Chesapeake Energy Corporation Reports 2018 First Quarter Financial And Operational Results

OKLAHOMA CITY, May 2, 2018

• 2018 first quarter net income available to common stockholders of $268 million, or $0.29 per diluted share; 2018 first quarter adjusted net income available to common stockholders of $361 million, or $0.34 per diluted share
• 2018 first quarter net cash provided by operating activities increased $557 million compared to 2017 first quarter
• Reduced $581 million principal amount of long-term debt in 2018 first quarter
• Average 2018 first quarter production of approximately 554,000 barrels of oil equivalent (boe) per day, up 11 percent compared to 2017 first quarter, adjusted for asset sales
• Average 2018 first quarter oil production of approximately 92,000 barrels of oil per day, up 16 percent compared to 2017 first quarter, adjusted for asset sales

Doug Lawler, Chesapeake's Chief Executive Officer, commented, "The strength of our operations and improved cost structure, coupled with higher realized prices, resulted in our best quarterly financial performance in over three years. For the second consecutive quarter, we recorded significant growth in our earnings and cash flow.  Notably, our margin improvement, while aided by increases in commodity indices, was primarily driven by strong oil production and a lower cost structure, highlighting the differential profit generated beyond price impacts, and the sustainability of our improving financial performance. The net cash flow provided by operating and investing activities, including net proceeds from asset sales, was $609 million for the quarter and was the highest in more than three years, allowing us to reduce our long-term debt by $581 million. Our results provide further evidence that we are achieving our long term goals of growing cash flow, expanding margins, reducing long term debt and generating higher returns to shareholders."

2018 First Quarter Results

For the 2018 first quarter, Chesapeake reported net income of $294 million and net income available to common stockholders of $268 million, or $0.29 per diluted share.  The company's EBITDA for the 2018 first quarter was $703 million. Adjusting for items that are typically excluded by securities analysts, the 2018 first quarter adjusted net income attributable to Chesapeake was $361 million, or $0.34 per diluted share, while the company's adjusted EBITDA was $733 million. Reconciliations of financial measures calculated in accordance with GAAP to non-GAAP measures are provided on pages 11 - 13 of this release.

Production expenses during the 2018 first quarter were $2.94 per boe, while general and administrative expenses (including stock-based compensation) during the 2018 first quarter were $1.44 per boe. The increase in production expenses was primarily the result of increased saltwater disposal costs and workover activity. With regard to general and administrative expenses, lower compensation costs were more than offset by lower overhead allocations, primarily as a result of certain 2017 divestitures. Chesapeake's combined production and general and administrative expenses per boe increased by 5 percent year over year. However, the company's gathering, processing, and transportation expenses decreased by 4 percent year over year to $7.15 per boe during the 2018 first quarter, resulting in lower overall expenses per unit of production on a combined basis.

Capital Spending Overview