760

$

3.42

Total 2018

8,159

$

3.35

Natural Gas Swaps

Losses from Closed Natural Gas Trades

Swaps

(bcf)

Avg. NYMEX

Price of

Swaps

Losses

from ClosedTrades

($ in millions)

Q2 2018

118

$

2.92

$

(4)

Q3 2018

120

$

2.94

(4)

Q4 2018

120

$

3.00

(6)

Total 2018

358

$

2.95

$

(14)

Total 2019 - 2022

$

(49)

Natural Gas Two-Way Collars

Collars(bcf)

Avg. NYMEXBought Put Price

Avg. NYMEXSold Call Price

Q2 2018

12

$

3.00

$

3.25

Q3 2018

12

$

3.00

$

3.25

Q4 2018

12

$

3.00

$

3.25

Total 2018

36

$

3.00

$

3.25

Natural Gas Three-Way Collars

Collars(bcf)

Avg. NYMEXSold Put Price

Avg. NYMEXBought Put Price

Avg. NYMEXSold Call Price

Total 2019

87

$

2.50

$

2.80

$

3.10

Natural Gas Net Written Call Options

Call Options

(bcf)

Avg. NYMEX

Strike Price

Q2 2018

16

$

6.27

Q3 2018

17

$

6.27

Q4 2018

17

$

6.27

Total 2018

50

$

6.27

Total 2019 – 2020

44

$

12.00

Natural Gas Basis Protection Swaps

Volume

(bcf)

Avg. NYMEXplus/(minus)

Q2 2018

18

$

(0.77)

Q3 2018

17

$

(0.77)

Q4 2018

6

$

(0.77)

Total 2018

41

$

(0.77)

Total 2019

4

$

2.24

Ethane Swaps

Volume

(mmgal)

Avg. NYMEXPrice of Swaps

Q2 2018

4

$

0.28

Total 2018

4

$

0.28

Propane Swaps

Volume

(mmgal)

Avg. NYMEXPrice of Swaps

Q2 2018

12

$

0.78

Q3 2018

15

$

0.79

Q4 2018

15

$

0.79

Total 2018

42

$

0.79

Butane Swaps

Volume

(mmgal)

Avg. NYMEXPrice of Swaps

Q2 2018

1

$

0.88

Q3 2018

1

$

0.88

Q4 2018

2

$

0.88

Total 2018

4

$

0.88

Butane Swaps Priced as a Percentage of WTI

Volume

(mmgal)

Avg. NYMEX as a % of WTI Swaps

Q2 2018

1

70.5

%

Q3 2018

1

70.5

%

Q4 2018

2

70.5

Total 2018

4

70.5

%

Iso-Butane Swaps

Volume

(mmgal)

Avg. NYMEXPrice of Swaps

Q2 2018

2

$

0.92

Q3 2018

4

$

0.92

Q4 2018

4

$

0.92

Total 2018

10

$

0.92

Natural Gasoline Swaps

Volume

(mmgal)

Avg. NYMEXPrice of Swaps

Q2 2018

10

$

1.42

Q3 2018

11

$

1.42

Q4 2018

12

$

1.42

Total 2018

33

$

1.42