September 30,
2019 December 31, 2018
($ in millions)
CURRENT LIABILITIES:
Accounts payable $ 526
$ 763
Current maturities of long-term debt, net 208
381
Accrued interest 124
141
Short-term derivative liabilities —
3
Other current liabilities ($1 and $2 attributable to our VIE) 1,490
1,599
Total Current Liabilities 2,348
2,887
LONG-TERM LIABILITIES:
Long-term debt, net 9,133
7,341
Asset retirement obligations, net of current portion 177
155
Other long-term liabilities 186
219
Total Long-Term Liabilities 9,496
7,715
CONTINGENCIES AND COMMITMENTS (Note 7)

EQUITY:
Chesapeake Stockholders’ Equity:
Preferred stock, $0.01 par value, 20,000,000 shares authorized:
5,563,458 and 5,603,458 shares outstanding 1,631
1,671
Common stock, $0.01 par value, 3,000,000,000 and 2,000,000,000 shares authorized:
1,954,150,951 and 913,715,512 shares issued
19
9
Additional paid-in capital 16,975
14,378
Accumulated deficit (13,896 ) (13,912 )
Accumulated other comprehensive income (loss) 3
(23 )
Less: treasury stock, at cost;
5,623,592 and 3,246,553 common shares
(36 ) (31 )
Total Chesapeake Stockholders’ Equity 4,696
2,092
Noncontrolling interests 39
41
Total Equity 4,735
2,133
TOTAL LIABILITIES AND EQUITY $ 16,579
$ 12,735


(a)	Amounts and shares have been retroactively adjusted to reflect a 1-for-200 (1:200) reverse stock split effective April 14, 2020. See Note 9 for additional information.

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

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL	$	511		$	1,170		$	2,579		$	3,553
Marketing	448			889			1,412			3,038
Total Revenues	959			2,059			3,991			6,591
Other	15			15			45			45
Gains on sales of assets	1			13			1			33
Total Revenues and Other	975			2,087			4,037			6,669
OPERATING EXPENSES:
Oil, natural gas and NGL production	82			135			295			394
Oil, natural gas and NGL gathering, processing and transportation	258			270			813			815
Severance and ad valorem taxes	37			55			116			168
Exploration	5			17			417			56
Marketing	450			901			1,438			3,071
General and administrative	52			66			229			258
Separation and other termination costs	16			0			43			0
Provision for legal contingencies, net	12			0			20			3
Depreciation, depletion and amortization	170			573			931			1,672
Impairments	0			9			8,522			11
Other operating expense	4			15			92			79
Total Operating Expenses	1,086			2,041			12,916			6,527
INCOME (LOSS) FROM OPERATIONS	(111		)	46			(8,879		)	142
OTHER INCOME (EXPENSE):
Interest expense	(25		)	(177		)	(307		)	(513		)
Losses on investments	0			(4		)	(23		)	(28		)
Gains on purchases or exchanges of debt	0			70			65			70
Other income	2			3			14			30
Reorganization items, net	(611		)	0			(217		)	0
Total Other Expense	(634		)	(108		)	(468		)	(441		)
LOSS BEFORE INCOME TAXES	(745		)	(62		)	(9,347		)	(299		)
Income tax benefit	0			(1		)	(13		)	(315		)
NET INCOME (LOSS)	(745		)	(61		)	(9,334		)	16
Net loss attributable to noncontrolling interests	0			0			16			0
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	(745		)	(61		)	(9,318		)	16
Preferred stock dividends	0			(23		)	(22		)	(69		)
Loss on exchange of preferred stock	0			(17		)	0			(17		)
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS	$	(745	)	$	(101	)	$	(9,340	)	$	(70	)
LOSS PER COMMON SHARE:^(a)
Basic	$	(76.18	)	$	(11.89	)	$	(955.99	)	$	(8.92	)
Diluted	$	(76.18	)	$	(11.89	)	$	(955.99	)	$	(8.92	)
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in thousands):^(a)
Basic	9,780			8,492			9,770			7,848
Diluted	9,780			8,492			9,770			7,848


(a)	All share and per share information has been retroactively adjusted to reflect a 1-for-200 (1:200) reverse stock split effective April 14, 2020. See Note 9 for additional information.

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

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018* 2019 2018*
($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL $ 1,170
$ 1,199
$ 3,553
$ 3,424
Marketing 889
1,219
3,038
3,738
Total Revenues 2,059
2,418
6,591
7,162
Other 15
16
45
48
Gains (losses) on sales of assets 13
(10 ) 33
27
Total Revenues and Other 2,087
2,424
6,669
7,237
OPERATING EXPENSES:
Oil, natural gas and NGL production 155
132
453
417
Oil, natural gas and NGL gathering, processing and transportation 270
364
815
1,060
Production taxes 35
34
109
91
Exploration 17
22
56
123
Marketing 901
1,238
3,071
3,798
General and administrative 66
81
258
273
Restructuring and other termination costs —
—
—
38
Provision for legal contingencies, net —
8
3
17
Depreciation, depletion and amortization 573
405
1,672
1,335
Impairments 9
58
11
122
Other operating (income) expense 15
—
79
(1 )
Total Operating Expenses 2,041
2,342
6,527
7,273
INCOME (LOSS) FROM OPERATIONS 46
82
142
(36 )
OTHER INCOME (EXPENSE):

Interest expense (177 ) (165 ) (513 ) (482 )
Gains (losses) on investments (4 ) —
(28 ) 139
Gains (losses) on purchases or exchanges of debt 70
(68 ) 70
(68 )
Other income 3
6
30
62
Total Other Expense (108 ) (227 ) (441 ) (349 )
LOSS BEFORE INCOME TAXES (62 ) (145 ) (299 ) (385 )
Income tax expense (benefit) (1 ) 1
(315 ) (8 )
NET INCOME (LOSS) (61 ) (146 ) 16
(377 )
Net income attributable to noncontrolling interests —
—
—
(1 )
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE (61 ) (146 ) 16
(378 )
Preferred stock dividends (23 ) (23 ) (69 ) (69 )
Loss on exchange of preferred stock (17 ) —
(17 ) —
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS $ (101 ) $ (169 ) $ (70 ) $ (447 )
LOSS PER COMMON SHARE:
Basic $ (0.06 ) $ (0.19 ) $ (0.04 ) $ (0.49 )
Diluted $ (0.06 ) $ (0.19 ) $ (0.04 ) $ (0.49 )
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):
Basic 1,698
910
1,570
909
Diluted 1,698
910
1,570
909

* Financial information for 2018 has been recast to reflect the retrospective application of the successful efforts method of accounting. See ~~Note 1~~.

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	($ in millions)
NET INCOME (LOSS)	$	(745	)	$	(61	)	$	(9,334	)	$	16
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX:
Reclassification of losses on settled derivative instruments^(a)	7			8			24			26
Other Comprehensive Income	7			8			24			26
COMPREHENSIVE INCOME (LOSS)	(738		)	(53		)	(9,310		)	42
COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	0			0			16			0
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	$	(738	)	$	(53	)	$	(9,294	)	$	42

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018* 2019 2018*
($ in millions)
NET INCOME (LOSS) $ (61 ) $ (146 ) $ 16
$ (377 )
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX:
Unrealized gains on derivative instruments^(a)
—
—
—
—
Reclassification of losses on settled derivative instruments^(a)
8
8
26
25
Other Comprehensive Income 8
8
26
25
COMPREHENSIVE INCOME (LOSS) (53 ) (138 ) 42
(352 )
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS —
—
—
(1 )
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE $ (53 ) $ (138 ) $ 42
$ (353 )

* Financial information for 2018 has been recast to reflect the retrospective application of the successful efforts method of accounting. See ~~Note 1~~.


(a)	Deferred tax activity incurred in other comprehensive income was offset by a valuation allowance.

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

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Nine Months Ended September 30,
	2020			2019
	($ in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)	$	(9,334	)	$	16
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation, depletion and amortization	931			1,672
Deferred income tax benefit	(10		)	(314		)
Derivative gains, net	(573		)	(137		)
Cash receipts on derivative settlements, net	890			129
Stock-based compensation	16			24
Gains on sales of assets	(1		)	(33		)
Impairments	8,522			11
Non-cash reorganization items, net	(300		)	0
Exploration	409			35
Losses on investments	23			21
Gains on purchases or exchanges of debt	(65		)	(70		)
Other	(46		)	42
Changes in assets and liabilities	693			(214		)
Net Cash Provided By Operating Activities	1,155			1,182
CASH FLOWS FROM INVESTING ACTIVITIES:
Drilling and completion costs	(946		)	(1,640		)
Business combination, net	0			(353		)
Acquisitions of proved and unproved properties	(9		)	(31		)
Proceeds from divestitures of proved and unproved properties	10			110
Additions to other property and equipment	(18		)	(27		)
Proceeds from sales of other property and equipment	5			6
Net Cash Used In Investing Activities	(958		)	(1,935		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from pre-petition revolving credit facility borrowings	3,806			8,805
Payments on pre-petition revolving credit facility borrowings	(3,467		)	(7,495		)
Proceeds from DIP credit facility borrowings	60			0
Payments on DIP credit facility borrowings	(60		)	0
DIP credit facility and exit facilities financing costs	(109		)	0
Cash paid to purchase debt	(95		)	(457		)
Cash paid for preferred stock dividends	(22		)	(69		)
Other	(10		)	(21		)
Net Cash Provided By Financing Activities	103			763
Net increase in cash and cash equivalents	300			10
Cash and cash equivalents, beginning of period	6			4
Cash and cash equivalents, end of period	$	306		$	14

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

Nine Months Ended
September 30,
2019 2018*
($ in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ 16
$ (377 )
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH
PROVIDED BY OPERATING ACTIVITIES:

Depreciation, depletion and amortization 1,672
1,335
Deferred income tax benefit (314 ) (10 )
Derivative (gains) losses, net (137 ) 500
Cash receipts (payments) on derivative settlements, net 129
(162 )
Stock-based compensation 24
25
Gains on sales of assets (33 ) (27 )
Impairments 11
122
Exploration 35
81
(Gains) losses on investments 21
(139 )
(Gains) losses on purchases or exchanges of debt (70 ) 68
Other 42
(90 )
Changes in assets and liabilities (214 ) 69
Net Cash Provided By Operating Activities 1,182
1,395
CASH FLOWS FROM INVESTING ACTIVITIES:
Drilling and completion costs (1,640 ) (1,407 )
Business combination, net (353 ) —
Acquisitions of proved and unproved properties (31 ) (118 )
Proceeds from divestitures of proved and unproved properties 110
395
Additions to other property and equipment (27 ) (11 )
Proceeds from sales of other property and equipment 6
75
Proceeds from sales of investments —
74
Net Cash Used In Investing Activities (1,935 ) (992 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility borrowings 8,805
9,095
Payments on revolving credit facility borrowings (7,495 ) (9,231 )
Proceeds from issuance of senior notes, net —
1,237
Cash paid to purchase debt (457 ) (1,285 )
Extinguishment of other financing —
(122 )
Cash paid for preferred stock dividends (69 ) (69 )
Distributions to noncontrolling interest owners (2 ) (5 )
Other (19 ) (24 )
Net Cash Provided By (Used In) Financing Activities 763
(404 )
Net increase (decrease) in cash and cash equivalents 10
(1 )
Cash and cash equivalents, beginning of period 4
5
Cash and cash equivalents, end of period $ 14
$ 4

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)

(Unaudited)



Supplemental disclosures to the condensed consolidated statements of cash flows are presented below:
	Nine Months Ended September 30,
	2020			2019
	($ in millions)
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for reorganization items, net	$	118		$	0
Interest paid, net of capitalized interest	$	201		$	487
Income taxes paid, net of refunds received	$	1		$	(6	)

SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NON-CASH INVESTING AND FINANCING ACTIVITIES:
Change in accrued drilling and completion costs	$	(206	)	$	49
Put option premium on equity backstop agreement	$	60		$	0
Operating lease obligations recognized	$	32		$	0
Common stock issued for business combination	$	0		$	2,037
Debt exchanged for common stock	$	0		$	693
Preferred stock exchanged for common stock	$	0		$	40
Change in senior notes exchanged	$	0		$	35

Supplemental disclosures to the condensed consolidated statements of cash flows are presented below:
Nine Months Ended
September 30,
2019 2018*
($ in millions)
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of capitalized interest $ 487
$ 527
Income taxes paid, net of refunds received $ (6 ) $ (3 )

SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for business combination $ 2,037
$ —
Debt exchanged for common stock $ 693
$ —
Preferred stock exchanged for common stock $ 40
$ —
Change in senior notes exchanged $ 35
$ —
Change in accrued drilling and completion costs $ 49
$ 142
Change in divested proved and unproved properties $ (144 ) $ (5 )

* Financial information for 2018 has been recast to reflect the retrospective application

The accompanying notes are an integral part of ~~the successful efforts method of accounting. See~~ ~~Note 1~~.these condensed consolidated financial statements.

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	($ in millions)
PREFERRED STOCK:
Balance, beginning of period	$	1,631		$	1,671		$	1,631		$	1,671
Exchange of 0, 40,000, 0, and 40,000 shares of preferred stock for common stock	0			(40		)	0			(40		)
Balance, end of period	1,631			1,631			1,631			1,631
COMMON STOCK:^(a)
Balance, beginning of period	0			0			0			0
Common shares issued for WildHorse Merger	0			0			0			0
Balance, end of period	0			0			0			0
ADDITIONAL PAID-IN CAPITAL:^(a)
Balance, beginning of period	16,924			16,396			16,973			14,387
Common shares issued for WildHorse Merger	0			0			0			2,037
Exchange of preferred stock for 0, 51,839, 0 and 51,839 shares of common stock	0			40			0			40
Exchange of senior notes for 0, 1,177,817, 0 and 1,177,817 shares of common stock	0			440			0			440
Exchange of convertible senior notes for 0, 366,945, 0 and 366,945 shares of common stock	0			135			0			135
Equity component of convertible notes repurchases	0			(2		)	0			(2		)
Stock-based compensation	7			9			(20		)	27
Dividends on preferred stock	0			(23		)	(22		)	(69		)
Balance, end of period	16,931			16,995			16,931			16,995
ACCUMULATED DEFICIT:
Balance, beginning of period	(22,793		)	(13,835		)	(14,220		)	(13,912		)
Net income (loss) attributable to Chesapeake	(745		)	(61		)	(9,318		)	16
Balance, end of period	(23,538		)	(13,896		)	(23,538		)	(13,896		)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Balance, beginning of period	29			(5		)	12			(23		)
Hedging activity	7			8			24			26
Balance, end of period	36			3			36			3

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

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018* 2019 2018*
($ in millions)
PREFERRED STOCK:
Balance, beginning of period $ 1,671
$ 1,671
$ 1,671
$ 1,671
Exchange of 40,000, 0, 40,000 and 0 shares of preferred stock for common stock (40 ) —
(40 ) —
Balance, end of period 1,631
1,671
1,631
1,671
COMMON STOCK:
Balance, beginning of period 16
9
9
9
Common shares issued for WildHorse Merger —
—
7
—
Exchange of senior notes and convertible senior notes 3
—
3
—
Balance, end of period 19
9
19
9
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period 16,380
14,408
14,378
14,437
Common shares issued for WildHorse Merger —
—
2,030
—
Exchange of preferred stock for 10,367,950, 0 10,367,950 and 0 shares of common stock 40
—
40
—
Exchange of senior notes for 235,563,519, 0 235,563,519 and 0 shares of common stock 438
—
438
—
Exchange of convertible senior notes for 73,389,094, 0, 73,389,094 and 0 shares of common stock 134
—
134
—
Equity component of convertible notes repurchases (2 ) —
(2 ) —
Stock-based compensation 8
9
26
26
Dividends on preferred stock (23 ) (23 ) (69 ) (69 )
Balance, end of period 16,975
14,394
16,975
14,394
ACCUMULATED DEFICIT:
Balance, beginning of period (13,835 ) (14,370 ) (13,912 ) (14,130 )
Net income (loss) attributable to Chesapeake (61 ) (146 ) 16
(378 )
Cumulative effect of accounting change —
—
—
(8 )
Balance, end of period (13,896 ) (14,516 ) (13,896 ) (14,516 )
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Balance, beginning of period (5 ) (40 ) (23 ) (57 )
Hedging activity 8
8
26
25
Balance, end of period 3
(32 ) 3
(32 )

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - (Continued)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	($ in millions)
TREASURY STOCK – COMMON:^(a)
Balance, beginning of period	0			(36		)	(32		)	(31		)
Purchase of 0, 267, 17,901 and 13,369 shares for company benefit plans	0			0			(2		)	(7		)
Release of 0, 187, 44,126 and 1,484 shares from company benefit plans	0			0			34			2
Balance, end of period	0			(36		)	0			(36		)
TOTAL CHESAPEAKE STOCKHOLDERS’ EQUITY (DEFICIT)	(4,940		)	4,697			(4,940		)	4,697
NONCONTROLLING INTERESTS:
Balance, beginning of period	21			39			37			41
Net loss attributable to noncontrolling interests	0			0			(16		)	0
Distributions to noncontrolling interest owners	0			0			0			(2		)
Balance, end of period	21			39			21			39
TOTAL EQUITY (DEFICIT)	$	(4,919	)	$	4,736		$	(4,919	)	$	4,736


(a)	Amounts and shares have been retroactively adjusted to reflect a 1-for-200 (1:200) reverse stock split effective April 14, 2020. See Note 9 for additional information.

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018* 2019 2018*
($ in millions)
TREASURY STOCK – COMMON:
Balance, beginning of period (36 ) (31 ) (31 ) (31 )
Purchase of 53,337, 30,509, 2,673,903, and 1,499,033 shares for company benefit plans —
—
(7 ) (4 )
Release of 37,301, 41,617, 296,864 and 431,474 shares from company benefit plans —
—
2
4
Balance, end of period (36 ) (31 ) (36 ) (31 )
TOTAL CHESAPEAKE STOCKHOLDERS’ EQUITY 4,696
1,495
4,696
1,495
NONCONTROLLING INTERESTS:
Balance, beginning of period 39
42
41
44
Net income attributable to noncontrolling interests —
—
—
1
Distributions to noncontrolling interest owners —
(2 ) (2 ) (5 )
Balance, end of period 39
40
39
40
TOTAL EQUITY $ 4,735
$ 1,535
$ 4,735
$ 1,535

* Financial information for prior periods has been recast to reflect the retrospective application

The accompanying notes are an integral part of ~~the successful efforts method of accounting. See~~ ~~Note 1~~.these condensed consolidated financial statements.

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	Chapter 11 Proceedings

Unless the context otherwise requires, references to “Chesapeake”, the “Company”, “us”, “we” and “our” in this report are to Chesapeake Energy Corporation together with its subsidiaries. On June 28, 2020, (the “Petition Date”) we and certain of our subsidiaries (collectively, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) for relief (the “Bankruptcy Filing”) under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On June 29, 2020, the Bankruptcy Court entered an order authorizing the joint administration of the Chapter 11 Cases under the caption In re Chesapeake Energy Corporation, Case No. 20-33233. Subsidiaries with noncontrolling interests, consolidated variable interest entities and certain de minimis subsidiaries (collectively, the “Non-Filing Entities”) were not part of the Bankruptcy Filing. The Non-Filing Entities will continue to operate in the ordinary course of business.

Debtor-In-Possession

We are currently operating as debtors in possession in accordance with the applicable provisions of the Bankruptcy Code. The Bankruptcy Court granted the first day relief we requested that was designed primarily to mitigate the impact of the Chapter 11 Cases on our operations, customers and employees. As a result, we are able to conduct normal business activities and pay all associated obligations for the period following the Bankruptcy Filing and are also authorized to pay owner royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided prior to the Bankruptcy Filing. During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of business require the prior approval of the Bankruptcy Court.

Automatic Stay

Subject to certain specific exceptions under the Bankruptcy Code, the filing of the Chapter 11 Cases automatically stayed all judicial or administrative actions against us and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to pre-petition claims. Absent an order from the Bankruptcy Court, substantially all of the Debtors’ pre-petition liabilities are subject to settlement under the Bankruptcy Code.

Restructuring Support Agreement

On June 28, 2020, the Debtors entered into a restructuring support agreement (the "RSA") with certain holders (collectively, the "Consenting Stakeholders") of (i) obligations under that certain Amended and Restated Credit Agreement, dated as of September 12, 2018, by and among Chesapeake, as borrower, the Debtor guarantors party thereto, MUFG Union Bank, N.A., as administrative agent, and the other lender, issuer, and agent parties thereto (the "pre-petition revolving credit facility"); (ii) obligations under that certain Term Loan Agreement, dated as of December 19, 2019, by and among Chesapeake, as borrower, the Debtor guarantors party thereto, GLAS USA LLC., as administrative agent, and the lender parties thereto (the "FLLO Term Loan"); and (iii) obligations under the 11.5% Senior Secured Second Lien Notes due 2025 (the "Second Lien Notes") issued pursuant to that certain indenture, dated as of December 19, 2019, by and among Chesapeake, as issuer, certain guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee and collateral trustee to support a restructuring (the "Restructuring") on the terms set forth in the RSA and the term sheet annexed to the RSA (the "Restructuring Term Sheet"). Certain Consenting Stakeholders also hold Unsecured Notes (as defined in the Restructuring Term Sheet) and their Unsecured Notes are also subject to the terms and obligations under the RSA. The RSA contemplates that the Company will implement the Restructuring through the Chapter 11 Cases pursuant to a consensual plan of reorganization (the "Plan") filed in the Chapter 11 proceedings as described further below.

The RSA contains certain covenants on the part of each of the Company and the Consenting Stakeholders, including limitations on the parties’ ability to pursue alternative transactions (subject to customary provisions regarding the ability of the Company’s Board of Directors to satisfy its fiduciary duties), commitments by the Consenting Stakeholders to vote in favor of the Plan and commitments of the Company and the Consenting Stakeholders to negotiate in good faith to finalize the documents and agreements contemplated by and required to implement the Plan. The RSA also provides for certain conditions to the obligations of the parties and for termination upon the occurrence of certain events, including, without limitation, the failure to achieve certain milestones and certain breaches by the parties under the RSA. One such condition is the requirement to obtain sufficient savings on certain midstream obligations (as determined by the required plan sponsors, defined in the RSA) through rejection of such contracts and/or renegotiation of their terms.

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The RSA includes a hedging provision that authorizes the Debtors to enter into post-petition hedge agreements with the lenders under the DIP Credit Facility (as defined below). Beginning 30 days after the Petition Date, the Debtors are required to, at a minimum, hedge 50% of the anticipated projected monthly production from proved developed producing oil and natural gas reserves (in each case, calculated separately for (i) crude oil and (ii) natural gas and natural gas liquids, taken together) for a rolling 24-month period. The Debtors notional hedge volumes shall not exceed (a) for the 18-month period from the date such commodity hedge transaction is executed, the lesser of (x) 80% of forecasted production for such months and (y) 80% of the anticipated projected monthly production from proved oil and natural gas reserves, (b) for the 6-month period following, 90% of the anticipated projected monthly production from proved developed producing oil and natural gas reserves and (c) for the 24-month period thereafter, 80% of the anticipated projected monthly production from proved developed producing oil and natural gas reserves.

Although the Company intends to pursue the Restructuring in accordance with the terms set forth in the Plan, there can be no assurance that the Company will be successful in completing the Restructuring or any other similar transaction on the terms set forth in the Plan, on different terms, or at all.

Plan of Reorganization

On September 11, 2020, the Debtors filed the Plan and a related disclosure statement with the Bankruptcy Court. As is customary in bankruptcy proceedings, the Debtors subsequently filed with the Bankruptcy Court an amended plan and amended disclosure statement on October 8, 2020 and a seconded amended plan and second amended disclosure statement on October 30, 2020. The Plan is subject to approval by the Bankruptcy Court. If the Plan is confirmed by the Bankruptcy Court, the Debtors would exit Chapter 11 pursuant to the terms of the Plan. Under the Plan, the claims against and interests in the Debtors are organized into classes based, in part, on their respective priorities. Below is a summary of the treatment that the stakeholders of the Company would receive under the Plan upon the emergence from bankruptcy:

•

Holders of Other Secured Claims. Each holder of Other Secured Claims (as defined in the RSA) would receive, at the Company's option and in consultation with a requisite number of holders of claims who are backstopping a rights offering pursuant to the Plan: (a) payment in full in cash; (b) the collateral securing its secured claim; (c) reinstatement of its secured claim; or (d) such other treatment rendering its secured claim unimpaired in accordance with Section 1124 of the Bankruptcy Code.


•	Holders of Other Priority Claims. Each holder of Other Priority Claims (as defined in the RSA) would receive treatment in a manner consistent with Section 1129(a)(9) of the Bankruptcy Code.

•

Holders of Pre-Petition Revolving Credit Facility Claims. On the effective date of the Plan (the "Plan Effective Date"), each holder of obligations under the pre-petition revolving credit facility would receive, at such holder's option, its pro rata share of either Tranche A RBL Exit Facility Loans or Tranche B RBL Exit Facility Loans (each as defined in the Exit Facilities Term Sheet, defined below), each on a dollar for dollar basis.

•

Holders of FLLO Term Loan Facility Claims. On the Plan Effective Date, each holder of obligations under the FLLO Term Loan Facility would receive its pro rata share of (i) 76% of the reorganized Company's new common equity interests (the "New Common Stock"), subject to the terms set forth in the Restructuring Term Sheet and (ii) the right to participate in a rights offering on the terms set forth in the Restructuring Term Sheet.

•

Holders of Second Lien Notes Claims. On the Plan Effective Date, each holder of the Second Lien Notes would receive its pro rata share of (i) 12% of the New Common Stock, subject to the terms set forth in the Restructuring Term Sheet, (ii) the right to participate in a rights offering on the terms set forth in the Restructuring Term Sheet, and (iii) warrants to purchase 10% of the New Common Stock on certain terms set forth in the Restructuring Term Sheet, warrants to purchase another 10% of the New Common Stock on certain other terms set forth in the Restructuring Term Sheet, and 50% of warrants to purchase another 10% of the New Common Stock on certain other terms set forth in the Restructuring Term Sheet (the "New Class C Warrants").


•	Holders of Unsecured Notes Claims. On the Plan Effective Date, each holder of the Unsecured Notes (as defined in the RSA) would receive its pro rata share of (i) 12% of the New Common Stock, subject to the terms set forth in the Restructuring Term Sheet (the "Unsecured Notes Claims Recovery"), and (ii) 50% of the New Class C Warrants.

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•	Holders of General Unsecured Claims. On the Plan Effective Date, each holder of allowed general unsecured claims would receive its pro rata share of the General Unsecured Claims Recovery.


•	Equity Holders. Each holder of an equity interest in Chesapeake, including our common and preferred stock, would have such interest canceled, released, and extinguished without any distribution.

DIP Credit Facility

On June 28, 2020, prior to the commencement of the Chapter 11 Cases, the Company entered into a commitment letter (the “Commitment Letter”) with certain of the lenders under the pre-petition revolving credit facility and/or their affiliates (collectively, the “Commitment Parties”), pursuant to which, and subject to the satisfaction of certain customary conditions, including the approval of the Bankruptcy Court, the Commitment Parties agreed to provide the Debtors with a post-petition senior secured super-priority debtor-in-possession revolving credit facility in an aggregate principal amount of up to approximately $2.104 billion (the “DIP Credit Facility”), consisting of a revolving loan facility of new money in an aggregate principal amount of up to $925 million, which includes a sub-facility of up to $200 million for the issuance of letters of credit, and an up to approximately $1.179 billion term loan that reflects the roll-up of a portion of outstanding borrowings under the pre-petition revolving credit facility. Pursuant to the Commitment Letter, the Commitment parties have also committed to provide, subject to certain conditions, an up to $2.5 billion exit credit facility, consisting of an up to $1.75 billion revolving credit facility (the “Exit Revolving Facility”) and an up to $750 million senior secured term loan facility (the “Exit Term Loan Facility” and, together with the Exit Revolving Facility, the “Exit Credit Facilities”). The terms and conditions of the DIP Credit Facility are set forth in the Senior Secured Super-Priority Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”) attached to the Commitment Letter. The proceeds of the DIP Credit Facility may be used for, among other things, post-petition working capital, permitted capital investments, general corporate purposes, letters of credit, administrative costs, premiums, expenses and fees for the transactions contemplated by the Chapter 11 Cases, payment of court approved adequate protection obligations, and other such purposes consistent with the DIP Credit Facility. The terms and conditions of the Exit Credit Facilities are reflected in an exit facilities term sheet attached as an exhibit to the Restructuring Term Sheet (the “Exit Facilities Term Sheet”). The obligations of the lenders to provide the Exit Credit Facilities are subject to satisfaction of certain conditions set forth in the Exit Facilities Term Sheet, including conditions requiring (i) a minimum liquidity of $500 million, (ii) a leverage ratio no greater than 2.25:1.00 and (iii) asset coverage of credit facilities to PV-10 of at least 1.50:1.00. In the Current Period, we incurred $118 million of fees related to the arrangement and funding of the DIP Credit Facility and Exit Credit Facilities. The DIP Credit Facility was approved by the Bankruptcy Court on a final basis on July 31, 2020 and became effective as of July 1, 2020. See Note 4 for additional information.

Executory Contracts

Subject to certain exceptions, under the Bankruptcy Code, we may assume, assign, or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves us from performing our future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Counterparties to rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against our estate for such damages. Generally, the assumption of an executory contract or unexpired lease requires us to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with us, including where applicable a quantification of our obligations under any such executory contract or unexpired lease of us, is qualified by any overriding rejection rights we have under the Bankruptcy Code.

Potential Claims

We have filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of us and each of our subsidiaries, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing. Certain holders of pre-petition claims that are not governmental units were required to file proofs of claim by the deadline for general claims, (the “bar date”), which was set by the Bankruptcy Court as October 30, 2020. Governmental units are required to file proof of claims by December 28, 2020, the deadline that was set by the Bankruptcy Court.

As of November 5, 2020, the Debtors have received approximately 7,350 proofs of claim, approximately half of which represent general unsecured claims, for an aggregate amount of approximately $11.2 billion. We will continue

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to evaluate these claims throughout the Chapter 11 process and recognize or adjust amounts in future financial statements as necessary using the best information available at such time. Differences between amounts scheduled by us and claims by creditors will ultimately be reconciled and resolved in connection with the claims resolution process. In light of the expected number of creditors, the claims resolution process may take considerable time to complete and likely will continue after we emerge from bankruptcy.

Financial Statement Classification of Liabilities Subject to Compromise

The accompanying unaudited condensed consolidated balance sheet as of September 30, 2020, includes amounts classified as liabilities subject to compromise, which represent liabilities we anticipate will be allowed as claims in the Chapter 11 Cases. These amounts represent our current estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases, and may differ from actual future settlement amounts paid. Differences between liabilities estimated and claims filed, or to be filed, will be investigated and resolved in connection with the claims resolution process. We will continue to evaluate these liabilities throughout the Chapter 11 process and adjust amounts as necessary. Such adjustments may be material.

Liabilities subject to compromise includes amounts related to the rejection of various executory contracts and unexpired leases. Additional amounts may be included in liabilities subject to compromise in future periods if additional executory contracts and unexpired leases are rejected. The nature of many of the potential claims arising under our executory contracts and unexpired leases has not been determined at this time, and therefore, such claims are not reasonably estimable at this time and may be material.

The following table summarizes the components of liabilities subject to compromise included on our unaudited condensed consolidated balance sheet as of September 30, 2020:



	September 30, 2020
	($ in millions)
Debt	$	7,166
Accounts payable	148
Accrued interest	235
Other liabilities	879
Liabilities subject to compromise	$	8,428

Reorganization Items, Net

We have incurred and will continue to incur significant expenses, gains and losses associated with the reorganization, primarily the write-off of unamortized debt issuance costs and related unamortized premiums and discounts, debt and equity financing fees, provision for allowed claims and legal and professional fees incurred subsequent to the Chapter 11 filings for the restructuring process. The amount of these items, which are being incurred in reorganization items, net within our accompanying unaudited condensed consolidated statements of operations, are expected to significantly affect our statements of operations. In future periods, we may also incur adjustments for allowable claims related to our legal proceedings and executory contracts approved for rejections by the Bankruptcy Court.

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(Unaudited)

The following table summarizes the components in reorganization items, net included in our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2020:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020			2019
	($ in millions)
Write off of unamortized debt premiums (discounts)	$	0		$	0	$	518		$	0
Write off of unamortized debt issuance costs	0			0		(61		)	0
Debt and equity financing fees	(115		)	0		(178		)	0
Provision for allowed claims	(465		)	0		(465		)	0
Legal and professional fees	(40		)	0		(40		)	0
Gain on settlement of pre-petition accounts payable	12			0		12			0
Loss on settlement of pre-petition revenues payable	(3		)	0		(3		)	0
Reorganization items, net	$	(611	)	$	0	$	(217	)	$	0


2.	Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Chesapeake were prepared in accordance with accounting principles generally accepted in the United States of America ~~(“GAAP”)~~ and the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures have been condensed or omitted.

This Quarterly Report on Form 10-Q (this “Form 10-Q”) relates to the three and nine months ended September 30, ~~2019~~2020 (the “Current Quarter” and the “Current Period”, respectively) and the three and nine months ended September 30, ~~2018~~2019 (the “Prior Quarter” and the “Prior Period”, respectively). Our annual report on Form ~~8-K dated May 9,~~10-K for the year ended December 31, 2019 (“2019 Form 10-K”) should be read in conjunction with this Form 10-Q. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of our condensed consolidated financial statements and accompanying notes and include the accounts of our direct and indirect wholly owned subsidiaries and entities in which we have a controlling financial interest. Intercompany accounts and balances have been ~~eliminated~~.eliminated.

~~Recast Financial Information for Change in Accounting Principle~~Going Concern

In the first quarter of 2019, we voluntarily changed our method of accounting for oil and natural gas exploration and development activities from the full cost method to the successful efforts method. Accordingly, financial information for prior periods has been recast to reflect retrospective application of the successful efforts method. Although the full cost method of accounting for oil and natural gas exploration and development activities continues to be an accepted alternative, the successful efforts method of accounting is the generally preferred method of the SEC and, because it is more widely used in the industry, we expect the change to improve the comparability of ourThe accompanying unaudited condensed consolidated financial statements ~~to our peers. We also believe~~have been prepared assuming we will continue as a going concern and contemplate the ~~successful efforts method provides a more representational depiction~~realization of assets and satisfaction of liabilities in the normal course of business. Our ability to continue as a going concern is contingent on our ability to comply with the financial and other covenants contained in our DIP Credit Facility, the Bankruptcy Court’s approval of the Plan and our ability to successfully implement the Plan and obtain exit financing, among other factors. As a result of the Bankruptcy Filing, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating ~~results~~as debtors-in-possession under Chapter 11, we may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business (and subject to restrictions contained in the DIP Credit Facility), for amounts other than those reflected in the accompanying unaudited condensed consolidated financial statements. Further, the Plan could materially change the amounts and ~~provides for~~classifications of assets and liabilities reported in the condensed consolidated financial statements. The factors noted above raise substantial doubt about our ~~investments in oil~~ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and ~~natural gas properties~~classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to ~~be assessed for impairment in accordance with~~continue as a going concern or as a consequence of the Bankruptcy Filing.

Accounting During Bankruptcy

We have applied Accounting Standards Codification (ASC) ~~Topic 360,~~852, ~~Property Plant and Equipment,~~Reorganizations, ~~rather than valuations based on prices and costs prescribed under~~in preparing the ~~full cost method as of~~unaudited condensed consolidated financial statements. ASC 852 requires that the ~~balance sheet date. For detailed information regarding the effects of the change~~financial statements, for periods subsequent to the ~~successful efforts method, see~~ ~~Note 2~~.Chapter 11 Cases, distinguish transactions and events that are directly associated with the reorganization from

~~Oil and Natural Gas Properties~~

We follow the successful efforts method of accounting for our oil and natural gas properties. Under this method, exploration costs, such as exploratory geological and geophysical costs, expiration of unproved leasehold, delay rentals and exploration overhead are expensed as incurred. All costs related to production, general corporate overhead and similar activities are also expensed as incurred. All property acquisition costs and development costs are capitalized when incurred.

Exploratory drilling costs are initially capitalized, or suspended, pending the determination of proved reserves. If proved reserves are found, drilling costs remain capitalized and are classified as proved properties. Costs of unsuccessful wells are charged to exploration expense. For exploratory wells that find reserves that cannot be classified as proved when drilling is completed, costs continue to be capitalized as suspended exploratory drilling costs if there have been sufficient reserves found to justify completion as a producing well and sufficient progress is being made in assessing the reserves and the economic and operational viability of the project. If we determine that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed. In some instances, this determination may take longer than one year. We review the status of all suspended exploratory drilling costs quarterly. Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of oil and natural gas, are capitalized.

Costs of drilling and equipping successful wells, costs to construct or acquire facilities, and associated asset retirement costs are depreciated using the unit-of-production (UOP) method based on total estimated proved developed oil and gas reserves. Costs of acquiring proved properties, including leasehold acquisition costs transferred from unproved properties, are depleted using the UOP method based on total estimated proved developed and undeveloped reserves.

Proceeds from the sales of individual oil and natural gas properties and the capitalized costs of individual properties sold or abandoned are credited and charged, respectively, to accumulated depreciation, depletion and amortization, if doing so does not materially impact the depletion rate of an amortization base. Generally, no gain or loss is recognized

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)

~~until~~the ongoing operations of the business. Accordingly, certain revenues, expenses, realized gains and losses and provisions for losses that are realized or incurred during the bankruptcy proceedings, including losses related to executory contracts that have been approved for rejection by the Bankruptcy Court, and unamortized deferred financing costs, premiums and discounts associated with debt classified as liabilities subject to compromise, are recorded as reorganization items, net. In addition, pre-petition obligations that may be impacted by the Chapter 11 process have been classified on the unaudited condensed consolidated balance sheet as of September 30, 2020 as liabilities subject to compromise. These liabilities are reported at the amounts we anticipate will be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts. See Note 1 for more information regarding reorganization items.

Risks and Uncertainties

The global spread of COVID-19 created significant volatility, uncertainty, and economic disruption during the first nine months of 2020. The pandemic has reached more than 200 countries and territories and has resulted in widespread adverse impacts on the global economy and on our customers and other parties with whom we have business relations. State and local authorities have also implemented multi-step policies with the goal of re-opening. However, certain jurisdictions began re-opening only to return to restrictions in the face of increases in new COVID-19 cases. To date, we have experienced limited operational impacts as a result of the restrictions from working remotely or COVID-19 directly. As an ~~entire amortization base is sold.~~essential business under the guidelines issued by each of the states in which we operate, we have been allowed to continue operations. As a result, since mid-March, we have restricted access to all of our offices and for a period of time directed employees to work remotely to the extent possible. We began to re-open our offices in phases beginning mid-May and special precautions have been implemented to minimize the risk of exposure. These actions have allowed us to maintain the engagement and connectivity of our personnel. However, ~~a gain or loss is recognized~~due to severe impacts from the ~~sale~~global COVID-19 pandemic on the global demand for oil and natural gas, financial results may not be necessarily indicative of ~~less than an~~operating results for the entire ~~amortization base~~year. Moreover, future operations could be negatively affected if a significant number of our employees are quarantined as a result of exposure to the ~~disposition~~virus.

There is ~~significant enough~~considerable uncertainty regarding the extent to ~~materially impact~~which COVID-19 will continue to spread and the ~~depletion rate~~extent and duration of governmental and other measures implemented to try to slow the spread of the ~~remaining properties~~virus, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders and business and government shutdowns. One of the largest impacts of the pandemic has been a significant reduction in global demand for oil and, to a lesser extent, natural gas. Prices in the ~~amortization base.~~

~~When circumstances indicate that the carrying value of proved~~ oil and gas ~~properties may not~~market have remained depressed, as the oversupply and lack of demand in the market persist. Oil and natural gas prices are expected to continue to be ~~recoverable, we compare unamortized capitalized costs~~volatile as a result of the near-term production instability and the ongoing COVID-19 outbreaks and as changes in oil and natural gas inventories, industry demand and global and national economic performance are reported. The resulting supply/demand imbalance is having disruptive impacts on the oil and natural gas exploration and production industry and on other industries that serve exploration and production companies. We expect to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based on our estimate of future crudesee continued volatility in oil and natural gas prices ~~operating costs, anticipated production from proved reserves~~for the foreseeable future, and ~~other relevant data, are lower than~~such volatility, combined with the ~~unamortized capitalized costs, the capitalized costs are reduced~~current depressed prices, has impacted and is expected to ~~fair value. Fair value is generally estimated using the income approach described in the ASC 820,~~ ~~Fair Value Measurements. If applicable, we utilize~~continue to adversely impact our business. The continued low level of demand and prices ~~and other relevant information generated by market transactions involving assets and liabilities that are identical or comparable to the item being measured as the basis~~ for determining fair value. The expected future cash flows used for impairment reviews and related fair value measurements are typically based on judgmental assessments of future production volumes, commodity prices, operating costs, and capital investment plans, considering all available information at the date of review. These assumptions are applied to develop future cash flow projections that are then discounted to estimated fair value, using a discount rate believed to be consistent with those applied by market participants. We have classified these fair value measurements as Level 3 in the fair value hierarchy.

~~Capitalized Interest~~

Interest from external borrowings is capitalized on significant investments in major development projects until the asset is ready for service using the weighted average borrowing rate of outstanding borrowings. Capitalized interest is determined by multiplying our weighted average borrowing cost on debt by the average amount of qualifying costs incurred. Capitalized interest is depreciated over the useful lives of the assets in the same manner as the depreciation of the underlying asset.

~~Recently Issued Accounting Standards~~

~~In February 2016, the FASB issued Auditing Standards Update (ASU) 2016-02,~~ ~~Leases (Topic 842)~~ ~~(“ASC 842”)~~, which requires lessees to recognize a lease liability and a right-of-use (ROU) asset on the balance sheet for all leases, including operating leases, with terms in excess of 12 months. As the implicit rate of the lease is not always readily determinable, the company uses its incremental borrowing rate to calculate the present value of lease payments based on information available at the commencement date. Operating ROU assets are included in other long-term assets while operating lease liabilities are included in other current and other long-term liabilities on the condensed consolidated balance sheet. Finance ROU assets are reflected in total property and equipment, net, while finance lease liabilities are included in other current and other long-term liabilities on the condensed consolidated balance sheet.

~~ASC 842 does not apply to our leases of mineral rights to explore for or use~~ oil and natural gas ~~resources, including the intangible rights to explore for those natural resources and rights to use the land in which those natural resources are contained.~~

~~We adopted the new standard on January 1, 2019 and as permitted by ASU 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements~~, ~~we will not adjust comparative-period financial statements~~or otherwise has had and will continue to ~~apply~~have a material adverse effect on our business, cash flows, liquidity, financial condition and results of operations.

We cannot predict the ~~guidance in Topic 840, including its disclosure requirements,~~full impact that COVID-19 or the significant disruption and volatility currently being experienced in the ~~comparative periods presented prior to adoption. No cumulative-effect adjustment to retained earnings was required as a result of the modified retrospective approach.~~

Upon adoption of ASC 842, we made certain elections permitting us to not reassess: (1) whether any expired or existing contracts contained leases (2) the lease classification for any expired or existing leases,oil and (3) initial direct costs for any existing leases. Upon adoption of ASC 842, we also made an election permitting us to continue applying our current policy for land easements. The adoption of ASC 842 did not result in a material impactnatural gas markets will have on our ~~balance sheet,~~business, cash flows, liquidity, financial condition and results of operations ~~or cash flows.~~

~~Short-term leases~~at this time due to numerous uncertainties. The ultimate impacts will ~~not be recognized~~depend on future developments, including the ~~balance sheet as an asset or a liability,~~ultimate geographic spread of the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the development of effective treatments, the duration of the outbreak, actions taken by members of Organization of Petroleum Exporting Countries (OPEC+) and other foreign, oil-exporting countries, governmental authorities, customers and other third parties, workforce availability, and the ~~related rental expense will be expensed as incurred. We have short-term lease agreements related~~timing and extent to ~~most of our drilling rig arrangements~~which normal economic and ~~hydraulic fracturing arrangements and some of our compressor rental arrangements.~~operating conditions resume.

~~See~~ ~~Note 9~~ ~~for further information regarding leases.~~

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)


2.	~~Change in Accounting Principle~~

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~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Three Months Ended September 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Under
Full Cost Successful
Efforts
Adjustment Under Successful Efforts
($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL $ 1,170
$ —
$ 1,170
Marketing 889
—
889
Total Revenues 2,059
—
2,059
Other —
15
15
Gains on sales of assets —
13
13
Total Revenues and Other 2,059
28
2,087
OPERATING EXPENSES:
Oil, natural gas and NGL production 155
—
155
Oil, natural gas and NGL gathering, processing and transportation 270
—
270
Production taxes 35
—
35
Exploration —
17
17
Marketing 901
—
901
General and administrative 52
14
66
Depreciation, depletion and amortization 421
152
573
Impairments 1
8
9
Other operating expense 15
—
15
Total Operating Expenses 1,850
191
2,041
INCOME FROM OPERATIONS 209
(163 ) 46
OTHER INCOME (EXPENSE):
Interest expense (134 ) (43 ) (177 )
Losses on investments (4 ) —
(4 )
Gains on purchases or exchanges of debt 70
—
70
Other income 2
1
3
Total Other Expense (66 ) (42 ) (108 )
INCOME (LOSS) BEFORE INCOME TAXES 143
(205 ) (62 )
Income tax benefit (1 ) —
(1 )
NET INCOME (LOSS) 144
(205 ) (61 )
Net loss attributable to noncontrolling interests —
—
—
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE 144
(205 ) (61 )
Preferred stock dividends (23 ) —
(23 )
Loss on exchange of preferred stock (17 ) —
(17 )
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ 104
$ (205 ) $ (101 )
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ 0.06
$ (0.12 ) $ (0.06 )
Diluted $ 0.06
$ (0.12 ) $ (0.06 )
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):
Basic 1,698
—
1,698
Diluted 1,698
—
1,698

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Three Months Ended September 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Under
Full Cost
Successful
Efforts
Adjustment Under Successful Efforts
($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL $ 1,199
$ —
$ 1,199
Marketing 1,219
—
1,219
Total Revenues 2,418
—
2,418
Other —
16
16
Losses on sales of assets —
(10 ) (10 )
Total Revenues and Other 2,418
6
2,424
OPERATING EXPENSES:
Oil, natural gas and NGL production 132
—
132
Oil, natural gas and NGL gathering, processing and transportation 364
—
364
Production taxes 34
—
34
Exploration —
22
22
Marketing 1,238
—
1,238
General and administrative 66
15
81
Provision for legal contingencies, net 8
—
8
Depreciation, depletion and amortization 291
114
405
Impairments 5
53
58
Total Operating Expenses 2,138
204
2,342
INCOME FROM OPERATIONS 280
(198 ) 82
OTHER INCOME (EXPENSE):
Interest expense (127 ) (38 ) (165 )
Losses on purchases or exchanges of debt (68 ) —
(68 )
Other income 1
5
6
Total Other Expense (194 ) (33 ) (227 )
INCOME (LOSS) BEFORE INCOME TAXES 86
(231 ) (145 )
Income tax expense 1
—
1
NET INCOME (LOSS) 85
(231 ) (146 )
Net income attributable to noncontrolling interests (1 ) 1
—
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE 84
(230 ) (146 )
Preferred stock dividends (23 ) —
(23 )
Earnings allocated to participating securities (1 ) 1
—
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ 60
$ (229 ) $ (169 )
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ 0.07
$ (0.26 ) $ (0.19 )
Diluted $ 0.07
$ (0.26 ) $ (0.19 )
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):
Basic 910
—
910
Diluted 911
(1 ) 910

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Nine Months Ended September 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Under
Full Cost Successful
Efforts
Adjustment Under Successful Efforts
($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL $ 3,553
$ —
$ 3,553
Marketing 3,038
—
3,038
Total Revenues 6,591
—
6,591
Other —
45
45
Gains on sales of assets —
33
33
Total Revenues and Other 6,591
78
6,669
OPERATING EXPENSES:
Oil, natural gas and NGL production 453
—
453
Oil, natural gas and NGL gathering, processing and transportation 815
—
815
Production taxes 109
—
109
Exploration —
56
56
Marketing 3,071
—
3,071
General and administrative 216
42
258
Provision for legal contingencies 3
—
3
Depreciation, depletion and amortization 1,197
475
1,672
Gain on sale of oil and natural gas properties (10 ) 10
—
Impairments 3
8
11
Other operating expense 79
—
79
Total Operating Expenses 5,936
591
6,527
INCOME FROM OPERATIONS 655
(513 ) 142
OTHER INCOME (EXPENSE):
Interest expense (400 ) (113 ) (513 )
Losses on investments (28 ) —
(28 )
Gains on purchases or exchanges of debt 70
—
70
Other income 22
8
30
Total Other Expense (336 ) (105 ) (441 )
INCOME (LOSS) BEFORE INCOME TAXES 319
(618 ) (299 )
Income tax benefit (315 ) —
(315 )
NET INCOME 634
(618 ) 16
Net income attributable to noncontrolling interests (1 ) 1
—
NET INCOME ATTRIBUTABLE TO CHESAPEAKE 633
(617 ) 16
Preferred stock dividends (69 ) —
(69 )
Loss on exchange of preferred stock (17 ) —
(17 )
Earnings allocated to participating securities (2 ) 2
—
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ 545
$ (615 ) $ (70 )
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ 0.35
$ (0.39 ) $ (0.04 )
Diluted $ 0.35
$ (0.39 ) $ (0.04 )
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):
Basic 1,570
—
1,570
Diluted 1,570
—
1,570

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Nine Months Ended September 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Under
Full Cost
Successful
Efforts
Adjustment Under Successful Efforts
($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL $ 3,424
$ —
$ 3,424
Marketing 3,738
—
3,738
Total Revenues 7,162
—
7,162
Other —
48
48
Gains on sales of assets —
27
27
Total Revenues and Other 7,162
75
7,237
OPERATING EXPENSES:
Oil, natural gas and NGL production 417
—
417
Oil, natural gas and NGL gathering, processing and transportation 1,060
—
1,060
Production taxes 91
—
91
Exploration —
123
123
Marketing 3,798
—
3,798
General and administrative 229
44
273
Restructuring and other termination costs 38
—
38
Provision for legal contingencies, net 17
—
17
Depreciation, depletion and amortization 867
468
1,335
Impairments 51
71
122
Other operating (income) expense 6
(7 ) (1 )
Total Operating Expenses 6,574
699
7,273
INCOME (LOSS) FROM OPERATIONS 588
(624 ) (36 )
OTHER INCOME (EXPENSE):
Interest expense (367 ) (115 ) (482 )
Gains on investments 139
—
139
Losses on purchases or exchanges of debt (68 ) —
(68 )
Other income 63
(1 ) 62
Total Other Expense (233 ) (116 ) (349 )
INCOME (LOSS) BEFORE INCOME TAXES 355
(740 ) (385 )
Income tax benefit (8 ) —
(8 )
NET INCOME (LOSS) 363
(740 ) (377 )
Net income attributable to noncontrolling interests (3 ) 2
(1 )
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE 360
(738 ) (378 )
Preferred stock dividends (69 ) —
(69 )
Earnings allocated to participating securities (3 ) 3
—
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ 288
$ (735 ) $ (447 )
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ 0.32
$ (0.81 ) $ (0.49 )
Diluted $ 0.32
$ (0.81 ) $ (0.49 )
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):
Basic 909
—
909
Diluted 909
—
909

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Three Months Ended September 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Under Full Cost Successful
Efforts
Adjustment Under Successful Efforts
($ in millions)
NET INCOME (LOSS) $ 144
$ (205 ) $ (61 )
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX:
Unrealized gains on derivative instruments —
—
—
Reclassification of losses on settled derivative instruments 8
—
8
Other Comprehensive Income 8
—
8
COMPREHENSIVE INCOME (LOSS) 152
(205 ) (53 )
COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS —
—
—
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE $ 152
$ (205 ) $ (53 )

Three Months Ended September 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Under Full Cost Successful
Efforts
Adjustment Under Successful Efforts
($ in millions)
NET INCOME (LOSS) $ 85
$ (231 ) $ (146 )
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX:
Unrealized gains on derivative instruments —
—
—
Reclassification of losses on settled derivative instruments 8
—
8
Other Comprehensive Income 8
—
8
COMPREHENSIVE INCOME (LOSS) 93
(231 ) (138 )
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (1 ) 1
—
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE $ 92
$ (230 ) $ (138 )

Nine Months Ended September 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Under Full Cost Successful
Efforts
Adjustment Under Successful Efforts
($ in millions)
NET INCOME $ 634
$ (618 ) $ 16
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX:
Unrealized gains on derivative instruments —
—
—
Reclassification of losses on settled derivative instruments 26
—
26
Other Comprehensive Income 26
—
26
COMPREHENSIVE INCOME 660
(618 ) 42
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS (1 ) 1
—
COMPREHENSIVE INCOME ATTRIBUTABLE TO CHESAPEAKE $ 659
$ (617 ) $ 42

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Nine Months Ended September 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Under Full Cost Successful
Efforts
Adjustment Under Successful Efforts
($ in millions)
NET INCOME (LOSS) $ 363
$ (740 ) $ (377 )
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX:
Unrealized gains on derivative instruments —
—
—
Reclassification of losses on settled derivative instruments 25
—
25
Other Comprehensive Income 25
—
25
COMPREHENSIVE INCOME (LOSS) 388
(740 ) (352 )
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (3 ) 2
(1 )
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE $ 385
$ (738 ) $ (353 )

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Nine Months Ended September 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Under
Full Cost
Successful
Efforts
Adjustment Under Successful Efforts
($ in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 634
$ (618 ) $ 16
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED BY OPERATING ACTIVITIES:

Depreciation, depletion and amortization 1,197
475
1,672
Deferred income tax benefit (314 ) —
(314 )
Derivative losses, net (137 ) —
(137 )
Cash receipts on derivative settlements, net 129
—
129
Stock-based compensation 24
—
24
Gains on sales of assets —
(33 ) (33 )
Impairments 3
8
11
Exploration —
35
35
Losses on investments 21
—
21
Gains on purchases of debt (70 ) —
(70 )
Other 33
9
42
Changes in assets and liabilities (169 ) (45 ) (214 )
Net Cash Provided By Operating Activities 1,351
(169 ) 1,182
CASH FLOWS FROM INVESTING ACTIVITIES:
Drilling and completion costs (1,694 ) 54
(1,640 )
Business combination, net (353 ) —
(353 )
Acquisitions of proved and unproved properties (146 ) 115
(31 )
Proceeds from divestitures of proved and unproved properties 110
—
110
Additions to other property and equipment (27 ) —
(27 )
Proceeds from sales of other property and equipment 6
—
6
Net Cash Used In Investing Activities (2,104 ) 169
(1,935 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility borrowings 8,805
—
8,805
Payments on revolving credit facility borrowings (7,495 ) —
(7,495 )
Cash paid to purchase debt (457 ) —
(457 )
Cash paid for preferred stock dividends (69 ) —
(69 )
Distributions to noncontrolling interest owners (2 ) —
(2 )
Other (19 ) —
(19 )
Net Cash Provided By Financing Activities 763
—
763
Net increase in cash and cash equivalents 10
—
10
Cash and cash equivalents, beginning of period 4
—
4
Cash and cash equivalents, end of period $ 14
$ —
$ 14

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Nine Months Ended September 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Under
Full Cost
Successful
Efforts
Adjustment Under Successful Efforts
($ in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ 363
$ (740 ) $ (377 )
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation, depletion and amortization 867
468
1,335
Deferred income tax benefit (10 ) —
(10 )
Derivative losses, net 500
—
500
Cash payments on derivative settlements, net (162 ) —
(162 )
Stock-based compensation 25
—
25
Gains on sales of assets —
(27 ) (27 )
Impairments 51
71
122
Exploration —
81
81
Gains on investments (139 ) —
(139 )
Losses on purchases or exchanges of debt 68
—
68
Other (83 ) (7 ) (90 )
Changes in assets and liabilities 116
(47 ) 69
Net Cash Provided By Operating Activities 1,596
(201 ) 1,395
CASH FLOWS FROM INVESTING ACTIVITIES:
Drilling and completion costs (1,482 ) 75
(1,407 )
Acquisitions of proved and unproved properties (244 ) 126
(118 )
Proceeds from divestitures of proved and unproved properties 395
—
395
Additions to other property and equipment (11 ) —
(11 )
Proceeds from sales of other property and equipment 75
—
75
Proceeds from sales of investments 74
—
74
Net Cash Used In Investing Activities (1,193 ) 201
(992 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility borrowings 9,095
—
9,095
Payments on revolving credit facility borrowings (9,231 ) —
(9,231 )
Proceeds from issuance of senior notes, net 1,237
—
1,237
Cash paid to purchase debt (1,285 ) —
(1,285 )
Extinguishment of other financing (122 ) —
(122 )
Cash paid for preferred stock dividends (69 ) —
(69 )
Distributions to noncontrolling interest owners (5 ) —
(5 )
Other (24 ) —
(24 )
Net Cash Used In Financing Activities (404 ) —
(404 )
Net decrease in cash and cash equivalents (1 ) —
(1 )
Cash and cash equivalents, beginning of period 5
—
5
Cash and cash equivalents, end of period $ 4
$ —
$ 4

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Three Months Ended September 30, 2019
CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
Under
Full Cost Successful Efforts Adjustment Under Successful Efforts
($ in millions)
PREFERRED STOCK:
Balance, beginning of period $ 1,671
$ —
$ 1,671
Exchange of 40,000 shares of preferred stock for common stock (40 ) —
(40 )
Balance, end of period 1,631
—
1,631
COMMON STOCK:
Balance, beginning of period 16
—
16
Exchange of senior notes and convertible senior notes 3
—
3
Exchange of preferred stock —
—
—
Balance, end of period 19
—
19
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period 16,380
—
16,380
Exchange of preferred stock for 10,367,950 shares of common stock 40
—
40
Exchange of senior notes for 235,563,519 shares of common stock 438
—
438
Exchange of convertible senior notes for 73,389,094 shares of common stock 134
—
134
Equity component of convertible notes repurchases (2 ) —
(2 )
Stock-based compensation 8
—
8
Dividends on preferred stock (23 ) —
(23 )
Balance, end of period 16,975
—
16,975
ACCUMULATED DEFICIT:
Balance, beginning of period (15,171 ) 1,336
(13,835 )
Net income (loss) attributable to Chesapeake 144
(205 ) (61 )
Balance, end of period (15,027 ) 1,131
(13,896 )
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance, beginning of period (5 ) —
(5 )
Hedging activity 8
—
8
Balance, end of period 3
—
3
TREASURY STOCK – COMMON:
Balance, beginning of period (36 ) —
(36 )
Purchase of 53,337 shares for company benefit plans —
—
—
Release of 37,301 shares from company benefit plans —
—
—
Balance, end of period (36 ) —
(36 )
TOTAL CHESAPEAKE STOCKHOLDERS’ EQUITY 3,565
1,131
4,696
NONCONTROLLING INTERESTS:
Balance, beginning of period 122
(83 ) 39
Net loss attributable to noncontrolling interests —
—
—
Distributions to noncontrolling interest owners —
—
—
Balance, end of period 122
(83 ) 39
TOTAL EQUITY $ 3,687
$ 1,048
$ 4,735

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Three Months Ended September 30, 2018
CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
Under
Full Cost Successful Efforts Adjustment Under Successful Efforts
($ in millions)
PREFERRED STOCK:
Balance, beginning and end of period $ 1,671
$ —
$ 1,671
COMMON STOCK:
Balance, beginning of period 9
—
9
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period 14,408
—
14,408
Stock-based compensation 9
—
9
Dividends on preferred stock (23 ) —
(23 )
Balance, end of period 14,394
—
14,394
ACCUMULATED DEFICIT:
Balance, beginning of period (16,257 ) 1,887
(14,370 )
Net income (loss) attributable to Chesapeake 84
(230 ) (146 )
Balance, end of period (16,173 ) 1,657
(14,516 )
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance, beginning of period (40 ) —
(40 )
Hedging activity 8
—
8
Balance, end of period (32 ) —
(32 )
TREASURY STOCK – COMMON:
Balance, beginning of period (31 ) —
(31 )
Purchase of 30,509 shares for company benefit plans —
—
—
Release of 41,617 shares from company benefit plans —
—
—
Balance, end of period (31 ) —
(31 )
TOTAL CHESAPEAKE STOCKHOLDERS’ EQUITY (DEFICIT) (162 ) 1,657
1,495
NONCONTROLLING INTERESTS:
Balance, beginning of period 123
(81 ) 42
Net income attributable to noncontrolling interests 1
(1 ) —
Distributions to noncontrolling interest owners (2 ) —
(2 )
Balance, end of period 122
(82 ) 40
TOTAL EQUITY (DEFICIT) $ (40 ) $ 1,575
$ 1,535

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Nine Months Ended September 30, 2019
CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
Under
Full Cost Successful Efforts Adjustment Under Successful Efforts
($ in millions)
PREFERRED STOCK:
Balance, beginning of period $ 1,671
$ —
$ 1,671
Exchange of 40,000 shares of preferred stock for common stock (40 ) —
(40 )
Balance, end of period 1,631
—
1,631
COMMON STOCK:
Balance, beginning of period 9
—
9
Common shares issued for WildHorse Merger 7
—
7
Exchange of senior notes and convertible senior notes 3
—
3
Exchange of preferred stock —
—
—
Balance, end of period 19
—
19
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period 14,378
—
14,378
Common shares issued for WildHorse Merger 2,030
—
2,030
Exchange of preferred stock for 10,367,950 shares of common stock 40
—
40
Exchange of senior notes for 235,563,519 shares of common stock 438
—
438
Exchange of convertible senior notes for 73,389,094 shares of common stock 134
—
134
Equity component of convertible notes repurchases (2 ) —
(2 )
Stock-based compensation 26
—
26
Dividends on preferred stock (69 ) —
(69 )
Balance, end of period 16,975
—
16,975
ACCUMULATED DEFICIT:
Balance, beginning of period (15,660 ) 1,748
(13,912 )
Net income attributable to Chesapeake 633
(617 ) 16
Balance, end of period (15,027 ) 1,131
(13,896 )
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance, beginning of period (23 ) —
(23 )
Hedging activity 26
—
26
Balance, end of period 3
—
3
TREASURY STOCK – COMMON:
Balance, beginning of period (31 ) —
(31 )
Purchase of 2,673,903 shares for company benefit plans (7 ) —
(7 )
Release of 296,864 shares from company benefit plans 2
—
2
Balance, end of period (36 ) —
(36 )
TOTAL CHESAPEAKE STOCKHOLDERS’ EQUITY 3,565
1,131
4,696
NONCONTROLLING INTERESTS:
Balance, beginning of period 123
(82 ) 41
Net income (loss) attributable to noncontrolling interests 1
(1 ) —
Distributions to noncontrolling interest owners (2 ) —
(2 )
Balance, end of period 122
(83 ) 39
TOTAL EQUITY $ 3,687
$ 1,048
$ 4,735

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

Nine Months Ended September 30, 2018
CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
Under
Full Cost Successful Efforts Adjustment Under Successful Efforts
($ in millions)
PREFERRED STOCK:
Balance, beginning and end of period $ 1,671
$ —
$ 1,671
COMMON STOCK:
Balance, beginning and end of period 9
—
9
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period 14,437
—
14,437
Stock-based compensation 26
—
26
Dividends on preferred stock (69 ) —
(69 )
Balance, end of period 14,394
—
14,394
ACCUMULATED DEFICIT:
Balance, beginning of period (16,525 ) 2,395
(14,130 )
Net income (loss) attributable to Chesapeake 360
(738 ) (378 )
Cumulative effect of accounting change (8 ) —
(8 )
Balance, end of period (16,173 ) 1,657
(14,516 )
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance, beginning of period (57 ) —
(57 )
Hedging activity 25
—
25
Balance, end of period (32 ) —
(32 )
TREASURY STOCK – COMMON:
Balance, beginning of period (31 ) —
(31 )
Purchase of 1,499,033 shares for company benefit plans (4 ) —
(4 )
Release of 431,474 shares from company benefit plans 4
—
4
Balance, end of period (31 ) —
(31 )
TOTAL CHESAPEAKE STOCKHOLDERS’ EQUITY (DEFICIT) (162 ) 1,657
1,495
NONCONTROLLING INTERESTS:
Balance, beginning of period 124
(80 ) 44
Net income attributable to noncontrolling interests 3
(2 ) 1
Distributions to noncontrolling interest owners (5 ) —
(5 )
Balance, end of period 122
(82 ) 40
TOTAL EQUITY (DEFICIT) $ (40 ) $ 1,575
$ 1,535

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~


3.	~~Oil and Natural Gas Property Transactions~~

~~WildHorse Acquisition~~

On February 1, 2019, we acquired WildHorse Resource Development Corporation (“WildHorse”), an oil and gas company with operations in the Eagle Ford Shale and Austin Chalk formations in southeast Texas for approximately 717.4 million shares of our common stock and $381 million in cash. We funded the cash portion of the consideration through borrowings under the Chesapeake revolving credit facility. In connection with the closing, we acquired all of WildHorse’s debt. See ~~Note 6~~ ~~for additional information on the acquired debt.~~

~~Purchase Price Allocation~~

We have accounted for the acquisition of WildHorse and its corresponding merger (the “Merger”) with and into our wholly owned subsidiary, Brazos Valley Longhorn, L.L.C. (“Brazos Valley Longhorn” or “BVL”), as a business combination, using the acquisition method. The following table represents the preliminary allocation of the total purchase price of WildHorse to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, valuation of pre-acquisition contingencies and final appraisals of assets acquired and liabilities assumed. We expect to complete the purchase price allocation during the 12-month period following the acquisition date, during which time the value of the assets and liabilities may be revised as appropriate.

Preliminary Purchase Price Allocation
($ in millions)
Consideration:
Cash $ 381
Fair value of Chesapeake’s common stock issued in the Merger ^(a)
2,037
Total consideration $ 2,418

Fair Value of Liabilities Assumed:
Current liabilities $ 166
Long-term debt 1,379
Deferred tax liabilities 314
Other long-term liabilities 36
Amounts attributable to liabilities assumed $ 1,895

Fair Value of Assets Acquired:
Cash and cash equivalents $ 28
Other current assets 128
Proved oil and natural gas properties 3,264
Unproved properties 756
Other property and equipment 77
Other long-term assets 60
Amounts attributable to assets acquired $ 4,313

Total identifiable net assets $ 2,418


~~(a)~~	~~Based on 717,376,170 Chesapeake common shares issued at closing at $2.84 per share (closing price as of February 1, 2019).~~

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~

We included in our condensed consolidated statements of operations revenues of $543 million, direct operating expenses of $579 million and other expense of $67 million related to the WildHorse business for the period from February 1, 2019 to September 30, 2019.

~~Pro Forma Financial Information~~

The following unaudited pro forma financial information for the nine months ended September 30, 2019 and three and nine months ended September 30, 2018, respectively, is based on our historical consolidated financial statements adjusted to reflect as if the WildHorse acquisition had occurred on January 1, 2018. The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including adjustments to conform the classification of expenses in WildHorse’s statements of operations to our classification for similar expenses and the estimated tax impact of pro forma adjustments.

Three Months Ended September 30,
Nine Months Ended
September 30,
2018 2019 2018
($ in millions except per share data)
Revenues $ 2,607
$ 6,661
$ 7,692
Net income (loss) available to common stockholders $ (199 ) $ (85 ) $ (543 )
Earnings per common share:
Basic $ (0.12 ) $ (0.05 ) $ (0.33 )
Diluted $ (0.12 ) $ (0.05 ) $ (0.33 )

This unaudited pro forma information has been derived from historical information. The unaudited pro forma financial information is not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of the periods presented, nor is it necessarily indicative of future results.

~~Divestitures~~

In the Prior Period, we sold portions of our acreage, producing properties and other related property and equipment in the Mid-Continent, including our Mississippian Lime assets, for approximately $491 million, subject to certain customary closing adjustments. Included in the sales were approximately 238,500 net acres and interests in approximately 3,200 wells. Also, in the Current Quarter, the Prior Quarter, the Current Period and the Prior Period, we received proceeds of approximately $28 million, $8 million, $110 million and $31 million, respectively, subject to customary closing adjustments, for the sale of other oil and natural gas properties covering various operating areas.

~~TABLE OF CONTENTS~~

~~CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(Unaudited)~~


4.	~~Capitalized Exploratory Well Costs~~

A summary of the changes in our capitalized well costs for the Current Period is detailed below. Additions pending the determination of proved reserves excludes amounts capitalized and subsequently charged to expense within the same year.

2019
($ in millions)
Balance as of January 1 $ 36
Additions pending the determination of proved reserves 14
Divestitures and other —
Reclassifications to proved properties (18 )
Charges to exploration expense (8 )
Balance as of September 30 $ 24

~~As of September 30, 2019, approximately $1 million of drilling and completion costs on exploratory wells pending determination of proved reserves have been capitalized for greater than one year.~~


5.	~~Earnings Per Share~~

Basic earnings per share (EPS) is calculated using the weighted average number of common shares outstanding during the period and includes the effect of any participating securities as appropriate. Participating securities consist of unvested restricted stock issued to our employees and non-employee directors that provide dividend rights.

Diluted EPS is calculated assuming the issuance of common shares for all potentially dilutive securities, provided the effect is not antidilutive. For all periods presented, our convertible senior notes did not have a dilutive effect and, therefore, were excluded from the calculation of diluted EPS.

Shares of common stock for the following securities were excluded from the calculation of diluted EPS as the effect was antidilutive:


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018	2020	2019	2020	2019
	(in millions)				(in thousands)
Common stock equivalent of our preferred stock outstanding(a)	58	60	58	60	290	290	290	290
Common stock equivalent of our convertible senior notes outstanding(a)	124	146	124	146	0	621	621	621
Common stock equivalent of our preferred stock outstanding prior to exchange(a)	1	—	1	—	0	5	0	5
Participating securities(a)	—	2	—	1	0	1	0	2


(a)	Amount has been retroactively adjusted to reflect a 1-for-200 (1:200) reverse stock split effective April 14, 2020. See Note 9 for additional information.

As a result of the Company’s reverse stock split effective on April 14, 2020, proportionate adjustments were made to the conversion price of Chesapeake’s outstanding 5.5% Convertible Senior Notes due 2026, 4.5% Cumulative Convertible Preferred Stock, 5.00% Cumulative Convertible Preferred Stock (Series 2005B), 5.75% Cumulative Convertible Non-Voting Preferred Stock (Series A) and 5.75% Cumulative Non-Voting Convertible Preferred Stock and to the outstanding awards and number of shares issued and issuable under the Company's equity compensation plans. See Note 9 for additional information.

~~TABLE OF CONTENTS~~Table of Contents

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –- (Continued)

(Unaudited)


6.4.	Debt

Our long-term debt consisted of the following as of September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:


	September 30, 2019						December 31, 2018						September 30, 2020						December 31, 2019
	Principal Amount			Carrying Amount			Principal Amount			Carrying Amount			Principal Amount			Carrying Amount			Principal Amount			Carrying Amount
	($ in millions)												($ in millions)
Floating rate senior notes due 2019	—			—			380			380
DIP credit facility													$	0		$	0		$	0		$	0
Pre-petition revolving credit facility													1,929			1,929			1,590			1,590
Term loan due 2024													1,500			1,500			1,500			1,470
11.5% senior secured second lien notes due 2025													2,330			2,330			2,330			3,248
6.625% senior notes due 2020	208			208			437			437			176			176			208			208
6.875% senior notes due 2020	93			93			227			227			73			73			93			93
6.125% senior notes due 2021	167			167			548			548			167			167			167			167
5.375% senior notes due 2021	127			127			267			267			127			127			127			127
4.875% senior notes due 2022	338			338			451			451			272			272			338			338
5.75% senior notes due 2023	209			209			338			338			167			167			209			209
7.00% senior notes due 2024	850			850			850			850			624			624			624			624
6.875% senior notes due 2025^(a)	618			621			—			—
6.875% senior notes due 2025													2			2			2			2
8.00% senior notes due 2025	1,245			1,237			1,300			1,291			246			246			246			245
5.5% convertible senior notes due 2026^(b)	1,064			758			1,250			866
5.5% convertible senior notes due 2026													1,064			1,064			1,064			765
7.5% senior notes due 2026	400			400			400			400			119			119			119			119
8.00% senior notes due 2026	919			885			—			—			46			46			46			44
8.00% senior notes due 2027	1,090			1,089			1,300			1,299			253			253			253			253
2.25% contingent convertible senior notes due 2038	—			—			1			1
Chesapeake revolving credit facility	1,504			1,504			419			419
BVL revolving credit facility^(a)	900			900			—			—
Debt issuance costs	—			(46		)	—			(53		)	—			0			—			(44		)
Interest rate derivatives	—			1			—			1
Total debt, net	9,732			9,341			8,168			7,722			9,095			9,095			8,916			9,458
Less current maturities of long-term debt, net^(c)	(208		)	(208		)	(381		)	(381		)
Less current maturities of long-term debt													(1,929		)	(1,929		)	(385		)	(385		)
Less amounts reclassified to liabilities subject to compromise													(7,166		)	(7,166		)	0			0
Total long-term debt, net	$	9,524		$	9,133		$	7,787		$	7,341		$	0		$	0		$	8,531		$	9,073

~~___________________________________________~~



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



Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class	Trading ~~Symbol(s)~~Symbol⁽¹⁾	Name of Each Exchange on Which Registered
Common Stock, par value $0.01	~~CHK~~CHKAQ	~~New York Stock Exchange~~N/A
6.625% Senior Notes due 2020	~~CHK20A~~*	~~New York Stock Exchange~~N/A
6.875% Senior Notes due 2020	~~CHK20~~*	~~New York Stock Exchange~~N/A
6.125% Senior Notes due 2021	~~CHK21~~*	~~New York Stock Exchange~~N/A
5.375% Senior Notes due 2021	~~CHK21A~~*	~~New York Stock Exchange~~N/A
4.875% Senior Notes due 2022	~~CHK22~~*	~~New York Stock Exchange~~N/A
5.75% Senior Notes due 2023	~~CHK23~~*	~~New York Stock Exchange~~N/A
4.5% Cumulative Convertible Preferred Stock	~~CHK Pr D~~*	~~New York Stock Exchange~~N/A



	PART I. FINANCIAL INFORMATION	Page
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019	34
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019	56
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019	67
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019	78
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019	910
	Notes to the Condensed Consolidated Financial Statements (Unaudited)
	Note 1. Chapter 11 Proceedings	12
	Note 2. Basis of Presentation and Summary of Significant Accounting Policies	11
	~~Note 2. Change in Accounting Principle~~		1316
	Note 3. ~~Oil and Natural Gas Property Transactions~~Earnings per Share	2618
	Note 4. ~~Capitalized Exploratory Well Costs~~Debt	2819
	Note 5. ~~Earnings per Share~~ Contingencies and Commitments	2822
	Note 6. ~~Debt~~Other Liabilities	24
	Note 7. Revenue	25
	Note 8. Income Taxes	27
	Note 9. Equity	29
	Note ~~7. Contingencies~~10. Share-Based Compensation	30
	Note 11. Derivative and ~~Commitments~~Hedging Activities	33
	Note ~~8. Other Liabilities~~12. Exploration Expense	3437
	Note ~~9. Leases~~	35
	~~Note 10. Revenue Recognition~~13. Impairments		38
	Note ~~11. Income Taxes~~14. Capitalized Exploratory Well Costs	40
	~~Note 12. Equity~~		42
	~~Note 13. Share-Based Compensation~~		43
	~~Note 14. Derivative and Hedging Activities~~		4739
	Note 15. Investments	5339
	Note 16. Other Operating ~~Expenses~~Expense	5339
	Note 17. ~~Restructuring~~Separation and Other Termination Costs	5339
	Note 18. ~~Fair Value Measurements~~Condensed Combined Debtor-in-Possession Financial Information	5440
	Note 19. ~~Condensed Consolidating Financial~~Subsequent Events	43
	Supplementary Information	5444
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6345
	Liquidity and Capital Resources	6449
	Results of Operations for the Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019	6953
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	7863
Item 4.	Controls and Procedures	8264
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	8365
Item 1A.	Risk Factors	8367
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8573
Item 3.	Defaults Upon Senior Securities	8573
Item 4.	Mine Safety Disclosures	8573
Item 5.	Other Information	8573
Item 6.	Exhibits	8674
Signatures		8876



	September 30, 2020			December 31, 2019
ASSETS	($ in millions)
CURRENT ASSETS:
Cash and cash equivalents ($2 and $2 attributable to our VIE)	$	306		$	6
Accounts receivable, net	676			990
Short-term derivative assets	0			134
Other current assets	90			121
Total Current Assets	1,072			1,251
PROPERTY AND EQUIPMENT:
Oil and natural gas properties, at cost based on successful efforts accounting:
Proved oil and natural gas properties ($755 and $755 attributable to our VIE)	31,511			30,765
Unproved properties	1,738			2,173
Other property and equipment	1,786			1,810
Total Property and Equipment, at Cost	35,035			34,748
Less: accumulated depreciation, depletion and amortization (($748) and ($713) attributable to our VIE)	(29,399		)	(20,002		)
Property and equipment held for sale, net	10			10
Total Property and Equipment, Net	5,646			14,756
Other long-term assets	185			186
TOTAL ASSETS	$	6,903		$	16,193



	September 30, 2019			December 31, 2018
	($ in millions)
CURRENT ASSETS:
Cash and cash equivalents ($2 and $1 attributable to our VIE)	$	14		$	4
Accounts receivable, net	977			1,247
Short-term derivative assets	272			209
Other current assets	140			138
Total Current Assets	1,403			1,598
PROPERTY AND EQUIPMENT:
Oil and natural gas properties, at cost based on successful efforts accounting:
Proved oil and natural gas properties ($755 and $755 attributable to our VIE)	30,288			25,407
Unproved properties	2,200			1,561
Other property and equipment	1,810			1,721
Total Property and Equipment, at Cost	34,298			28,689
Less: accumulated depreciation, depletion and amortization (($711) and ($707) attributable to our VIE)	(19,432		)	(17,886		)
Property and equipment held for sale, net	10			15
Total Property and Equipment, Net	14,876			10,818
LONG-TERM ASSETS:
Long-term derivative assets	51			76
Other long-term assets	249			243
TOTAL ASSETS	$	16,579		$	12,735



	September 30, 2020			December 31, 2019
LIABILITIES AND EQUITY (DEFICIT)	($ in millions)
CURRENT LIABILITIES:
Accounts payable	$	316		$	498
Current maturities of long-term debt, net	1,929			385
Accrued interest	2			75
Short-term derivative liabilities	105			2
Other current liabilities (nominal and $1 attributable to our VIE)	753			1,432
Total Current Liabilities	3,105			2,392
Long-term debt, net	0			9,073
Long-term derivative liabilities	61			2
Asset retirement obligations, net of current portion	212			200
Other long-term liabilities	16			125
Liabilities subject to compromise	8,428			0
Total Liabilities	11,822			11,792
CONTINGENCIES AND COMMITMENTS (Note 5)
EQUITY (DEFICIT):
Chesapeake Stockholders’ Equity (Deficit):
Preferred stock, $0.01 par value, 20,000,000 shares authorized: 5,563,458 shares outstanding	1,631			1,631
Common stock, $0.01 par value, 22,500,000 and 15,000,000 shares authorized: 9,780,371 and 9,772,793 shares issued^(a)	0			0
Additional paid-in capital^(a)	16,931			16,973
Accumulated deficit	(23,538		)	(14,220		)
Accumulated other comprehensive income	36			12
Less: treasury stock, at cost; 0 and 26,224 common shares^(a)	0			(32		)
Total Chesapeake Stockholders’ Equity (Deficit)	(4,940		)	4,364
Noncontrolling interests	21			37
Total Equity (Deficit)	(4,919		)	4,401
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	6,903		$	16,193



	Nine Months Ended September 30,
	2019			2018*
	($ in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)	$	16		$	(377	)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation, depletion and amortization	1,672			1,335
Deferred income tax benefit	(314		)	(10		)
Derivative (gains) losses, net	(137		)	500
Cash receipts (payments) on derivative settlements, net	129			(162		)
Stock-based compensation	24			25
Gains on sales of assets	(33		)	(27		)
Impairments	11			122
Exploration	35			81
(Gains) losses on investments	21			(139		)
(Gains) losses on purchases or exchanges of debt	(70		)	68
Other	42			(90		)
Changes in assets and liabilities	(214		)	69
Net Cash Provided By Operating Activities	1,182			1,395
CASH FLOWS FROM INVESTING ACTIVITIES:
Drilling and completion costs	(1,640		)	(1,407		)
Business combination, net	(353		)	—
Acquisitions of proved and unproved properties	(31		)	(118		)
Proceeds from divestitures of proved and unproved properties	110			395
Additions to other property and equipment	(27		)	(11		)
Proceeds from sales of other property and equipment	6			75
Proceeds from sales of investments	—			74
Net Cash Used In Investing Activities	(1,935		)	(992		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility borrowings	8,805			9,095
Payments on revolving credit facility borrowings	(7,495		)	(9,231		)
Proceeds from issuance of senior notes, net	—			1,237
Cash paid to purchase debt	(457		)	(1,285		)
Extinguishment of other financing	—			(122		)
Cash paid for preferred stock dividends	(69		)	(69		)
Distributions to noncontrolling interest owners	(2		)	(5		)
Other	(19		)	(24		)
Net Cash Provided By (Used In) Financing Activities	763			(404		)
Net increase (decrease) in cash and cash equivalents	10			(1		)
Cash and cash equivalents, beginning of period	4			5
Cash and cash equivalents, end of period	$	14		$	4



	Three Months Ended September 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	Under Full Cost			Successful Efforts Adjustment			Under Successful Efforts
	($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL	$	1,170		$	—		$	1,170
Marketing	889			—			889
Total Revenues	2,059			—			2,059
Other	—			15			15
Gains on sales of assets	—			13			13
Total Revenues and Other	2,059			28			2,087
OPERATING EXPENSES:
Oil, natural gas and NGL production	155			—			155
Oil, natural gas and NGL gathering, processing and transportation	270			—			270
Production taxes	35			—			35
Exploration	—			17			17
Marketing	901			—			901
General and administrative	52			14			66
Depreciation, depletion and amortization	421			152			573
Impairments	1			8			9
Other operating expense	15			—			15
Total Operating Expenses	1,850			191			2,041
INCOME FROM OPERATIONS	209			(163		)	46
OTHER INCOME (EXPENSE):
Interest expense	(134		)	(43		)	(177		)
Losses on investments	(4		)	—			(4		)
Gains on purchases or exchanges of debt	70			—			70
Other income	2			1			3
Total Other Expense	(66		)	(42		)	(108		)
INCOME (LOSS) BEFORE INCOME TAXES	143			(205		)	(62		)
Income tax benefit	(1		)	—			(1		)
NET INCOME (LOSS)	144			(205		)	(61		)
Net loss attributable to noncontrolling interests	—			—			—
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	144			(205		)	(61		)
Preferred stock dividends	(23		)	—			(23		)
Loss on exchange of preferred stock	(17		)	—			(17		)
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$	104		$	(205	)	$	(101	)
EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.06		$	(0.12	)	$	(0.06	)
Diluted	$	0.06		$	(0.12	)	$	(0.06	)
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):
Basic	1,698			—			1,698
Diluted	1,698			—			1,698



	Three Months Ended September 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	Under Full Cost			Successful Efforts Adjustment			Under Successful Efforts
	($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL	$	1,199		$	—		$	1,199
Marketing	1,219			—			1,219
Total Revenues	2,418			—			2,418
Other	—			16			16
Losses on sales of assets	—			(10		)	(10		)
Total Revenues and Other	2,418			6			2,424
OPERATING EXPENSES:
Oil, natural gas and NGL production	132			—			132
Oil, natural gas and NGL gathering, processing and transportation	364			—			364
Production taxes	34			—			34
Exploration	—			22			22
Marketing	1,238			—			1,238
General and administrative	66			15			81
Provision for legal contingencies, net	8			—			8
Depreciation, depletion and amortization	291			114			405
Impairments	5			53			58
Total Operating Expenses	2,138			204			2,342
INCOME FROM OPERATIONS	280			(198		)	82
OTHER INCOME (EXPENSE):
Interest expense	(127		)	(38		)	(165		)
Losses on purchases or exchanges of debt	(68		)	—			(68		)
Other income	1			5			6
Total Other Expense	(194		)	(33		)	(227		)
INCOME (LOSS) BEFORE INCOME TAXES	86			(231		)	(145		)
Income tax expense	1			—			1
NET INCOME (LOSS)	85			(231		)	(146		)
Net income attributable to noncontrolling interests	(1		)	1			—
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	84			(230		)	(146		)
Preferred stock dividends	(23		)	—			(23		)
Earnings allocated to participating securities	(1		)	1			—
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$	60		$	(229	)	$	(169	)
EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.07		$	(0.26	)	$	(0.19	)
Diluted	$	0.07		$	(0.26	)	$	(0.19	)
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):
Basic	910			—			910
Diluted	911			(1		)	910



	Nine Months Ended September 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	Under Full Cost			Successful Efforts Adjustment			Under Successful Efforts
	($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL	$	3,553		$	—		$	3,553
Marketing	3,038			—			3,038
Total Revenues	6,591			—			6,591
Other	—			45			45
Gains on sales of assets	—			33			33
Total Revenues and Other	6,591			78			6,669
OPERATING EXPENSES:
Oil, natural gas and NGL production	453			—			453
Oil, natural gas and NGL gathering, processing and transportation	815			—			815
Production taxes	109			—			109
Exploration	—			56			56
Marketing	3,071			—			3,071
General and administrative	216			42			258
Provision for legal contingencies	3			—			3
Depreciation, depletion and amortization	1,197			475			1,672
Gain on sale of oil and natural gas properties	(10		)	10			—
Impairments	3			8			11
Other operating expense	79			—			79
Total Operating Expenses	5,936			591			6,527
INCOME FROM OPERATIONS	655			(513		)	142
OTHER INCOME (EXPENSE):
Interest expense	(400		)	(113		)	(513		)
Losses on investments	(28		)	—			(28		)
Gains on purchases or exchanges of debt	70			—			70
Other income	22			8			30
Total Other Expense	(336		)	(105		)	(441		)
INCOME (LOSS) BEFORE INCOME TAXES	319			(618		)	(299		)
Income tax benefit	(315		)	—			(315		)
NET INCOME	634			(618		)	16
Net income attributable to noncontrolling interests	(1		)	1			—
NET INCOME ATTRIBUTABLE TO CHESAPEAKE	633			(617		)	16
Preferred stock dividends	(69		)	—			(69		)
Loss on exchange of preferred stock	(17		)	—			(17		)
Earnings allocated to participating securities	(2		)	2			—
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$	545		$	(615	)	$	(70	)
EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.35		$	(0.39	)	$	(0.04	)
Diluted	$	0.35		$	(0.39	)	$	(0.04	)
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):
Basic	1,570			—			1,570
Diluted	1,570			—			1,570



	Nine Months Ended September 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	Under Full Cost			Successful Efforts Adjustment			Under Successful Efforts
	($ in millions except per share data)
REVENUES AND OTHER:
Oil, natural gas and NGL	$	3,424		$	—		$	3,424
Marketing	3,738			—			3,738
Total Revenues	7,162			—			7,162
Other	—			48			48
Gains on sales of assets	—			27			27
Total Revenues and Other	7,162			75			7,237
OPERATING EXPENSES:
Oil, natural gas and NGL production	417			—			417
Oil, natural gas and NGL gathering, processing and transportation	1,060			—			1,060
Production taxes	91			—			91
Exploration	—			123			123
Marketing	3,798			—			3,798
General and administrative	229			44			273
Restructuring and other termination costs	38			—			38
Provision for legal contingencies, net	17			—			17
Depreciation, depletion and amortization	867			468			1,335
Impairments	51			71			122
Other operating (income) expense	6			(7		)	(1		)
Total Operating Expenses	6,574			699			7,273
INCOME (LOSS) FROM OPERATIONS	588			(624		)	(36		)
OTHER INCOME (EXPENSE):
Interest expense	(367		)	(115		)	(482		)
Gains on investments	139			—			139
Losses on purchases or exchanges of debt	(68		)	—			(68		)
Other income	63			(1		)	62
Total Other Expense	(233		)	(116		)	(349		)
INCOME (LOSS) BEFORE INCOME TAXES	355			(740		)	(385		)
Income tax benefit	(8		)	—			(8		)
NET INCOME (LOSS)	363			(740		)	(377		)
Net income attributable to noncontrolling interests	(3		)	2			(1		)
NET INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	360			(738		)	(378		)
Preferred stock dividends	(69		)	—			(69		)
Earnings allocated to participating securities	(3		)	3			—
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$	288		$	(735	)	$	(447	)
EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.32		$	(0.81	)	$	(0.49	)
Diluted	$	0.32		$	(0.81	)	$	(0.49	)
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (in millions):
Basic	909			—			909
Diluted	909			—			909



	Three Months Ended September 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	Under Full Cost		Successful Efforts Adjustment			Under Successful Efforts
	($ in millions)
NET INCOME (LOSS)	$	144	$	(205	)	$	(61	)
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX:
Unrealized gains on derivative instruments	—		—			—
Reclassification of losses on settled derivative instruments	8		—			8
Other Comprehensive Income	8		—			8
COMPREHENSIVE INCOME (LOSS)	152		(205		)	(53		)
COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—		—			—
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CHESAPEAKE	$	152	$	(205	)	$	(53	)



	Three Months Ended September 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	Under Full Cost			Successful Efforts Adjustment			Under Successful Efforts
	($ in millions)
PREFERRED STOCK:
Balance, beginning of period	$	1,671		$	—		$	1,671
Exchange of 40,000 shares of preferred stock for common stock	(40		)	—			(40		)
Balance, end of period	1,631			—			1,631
COMMON STOCK:
Balance, beginning of period	16			—			16
Exchange of senior notes and convertible senior notes	3			—			3
Exchange of preferred stock	—			—			—
Balance, end of period	19			—			19
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	16,380			—			16,380
Exchange of preferred stock for 10,367,950 shares of common stock	40			—			40
Exchange of senior notes for 235,563,519 shares of common stock	438			—			438
Exchange of convertible senior notes for 73,389,094 shares of common stock	134			—			134
Equity component of convertible notes repurchases	(2		)	—			(2		)
Stock-based compensation	8			—			8
Dividends on preferred stock	(23		)	—			(23		)
Balance, end of period	16,975			—			16,975
ACCUMULATED DEFICIT:
Balance, beginning of period	(15,171		)	1,336			(13,835		)
Net income (loss) attributable to Chesapeake	144			(205		)	(61		)
Balance, end of period	(15,027		)	1,131			(13,896		)
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance, beginning of period	(5		)	—			(5		)
Hedging activity	8			—			8
Balance, end of period	3			—			3
TREASURY STOCK – COMMON:
Balance, beginning of period	(36		)	—			(36		)
Purchase of 53,337 shares for company benefit plans	—			—			—
Release of 37,301 shares from company benefit plans	—			—			—
Balance, end of period	(36		)	—			(36		)
TOTAL CHESAPEAKE STOCKHOLDERS’ EQUITY	3,565			1,131			4,696
NONCONTROLLING INTERESTS:
Balance, beginning of period	122			(83		)	39
Net loss attributable to noncontrolling interests	—			—			—
Distributions to noncontrolling interest owners	—			—			—
Balance, end of period	122			(83		)	39
TOTAL EQUITY	$	3,687		$	1,048		$	4,735



	Preliminary Purchase Price Allocation
	($ in millions)
Consideration:
Cash	$	381
Fair value of Chesapeake’s common stock issued in the Merger ^(a)	2,037
Total consideration	$	2,418

Fair Value of Liabilities Assumed:
Current liabilities	$	166
Long-term debt	1,379
Deferred tax liabilities	314
Other long-term liabilities	36
Amounts attributable to liabilities assumed	$	1,895

Fair Value of Assets Acquired:
Cash and cash equivalents	$	28
Other current assets	128
Proved oil and natural gas properties	3,264
Unproved properties	756
Other property and equipment	77
Other long-term assets	60
Amounts attributable to assets acquired	$	4,313

Total identifiable net assets	$	2,418



	Three Months Ended September 30,			Nine Months Ended September 30,
	2018			2019			2018
	($ in millions except per share data)
Revenues	$	2,607		$	6,661		$	7,692
Net income (loss) available to common stockholders	$	(199	)	$	(85	)	$	(543	)
Earnings per common share:
Basic	$	(0.12	)	$	(0.05	)	$	(0.33	)
Diluted	$	(0.12	)	$	(0.05	)	$	(0.33	)



	2019
	($ in millions)
Balance as of January 1	$	36
Additions pending the determination of proved reserves	14
Divestitures and other	—
Reclassifications to proved properties	(18		)
Charges to exploration expense	(8		)
Balance as of September 30	$	24


~~(a)~~	On February 1, 2019, we acquired the debt of WildHorse which consisted of 6.875% Senior Notes due 2025 and a revolving credit facility. We now refer to this debt as our BVL Senior Notes and our BVL revolving credit facility, respectively. See further discussion below.


~~(c)~~	~~As of September 30, 2019, net current maturities of long-term debt includes our 6.625% Senior Notes due August 2020.~~



	Notes Repurchased
	($ in millions)
6.625% senior notes due 2020	$	32
6.875% senior notes due 2020	20
4.875% senior notes due 2022	66
5.75% senior notes due 2023	42
Total	$	160



	Notes Exchanged
	($ in millions)
6.625% senior notes due 2020	$	229
6.875% senior notes due 2020	134
6.125% senior notes due 2021	381
5.375% senior notes due 2021	140
Total	$	884


	September 30, 2019		December 31, 2018		September 30, 2020		December 31, 2019
	($ in millions)				($ in millions)
Revenues and royalties due others	$	429	$	687	$	235	$	516
Accrued drilling and production costs	474		258		88		326
Debt and equity financing fees					69		0
Joint interest prepayments received	49		73		27		52
VPP deferred revenue^(a)	56		59
Accrued compensation and benefits	156		202
Operating leases^(a)					23		9
Accrued reorganization professional fees					23		0
VPP deferred revenue^(b)					22		55
Accrued compensation and benefits^(c)					61		156
Other accrued taxes	141		108		123		150
Other	185		212		82		168
Total other current liabilities	$	1,490	$	1,599	$	753	$	1,432


(a)	In the Current Quarter, we entered into a drilling rig contract that extends through 2021 and recorded an operating lease liability and right-of-use asset.


(c)	In the Current Period, we terminated our nonqualified deferred compensation plan. Accordingly, we derecognized the asset associated with the plan after the participants’ investments were liquidated. The cash was distributed to the participants, and we extinguished the corresponding $43 million accrued liability.



	Financing		Operating
	($ in millions)
ROU assets	$	20	$	22

Lease liabilities:
Current lease liabilities	$	9	$	9
Long-term lease liabilities	11		16
Total lease liabilities	$	20	$	25



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease cost:	($ in millions)
Amortization of ROU assets	$	2	$	6
Interest on lease liability	—		1
Finance lease cost	2		7
Operating lease cost	7		24
Short-term lease cost	34		82
Total lease cost^(a)	$	43	$	113

Other information:
Operating cash outflows from finance lease	$	—	$	1
Operating cash outflows from operating leases	$	3	$	8
Investing cash outflows from operating leases	$	38	$	98
Financing cash outflows from finance lease	$	2	$	6


Weighted-average remaining lease term - finance lease			2.25 years
Weighted-average remaining lease term - operating leases			4.87 years
Weighted-average discount rate - finance lease			7.50		%
Weighted-average discount rate - operating leases			4.17		%


~~(a)~~	~~Includes $38 million and $98 million of capitalized lease costs for the Current Quarter and the Current Period, respectively.~~



	September 30, 2019
	Financing Lease			Operating Leases
	($ in millions)
Remainder of 2019	$	3		$	2
2020	10			9
2021	10			5
2022	—			3
2023	—			2
Thereafter	—			7
Total lease payments	23			28
Less imputed interest	(3		)	(3		)
Present value of lease liabilities	20			25
Less current maturities	(9		)	(9		)
Present value of lease liabilities, less current maturities	$	11		$	16



	December 31, 2018
	Capital Lease		Operating Leases
	($ in millions)
2019	$	10	$	3
2020	10		1
2021	10		—
Total minimum lease payments	$	30	$	4



	Three Months Ended September 30, 2019
	Oil			Natural Gas			NGL			Total
	($ in millions)
Marcellus	$	—		$	158		$	—		$	158
Haynesville	—			129			—			129
Eagle Ford	282			32			22			336
Brazos Valley	194			10			5			209
Powder River Basin	97			16			5			118
Mid-Continent	40			8			5			53
Revenue from contracts with customers	613			353			37			1,003
Gains on oil, natural gas and NGL derivatives	124			43			—			167
Oil, natural gas and NGL revenue	$	737		$	396		$	37		$	1,170

Marketing revenue from contracts with customers	$	603		$	165		$	37		$	805
Other marketing revenue	80			4			—			84
Losses on oil, natural gas and NGL derivatives	—			—			—			—
Marketing revenue	$	683		$	169		$	37		$	889

	Three Months Ended September 30, 2018
	Oil			Natural Gas			NGL			Total
	($ in millions)
Marcellus	$	—		$	184		$	—		$	184
Haynesville	—			195			—			195
Eagle Ford	399			36			58			493
Powder River Basin	78			17			13			108
Mid-Continent	58			15			12			85
Utica	59			131			76			266
Revenue from contracts with customers	594			578			159			1,331
Losses on oil, natural gas and NGL derivatives	(100		)	(18		)	(14		)	(132		)
Oil, natural gas and NGL revenue	$	494		$	560		$	145		$	1,199

Marketing revenue from contracts with customers	707			211			112			1,030
Other marketing revenue	119			70			—			189
Marketing revenue	$	826		$	281		$	112		$	1,219



	Three Months Ended September 30, 2020
	Oil			Natural Gas			NGL		Total
	($ in millions)
Marcellus	$	0		$	137		$	0	$	137
Haynesville	0			92			0		92
Eagle Ford	189			26			26		241
Brazos Valley	127			3			3		133
Powder River Basin	36			7			4		47
Mid-Continent	14			5			3		22
Revenue from contracts with customers	366			270			36		672
Losses on oil, natural gas and NGL derivatives	(2		)	(159		)	0		(161		)
Oil, natural gas and NGL revenue	$	364		$	111		$	36	$	511

Marketing revenue	$	301		$	116		$	31	$	448

	Three Months Ended September 30, 2019
	Oil			Natural Gas			NGL		Total
	($ in millions)
Marcellus	$	0		$	158		$	0	$	158
Haynesville	0			129			0		129
Eagle Ford	282			32			22		336
Brazos Valley	194			10			5		209
Powder River Basin	97			16			5		118
Mid-Continent	40			8			5		53
Revenue from contracts with customers	613			353			37		1,003
Gains on oil, natural gas and NGL derivatives	124			43			0		167
Oil, natural gas and NGL revenue	$	737		$	396		$	37	$	1,170

Marketing revenue from contracts with customers	$	603		$	165		$	37	$	805
Other marketing revenue	80			4			0		84
Marketing revenue	$	683		$	169		$	37	$	889


	Nine Months Ended September 30, 2019												Nine Months Ended September 30, 2020
	Oil			Natural Gas			NGL			Total			Oil			Natural Gas			NGL		Total
	($ in millions)												($ in millions)
Marcellus	$	—		$	656		$	—		$	656		$	0		$	445		$	0	$	445
Haynesville	—			494			—			494			0			245			0		245
Eagle Ford	962			117			89			1,168			539			77			59		675
Brazos Valley	513			23			12			548			375			10			9		394
Powder River Basin	273			59			23			355			133			28			14		175
Mid-Continent	131			34			26			191			44			19			9		72
Revenue from contracts with customers	1,879			1,383			150			3,412			1,091			824			91		2,006
Gains (losses) on oil, natural gas and NGL derivatives	(49		)	190			—			141			689			(116		)	0		573
Oil, natural gas and NGL revenue	$	1,830		$	1,573		$	150		$	3,553		$	1,780		$	708		$	91	$	2,579

Marketing revenue from contracts with customers	$	1,830		$	741		$	202		$	2,773		$	930		$	338		$	76	$	1,344
Other marketing revenue	230			38			—			268			67			1			0		68
Losses on oil, natural gas and NGL derivatives	—			(3		)	—			(3		)
Marketing revenue	$	2,060		$	776		$	202		$	3,038		$	997		$	339		$	76	$	1,412

	Nine Months Ended September 30, 2018												Nine Months Ended September 30, 2019
	Oil			Natural Gas			NGL			Total			Oil			Natural Gas			NGL		Total
	($ in millions)												($ in millions)
Marcellus	$	—		$	646		$	—		$	646		$	0		$	657		$	0	$	657
Haynesville	2			603			—			605			0			494			0		494
Eagle Ford	1,148			120			143			1,411			962			117			88		1,167
Brazos Valley													513			23			12		548
Powder River Basin	173			40			30			243			273			59			23		355
Mid-Continent	196			63			42			301			131			34			26		191
Utica	179			350			189			718
Revenue from contracts with customers	1,698			1,822			404			3,924			1,879			1,384			149		3,412
Losses on oil, natural gas and NGL derivatives	(388		)	(85		)	(27		)	(500		)
Gains (losses) on oil, natural gas and NGL derivatives													(49		)	190			0		141
Oil, natural gas and NGL revenue	$	1,310		$	1,737		$	377		$	3,424		$	1,830		$	1,574		$	149	$	3,553

Marketing revenue from contracts with customers	2,125			733			324			3,182			$	1,830		$	741		$	202	$	2,773
Other marketing revenue	381			175			—			556			230			38			0		268
Losses on marketing derivatives													0			(3		)	0		(3		)
Marketing revenue	$	2,506		$	908		$	324		$	3,738		$	2,060		$	776		$	202	$	3,038



	Three Months Ended September 30,		Nine Months Ended, September 30,
	2019	2018	2019	2018
	(in thousands)
Beginning balance	1,634,486	913,271	913,716	908,733
Common shares issued for WildHorse Merger^(a)	—	—	717,376	—
Exchange of convertible notes^(b)	73,389	—	73,389	—
Exchange of senior notes^(b)	235,564	—	235,564	—
Exchange of preferred stock^(c)	10,368	—	10,368	—
Restricted stock issuances (net of forfeitures and cancellations)^(d)	344	421	3,738	4,959
Ending balance	1,954,151	913,692	1,954,151	913,692



	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
	(in thousands)
Beginning balance^(a)	9,780	8,172	9,773	4,568
Common shares issued for WildHorse Merger^(a)	0	0	0	3,587
Exchange of convertible notes^(a)(b)	0	367	0	367
Exchange of senior notes^(a)(b)	0	1,178	0	1,178
Exchange of preferred stock^(a)(c)	0	52	0	52
Restricted stock issuances (net of forfeitures and cancellations)^(a)(d)	0	2	7	19
Ending balance^(a)	9,780	9,771	9,780	9,771


(a)	All share information has been retroactively adjusted to reflect a 1-for-200 (1:200) reverse stock split effective April 14, 2020. See ~~Note 3~~below for ~~discussion of WildHorse Merger.~~ additional information.



	5.75%		5.75% (A)			4.50%		5.00% (2005B)
	(in thousands)
Shares outstanding as of July 1, 2019	770		463			2,559		1,811
Exchange of preferred stock^(a)	—		(40		)	—		—
Shares outstanding as of September 30, 2019	770		423			2,559		1,811

Shares outstanding as of July 1, 2018 and September 30, 2018	770		463			2,559		1,811

Shares outstanding as of January 1, 2019	770		463			2,559		1,811
Exchange of preferred stock^(a)	—		(40		)	—		—
Shares outstanding as of September 30, 2019	770		423			2,559		1,811

Shares outstanding as of January 1, 2018 and September 30, 2018	770		463			2,559		1,811

Liquidation price per share	$	1,000	$	1,000		$	100	$	100