10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 1-13726

CHESAPEAKE ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

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	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share	CHK	The Nasdaq Stock Market LLC
Class A Warrants to purchase Common Stock	CHKEW	The Nasdaq Stock Market LLC
Class B Warrants to purchase Common Stock	CHKEZ	The Nasdaq Stock Market LLC
Class C Warrants to purchase Common Stock	CHKEL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒      No ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒  Accelerated Filer ☐  Non-accelerated Filer ☐  

Smaller Reporting Company ☐  Emerging Growth Company ☐ 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐      No ☒ 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court Yes  ☒ No ☐

As of October 28, 2022, there were 133,971,136 shares of our $0.01 par value common stock outstanding.

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

INDEX TO FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022

	PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Operations	8
	Condensed Consolidated Statements of Comprehensive Income (Loss)	10
	Condensed Consolidated Statements of Cash Flows	11
	Condensed Consolidated Statements of Stockholders’ Equity	13
	Notes to Condensed Consolidated Financial Statements (Unaudited)
	Note 1. Basis of Presentation and Summary of Significant Accounting Policies	15
	Note 2. Chapter 11 Emergence	16
	Note 3. Fresh Start Accounting	18
	Note 4. Natural Gas and Oil Property Transactions	26
	Note 5. Earnings Per Share	30
	Note 6. Debt	31
	Note 7. Contingencies and Commitments	33
	Note 8. Other Current Liabilities	34
	Note 9. Revenue	34
	Note 10. Income Taxes	36
	Note 11. Equity	38
	Note 12. Share-Based Compensation	39
	Note 13. Derivative and Hedging Activities	42
	Note 14. Other Operating Expense (Income), Net	44
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
	Liquidity and Capital Resources	47
	Results of Operations	52
	Non-GAAP Measures	63
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	66
Item 4.	Controls and Procedures	67
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	69
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	70
Signatures		72

Definitions

Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Chesapeake,” the “Company” and “Registrant” refer to Chesapeake Energy Corporation and its consolidated subsidiaries. All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified. In addition, the following are other abbreviations and definitions of certain terms used within this Quarterly Report on Form 10-Q:

“ASC” means Accounting Standards Codification.

“Backstop Commitment Agreement” means that certain Backstop Commitment Agreement, dated as of June 28, 2020, by and between Chesapeake and the Backstop Parties, as may be further amended, modified, or supplemented from time to time, in accordance with its terms.

“Backstop Parties” means the members of the FLLO Ad Hoc Group that are signatories to the Backstop Commitment Agreement and Franklin Advisers, Inc., as investment manager on behalf of certain funds and accounts.

“Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. §§ 101–1532, as amended.

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Texas.

“Bbl” or “Bbls” means barrel or barrels.

“Bcf” means billion cubic feet.

“Chapter 11 Cases” means, when used with reference to a particular Debtor, the case pending for that Debtor under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court, and when used with reference to all the Debtors, the procedurally consolidated Chapter 11 cases pending for the Debtors in the Bankruptcy Court.

“Chief” means Chief E&D Holdings, LP.

“Class A Warrants” means warrants to purchase 10 percent of the New Common Stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan, the Class B Warrants, and the Class C Warrants), at an initial exercise price per share of $27.63. The Class A Warrants are exercisable from the Effective Date until February 9, 2026.

“Class B Warrants” means warrants to purchase 10 percent of the New Common Stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan and the Class C Warrants), at an initial exercise price per share of $32.13. The Class B Warrants are exercisable from the Effective Date until February 9, 2026.

“Class C Warrants” means warrants to purchase 10 percent of the New Common Stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan), at an initial exercise price per share of $36.18. The Class C Warrants are exercisable from the Effective Date until February 9, 2026.

“Confirmation Order” means the order confirming the Fifth Amended Joint Chapter 11 Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates, Docket No. 2915, entered by the Bankruptcy Court on January 16, 2021.

“DD&A” means depreciation, depletion and amortization.

“Debtors” means the Company, together with all of its direct and indirect subsidiaries that have filed the Chapter 11 Cases.

“DIP Facility” means that certain debtor-in-possession financing facility documented pursuant to the DIP Documents and DIP Order.

“Effective Date” means February 9, 2021.

“Exit Credit Facility” means the reserve-based revolving credit facility available upon emergence from bankruptcy.

“FLLO Term Loan Facility” means the facility outstanding under the FLLO Term Loan Facility Credit Agreement.

“FLLO Term Loan Facility Credit Agreement” means that certain Term Loan Agreement, dated as of December 19, 2019 ((i) as supplemented by that certain Class A Term Loan Supplement, dated as of December 19, 2019 (as amended, restated or otherwise modified from time to time), by and among Chesapeake, as borrower, the Debtor guarantors party thereto, GLAS USA LLC, as administrative agent, and the lenders party thereto, and (ii) as further amended, restated, or otherwise modified from time to time), by and among Chesapeake, the Debtor guarantors party thereto, GLAS USA LLC, as administrative agent, and the lenders party thereto.

“Free Cash Flow” (a non-GAAP measure) means net cash provided by operating activities (GAAP) less cash capital expenditures.

“G&A” means general and administrative expenses.

“GAAP” means U.S. generally accepted accounting principles.

“General Unsecured Claim” means any Claim against any Debtor that is not otherwise paid in full during the Chapter 11 Cases pursuant to an order of the Bankruptcy Court and is not an Administrative Claim, a Priority Tax Claim, an Other Priority Claim, an Other Secured Claim, a Revolving Credit Facility Claim, a FLLO Term Loan Facility Claim, a Second Lien Notes Claim, an Unsecured Notes Claim, an Intercompany Claim, or a Section 510(b) Claim.

“Marcellus Acquisition” means Chesapeake’s acquisition of Chief and associated non-operated interests held by affiliates of Radler and Tug Hill, Inc., which closed on March 9, 2022 with an effective date of January 1, 2022.

“MBbls” means thousand barrels.

“MMBbls” means million barrels.

“Mcf” means thousand cubic feet.

“Mcfe” means one thousand cubic feet of natural gas equivalent, with one barrel of oil or NGL converted to an equivalent volume of natural gas using the ratio of one barrel of oil or NGL to six Mcf of natural gas.

“MMcf” means million cubic feet.

“MMcfe” means million cubic feet of natural gas equivalent.

“New Common Stock” means the single class of common stock issued by Reorganized Chesapeake on the Effective Date.

“NGL” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“OPEC+” means Organization of the Petroleum Exporting Countries Plus.

“Petition Date” means June 28, 2020, the date on which the Debtors commenced the Chapter 11 Cases.

“Plan” means the Fifth Amended Joint Chapter 11 Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates, attached as Exhibit A to the Confirmation Order.

“Present Value of Estimated Future Net Revenues or PV-10 (non-GAAP)” means the estimated future gross revenue to be generated from the production of proved reserves, net of estimated production and future development costs, using prices calculated as the average natural gas and oil price during the preceding 12-month period prior to the end of the current reporting period, (determined as the unweighted arithmetic average of prices on the first day of each month within the 12-month period) and costs in effect at the determination date (unless such costs are subject to change pursuant to contractual provisions), without giving effect to non-property related expenses such as general and administrative expenses, debt service and future income tax expense or to depreciation, depletion and amortization, discounted using an annual discount rate of 10%.

“Put Option Premium” means a nonrefundable aggregate fee of $60 million, which represents 10 percent of the Rights Offering Amount, payable to the Backstop Parties in accordance with, and subject to the terms of the

Backstop Commitment Agreement based on their respective backstop commitment percentages at the time such payment is made.

“Radler” means Radler 2000 Limited Partnership.

“Rights Offering” means the New Common Stock rights offering for the Rights Offering Amount consummated by the Debtors on the Effective Date.

“SEC” means United States Securities and Exchange Commission.

“Second Lien Notes” means the 11.500% senior notes due 2025 issued by Chesapeake pursuant to the Second Lien Notes Indenture.

“Second Lien Notes Claim” means any Claim on account of the Second Lien Notes.

“Tranche A Loans” means the fully revolving loans made under and on the terms set forth under the Exit Credit Facility which will be partially funded on the Effective Date, will have a scheduled maturity of 3 years from the Effective Date, and shall at all times be repaid prior to the repayment of the Tranche B Loans.

“Tranche B Loans” means term loans made under and on the terms set forth under the Exit Credit Facility which will be fully funded on the Effective Date, will have a scheduled maturity of 4 years from the Effective Date, will be repaid or prepaid only after there are no Tranche A Loans outstanding, and once so prepaid or repaid, may not be reborrowed.

“Vine” means Vine Energy Inc.

“Vine Acquisition” means Chesapeake’s acquisition of Vine, which closed on November 1, 2021.

“Warrants” means collectively, the Class A Warrants, Class B Warrants and Class C Warrants.

“/Bbl” means per barrel.

“/Mcf” means per Mcf.

“/Mcfe” means per Mcfe.

“2021 Predecessor Period” means the period of January 1, 2021 through February 9, 2021.

“2021 Successor Period” means the period of February 10, 2021 through September 30, 2021.

“2021 Successor Quarter” means the three months ended September 30, 2021.

“2022 Successor Period” means the nine months ended September 30, 2022.

“2022 Successor Quarter” means the three months ended September 30, 2022.

PART I. FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	Successor
	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	74	$	905
Restricted cash	56		9
Accounts receivable, net	1,757		1,115
Short-term derivative assets	4		5
Other current assets	168		69
Total current assets	2,059		2,103
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties	11,437		7,682
Unproved properties	2,192		1,530
Other property and equipment	506		495
Total property and equipment	14,135		9,707
Less: accumulated depreciation, depletion and amortization	(2,182)		(908)
Property and equipment held for sale, net	1		3
Total property and equipment, net	11,954		8,802
Other long-term assets	76		104
Total assets	$	14,089	$	11,009

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

6

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS – (Continued)

(Unaudited)

	Successor
	September 30, 2022		December 31, 2021
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	539	$	308
Accrued interest	40		38
Short-term derivative liabilities	1,875		899
Other current liabilities	1,784		1,202
Total current liabilities	4,238		2,447
Long-term debt, net	2,717		2,278
Long-term derivative liabilities	419		249
Asset retirement obligations, net of current portion	350		349
Other long-term liabilities	18		15
Total liabilities	7,742		5,338
Contingencies and commitments (Note 7)
Stockholders' equity:
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,334,663 and 117,917,349 shares issued	1		1
Successor additional paid-in capital	5,627		4,845
Retained earnings	719		825
Total stockholders' equity	6,347		5,671
Total liabilities and stockholders' equity	$	14,089	$	11,009

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

7

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Successor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021
Revenues and other:
Natural gas, oil and NGL	$	2,987	$	1,170
Marketing	1,206		627
Natural gas and oil derivatives	(1,029)		(910)
Gains (losses) on sales of assets	(2)		3
Total revenues and other	3,162		890
Operating expenses:
Production	121		80
Gathering, processing and transportation	286		219
Severance and ad valorem taxes	67		41
Exploration	2		2
Marketing	1,200		625
General and administrative	40		30
Depreciation, depletion and amortization	440		228
Other operating expense, net	1		3
Total operating expenses	2,157		1,228
Income (loss) from operations	1,005		(338)
Other income (expense):
Interest expense	(52)		(17)
Other income	4		—
Total other income (expense), net	(48)		(17)
Income (loss) before income taxes	957		(355)
Income tax expense (benefit)	74		(10)
Net income (loss) available to common stockholders	$	883	$	(345)
Earnings (loss) per common share:
Basic	$	7.29	$	(3.51)
Diluted	$	6.12	$	(3.51)
Weighted average common shares outstanding (in thousands):
Basic	121,150		98,221
Diluted	144,390		98,221

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

8

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – (Continued)

(Unaudited)

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Revenues and other:
Natural gas, oil and NGL	$	7,691	$	2,615	$	398
Marketing	3,296		1,443		239
Natural gas and oil derivatives	(3,668)		(1,604)		(382)
Gains on sales of assets	298		9		5
Total revenues and other	7,617		2,463		260
Operating expenses:
Production	349		194		32
Gathering, processing and transportation	802		541		102
Severance and ad valorem taxes	187		106		18
Exploration	14		4		2
Marketing	3,279		1,440		237
General and administrative	102		69		21
Separation and other termination costs	—		11		22
Depreciation, depletion and amortization	1,300		579		72
Impairments	—		1		—
Other operating expense (income), net	32		1		(12)
Total operating expenses	6,065		2,946		494
Income (loss) from operations	1,552		(483)		(234)
Other income (expense):
Interest expense	(120)		(47)		(11)
Other income	29		31		2
Reorganization items, net	—		—		5,569
Total other income (expense), net	(91)		(16)		5,560
Income (loss) before income taxes	1,461		(499)		5,326
Income tax expense (benefit)	105		(10)		(57)
Net income (loss) available to common stockholders	$	1,356	$	(489)	$	5,383
Earnings (loss) per common share:
Basic	$	11.03	$	(4.99)	$	550.35
Diluted	$	9.35	$	(4.99)	$	534.51
Weighted average common shares outstanding (in thousands):
Basic	122,924		98,040		9,781
Diluted	145,031		98,040		10,071

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

9

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Successor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021
Net income (loss)	$	883	$	(345)
Other comprehensive income, net of income tax:
Reclassification of losses on settled derivative instruments	—		—
Other comprehensive income	—		—
Comprehensive income (loss)	$	883	$	(345)

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Net income (loss)	$	1,356	$	(489)	$	5,383
Other comprehensive income, net of   income tax:
Reclassification of losses on settled derivative instruments	—		—		3
Other comprehensive income	—		—		3
Comprehensive income (loss)	$	1,356	$	(489)	$	5,386

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

10

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Cash flows from operating activities:
Net income (loss)	$	1,356	$	(489)	$	5,383
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	1,300		579		72
Deferred income tax expense (benefit)	19		—		(57)
Derivative losses, net	3,668		1,604		382
Cash payments on derivative settlements, net	(2,845)		(437)		(17)
Share-based compensation	16		5		3
Gains on sales of assets	(298)		(9)		(5)
Impairments	—		1		—
Non-cash reorganization items, net	—		—		(6,680)
Exploration	10		1		2
Other	19		10		45
Changes in assets and liabilities	(170)		(19)		851
Net cash provided by (used in) operating activities	3,075		1,246		(21)
Cash flows from investing activities:
Capital expenditures	(1,299)		(404)		(66)
Business combination, net	(1,967)		—		—
Proceeds from divestitures of property and equipment	409		9		—
Net cash used in investing activities	(2,857)		(395)		(66)
Cash flows from financing activities:
Proceeds from Exit Credit Facility - Tranche A Loans	7,255		30		—
Payments on Exit Credit Facility - Tranche A Loans	(6,805)		(80)		(479)
Payments on DIP Facility borrowings	—		—		(1,179)
Proceeds from issuance of senior notes, net	—		—		1,000
Proceeds from issuance of common stock	—		—		600
Proceeds from warrant exercise	3		2		—
Debt issuance and other financing costs	—		(3)		(8)
Cash paid to repurchase and retire common stock	(667)		—		—
Cash paid for common stock dividends	(788)		(67)		—
Other	—		(1)		—
Net cash used in financing activities	(1,002)		(119)		(66)
Net increase (decrease) in cash, cash equivalents and restricted cash	(784)		732		(153)
Cash, cash equivalents and restricted cash, beginning of period	914		126		279
Cash, cash equivalents and restricted cash, end of period	$	130	$	858	$	126

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

11

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)

(Unaudited)

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Cash and cash equivalents	$	74	$	849	$	40
Restricted cash	56		9		86
Total cash, cash equivalents and restricted cash	$	130	$	858	$	126

Supplemental disclosures to the condensed consolidated statements of cash flows are presented below:

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Supplemental cash flow information:
Cash paid for reorganization items, net	$	—	$	65	$	66
Interest paid, net of capitalized interest	$	107	$	33	$	13
Income taxes paid, net of refunds received	$	181	$	(3)	$	—
Supplemental disclosure of significant   non-cash investing and financing activities:
Change in accrued drilling and completion costs	$	193	$	25	$	(5)
Put option premium on equity backstop agreement	$	—	$	—	$	60
Common stock issued for business combination	$	764	$	—	$	—
Operating lease obligations recognized	$	25	$	—	$	—

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

12

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income		Total Stockholders' Equity
Balance as of December 31, 2021 (Successor)	—	$	—	117,917,349	$	1	$	4,845	$	825	$	—	$	5,671
Issuance of common stock for Marcellus Acquisition	—	—		9,442,185	—		764		—		—		764
Share-based compensation	—	—		23,169	—		5		—		—		5
Issuance of common stock for warrant exercise	—	—		669,669	—		1		—		—		1
Repurchase and retirement of common stock	—	—		(1,000,000)	—		—		(83)		—		(83)
Net loss	—	—		—	—		—		(764)		—		(764)
Dividends on common stock	—	—		—	—		—		(211)		—		(211)
Balance as of March 31, 2022 (Successor)	—	$	—	127,052,372	$	1	$	5,615	$	(233)	$	—	$	5,383
Share-based compensation	—	—		146,054	—		3		—		—		3
Issuance of common stock for warrant exercise	—	—		166,606	—		1		—		—		1
Issuance of reserved common stock and warrants	—	—		36,951	—		—		—		—		—
Repurchase and retirement of common stock	—	—		(5,811,727)	—		—		(515)		—		(515)
Net income	—	—		—	—		—		1,237		—		1,237
Dividends on common stock	—	—		—	—		—		(301)		—		(301)
Balance as of June 30, 2022 (Successor)	—	$	—	121,590,256	$	1	$	5,619	$	188	$	—	$	5,808
Share-based compensation	—	—		991	—		7		—		—		7
Issuance of common stock for warrant exercise	—	—		493,016	—		1		—		—		1
Repurchase and retirement of common stock	—	—		(749,600)	—		—		(69)		—		(69)
Net income	—	—		—	—		—		883		—		883
Dividends on common stock	—	—		—	—		—		(283)		—		(283)
Balance as of September 30, 2022 (Successor)	—	$	—	121,334,663	$	1	$	5,627	$	719	$	—	$	6,347

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

13

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - (Continued)

(Unaudited)

	Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income		Total Stockholders' Equity
Balance as of December 31, 2020 (Predecessor)	5,563,358	$	1,631	9,780,547	$	—	$	16,937	$	(23,954)	$	45	$	(5,341)
Share-based compensation	—	—		67	—		3		—		—		3
Hedging activity	—	—		—	—		—		—		3		3
Net income	—	—		—	—		—		5,383		—		5,383
Cancellation of Predecessor Equity	(5,563,358)	(1,631)		(9,780,614)	—		(16,940)		18,571		(48)		(48)
Issuance of Successor common stock	—	—		97,907,081	1		3,330		—		—		3,331
Issuance of Successor Class A warrants	—	—		—	—		93		—		—		93
Issuance of Successor Class B warrants	—	—		—	—		94		—		—		94
Issuance of Successor Class C warrants	—	—		—	—		68		—		—		68
Balance as of February 9, 2021 (Predecessor)	—	$	—	97,907,081	$	1	$	3,585	$	—	$	—	$	3,586
Balance as of February 10, 2021 (Successor)	—	$	—	97,907,081	$	1	$	3,585	$	—	$	—	$	3,586
Net income	—	—		—	—		—		295		—		295
Balance as of March 31, 2021 (Successor)	—	$	—	97,907,081	$	1	$	3,585	$	295	$	—	$	3,881
Share-based compensation	—	—		921	—		3		—		—		3
Issuance of common stock for warrant exercise	—	—		46,035	—		2		—		—		2
Net loss	—	—		—	—		—		(439)		—		(439)
Dividends on common stock	—	—		—	—		—		(34)		—		(34)
Balance as of June 30, 2021 (Successor)	—	$	—	97,954,037	$	1	$	3,590	$	(178)	$	—	$	3,413
Share-based compensation	—	—		761	—		4		—		—		4
Issuance of common stock for warrant exercise	—	—		6,218	—		—		—		—		—
Issuance of reserved common stock and warrants	—	—		325,715	—		—		—		—		—
Net loss	—	—		—	—		—		(345)		—		(345)
Dividends on common stock	—	—		—	—		—		(34)		—		(34)
Balance as of September 30, 2021 (Successor)	—	$	—	98,286,731	$	1	$	3,594	$	(557)	$	—	$	3,038

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

14

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

Description of Company

Chesapeake Energy Corporation (“Chesapeake”, “we”, “our”, “us” or the “Company”) is a natural gas and oil exploration and production company engaged in the acquisition, exploration and development of properties for the production of natural gas, oil and NGL from underground reservoirs. Our operations are located onshore in the United States. As discussed in Note 2 below, we filed the Chapter 11 Cases on the Petition Date and subsequently operated as a debtor-in-possession, in accordance with applicable provisions of the Bankruptcy Code, until emergence on February 9, 2021. To facilitate our financial statement presentations, we refer to the post-emergence reorganized Company in these condensed consolidated financial statements and footnotes as the “Successor” for periods subsequent to February 9, 2021, and to the pre-emergence Company as “Predecessor” for periods on or prior to February 9, 2021.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Chesapeake were prepared in accordance with 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 our financial position as of September 30, 2022 and December 31, 2021, the three months ended September 30, 2022 (“2022 Successor Quarter”), the nine months ended September 30, 2022 (“2022 Successor Period”), the three months ended September 30, 2021 (“2021 Successor Quarter”), the period of February 10, 2021 through September 30, 2021 (“2021 Successor Period”) and the period of January 1, 2021 through February 9, 2021 (“2021 Predecessor Period”). Our annual report on Form 10-K for the year ended December 31, 2021 (“2021 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 that, 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. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern.

Segments

Operating segments are defined as components of an enterprise that engage in activities from which it may earn revenues and incur expenses for which separate operational financial information is available and is regularly evaluated by the chief operating decision maker for the purpose of allocating an enterprise’s resources and assessing its operating performance. We have concluded that we have only one reportable operating segment due to the similar nature of the exploration and production business across Chesapeake and its consolidated subsidiaries and the fact that our marketing activities are ancillary to our operations.

Restricted Cash

As of September 30, 2022, we had restricted cash of $56 million. Our restricted cash represents funds legally restricted for payment of certain convenience class unsecured claims following our emergence from bankruptcy, as well as for future payment of certain royalties.

Voluntary Filing under Chapter 11 Bankruptcy

On the Petition Date, the Debtors filed the Chapter 11 Cases under the Bankruptcy Code in 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 continued to operate in the ordinary course of business.

15

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The Bankruptcy Court confirmed the Plan and entered the Confirmation Order on January 16, 2021. The Debtors emerged from the Chapter 11 Cases on the Effective Date. The Company’s bankruptcy proceedings and related matters have been summarized below.

During the pendency of the Chapter 11 Cases, we operated our business 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, vendors, suppliers, customers and employees. As a result, we were able to conduct normal business activities and pay all associated obligations for the period following the Petition Date and were also authorized to pay mineral interest owner royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided prior to the Petition Date. During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of business required the prior approval of the Bankruptcy Court.

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 were subject to compromise and discharge under the Bankruptcy Code. The automatic stay was lifted on the Effective Date.

We have applied ASC 852, Reorganizations, in preparing the unaudited condensed consolidated financial statements for the period ended February 9, 2021. ASC 852 requires that the financial statements, for periods subsequent to the Chapter 11 Cases, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses, realized gains and losses and provisions for losses that were realized or incurred during the bankruptcy proceedings, including gain on settlement of liabilities subject to compromise, losses related to executory contracts that have been approved for rejection by the Bankruptcy Court, and unamortized debt issuance costs, premiums and discounts associated with debt classified as liabilities subject to compromise, were recorded as reorganization items, net. See Note 3 for more information regarding reorganization items.

2. Chapter 11 Emergence

As described in Note 1, on the Petition Date, the Debtors filed the Chapter 11 Cases and on September 11, 2020, the Debtors filed the Plan, which was subsequently amended, and entered the Confirmation Order on January 16, 2021. The Debtors then emerged from bankruptcy upon effectiveness of the Plan on the Effective Date. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan.

Plan of Reorganization

In accordance with the Plan confirmed by the Bankruptcy Court, the following significant transactions occurred upon the Company’s emergence from bankruptcy on February 9, 2021:

•On the Effective Date, we issued 97,907,081 shares of New Common Stock, reserved 2,092,918 shares of New Common Stock for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims and reserved 37,174,210 shares of New Common Stock for issuance upon exercise of the Warrants, which were the result of the transactions described below. We also entered into a registration rights agreement, warrant agreements and amended our articles of incorporation and bylaws for the authorization of the New Common Stock and to provide registration rights thereunder, among other corporate governance actions. See Note 11 for further discussion of our post-emergence equity.

•Each holder of an equity interest in the Predecessor, including Predecessor’s common and preferred stock, had such interest canceled, released, and extinguished without any distribution.

•Each holder of obligations under the pre-petition revolving credit facility received, at such holder's prior determined allocation, its pro rata share of either Tranche A Loans or Tranche B Loans, on a dollar for dollar basis.

•Each holder of obligations under the FLLO Term Loan Facility received its pro rata share of 23,022,420 shares of New Common Stock.

16

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

•Each holder of an Allowed Second Lien Notes Claim received its pro rata share of 3,635,118 shares of New Common Stock, 11,111,111 Class A Warrants to purchase 11,111,111 shares of New Common Stock, 12,345,679 Class B Warrants to purchase 12,345,679 shares of New Common Stock, and 6,858,710 Class C Warrants to purchase 6,858,710 shares of New Common Stock.

•Each holder of an Allowed Unsecured Notes Claim received its pro rata share of 1,311,089 shares of New Common Stock and 2,473,757 Class C Warrants to purchase 2,473,757 shares of New Common Stock.

•Each holder of an Allowed General Unsecured Claim received its pro rata share of 231,112 shares of New Common Stock and 436,060 Class C Warrants to purchase 436,060 shares of New Common Stock; provided that to the extent such Allowed General Unsecured Claim is a Convenience Claim, such holder instead received its pro rata share of $10 million, which pro rata share shall not exceed five percent of such Convenience Claim.

•Participants in the Rights Offering extending to the applicable classes under the Plan received 62,927,320 shares of New Common Stock.

•In connection with the Rights Offering described above, the Backstop Parties under the Backstop Commitment Agreement received 6,337,031 shares of New Common Stock in respect to the Put Option Premium, and 442,991 shares of New Common Stock were issued in connection with the backstop obligation thereunder to purchase unsubscribed shares of the New Common Stock.

•2,092,918 shares of New Common Stock and 3,948,893 Class C Warrants were reserved for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims. The reserved New Common Stock and Class C Warrants will be issued on a pro rata basis upon the determination of the allowed portion of all disputed General Unsecured Claims and Unsecured Notes Claims.

•The 2021 Long-Term Incentive Plan (the “LTIP”) was approved with a share reserve equal to 6,800,000 shares of New Common Stock.

•Each holder of an Allowed Other Secured Claim will receive, at the Company's option and in consultation with the Required Consenting Stakeholders (as defined in 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 that renders its secured claim unimpaired in accordance with Section 1124 of the Bankruptcy Code.

•Each holder of an Allowed Other Priority Claim will receive cash up to the allowed amount of its claim.

Additionally, pursuant to the Plan confirmed by the Bankruptcy Court, the Company’s post-emergence Board of Directors is comprised of seven directors, including the Company’s Chief Executive Officer, Domenic J. Dell’Osso Jr., the Company’s Executive Chairman, Michael Wichterich, and five non-employee directors, Timothy S. Duncan, Benjamin C. Duster, IV, Sarah Emerson, Matthew M. Gallagher and Brian Steck.

17

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

3. Fresh Start Accounting

Fresh Start Accounting

In connection with our emergence from bankruptcy and in accordance with ASC 852, we qualified for and applied fresh start accounting on the Effective Date. We were required to apply fresh start accounting because (i) the holders of existing voting shares of the Company prior to its emergence received less than 50% of the voting shares of the Company outstanding following its emergence from bankruptcy and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan of approximately $6.8 billion was less than the post-petition liabilities and allowed claims of $13.2 billion.

In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair value in conformity with FASB ASC Topic 820 - Fair Value Measurements and FASB ASC Topic 805 - Business Combinations. Accordingly, the consolidated financial statements after February 9, 2021 are not comparable with the consolidated financial statements as of or prior to that date. The Effective Date fair values of the Successor’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor.

Reorganization Value

Reorganization value is derived from an estimate of enterprise value, or fair value of the Company’s interest-bearing debt and stockholders’ equity. Under ASC 852, reorganization value generally approximates fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of a restructuring. As set forth in the disclosure statement, amended for updated pricing, and approved by the Bankruptcy Court, the enterprise value of the Successor was estimated to be between $3.5 billion and $4.9 billion. With the assistance of third-party valuation advisors, we determined the enterprise value and corresponding implied equity value of the Successor using various valuation approaches and methods, including: (i) income approach using a calculation of present value of future cash flows based on our financial projections, (ii) the market approach using selling prices of similar assets and (iii) the cost approach. For GAAP purposes, the Company valued the Successor’s individual assets, liabilities and equity instruments and determined an estimate of the enterprise value within the estimated range. Management concluded that the best estimate of enterprise value was $4.85 billion. Specific valuation approaches and key assumptions used to arrive at reorganization value, and the value of discrete assets and liabilities resulting from the application of fresh start accounting, are described below in greater detail within the valuation process.

The enterprise value and corresponding implied equity value are dependent upon achieving the future financial results set forth in our valuation using an asset-based methodology of estimated proved reserves, undeveloped properties, and other financial information, considerations and projections, applying a combination of the income, cost and market approaches as of the fresh start reporting date of February 9, 2021. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially.

18

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table reconciles the enterprise value to the implied fair value of the Successor’s equity as of the Effective Date:

	February 9, 2021
Enterprise Value	$	4,851
Plus: Cash and cash equivalents(a)	48
Less: Fair value of debt	(1,313)
Successor equity value	$	3,586

____________________________________________

(a)Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above.

The following table reconciles the enterprise value to the reorganization value as of the Effective Date:

	February 9, 2021
Enterprise Value	$	4,851
Plus: Cash and cash equivalents(a)	48
Plus: Current liabilities	1,582
Plus: Asset retirement obligations (non-current portion)	236
Plus: Other non-current liabilities	97
Reorganization value of Successor assets	$	6,814

____________________________________________

(a)Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above.

Valuation Process

The fair values of our natural gas and oil properties, other property and equipment, other long-term assets, long-term debt, asset retirement obligations and warrants were estimated as of the Effective Date.

Natural gas and oil properties. The Company’s principal assets are its natural gas and oil properties, which are accounted for under the successful efforts accounting method. The Company determined the fair value of its natural gas and oil properties based on the discounted future net cash flows expected to be generated from these assets. Discounted cash flow models by operating area were prepared using the estimated future revenues and operating costs for all proved developed properties and undeveloped properties comprising the proved and unproved reserves. Significant inputs associated with the calculation of discounted future net cash flows include estimates of (i) recoverable reserves, (ii) production rates, (iii) future operating and development costs, (iv) future commodity prices escalated by an inflationary rate after five years, adjusted for differentials, and (v) a market-based weighted average cost of capital by operating area. The Company utilized NYMEX strip pricing, adjusted for differentials, to value the reserves. The NYMEX strip pricing inputs used are classified as Level 1 fair value assumptions and all other inputs are classified as Level 3 fair value assumptions. The discount rates utilized were derived using a weighted average cost of capital computation, which included an estimated cost of debt and equity for market participants with similar geographies and asset development type by operating area.

Other property and equipment. The fair value of other property and equipment such as buildings, land, computer equipment, and other equipment was determined using the replacement cost method under the cost approach which considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and the ability of those assets to generate cash flow.

Long-term debt. A market approach, based upon quotes from major financial institutions, was used to measure the fair value of the $500 million aggregate principal amount of 5.50% Senior Notes due 2026 (the “2026 Notes”)

19

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

and $500 million aggregate principal amount of 5.875% Senior Notes due 2029 (the “2029 Notes” and, together with the 2026 Notes, the “Notes”). The carrying value of borrowings under our Exit Credit Facility approximated fair value as the terms and interest rates are based on prevailing market rates.

Asset retirement obligations. The fair value of the Company’s asset retirement obligations was revalued based upon estimated current reclamation costs for our assets with reclamation obligations, an appropriate long-term inflation adjustment, and our revised credit adjusted risk-free rate. The credit adjusted risk-free rate was based on an evaluation of an interest rate that equates to a risk-free interest rate adjusted for the effect of our credit standing.

Warrants. The fair values of the Warrants issued upon the Effective Date were estimated using a Black-Scholes model, a commonly used option-pricing model. The Black-Scholes model was used to estimate the fair value of the warrants with an implied stock price of $20.52; initial exercise price per share of $27.63, $32.13 and $36.18 for Class A, Class B and Class C Warrants, respectively; expected volatility of 58% estimated using volatilities of similar entities; risk-free rate using a 5-year Treasury bond rate; and an expected annual dividend yield which was estimated to be zero.

Condensed Consolidated Balance Sheet

The following condensed consolidated balance sheet is as of February 9, 2021. This condensed consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Effective Date. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities and warrants.

	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
Assets
Current assets:
Cash and cash equivalents	$	243	$	(203)	(a)	$	—		$	40
Restricted cash	—		86		(b)	—			86
Accounts receivable, net	861		(18)		(c)	—			843
Short-term derivative assets	—		—			—			—
Other current assets	66		(5)		(d)	—			61
Total current assets	1,170		(140)			—			1,030
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties	25,794		—			(21,108)		(o)	4,686
Unproved properties	1,546		—			(1,063)		(o)	483
Other property and equipment	1,755		—			(1,256)		(o)	499
Total property and equipment	29,095		—			(23,427)		(o)	5,668
Less: accumulated depreciation, depletion and amortization	(23,877)		—			23,877		(o)	—
Property and equipment held for sale, net	9		—			(7)		(o)	2
Total property and equipment, net	5,227		—			443		(o)	5,670
Other long-term assets	198		—			(84)		(p)	114
Total assets	$	6,595	$	(140)		$	359		$	6,814

20

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	391	$	24	(e)	$	—		$	415
Current maturities of long-term debt, net	1,929		(1,929)		(f)	—			—
Accrued interest	4		(4)		(g)	—			—
Short-term derivative liabilities	398		—			—			398
Other current liabilities	645		124		(h)	—			769
Total current liabilities	3,367		(1,785)			—			1,582
Long-term debt, net	—		1,261		(i)	52		(q)	1,313
Long-term derivative liabilities	90		—			—			90
Asset retirement obligations, net of current portion	139		—			97		(r)	236
Other long-term liabilities	5		2		(j)	—			7
Liabilities subject to compromise	9,574		(9,574)		(k)	—			—
Total liabilities	13,175		(10,096)			149			3,228
Contingencies and commitments (Note 7)
Stockholders’ equity (deficit):
Predecessor preferred stock	1,631		(1,631)		(l)	—			—
Predecessor common stock	—		—			—			—
Predecessor additional paid-in capital	16,940		(16,940)		(l)	—			—
Successor common stock	—		1		(m)	—			1
Successor additional paid-in-capital	—		3,585		(m)	—			3,585
Accumulated other comprehensive income	48		—			(48)		(s)	—
Accumulated deficit	(25,199)		24,941		(n)	258		(t)	—
Total stockholders’ equity (deficit)	(6,580)		9,956			210			3,586
Total liabilities and stockholders’ equity (deficit)	$	6,595	$	(140)		$	359		$	6,814

21

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Reorganization Adjustments

(a)The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan:

Sources:
Proceeds from issuance of the Notes	$	1,000
Proceeds from Rights Offering	600
Proceeds from refunds of interest deposit for the Notes	5
Total sources of cash	$	1,605
Uses:
Payment of roll-up of DIP Facility balance	$	(1,179)
Payment of Exit Credit Facility - Tranche A Loan	(479)
Transfers to restricted cash for professional fee reserve	(76)
Transfers to restricted cash for convenience claim distribution reserve	(10)
Payment of professional fees	(31)
Payment of DIP Facility interest and fees	(12)
Payment of FLLO alternative transaction fee	(12)
Payment of the Notes fees funded out of escrow	(8)
Payment of RBL interest and fees	(1)
Total uses of cash	$	(1,808)
Net cash used	$	(203)

(b)Represents the transfer of funds to a restricted cash account for purposes of funding the professional fee reserve and the convenience claim distribution reserve.

(c)Reflects the removal of an insurance receivable associated with a discharged legal liability.

(d)Reflects the collection of an interest deposit for the senior unsecured notes.

(e)Changes in accounts payable include the following:

Accrual of professional service provider success fees	$	38
Accrual of convenience claim distribution reserve	10
Accrual of professional service provider fees	5
Reinstatement of accounts payable from liabilities subject to compromise	2
Payment of professional fees	(31)
Net impact to accounts payable	$	24

(f)Reflects payment of the pre-petition credit facility for $1.179 billion and transfer of the Tranche A and Tranche B Loans to long-term debt for $750 million.

(g)Reflect payments of accrued interest and fees on the DIP Facility.

(h)Changes in other current liabilities include the following:

Reinstatement of other current liabilities from liabilities subject to compromise	$	191
Accrual of the Notes fees	2
Settlement of Put Option Premium through issuance of Successor Common Stock	(60)
Payment of DIP Facility fees	(9)
Net impact to other current liabilities	$	124

22

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

(i)Changes in long-term debt include the following:

Issuance of the Notes	$	1,000
Issuance of Tranche A and Tranche B Loans	750
Payments on Tranche A Loans	(479)
Debt issuance costs for the Notes	(10)
Net impact to long-term debt, net	$	1,261

(j) Reflects reinstatement of a long-term lease liability.

(k) On the Effective Date, liabilities subject to compromise were settled in accordance with the Plan as follows:

Liabilities subject to compromise pre-emergence	$	9,574
To be reinstated on the Effective Date:
Accounts payable	$	(2)
Other current liabilities	(191)
Other long-term liabilities	(2)
Total liabilities reinstated	$	(195)
Consideration provided to settle amounts per the Plan or Reorganization:
Issuance of Successor common stock associated with the Rights Offering and Backstop Commitment and settlement of the Put Option Premium	$	(2,311)
Proceeds from issuance of Successor common stock associated with the Rights Offering and Backstop Commitment	600
Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment	(783)
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment	(124)
Issuance of Successor common stock to unsecured note holders	(45)
Issuance of Successor common stock to general unsecured claims	(8)
Fair value of Class A Warrants	(93)
Fair value of Class B Warrants	(94)
Fair value of Class C Warrants	(68)
Proceeds to holders of general unsecured claims	(10)
Total consideration provided to settle amounts per the Plan	$	(2,936)
Gain on settlement of liabilities subject to compromise	$	6,443

(l)Pursuant to the Plan, as of the Effective Date, all equity interests in Predecessor, including Predecessor’s common and preferred stock, were canceled without any distribution.

23

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

(m)Reflects the Successor equity including the issuance of 97,907,081 shares of New Common Stock, 11,111,111 shares of Class A Warrants, 12,345,679 shares of Class B Warrants and 9,768,527 shares of Class C Warrants pursuant to the Plan.

Issuance of Successor equity associated with the Rights Offering and Backstop Commitment	$	2,371
Issuance of Successor equity to holders of the FLLO Term Loan, incremental to the Rights Offering and Backstop Commitment	783
Issuance of Successor equity to holders of the Second Lien Notes, incremental to the Rights Offering and Backstop Commitment	124
Issuance of Successor equity to holders of the unsecured senior notes	45
Issuance of Successor equity to holders of allowed general unsecured claims	8
Fair value of Class A warrants	93
Fair value of Class B warrants	94
Fair value of Class C warrants	68
Total change in Successor common stock and additional paid-in capital	3,586
Less: par value of Successor common stock	(1)
Change in Successor additional paid-in capital	$	3,585

(n) Reflects the cumulative net impact of the effects on accumulated deficit as follows:

    

Gain on settlement of liabilities subject to compromise	$	6,443
Accrual of professional service provider success fees	(38)
Accrual of professional service provider fees	(5)
Surrender of other receivable	(18)
Payment of FLLO alternative transaction fee	(12)
Total reorganization items, net	6,370
Cancellation of predecessor equity	18,571
Net impact on accumulated deficit	$	24,941

Fresh Start Adjustments

(o)Reflects fair value adjustments to our (i) proved natural gas and oil properties, (ii) unproved properties, (iii) other property and equipment and (iv) property and equipment held for sale, and the elimination of accumulated depletion, depreciation and amortization.

(p)Reflects the fair value adjustment to record historical contracts at their fair values.

(q)Reflects the fair value adjustments to the 2026 Notes and 2029 Notes for $22 million and $30 million, respectively.

(r)Reflects the adjustment to our asset retirement obligations using assumptions as of the Effective Date, including an inflation factor of 2% and an average credit-adjusted risk-free rate of 5.18%.

(s)Reflects the fair value adjustment to eliminate the accumulated other comprehensive income of $9 million related to hedging settlements offset by the elimination of $57 million of income tax effects which has resulted in the recording of an income tax benefit of $57 million. See Note 10 for a discussion of income taxes.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

(t)Reflects the net cumulative impact of the fresh start adjustments on accumulated deficit as follows:

Fresh start adjustments to property and equipment	$	443
Fresh start adjustments to other long-term assets	(84)
Fresh start adjustments to long-term debt	(52)
Fresh start adjustments to long-term asset retirement obligations	(97)
Fresh start adjustments to accumulated other comprehensive income	(9)
Total fresh start adjustments impacting reorganizations items, net	201
Income tax effects on accumulated other comprehensive income	57
Net impact to accumulated deficit	$	258

Reorganization Items, Net

We incurred significant expenses, gains and losses associated with the reorganization, primarily the gain on settlement of liabilities subject to compromise, 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 accrual for allowed claims primarily represents damages from contract rejections and settlements attributable to the midstream savings requirement as stipulated in the Plan. While the claims reconciliation process is ongoing, we do not believe any existing unresolved claims will result in a material adjustment to the financial statements. The amount of these items, which were incurred in reorganization items, net within our accompanying unaudited condensed consolidated statements of operations, have significantly affected our statements of operations.

We did not have any reorganization items, net for the 2022 Successor Quarter, the 2022 Successor Period, the 2021 Successor Quarter or the 2021 Successor Period. The following table summarizes the components in reorganization items, net included in our unaudited condensed consolidated statements of operations:

	Predecessor
	Period from January 1, 2021 through February 9, 2021
Gains on the settlement of liabilities subject to compromise	$	6,443
Accrual for allowed claims	(1,002)
Gain on fresh start adjustments	201
Gain from release of commitment liabilities	55
Professional service provider fees and other	(60)
Success fees for professional service providers	(38)
Surrender of other receivable	(18)
FLLO alternative transaction fee	(12)
Total reorganization items, net	$	5,569

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

4. Natural Gas and Oil Property Transactions

Marcellus Acquisition

On March 9, 2022, we completed the Marcellus Acquisition for total consideration of approximately $2.77 billion, consisting of approximately $2 billion in cash, including working capital adjustments and approximately 9.4 million shares of our common stock, to acquire high quality producing assets and a deep inventory of premium drilling locations in the prolific Marcellus Shale in Northeast Pennsylvania. The Marcellus Acquisition was indebtedness free, effective as of January 1, 2022, subject to customary purchase price adjustments. We funded the cash portion of the consideration with cash on hand and $914 million of borrowings under the Company’s Exit Credit Facility. See Note 6 for further discussion of debt.

Preliminary Marcellus Acquisition Purchase Price Allocation

We have accounted for the Marcellus Acquisition as a business combination, using the acquisition method. The following table represents the preliminary allocation of the total purchase price 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. During the 2022 Successor Quarter, we recognized measurement period adjustments of $39 million to both restricted cash and current liabilities.

	Preliminary Purchase Price Allocation
Consideration:
Cash	$	2,000
Fair value of Chesapeake’s common stock issued in the merger	764
Working capital adjustments	6
Total consideration	$	2,770
Fair Value of Liabilities Assumed:
Current liabilities	$	459
Other long-term liabilities	129
Amounts attributable to liabilities assumed	$	588
Fair Value of Assets Acquired:
Cash, cash equivalents and restricted cash	$	39
Other current assets	218
Proved natural gas and oil properties	2,309
Unproved properties	788
Other property and equipment	1
Other long-term assets	3
Amounts attributable to assets acquired	$	3,358
Total identifiable net assets	$	2,770

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Natural Gas and Oil Properties

For the Marcellus Acquisition, we applied applicable guidance, under which an acquirer should recognize the identifiable assets acquired and the liabilities assumed on the acquisition date at fair value. The fair value estimate of proved and unproved natural gas and oil properties as of the acquisition date was based on estimated natural gas and oil reserves and related future net cash flows discounted using a weighted average cost of capital, including estimates of future production rates and future development costs. We utilized NYMEX strip pricing adjusted for inflation to value the reserves. We then applied various discount rates depending on the classification of reserves and other risk characteristics. Management utilized the assistance of a third-party valuation expert to estimate the value of the natural gas and oil properties acquired. Additionally, the fair value estimate of proved and unproved natural gas and oil properties was corroborated by utilizing a market approach, which considers recent comparable transactions for similar assets.

The inputs used to value natural gas and oil properties require significant judgment and estimates made by management and represent Level 3 inputs.

Marcellus Acquisition Revenues and Expenses Subsequent to Acquisition

We included in our condensed consolidated statements of operations natural gas, oil and NGL revenues of $959 million, marketing revenues of $20 million, net losses on natural gas and oil derivatives of $542 million, and direct operating expenses of $329 million, including depreciation, depletion and amortization related to the Marcellus Acquisition businesses for the period from March 10, 2022 (the date immediately following the completion of the Marcellus Acquisition) through September 30, 2022.

Vine Acquisition

On November 1, 2021, we acquired Vine, an energy company focused on the development of natural gas properties in the over-pressured stacked Haynesville and Mid-Bossier shale plays in Northwest Louisiana pursuant to a definitive agreement with Vine dated August 10, 2021, for total consideration of approximately $1.5 billion, consisting of approximately 18.7 million shares of our common stock and $90 million in cash. In conjunction with the Vine Acquisition, Vine’s Second Lien Term Loan was repaid and terminated for $163 million, inclusive of a $13 million make whole premium with cash on hand due to the agreement containing a change in control provision making the term loan callable upon closing. Vine’s reserve based loan facility, which had no borrowings as of November 1, 2021, was terminated at the time of the acquisition. Additionally, Vine’s 6.75% Senior Notes, with a principal amount of $950 million, were assumed by the Company. See Note 6 for additional discussion of the assumed debt. We funded the cash portion of the consideration with cash on hand.

Vine Purchase Price Allocation

We have accounted for the Vine Acquisition as a business combination, using the acquisition method. The following table represents the allocation of the total purchase price of Vine to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date. We finalized the acquisition accounting for this transaction as of September 30, 2022, which resulted in measurement period adjustments of $19 million to both deferred tax liabilities and unproved properties. See Note 10 for additional information regarding the change to deferred tax liabilities.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

	Purchase Price Allocation
Consideration:
Cash	$	253
Fair value of Chesapeake’s common stock issued in the merger	1,231
Restricted stock unit replacement awards	6
Total consideration	$	1,490
Fair Value of Liabilities Assumed:
Current liabilities	$	765
Long-term debt	1,021
Deferred tax liabilities	30
Other long-term liabilities	272
Amounts attributable to liabilities assumed	$	2,088
Fair Value of Assets Acquired:
Cash and cash equivalents	$	59
Other current assets	206
Proved natural gas and oil properties	2,181
Unproved properties	1,099
Other property and equipment	1
Other long-term assets	32
Amounts attributable to assets acquired	$	3,578
Total identifiable net assets	$	1,490

Natural Gas and Oil Properties

For the Vine Acquisition, we applied applicable guidance, under which an acquirer should recognize the identifiable assets acquired and the liabilities assumed on the acquisition date at fair value. The fair value estimate of proved and unproved natural gas and oil properties as of the acquisition date was based on estimated natural gas and oil reserves and related future net cash flows discounted using a weighted average cost of capital, including estimates of future production rates and future development costs. We utilized NYMEX strip pricing adjusted for inflation to value the reserves. We then applied various discount rates depending on the classification of reserves and other risk characteristics. Management utilized the assistance of a third-party valuation expert to estimate the value of the natural gas and oil properties acquired. Additionally, the fair value estimate of proved and unproved natural gas and oil properties was corroborated by utilizing a market approach, which considers recent comparable transactions for similar assets.

The inputs used to value natural gas and oil properties require significant judgment and estimates made by management and represent Level 3 inputs.

Financial Instruments and Other

The fair value measurements of long-term debt were estimated based on a market approach using estimates provided by an independent investment data services firm and represent Level 2 inputs.

Restricted Stock Unit Replacement Awards

Included in consideration for the Vine Acquisition is approximately $6 million related to pre-combination service recognized on Vine’s restricted stock unit (“RSU”) awards. For RSUs that were accelerated or transitioned at the time of the merger, we recognized expense for the portion of the award that was accelerated and included in consideration the portion of the award related to pre-combination service.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Vine Revenues and Expenses Subsequent to Acquisition

We included in our condensed consolidated statements of operations natural gas, oil and NGL revenues of $1,480 million, net losses on natural gas and oil derivatives of $846 million, direct operating expenses of $680 million, including depreciation, depletion and amortization, and other expense of $30 million, related to the Vine business for the nine months ended September 30, 2022.

Combined Pro Forma Financial Information

As the Vine Acquisition closed on November 1, 2021, all activity in 2022 is included in Chesapeake’s condensed consolidated statements of operations for the 2022 Successor Quarter and the 2022 Successor Period. The following unaudited pro forma financial information is based on our historical condensed consolidated financial statements adjusted to reflect as if the Marcellus Acquisition and Vine Acquisition had each occurred on February 10, 2021, the date Chesapeake emerged from bankruptcy. See Note 2 for additional information on the bankruptcy. The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including the estimated tax impact of the pro forma adjustments.

	Successor
	Nine Months Ended September 30, 2022
Revenues	$	7,617
Net income available to common stockholders	$	1,252
Earnings per common share:
Basic	$	10.00
Diluted	$	8.50

	Successor
	Three Months Ended September 30, 2021		Period from February 10, 2021 through September 30, 2021
Revenues	$	510	$	2,254
Net loss available to common stockholders	$	(1,159)	$	(1,732)
Loss per common share:
Basic	$	(9.15)	$	(13.70)
Diluted	$	(9.15)	$	(13.70)

Powder River Divestiture

On January 24, 2022, Chesapeake signed an agreement to sell its Powder River Basin assets in Wyoming to Continental Resources, Inc. (NYSE: CLR) for approximately $450 million, subject to customary closing adjustments. The divestiture, which closed on March 25, 2022, resulted in the recognition of a gain of approximately $298 million, which included $18 million of post-close adjustments, based on the difference between the carrying value of the assets and the cash received.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

5. Earnings Per Share

Basic earnings (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per common share is calculated in the same manner, but includes the impact of potentially dilutive securities. Potentially dilutive securities during the Successor Periods below consist of issuable shares related to warrants, unvested RSUs, and unvested performance share units (“PSUs”) and during the Predecessor Period have historically consisted of unvested RSUs, contingently issuable shares related to preferred stock and convertible senior notes unless their effect was antidilutive.

The reconciliations between basic and diluted earnings (loss) per share are as follows:

	Successor								Predecessor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Numerator
Net income (loss), basic and diluted	$	883	$	(345)	$	1,356	$	(489)	$	5,383
Denominator (in thousands)
Weighted average common shares outstanding, basic	121,150		98,221		122,924		98,040		9,781
Effect of potentially dilutive securities
Preferred stock	—		—		—		—		290
Warrants	22,794		—		21,692		—		—
Restricted stock units	396		—		368		—		—
Performance share units	50		—		47		—		—
Weighted average common shares outstanding, diluted	144,390		98,221		145,031		98,040		10,071
Earnings (loss) per common share:
Basic	$	7.29	$	(3.51)	$	11.03	$	(4.99)	$	550.35
Diluted	$	6.12	$	(3.51)	$	9.35	$	(4.99)	$	534.51

Successor

During the 2022 Successor Quarter and 2022 Successor Period, the diluted earnings per share calculation excludes the effect of 1,191,877 reserved shares of common stock and 2,248,726 reserved Class C Warrants related to the settlement of General Unsecured Claims associated with the Chapter 11 Cases, as all necessary conditions had not been met for such shares to be considered dilutive shares during the 2022 Successor Quarter and 2022 Successor Period.

During the 2021 Successor Quarter and the 2021 Successor Period, the diluted loss per share calculation excludes the effect of 1,767,203 reserved shares of common stock and 3,334,277 reserved Class C warrants related to the settlement of General Unsecured Claims associated with the Chapter 11 Cases, as all necessary conditions had not been met to be considered dilutive shares during the 2021 Successor Quarter and the 2021 Successor Period. Additionally, as both the 2021 Successor Quarter and the 2021 Successor Period had a net loss, the diluted loss per share calculation excludes the antidilutive effect, calculated using the treasury stock method, of

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

14,774,330 and 12,851,577 issuable shares related to warrants, 247,220 and 135,350 shares of restricted stock and 5,479 and 3,508 shares related to performance share units, respectively.

Predecessor

We had the option to settle conversions of the 5.50% convertible senior notes due 2026 with cash, shares or common stock or any combination thereof. As the price of our common stock was below the conversion threshold level for any time during the conversion period, there was no impact to diluted earnings per share.

6. Debt

Our long-term debt consisted of the following as of September 30, 2022 and December 31, 2021:

	Successor
	September 30, 2022				December 31, 2021
	Carrying Amount		Fair Value(a)		Carrying Amount		Fair Value(a)
Exit Credit Facility - Tranche A Loans	$	450	$	450	$	—	$	—
Exit Credit Facility - Tranche B Loans	221		221		221		221
5.50% senior notes due 2026	500		479		500		526
5.875% senior notes due 2029	500		462		500		535
6.75% senior notes due 2029	950		906		950		1,031
Premiums on senior notes	104		—		116		—
Debt issuance costs	(8)		—		(9)		—
Total long-term debt, net	$	2,717	$	2,518	$	2,278	$	2,313

____________________________________________

(a)The carrying value of borrowings under our Exit Credit Facility approximate fair value as the interest rates are based on prevailing market rates; therefore, they are a Level 1 fair value measurement. For all other debt, a market approach, based upon quotes from major financial institutions, which are Level 2 inputs, is used to measure the fair value.

Successor Debt

Our post-emergence exit financing consists of the Exit Credit Facility, which includes a reserve-based revolving credit facility and a non-revolving loan facility, the Notes and the Vine Notes (as defined below).

Exit Credit Facility. On the Effective Date, pursuant to the terms of the Plan, the Company, as borrower, entered into a reserve-based credit agreement (the “Credit Agreement”) providing for a reserve-based credit facility with an initial borrowing base of $2.5 billion. The borrowing base will be redetermined semiannually on or around May 1 and November 1 of each year. The aggregate initial elected commitments of the lenders under the Exit Credit Facility were $1.75 billion of Tranche A Loans and $221 million of fully funded Tranche B Loans.

The Exit Credit Facility provides for a $200 million sublimit of the aggregate commitments that are available for the issuance of letters of credit. The Exit Credit Facility bears interest at the ABR (alternate base rate) or LIBOR, at our election, plus an applicable margin (ranging from 2.25–3.25% per annum for ABR loans and 3.25–4.25% per annum for LIBOR loans, subject to a 1.00% LIBOR floor), depending on the percentage of the borrowing base then being utilized. The Tranche A Loans mature three years after the Effective Date and the Tranche B Loans mature four years after the Effective Date. The Tranche B Loans can be repaid if no Tranche A Loans are outstanding. Our borrowings under the Exit Credit Facility bore interest at an average interest rate of 6.0% during the 2022 Successor Period.

The Credit Agreement contains financial covenants that require the Company and the guarantors party thereto, on a consolidated basis, to maintain (i) a first lien leverage ratio of not more than 2.75 to 1:00, (ii) a total leverage ratio of not more than 3.50 to 1:00, (iii) a current ratio of not less than 1.00 to 1:00 and (iv) at any time additional secured debt is outstanding, an asset coverage ratio of not less than 1.50 to 1:00, defined as PV-10 of proved

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(Unaudited)

developed producing reserves to total secured debt. The Company has no additional secured debt outstanding as of September 30, 2022.

The Credit Agreement also contains customary affirmative and negative covenants, including, among other things, as to compliance with laws (including environmental laws and anti-corruption laws), delivery of quarterly and annual financial statements, conduct of business, maintenance of property, maintenance of insurance, restrictions on the incurrence of liens, indebtedness, asset dispositions, fundamental changes, restricted payments, and other customary covenants.

The Company is required to pay a commitment fee of 0.50% per annum on the average daily unused portion of the current aggregate commitments under the Tranche A Loans. The Company is also required to pay customary letter of credit and fronting fees.

Outstanding Senior Notes. On February 2, 2021, Chesapeake Escrow Issuer LLC, then an indirect wholly owned subsidiary of the Company, issued $500 million aggregate principal amount of its 2026 Notes and $500 million aggregate principal amount of its 2029 Notes. The Notes included a $52 million premium to reflect fair value adjustments at the date of emergence.

The Notes are guaranteed on a senior unsecured basis by each of the Company’s subsidiaries that guarantee the Exit Credit Facility.

The Notes were issued pursuant to an indenture, dated as of February 5, 2021, among the Issuer, the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee.

Interest on the Notes is payable semi-annually, on February 1 and August 1 of each year to holders of record on the immediately preceding January 15 and July 15.

Vine Senior Notes. As a result of the completion of the Vine Acquisition, the Company and certain of its subsidiaries entered into a supplemental indenture pursuant to which the Company assumed the obligations under Vine’s $950 million aggregate principal amount of 6.75% senior notes due 2029 (the “Vine Notes”) issued under the indenture dated April 7, 2021 with Wilmington Trust, National Association, as Trustee (the “Vine Indenture”). The Vine Notes included a $71 million premium to reflect fair value adjustments at the date of acquisition.

The Company and certain of its subsidiaries have agreed to guarantee such obligations under the Vine Indenture. Additionally, certain subsidiaries of Vine entered into a supplemental indenture to the Company’s existing indenture, dated February 5, 2021 with Deutsche Bank Trust Company Americas as trustee (the “CHK Indenture”), pursuant to which such subsidiaries of Vine have agreed to guarantee obligations under the CHK Indenture.

Interest on the Vine Notes is payable semi-annually, on April 15 and October 15 of each year to holders of record on the immediately preceding April 1 and October 1.

The Notes and the Vine Notes are the Company’s senior unsecured obligations. Accordingly, they rank (i) equal in right of payment to all existing and future senior unsecured indebtedness, (ii) effectively subordinate in right of payment to all existing and future secured indebtedness, including indebtedness under the Exit Credit Facility, to the extent of the value of the collateral securing such indebtedness, (iii) structurally subordinate in right of payment to all existing and future indebtedness and other liabilities of any future subsidiaries that do not guarantee the Notes and any entity that is not a subsidiary that does not guarantee the Notes and (iv) senior in right of payment to all future subordinated indebtedness. Each guarantee of the Notes by a guarantor is a general, unsecured, senior obligation of such guarantor. Accordingly, the guarantees (i) rank equally in right of payment with all existing and future senior indebtedness of such guarantor (including such guarantor’s guarantee of indebtedness under the Exit Credit Facility), (ii) are subordinated to all existing and future secured indebtedness of such guarantor, including such guarantor’s guarantee of indebtedness under our Exit Credit Facility, to the extent of the value of the collateral of such guarantor securing such secured indebtedness, (iii) are structurally subordinated to all indebtedness and other liabilities of any future subsidiaries of such guarantor that do not guarantee the notes and (iv) rank senior in right of payment to all future subordinated indebtedness of such guarantor.

Phase-Out of LIBOR

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The purpose of ASU 2020-04 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide

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(Unaudited)

migration away from Interbank Offered Rates such as LIBOR, which is expected to be phased out for most U.S. dollar settings on June 30, 2023, to alternative reference rates. ASU 2020-04 applies only to contracts, hedging relationships, debt arrangements and other transactions that reference a benchmark reference rate expected to be discontinued because of reference rate reform. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 and can be applied prospectively to contract modifications through December 31, 2022. The adoption of this guidance will not have a material impact on our condensed consolidated financial statements and related disclosures.

7. Contingencies and Commitments

Contingencies

Chapter 11 Proceedings

Commencement of the Chapter 11 Cases automatically stayed the proceedings and actions against us that are referenced below, in addition to actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company’s bankruptcy estates. The Plan in the Chapter 11 Cases, which became effective on February 9, 2021, provided for the treatment of claims against the Company’s bankruptcy estates, including pre-petition liabilities that had not been satisfied or addressed during the Chapter 11 Cases. See Note 2 for additional information.

Litigation and Regulatory Proceedings

We were involved in a number of litigation and regulatory proceedings as of the Petition Date. Many of these proceedings were in early stages, and many of them sought damages and penalties, the amount of which is indeterminate. Our total accrued liability in respect of litigation and regulatory proceedings is determined on a case-by-case basis and represents an estimate of probable losses after considering, among other factors, the progress of each case or proceeding, our experience and the experience of others in similar cases or proceedings, and the opinions and views of legal counsel. Significant judgment is required in making these estimates and our final liabilities may ultimately be materially different.

We are involved in, and expect to continue to be involved in, various lawsuits and disputes incidental to our business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions. The majority of the prepetition legal proceedings were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process before the Bankruptcy Court. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan.

Environmental Contingencies

The nature of the natural gas and oil business carries with it certain environmental risks for us and our subsidiaries. We have implemented various policies, programs, procedures, training and audits to reduce and mitigate such environmental risks. We conduct periodic reviews, on a company-wide basis, to assess changes in our environmental risk profile. Environmental reserves are established for environmental liabilities for which economic losses are probable and reasonably estimable. We manage our exposure to environmental liabilities in acquisitions by using an evaluation process that seeks to identify pre-existing contamination or compliance concerns and address the potential liability. Depending on the extent of an identified environmental concern, we may, among other things, exclude a property from the transaction, require the seller to remediate the property to our satisfaction in an acquisition or agree to assume liability for the remediation of the property.

We were recently dismissed as a defendant from numerous lawsuits in Oklahoma alleging that we and other companies engaged in activities that have caused earthquakes. The lawsuits sought compensation for injury to real and personal property, diminution of property value, economic losses due to business interruption, interference with the use and enjoyment of property, annoyance and inconvenience, personal injury and emotional distress. In addition, they sought the reimbursement of insurance premiums and the award of punitive damages, attorneys’ fees, costs, expenses and interest. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan.

Other Matters

Based on management’s current assessment, we are of the opinion that no pending or threatened lawsuit or dispute relating to our business operations is likely to have a material adverse effect on our future consolidated financial position, results of operations or cash flows. The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates.

Commitments

Gathering, Processing and Transportation Agreements

We have contractual commitments with midstream service companies and pipeline carriers for future gathering, processing and transportation of natural gas, oil and NGL to move certain of our production to market. Working interest owners and royalty interest owners, where appropriate, will be responsible for their proportionate share of these costs. Commitments related to gathering, processing and transportation agreements are not recorded as obligations in the accompanying condensed consolidated balance sheets; however, they are reflected in our estimates of proved reserves.

The aggregate undiscounted commitments under our gathering, processing and transportation agreements, excluding any reimbursement from working interest and royalty interest owners, credits for third-party volumes or future costs under cost-of-service agreements, are presented below:

	Successor
	September 30, 2022
Remainder of 2022	$	151
2023	546
2024	514
2025	444
2026	403
2027-2036	2,094
Total	$	4,152

In addition, we have entered into long-term agreements for certain natural gas gathering and related services within specified acreage dedication areas in exchange for cost-of-service based fees redetermined annually, or tiered fees based on volumes delivered relative to scheduled volumes. Future gathering fees may vary with the applicable agreement.

Other Commitments

As part of our normal course of business, we enter into various agreements providing, or otherwise arranging for, financial or performance assurances to third parties on behalf of our wholly owned guarantor subsidiaries. These agreements may include future payment obligations or commitments regarding operational performance that effectively guarantee our subsidiaries’ future performance.

In connection with acquisitions and divestitures, our purchase and sale agreements generally provide indemnification to the counterparty for liabilities incurred as a result of a breach of a representation or warranty by the indemnifying party and/or other specified matters. These indemnifications generally have a discrete term and are intended to protect the parties against risks that are difficult to predict or cannot be quantified at the time of entering into or consummating a particular transaction. For divestitures of natural gas and oil properties, our purchase and sale agreements may require the return of a portion of the proceeds we receive as a result of uncured title or environmental defects.

While executing our strategic priorities, we have incurred certain cash charges, including contract termination charges, financing extinguishment costs and charges for unused natural gas transportation and gathering capacity.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

8. Other Current Liabilities

Other current liabilities as of September 30, 2022 and December 31, 2021 are detailed below:

	Successor
	September 30, 2022		December 31, 2021
Revenues and royalties due others	$	938	$	617
Accrued drilling and production costs	324		142
Accrued hedging costs	114		113
Accrued compensation and benefits	74		91
Other accrued taxes	156		86
Operating leases	36		29
Joint interest prepayments received	23		14
Other	119		110
Total other current liabilities	$	1,784	$	1,202

9. Revenue

The following table shows revenue disaggregated by operating area and product type:

	Successor
	Three Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
Marcellus	$	1,324	$	—	$	—	$	1,324
Haynesville	1,093		—		—		1,093
Eagle Ford	79		437		54		570
Natural gas, oil and NGL revenue	$	2,496	$	437	$	54	$	2,987
Marketing revenue	$	827	$	328	$	51	$	1,206

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

	Successor
	Three Months Ended September 30, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	383	$	—	$	—	$	383
Haynesville	207		—		—		207
Eagle Ford	53		379		55		487
Powder River Basin	21		58		14		93
Natural gas, oil and NGL revenue	$	664	$	437	$	69	$	1,170
Marketing revenue	$	240	$	326	$	61	$	627

	Successor
	Nine Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
Marcellus	$	3,085	$	—	$	—	$	3,085
Haynesville	2,733		—		—		2,733
Eagle Ford	211		1,390		173		1,774
Powder River Basin	20		66		13		99
Natural gas, oil and NGL revenue	$	6,049	$	1,456	$	186	$	7,691
Marketing revenue	$	1,872	$	1,231	$	193	$	3,296

	Successor
	Period from February 10, 2021 through September 30, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	772	$	—	$	—	$	772
Haynesville	401		—		—		401
Eagle Ford	127		971		119		1,217
Powder River Basin	51		144		30		225
Natural gas, oil and NGL revenue	$	1,351	$	1,115	$	149	$	2,615
Marketing revenue	$	483	$	828	$	132	$	1,443

35

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

	Predecessor
	Period from January 1, 2021 through February 9, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	119	$	—	$	—	$	119
Haynesville	53		—		—		53
Eagle Ford	17		159		17		193
Powder River Basin	7		20		6		33
Natural gas, oil and NGL revenue	$	196	$	179	$	23	$	398
Marketing revenue	$	78	$	141	$	20	$	239

Accounts Receivable

Our accounts receivable are primarily from purchasers of natural gas, oil and NGL and from exploration and production companies that own interests in properties we operate. This industry concentration could affect our overall exposure to credit risk, either positively or negatively, because our purchasers and joint working interest owners may be similarly affected by changes in economic, industry or other conditions. We monitor the creditworthiness of all our counterparties and we generally require letters of credit or parent guarantees for receivables from parties deemed to have sub-standard credit, unless the credit risk can otherwise be mitigated. We utilize an allowance method in accounting for bad debt based on historical trends in addition to specifically identifying receivables that we believe may be uncollectible.

Accounts receivable as of September 30, 2022 and December 31, 2021 are detailed below:

	Successor
	September 30, 2022		December 31, 2021
Natural gas, oil and NGL sales	$	1,477	$	922
Joint interest	268		158
Other	14		38
Allowance for doubtful accounts	(2)		(3)
Total accounts receivable, net	$	1,757	$	1,115

10. Income Taxes

We estimate our annual effective tax rate (“AETR”) for continuing operations in recording our interim quarterly income tax provision for the various jurisdictions in which we operate. The tax effects of statutory rate changes, significant unusual or infrequently occurring items, and certain changes in the assessment of the realizability of deferred tax assets are excluded from the determination of our estimated AETR as such items are recognized as discrete items in the quarter in which they occur. Our estimated AETR for the 2022 Successor Period is 5.9% as a result of projecting current federal and state income taxes and a full valuation allowance against our anticipated net deferred asset position at December 31, 2022.

Our estimated AETR for the 2021 Successor Period was 2.0% as a result of maintaining a full valuation allowance against our net deferred asset position. The income tax provision for the 2021 Predecessor Period was determined based on actual results for the period ended February 9, 2021, including those resulting from fresh start accounting. The effective tax rate for the 2021 Predecessor Period was (1.1%) which resulted from the elimination of the income tax effects associated with hedging settlements from accumulated other comprehensive income as part of fresh start accounting. We recorded an income tax benefit of $57 million in the 2021 Predecessor Period for the elimination of such income tax effects. Any changes to our deferred tax assets and liabilities for the 2021 Predecessor Period (whether resulting from Reorganization Adjustments, Fresh Start Adjustments or otherwise) were completely offset with a corresponding adjustment to our valuation allowance which resulted in the low

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

effective tax rate. Accordingly, there are no balances shown for deferred tax assets or liabilities in the condensed consolidated balance sheet table shown in Note 3.

As of December 31, 2021, we were in a net deferred tax asset position and anticipate being in a net deferred tax asset position as of December 31, 2022. Based on all available positive and negative evidence, including projections of future taxable income, we believe it is more likely than not that our deferred tax assets will not be realized. As such, a full valuation allowance was recorded against our net deferred tax asset position for federal and state purposes as of September 30, 2022 and December 31, 2021. A significant piece of objectively verifiable negative evidence evaluated is the cumulative loss incurred throughout the last several quarters. Should future results of operations demonstrate a trend of profitability, additional weight may be placed upon other evidence, such as forecasts of future taxable income. Additionally, future events and new evidence, such as the integration and realization of profit from recently acquired assets, could lead to increased weight being placed upon future forecasts and the conclusion that some or all of the deferred tax assets are more likely than not to be realizable. Therefore, we believe that there is a possibility that some or all of the valuation allowance could be released in the foreseeable future.

Our ability to utilize net operating loss (“NOL”) carryforwards, disallowed business interest carryforwards, tax credits and possibly other tax attributes to reduce future taxable income and federal income tax is subject to various limitations under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). The utilization of such attributes may be subject to an annual limitation under Section 382 of the Code should transactions involving our equity result in a cumulative shift of more than 50% in the beneficial ownership of our stock during any three-year testing period (an “Ownership Change”).

As a result of emergence from bankruptcy on February 9, 2021, the Company did experience an Ownership Change. We did not qualify for the exception under Section 382(l)(5) of the Code, and therefore an annual limitation was determined under Section 382(l)(6) of the Code, which is based on the post-emergence value of our equity multiplied by the adjusted federal long-term rate in effect for the month in which the ownership change occurred. The amount of the annual limitation has been computed to be $54 million. The limitation applies to our NOL carryforwards, disallowed business interest carryforwards and general business credits until such attributes expire or are fully utilized. As we believe we were in an overall net unrealized built-in loss position at the Effective Date, the limitation also applies to any recognized built-in losses incurred for a period of five years but only to the extent of the overall net unrealized built-in loss. Recognized built-in losses include a portion of our tax depreciation, depletion, and amortization deductions along with a portion of our realized hedging losses. We incurred sufficient recognized built-in losses during the 2021 tax year such that we have no further restriction on the company’s deductions for such items. Some states impose similar limitations on tax attribute utilization upon experiencing an ownership change.

In Chapter 11 bankruptcy cases, the cancellation of debt income (“CODI”) realized upon emergence from bankruptcy is excludible from taxable income but results in a reduction of tax attributes in accordance with the attribute reduction and ordering rules of Section 108 of the Code. The amount of our CODI was $5 billion, all of which reduced our NOL carryforwards. As a result of the Section 382 limitation, $593 million of federal NOLs remaining after the CODI reduction were estimated to expire before they would become utilizable and, as such, were removed from our deferred tax assets. The states we operate in generally have similar rules for attribute reduction and Section 382 limitation which resulted in the reduction of certain of our state NOL carryforwards.

On November 1, 2021, we completed the acquisition of Vine. For federal income tax purposes, the transaction qualified as a tax-free merger under Section 368 of the Code and, as a result, we acquired carryover tax basis in Vine’s assets and liabilities. In the 2021 Successor Period, we recorded a $49 million net deferred tax liability determined through business combination accounting. Upon the completion of Vine’s tax returns in the 2022 Successor Period, the net deferred tax liability was adjusted to $30 million. As a result of this adjustment to the deferred tax liability, we increased our valuation allowance and recorded $19 million of income tax expense in the 2022 Successor Period.

On August 16, 2022, the President of the United States signed into law the Inflation Reduction Act of 2022 (“IRA”), which includes provisions for a 15% corporate alternative minimum tax on book income for companies whose average book income exceeds $1 billion for any three consecutive years preceding the tax year and a 1% excise tax on stock buybacks. These changes are generally in effect for tax years beginning after December 31, 2022. We are in the process of evaluating the potential impact of the IRA.

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

11. Equity

New Common Stock

As discussed in Note 2, on the Effective Date, we issued an aggregate of 97,907,081 shares of New Common Stock, par value $0.01 per share, to the holders of allowed claims, and 2,092,918 shares of New Common Stock were reserved for future distributions under the Plan. During the 2022 Successor Period, 36,951 reserved shares were issued to resolve allowed General Unsecured Claims.

On November 1, 2021 we completed the Vine Acquisition and issued 18,709,399 shares of New Common Stock. On March 9, 2022, we completed the Marcellus Acquisition and issued 9,442,185 shares of New Common Stock. See further discussion of both acquisitions in Note 4.

Dividends

In May 2021, we initiated a new annual dividend on our shares of common stock, expected to be paid quarterly. The following table summarizes our dividend payments in the 2022 Successor Period.

Payment Date	Stockholders of Record Date	Dividend Payment		Rate Per Share
March 22, 2022	March 7, 2022	$	210	$	1.7675
June 2, 2022	May 19, 2022	$	298	$	2.34
September 1, 2022	August 17, 2022	$	280	$	2.32

On November 1, 2022, we declared a quarterly dividend payable of $3.16 per share, which will be paid on December 1, 2022 to stockholders of record at the close of business on November 15, 2022. The dividend consists of a base quarterly dividend in the amount of $0.55 per share and a variable quarterly dividend in the amount of $2.61 per share.

Share Repurchase Program

As of December 2, 2021, the Company was authorized to purchase up to $1 billion of the Company’s common stock and/or warrants under a share repurchase program. In June 2022, our Board of Directors authorized an expansion of the share repurchase program by $1.0 billion, bringing the total authorized share repurchase amount to $2.0 billion for stock and/or warrants. The share repurchase program will expire on December 31, 2023.

In March 2022, we commenced our share repurchase program and repurchased 1 million shares of common stock for an aggregate price of $83 million. In June 2022, we repurchased 5.8 million shares of common stock for an aggregate price of $515 million, inclusive of shares for which cash settlement occurred in early July. During the 2022 Successor Quarter, we repurchased 0.75 million shares of common stock for an aggregate price of $69 million. The shares of common stock that were repurchased during the 2022 Successor Period were retired and recorded as a reduction to common stock and retained earnings.

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Warrants

	Class A Warrants	Class B Warrants	Class C Warrants(a)
Outstanding as of December 31, 2021	10,856,852	12,313,273	11,388,371
Converted into New Common Stock(b)	(1,036,606)	(22,392)	(13,845)
Outstanding as of March 31, 2022	9,820,246	12,290,881	11,374,526
Converted into New Common Stock(b)	(68,300)	(111)	(161,849)
Issued for General Unsecured Claims	—	—	69,720
Outstanding as of June 30, 2022	9,751,946	12,290,770	11,282,397
Converted into New Common Stock(b)	(500,450)	(31)	(97,403)
Outstanding as of September 30, 2022	9,251,496	12,290,739	11,184,994

_________________________________________

(a)As of September 30, 2022, we had 2,248,726 of reserved Class C Warrants.

(b)During the 2022 Successor Period, we issued 1,329,292 shares of New Common Stock as a result of Warrant exercises.

As discussed in Note 2, on the Effective Date, we issued 11,111,111 Class A Warrants, 12,345,679 Class B Warrants and 9,768,527 Class C Warrants that are initially exercisable for one share of New Common Stock per Warrant at initial exercise prices of $27.63, $32.13 and $36.18 per share, respectively, subject to adjustments pursuant to the terms of the Warrants. The Warrants are exercisable from the Effective Date until February 9, 2026. The Warrants contain customary anti-dilution adjustments in the event of any stock split, reverse stock split, reclassification, stock dividend or other distributions. The exercise prices of the Warrants were adjusted to prevent the dilution of rights for the effects of the quarterly dividend distribution on September 1, 2022, and the adjusted exercise prices are $25.10, $29.18, and $32.86 per share for the Class A, Class B and Class C Warrants, respectively. Additionally, we have recalculated the number of shares of New Common Stock issuable upon the exercise of each of the Class A, Class B and Class C Warrants, respectively, and as a result, 1.12 shares are issuable upon the exercise of a Class A, Class B or Class C Warrant.

On August 18, 2022, we announced exchange offers relating to our outstanding Class A Warrants, Class B Warrants and Class C Warrants. The exchange offers expired on October 7, 2022 and resulted in the issuance of 16,305,984 shares of our New Common Stock in exchange for the cancellation of (i) 4,752,207 Class A Warrants, (ii) 7,879,030 Class B Warrants and (iii) 7,252,004 Class C Warrants. Under the exchange offers, the Warrants were exchanged in a cashless transaction and were converted to shares of our New Common Stock at a ratio of 0.8636 for Class A Warrants, 0.8224 for Class B Warrants and 0.7890 for Class C Warrants, respectively.

Chapter 11 Proceedings

Upon emergence from Chapter 11 on February 9, 2021, as discussed in Note 2, Predecessor common stock and preferred stock were canceled and released under the Plan without receiving any recovery on account thereof.

12. Share-Based Compensation

As discussed in Note 2, on the Effective Date, our Predecessor common stock was canceled and New Common Stock was issued. Accordingly, our then existing share-based compensation awards were also canceled, which resulted in the recognition of any previously unamortized expense related to the canceled awards on the date of cancellation. Share-based compensation for the Predecessor and Successor Periods is not comparable.

Successor Share-Based Compensation

As of the Effective Date, the Board of Directors adopted the 2021 Long-Term Incentive Plan (the “LTIP”) with a share reserve equal to 6,800,000 shares of New Common Stock. The LTIP provides for the grant of RSUs, restricted stock awards, stock options, stock appreciation rights, performance awards and other stock awards to the Company’s employees and non-employee directors.

39

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Restricted Stock Units. In the 2021 and 2022 Successor Periods, we granted RSUs to employees and non-employee directors under the LTIP, which will vest over a three-year period. The fair value of RSUs is based on the closing sales price of our common stock on the date of grant, and compensation expense is recognized ratably over the requisite service period. A summary of the changes in unvested RSUs is presented below:

	Unvested Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2021	775	$	46.77
Granted	520	$	76.38
Vested	(293)	$	47.78
Forfeited	(103)	$	53.63
Unvested as of September 30, 2022	899	$	62.78

The aggregate intrinsic value of RSUs that vested during the 2022 Successor Period was approximately $26 million based on the stock price at the time of vesting.

As of September 30, 2022, there was approximately $45 million of total unrecognized compensation expense related to unvested RSUs. The expense is expected to be recognized over a weighted average period of approximately 2.22 years.

Performance Share Units. In the 2021 and 2022 Successor Periods, we granted PSUs to senior management under the LTIP, which will generally vest over a three-year period and will be settled in shares. The performance criteria include total shareholder return (“TSR”) and relative TSR (“rTSR”), and could result in a total payout between 0% - 200% of the target units. For the PSUs granted in 2021, the performance criteria also include share price hurdles which could result in a total payout between 0% - 100% of the target units. The fair value of the PSUs was measured on the grant date using a Monte Carlo simulation, and compensation expense is recognized ratably over the requisite service period because these awards depend on a combination of service and market criteria.

The following table presents the assumptions used in the valuation of the PSUs granted in 2022.

Assumption	TSR, rTSR
Risk-free interest rate	2.00	%
Volatility	70.2	%

A summary of the changes in unvested PSUs is presented below:

	Unvested Performance Share Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2021	183	$	66.12
Granted	133	$	109.65
Vested	—	$	—
Forfeited	(35)	$	59.09
Unvested as of September 30, 2022	281	$	87.56

As of September 30, 2022, there was approximately $18 million of total unrecognized compensation expense related to unvested PSUs. The expense is expected to be recognized over a weighted average period of approximately 2.23 years.

40

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Predecessor Share-Based Compensation

Our Predecessor share-based compensation program consisted of RSUs, stock options, PSUs and cash restricted stock units (“CRSUs”) granted to employees and RSUs granted to non-employee directors under our long-term incentive plans. The RSUs and stock options were equity-classified awards and the PSUs and CRSUs were liability-classified awards.

Restricted Stock Units. We granted RSUs to employees and non-employee directors. A summary of the changes in unvested RSUs is presented below:

	Unvested Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2020	1	$	616.57
Granted	—	$	—
Vested	—	$	—
Forfeited/canceled	(1)	$	611.47
Unvested as of February 9, 2021	—	$	—

Stock Options. In the year ended December 31, 2020, we granted members of management stock options that vested ratably over a three-year period. Each stock option award had an exercise price equal to the closing price of our common stock on the grant date. Outstanding options expired seven years to ten years from the date of grant.

We utilized the Black-Scholes option-pricing model to measure the fair value of stock options. The expected life of an option was determined using the simplified method. Volatility assumptions were estimated based on the average historical volatility of Chesapeake stock over the expected life of an option. The risk-free interest rate was based on the U.S. Treasury rate in effect at the time of the grant over the expected life of the option. The dividend yield was based on an annual dividend yield, taking into account our dividend policy, over the expected life of the option.

The following table provides information related to stock option activity:

	Number of Shares Underlying   Options	Weighted Average Exercise Price Per Share		Weighted   Average Contract Life in Years	Aggregate   Intrinsic Value(a)
	(in thousands)
Outstanding as of December 31, 2020	20	$	1,429.11	4.27	$	—
Granted	—	$	—
Exercised	—	$	—		$	—
Expired	(1)	$	741.86
Forfeited/canceled	(19)	$	1,452.40
Outstanding as of February 9, 2021	—	$	—	—	$	—
Exercisable as of February 9, 2021	—	$	—	—	$	—

___________________________________________

(a)The intrinsic value of a stock option is the amount by which the current market value or the market value upon exercise of the underlying stock exceeds the exercise price of the option.

41

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Restricted Stock Units, Stock Option, and PSU Compensation.

We recognized the following compensation costs, net of actual forfeitures, related to RSUs, stock options, and PSUs for the periods presented:

	Successor								Predecessor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
General and administrative expenses	$	5	$	2	$	14	$	4	$	3
Natural gas and oil properties	1		1		3		2		—
Production expense	1		1		2		1		—
Total RSU, stock option and PSU compensation	$	7	$	4	$	19	$	7	$	3

13. Derivative and Hedging Activities

We use derivative instruments to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility. These commodity derivative financial instruments include financial price swaps, basis protection swaps, collars, three-way collars, options and swaptions. All of our natural gas and oil derivative instruments are net settled based on the difference between the fixed-price payment and the floating-price payment, resulting in a net amount due to or from the counterparty. We do not intend to hold or issue derivative financial instruments for speculative trading purposes and have elected not to designate any of our derivative instruments for hedge accounting treatment.

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CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The estimated fair values of our natural gas and oil derivative instrument assets (liabilities) as of September 30, 2022 and December 31, 2021 are provided below: 

	Successor
	September 30, 2022			December 31, 2021
	Notional Volume	Fair Value		Notional Volume	Fair Value
Natural gas (Bcf):
Fixed-price swaps	449	$	(1,413)	637	$	(675)
Collars	547	(664)		205	(82)
Three-way collars	10	(29)		—	—
Call options	18	(63)		18	(17)
Swaptions	7	(19)		—	—
Basis protection swaps	398	16		252	(11)
Total natural gas	1,429	(2,172)		1,112	(785)
Oil (MMBbls):
Fixed-price swaps	4	(136)		13	(356)
Collars	6	23		—	—
Basis protection swaps	10	(5)		9	(2)
Total oil	20	(118)		22	(358)
Total estimated fair value		$	(2,290)		$	(1,143)

Effect of Derivative Instruments – Condensed Consolidated Balance Sheets

The following table presents the fair value and location of each classification of derivative instrument included in the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 on a gross basis and after same-counterparty netting:

	Gross Fair Value(a)		Amounts Netted in the Consolidated Balance Sheets		Net Fair Value Presented in the Consolidated Balance Sheets
Successor
As of September 30, 2022
Commodity Contracts:
Short-term derivative asset	$	118	$	(114)	$	4
Long-term derivative asset	28		(28)		—
Short-term derivative liability	(1,989)		114		(1,875)
Long-term derivative liability	(447)		28		(419)
Total derivatives	$	(2,290)	$	—	$	(2,290)
As of December 31, 2021
Commodity Contracts:
Short-term derivative asset	$	56	$	(51)	$	5
Short-term derivative liability	(950)		51		(899)
Long-term derivative liability	(249)		—		(249)
Total derivatives	$	(1,143)	$	—	$	(1,143)

___________________________________________

(a)These financial assets (liabilities) are measured at fair value on a recurring basis utilizing significant other observable inputs; see further discussion on fair value measurements below.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Fair Value

The fair value of our derivatives is based on third-party pricing models, which utilize inputs that are either readily available in the public market, such as natural gas, oil and NGL forward curves and discount rates, or can be corroborated from active markets or broker quotes, and, as such, are classified as Level 2. These values are compared to the values given by our counterparties for reasonableness. Derivatives are also subject to the risk that either party to a contract will be unable to meet its obligations. We factor non-performance risk into the valuation of our derivatives using current published credit default swap rates. To date, this has not had a material impact on the values of our derivatives.

Credit Risk Considerations

Our derivative instruments expose us to our counterparties’ credit risk. To mitigate this risk, we enter into derivative contracts only with counterparties that are highly rated or deemed by us to have acceptable credit strength and deemed by management to be competent and competitive market-makers, and we attempt to limit our exposure to non-performance by any single counterparty. As of September 30, 2022, our natural gas and oil derivative instruments were spread among 13 counterparties.

Hedging Arrangements

Certain of our hedging arrangements are with counterparties that are also lenders (or affiliates of lenders) under our Exit Credit Facility. The contracts entered into with these counterparties are secured by the same collateral that secures the Exit Credit Facility. The counterparties’ obligations must be secured by cash or letters of credit to the extent that any mark-to-market amounts owed to us exceed defined thresholds. As of September 30, 2022, we did not have any cash or letters of credit posted as collateral for our commodity derivatives.

Effect of Derivative Instruments – Accumulated Other Comprehensive Income

A reconciliation of the changes in accumulated other comprehensive income in our condensed consolidated statements of stockholders’ equity related to our terminated cash flow hedges is presented below:

	Predecessor
	Period from January 1, 2021 through February 9, 2021
	Before Tax		After Tax
Balance, beginning of period	$	(12)	$	45
Losses reclassified to income(a)	3		3
Fresh start adjustments	9		9
Elimination of tax effects	—		(57)
Balance, end of period	$	—	$	—

___________________________________________

(a)These losses were included as a component of total natural gas and oil derivatives.

Our accumulated other comprehensive loss balance represented the net deferred loss associated with commodity derivative contracts that were previously designated as cash flow hedges for which the original contract months were yet to occur. The remaining deferred gain or loss amounts were to be recognized in earnings in the month for which the original contract months were to occur. In connection with our adoption of fresh start accounting we recorded a fair value adjustment to eliminate the accumulated other comprehensive income related to hedging settlements including the elimination of tax effects. See Note 3 for a discussion of fresh start accounting adjustments. We did not have any changes or items impacting other comprehensive income for the 2022 Successor Quarter, the 2022 Successor Period, the 2021 Successor Quarter or the 2021 Successor Period.

14. Other Operating Expense (Income), Net

During the 2022 Successor Period, we recognized approximately $40 million of costs related to our Marcellus Acquisition, which included integration costs, consulting fees, financial advisory fees, legal fees and change in control expense in accordance with Chief’s existing employment agreements.

44

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

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with management’s perspective on our financial condition, liquidity, results of operations and certain other factors that may affect our future results. The following discussion should be read together with the condensed consolidated financial statements included in Item 1 of Part I of this report and the consolidated financial statements included in Item 8 of our 2021 Form 10-K.

We are an independent exploration and production company engaged in the acquisition, exploration and development of properties to produce natural gas, oil and NGL from underground reservoirs. We own a large and geographically diverse portfolio of onshore U.S. unconventional natural gas and liquids assets, including interests in approximately 8,300 gross natural gas and oil wells as of September 30, 2022. Our natural gas resource plays are the Marcellus Shale in the northern Appalachian Basin in Pennsylvania (“Marcellus”) and the Haynesville/Bossier Shales in northwestern Louisiana (“Haynesville”). Our liquids-rich resource play is the Eagle Ford Shale in South Texas (“Eagle Ford”), and in August 2022, we announced that we view the assets within the Eagle Ford as non-core to our future capital allocation strategy and will be reducing our activity in the Eagle Ford going forward, while considering potential transactions to divest our Eagle Ford assets.

Our strategy is to create stockholder value by generating sustainable Free Cash Flow from our natural gas and oil development and production activities, enhancing our scale, and returning significant cash to our stockholders. We continue to focus on improving margins through operating efficiencies and financial discipline and improving our Environmental, Social, and Governance (“ESG”) performance. To accomplish these goals, we intend to allocate our human resources and capital expenditures to projects we believe offer the highest cash return on capital invested, to deploy leading drilling and completion technology throughout our portfolio, and to take advantage of acquisition and divestiture opportunities to strengthen our portfolio. We also intend to continue to dedicate capital to projects that reduce the environmental impact of our natural gas and oil producing activities. We continue to seek opportunities to reduce cash costs (production, gathering, processing and transportation and general and administrative) per one thousand cubic feet of natural gas equivalent production, through operational efficiencies by, among other things, improving our production volumes from existing wells.

Leading a responsible energy future is foundational to Chesapeake's success. Our core values and culture demand we continuously evaluate the environmental impact of our operations and work diligently to improve our ESG performance across all facets of our Company. Our path to leading a responsible energy future begins with our initiative to achieve net-zero direct greenhouse gas emissions by 2035, which we announced in February 2021. To meet this challenge, we set meaningful initial goals including:

•Eliminate routine flaring from all new wells completed from 2021 forward, and enterprise-wide by 2025;

•Reduce our methane intensity to 0.09% by 2025; and

•Reduce our GHG intensity to 5.5 by 2025.

We achieved our interim goals for both intensity measures by exiting 2021 with a 0.07% methane intensity and a 4.5 GHG intensity, respectively. In July 2021, we announced our plan to receive independent certification of our natural gas production under the MiQ methane standard and EO100™ Standard for Responsible Energy Development. Our Haynesville assets were certified as responsibly sourced gas at the end of 2021, and our legacy Marcellus assets (excluding assets acquired in the Marcellus Acquisition) received dual certification as responsibly sourced gas at the end of the second quarter of 2022. We anticipate that the remaining Marcellus assets will receive dual certification by the end of 2022. The MiQ certification will provide a verified approach to tracking our commitment to reduce our methane intensity, as well as support our overall objective of achieving net-zero direct greenhouse gas emissions by 2035.

Our results of operations as reported in our condensed consolidated financial statements for the 2022 Successor Quarter, 2022 Successor Period, 2021 Successor Quarter, 2021 Successor Period and 2021 Predecessor Period are in accordance with GAAP. Although GAAP requires that we report on our results for the periods January 1, 2021 through February 9, 2021 (the 2021 Predecessor Period) and February 10, 2021 through September 30, 2021 (the 2021 Successor Period) separately, management views our operating results for the nine months ended September 30, 2021 by combining the results of the 2021 Predecessor Period and the 2021

45

Successor Period because management believes such presentation provides the most meaningful comparison of our results to prior periods. We are not able to compare the 40 days from January 1, 2021 through February 9, 2021 operating results to any of the previous periods reported in the condensed consolidated financial statements and do not believe reviewing this period in isolation would be useful in identifying any trends in, or reaching any conclusions regarding, our overall operating performance. We believe the key performance indicators, such as operating revenues and expenses for the 2021 Successor Period combined with the 2021 Predecessor Period, provide more meaningful comparisons to other periods and are useful in understanding operational trends. Additionally, there were no changes in policies between the periods, and any material impacts as a result of fresh start accounting were included within the discussion of these changes. These combined results do not comply with GAAP and have not been prepared as pro forma results under applicable regulations, but are presented because we believe they provide the most meaningful comparison of our results to prior periods. As the majority of our production profile consists of natural gas, we have converted the following results of operations, including prior periods, from a per barrel of oil equivalent, to a per one thousand cubic feet of natural gas equivalent, referred to, on such a converted basis, as Mcfe.

Recent Developments

Acquisitions

On March 9, 2022, we completed our Marcellus Acquisition pursuant to definitive agreements with Chief, Radler and Tug Hill, Inc. dated January 24, 2022. On November 1, 2021, we completed our Vine Acquisition pursuant to a definitive agreement with Vine dated August 10, 2021. These transactions strengthen Chesapeake’s competitive position, meaningfully increasing our operating cash flows and adding high quality producing assets and a deep inventory of premium drilling locations, while preserving the strength of our balance sheet.

Divestiture

On March 25, 2022, we completed the sale of our Powder River Basin assets in Wyoming to Continental Resources, Inc. for $450 million in cash, subject to post-closing adjustments, which resulted in the recognition of a gain of approximately $298 million.

Repurchases of Equity Securities and Dividends

In June 2022, our Board of Directors authorized an increase in the size of our share repurchase program from $1.0 billion to up to $2.0 billion in aggregate value of our common stock and/or warrants. As of September 30, 2022, we had repurchased approximately 7.6 million shares of our common stock pursuant to the share repurchase program and had $1,333 million available under the share repurchase program. In addition, we have paid dividends of approximately $788 million, in aggregate, on our common stock in the 2022 Successor Period. In August 2022, we increased our quarterly base dividend by 10% to $0.55 per share beginning with the dividend that was paid on September 1, 2022. During October 2022, we repurchased 4.0 million shares of our common stock for an aggregate price of approximately $400 million. As of October 28, 2022, we had approximately $0.9 billion remaining under our share repurchase program.

Warrant Exchange Offer

In August 2022, we also announced exchange offers relating to our outstanding Class A Warrants, Class B Warrants, and Class C Warrants. The exchange offers expired in October 2022 and resulted in the issuance of 16,305,984 shares of our common stock in exchange for the cancellation of (i) 4,752,207 Class A Warrants, or approximately 51.4% of the outstanding Class A Warrants, (ii) 7,879,030 Class B Warrants, or approximately 64.1% of the outstanding Class B Warrants, and (iii) 7,252,004 Class C Warrants, or approximately 64.8% of the outstanding Class C Warrants. As of October 28, 2022, 4,498,767 Class A Warrants, 4,408,490 Class B Warrants and 4,604,457 Class C Warrants remain outstanding.

COVID-19 Pandemic and Impact on Global Demand for Natural Gas and Oil

The global spread of COVID-19 and its variants created, and continues to create, significant volatility, uncertainty, and economic disruption during 2020, 2021 and into 2022. The ongoing pandemic has resulted in widespread adverse impacts on the global economy and on our customers and other parties with whom we have business relations. To date, we have experienced limited operational impacts as a result of COVID-19 or related

46

governmental restrictions. While we cannot predict the full impact that COVID-19 and its variants, or the related significant disruption and volatility in the natural gas and oil markets will have on our business, cash flows, liquidity, financial condition and results of operations, we believe demand is recovering and prices will continue to be positively impacted in the near term. For additional discussion regarding risks associated with the COVID-19 pandemic, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Form 10-K and Part I, Item 1A “Risk Factors” in our 2021 Form 10-K.

Russia’s Invasion of Ukraine; Volatility in Natural Gas, Oil and NGL Prices; and Inflationary Cost Pressures

In late February 2022, Russia launched a military invasion against Ukraine. Sustained conflict and disruption in the region is likely in the near term, and the longer-term duration of the war is uncertain. The Russian invasion has caused, and could intensify, volatility in natural gas, oil and NGL prices, driving a sharp upward spike in the short term, and may have an impact on global growth prospects, which could in turn affect demand for natural gas and oil. The global market is also currently experiencing inflationary pressures, including rising fuel costs, a tightening steel market and labor and supply chain shortages, which could result in increases to our operating and capital costs that are not fixed. We are monitoring the situation and assessing its impact on our business, including our business partners and customers.

Liquidity and Capital Resources

Liquidity Overview

For the 2022 Successor Period, our primary sources of capital resources and liquidity have consisted of internally generated cash flows from operations and borrowings under our Exit Credit Facility, and our primary uses of cash have been for the development of our natural gas and oil properties, acquisitions of additional natural gas and oil properties and return of value to stockholders through dividends and equity repurchases. Historically, our primary sources of capital resources and liquidity have consisted of internally generated cash flows from operations, borrowings under certain credit agreements and dispositions of non-core assets. Our ability to issue additional indebtedness, dispose of assets or access the capital markets was substantially limited during the Chapter 11 Cases and required court approval in most instances. Accordingly, our liquidity in the 2021 Predecessor Period depended mainly on cash generated from operations and available funds under certain credit agreements.

We believe we have emerged from the Chapter 11 Cases as a fundamentally stronger company, built to generate sustainable Free Cash Flow with a strengthened balance sheet, geographically diverse asset base and continuously improving ESG performance. As a result of the Chapter 11 Cases, we reduced our total indebtedness by $9.4 billion by issuing equity in a reorganized entity to the holders of our FLLO Term Loan, Second Lien Notes, unsecured notes and allowed general unsecured claimants.

We believe our cash flow from operations, cash on hand and borrowing capacity under the Exit Credit Facility, as discussed below, will provide sufficient liquidity during the next 12 months and the foreseeable future. As of September 30, 2022, we had $1,340 million of liquidity available, including $74 million of cash on hand and $1,266 million of aggregate unused borrowing capacity available under the Exit Credit Facility. As of September 30, 2022, we had $450 million of outstanding borrowings under our Exit Credit Facility – Tranche A Loans and $221 million in borrowings under our Exit Credit Facility – Tranche B Loans. See Note 6 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion of our debt obligations, including carrying and fair value of our senior notes.

Dividend

With our strong liquidity position, we initiated a new dividend strategy in the 2021 Successor Period. We paid dividends of $788 million on our common stock in the 2022 Successor Period. See Note 11 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

On November 1, 2022, we declared a quarterly dividend payable of $3.16 per share, which will be paid on December 1, 2022 to stockholders of record at the close of business on November 15, 2022. The dividend consists of a base quarterly dividend in the amount of $0.55 per share and a variable quarterly dividend in the amount of $2.61 per share.

The declaration and payment of any future dividend, whether fixed or variable, will remain at the full discretion of the Board of Directors and will depend on the Company’s financial results, cash requirements, future prospects

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and other relevant factors. The Company’s ability to pay dividends to its stockholders is restricted by (i) Oklahoma corporate law, (ii) its Certificate of Incorporation, (iii) the terms and provisions of its Credit Agreement and (iv) the terms and provisions of the indentures governing its 5.50% 2026 Notes, 5.875% 2029 Notes and 6.75% Senior Notes due 2029 assumed in the Vine Acquisition.

Derivative and Hedging Activities

Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL. We enter into various derivative instruments to mitigate a portion of our exposure to commodity price declines, but these transactions may also limit our cash flows in periods of rising commodity prices. Our natural gas, oil and NGL derivative activities, when combined with our sales of natural gas, oil and NGL, allow us to better predict the total revenue we expect to receive. See Item 3. Quantitative and Qualitative Disclosures About Market Risk included in Item 1 of Part I of this report for further discussion on the impact of commodity price risk on our financial position.

Contractual Obligations and Off-Balance Sheet Arrangements

As of September 30, 2022, our material contractual obligations included repayment of senior notes, outstanding borrowings and interest payment obligations under the Exit Credit Facility, derivative obligations, asset retirement obligations, lease obligations, undrawn letters of credit and various other commitments we enter into in the ordinary course of business that could result in future cash obligations. In addition, we have contractual commitments with midstream companies and pipeline carriers for future gathering, processing and transportation of natural gas, oil and NGL to move certain of our production to market. Estimated gross undiscounted future commitments under these agreements were approximately $4.2 billion as of September 30, 2022. As discussed above, we estimate the sources of our capital will continue to be adequate to fund our near and long-term contractual obligations. See Notes 6, 7 and 13 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

Post-Emergence Debt

On the Effective Date, pursuant to the terms of the Plan, the Company, as borrower, entered into a reserve-based credit agreement (the “Credit Agreement”) providing for the Exit Credit Facility which features an initial borrowing base of $2.5 billion. The borrowing base will be redetermined semiannually on or around May 1 and November 1 of each year. The aggregate initial elected commitments of the lenders under the Exit Credit Facility is $1.75 billion of revolving Tranche A Loans and $221 million of fully funded Tranche B Loans.

The Exit Credit Facility provides for a $200 million sublimit of the aggregate commitments that are available for the issuance of letters of credit. The Exit Credit Facility bears interest at the ABR (alternate base rate) or LIBOR, at our election, plus an applicable margin (ranging from 2.25–3.25% per annum for ABR loans and 3.25–4.25% per annum for LIBOR loans, subject to a 1.00% LIBOR floor), depending on the percentage of the borrowing base then being utilized. The Tranche A Loans mature 3 years after the Effective Date and the Tranche B Loans mature 4 years after the Effective Date. The Tranche B Loans can be repaid if no Tranche A Loans are outstanding. Our borrowings under the Exit Credit Facility bore interest at an average interest rate of 6.0% during the 2022 Successor Period.

On February 2, 2021, the Company issued $500 million aggregate principal amount of its 2026 Notes and $500 million aggregate principal amount of its 2029 Notes. The offering of the Notes was part of a series of exit financing transactions undertaken in connection with the Debtors’ Chapter 11 Cases and meant to provide the exit financing originally intended to be provided by the Exit Term Loan Facility pursuant to the Commitment Letter.

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Assumption and Repayment of Vine Debt

In conjunction with the Vine Acquisition, Vine’s Second Lien Term Loan was repaid and terminated for $163 million inclusive of a $13 million make whole premium with cash on hand due to the agreement containing a change in control provision making the term loan callable upon closing. Vine’s reserve based loan facility, which had no borrowings as of November 1, 2021, was terminated at the time of the acquisition. Additionally, Vine’s 6.75% Senior Notes with a principal amount of $950 million were assumed by the Company.

Capital Expenditures

For the year ending December 31, 2022, we currently expect to bring or have online approximately 195 to 235 gross wells across 11 to 16 rigs and plan to invest approximately $1.75 billion to $1.95 billion in capital expenditures. We expect that approximately 75% of our 2022 capital expenditures will be directed toward our natural gas assets. We currently plan to fund our 2022 capital program through cash on hand, expected cash flow from our operations and borrowings under our Exit Credit Facility. We may alter or change our plans with respect to our capital program and expected capital expenditures based on developments in our business, our financial position, our industry or any of the markets in which we operate.

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Sources of Funds

The following table presents the sources of our cash and cash equivalents for the periods presented.

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Cash provided by (used in) operating activities	$	3,075	$	1,246	$	(21)
Proceeds from Exit Credit Facility - Tranche A Loans, net	450		—		—
Proceeds from issuance of senior notes	—		—		1,000
Proceeds from issuance of common stock	—		—		600
Proceeds from warrant exercise	3		2		—
Proceeds from divestitures of property and equipment	409		9		—
Total sources of cash and cash equivalents	$	3,937	$	1,257	$	1,579

Cash Flows from Operating Activities

Cash provided by operating activities was $3,075 million in the 2022 Successor Period, cash provided by operating activities was $1,246 million in the 2021 Successor Period and cash used in operating activities was $21 million in the 2021 Predecessor Period. The increase in the 2022 Successor Period is primarily due to higher prices for the natural gas, oil and NGL we sold and increased volumes sold due to the Vine and Marcellus Acquisitions. The cash used in the 2021 Predecessor Period was primarily due to the payment of professional fees related to the Chapter 11 Cases. Cash flows from operations are largely affected by the same factors that affect our net income, excluding various non-cash items, such as depreciation, depletion and amortization, certain impairments, gains or losses on sales of assets, deferred income taxes and mark-to-market changes in our open derivative instruments. See further discussion below under Results of Operations.

Proceeds from Exit Credit Facility - Tranche A Loans, net

In the 2022 Successor Period, we borrowed a net $450 million on the Exit Credit Facility - Tranche A Loans. We funded a portion of the Marcellus Acquisition with borrowings under the Company’s Exit Credit Facility. A portion of the borrowings were repaid with internally generated cash from operating activities.

Proceeds from Issuance of Senior Notes and Common Stock

In the 2021 Predecessor Period, we issued $500 million aggregate principal amount of 5.50% 2026 Notes and $500 million aggregate principal amount of 5.875% 2029 Notes for total proceeds of $1.0 billion. Additionally, upon emergence from Chapter 11, we issued 62,927,320 shares of New Common Stock in exchange for $600 million of cash as agreed upon in the Plan.

Proceeds from Divestitures of Property and Equipment

In the 2022 Successor Period, we sold our Powder River Basin assets to Continental Resources, Inc. See Note 4 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

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Uses of Funds

The following table presents the uses of our cash and cash equivalents for the Successor and Predecessor periods:

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Natural Gas and Oil Expenditures:
Capital expenditures	$	1,299	$	404	$	66
Other Uses of Cash and Cash Equivalents:
Business combination, net	1,967		—		—
Payments on Exit Credit Facility - Tranche A Loans, net	—		50		479
Payments on DIP Facility borrowings	—		—		1,179
Debt issuance and other financing costs	—		3		8
Cash paid to repurchase and retire common stock	667		—		—
Cash paid for common stock dividends	788		67		—
Other	—		1		—
Total other uses of cash and cash equivalents	3,422		121		1,666
Total uses of cash and cash equivalents	$	4,721	$	525	$	1,732

Capital Expenditures

Our capital expenditures significantly increased in the 2022 Successor Period compared to the combined 2021 Successor and Predecessor Periods primarily as a result of increased drilling and completion activity in Haynesville and Marcellus, following the Vine Acquisition and Marcellus Acquisition, respectively.

Business Combination

In the 2022 Successor Period, we completed the Marcellus Acquisition for approximately $2 billion and 9.4 million shares of our common stock. See Note 4 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

Payments on DIP Facility Borrowings

On the Effective Date, the DIP Facility was terminated, and the holders of obligations under the DIP Facility received payment in full in cash; provided that, to the extent such lender under the DIP Facility was also a lender under the Exit Credit Facility, such lender’s allowed DIP claims were first reduced dollar-for-dollar and satisfied by the amount of its Exit RBL Loans provided as of the Effective Date.

Cash Paid to Repurchase and Retire Common Stock

In March 2022, we commenced our share repurchase program and repurchased 1 million shares of our common stock for an aggregate price of $83 million. In June 2022, we repurchased 5.8 million shares of our common stock for an aggregate price of $515 million, which is inclusive of shares for which cash settlement occurred in early July. During the 2022 Successor Quarter, we repurchased 0.75 million shares of our common stock, for an aggregate price of $69 million. The shares of common stock that were repurchased during the 2022 Successor Period were retired and recorded as a reduction to common stock and retained earnings.

Cash Paid for Common Stock Dividends

As part of our dividend program, we paid common stock base dividends of $182 million and common stock variable dividends of $606 million in the 2022 Successor Period. See Note 11 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion.

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Results of Operations

Natural Gas, Oil and NGL Production and Average Sales Prices

	Successor
	Three Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,987	7.25	—	—	—	—	1,987	7.25
Haynesville	1,605	7.40	—	—	—	—	1,605	7.40
Eagle Ford	121	7.04	50	94.62	16	37.53	516	11.99
Total	3,713	7.31	50	94.62	16	37.53	4,108	7.90
	Successor
	Three Months Ended September 30, 2021
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,302	3.20	—	—	—	—	1,302	3.20
Haynesville	589	3.81	—	—	—	—	589	3.81
Eagle Ford	140	4.07	59	70.36	18	33.32	599	8.83
Powder River Basin	53	4.33	9	69.31	3	44.53	128	7.91
Total	2,084	3.46	68	70.22	21	35.14	2,618	4.86
	Successor
	Nine Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,801	6.27	—	—	—	—	1,801	6.27
Haynesville	1,624	6.16	—	—	—	—	1,624	6.16
Eagle Ford	127	6.10	51	100.11	16	40.40	526	12.35
Powder River Basin	13	5.45	2	95.18	1	53.96	34	10.66
Total	3,565	6.21	53	99.87	17	41.14	3,985	7.07
	Successor
	Period from February 10, 2021 through September 30, 2021
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,289	2.57	—	—	—	—	1,289	2.57
Haynesville	552	3.11	—	—	—	—	552	3.11
Eagle Ford	142	3.83	63	66.41	19	27.36	630	8.28
Powder River Basin	55	3.94	10	65.02	3	36.91	133	7.25
Total	2,038	2.84	73	66.23	22	28.85	2,604	4.31

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	Predecessor
	Period from January 1, 2021 through February 9, 2021
	Natural Gas		Oil		NGL		Total
	MMcf per day	$/Mcf	MBbl per day	$/Bbl	MBbl per day	$/Bbl	MMcfe per day	$/Mcfe
Marcellus	1,233	2.42	—	—	—	—	1,233	2.42
Haynesville	543	2.44	—	—	—	—	543	2.44
Eagle Ford	165	2.57	74	53.37	18	23.94	721	6.71
Powder River Basin	61	2.92	10	51.96	4	34.31	144	5.71
Total	2,002	2.45	84	53.21	22	25.92	2,641	3.77

Natural Gas, Oil and NGL Sales

	Successor
	Three Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
Marcellus	$	1,324	$	—	$	—	$	1,324
Haynesville	1,093		—		—		1,093
Eagle Ford	79		437		54		570
Total natural gas, oil and NGL sales	$	2,496	$	437	$	54	$	2,987
	Successor
	Three Months Ended September 30, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	383	$	—	$	—	$	383
Haynesville	207		—		—		207
Eagle Ford	53		379		55		487
Powder River Basin	21		58		14		93
Total natural gas, oil and NGL sales	$	664	$	437	$	69	$	1,170
	Successor
	Nine Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
Marcellus	$	3,085	$	—	$	—	$	3,085
Haynesville	2,733		—		—		2,733
Eagle Ford	211		1,390		173		1,774
Powder River Basin	20		66		13		99
Total natural gas, oil and NGL sales	$	6,049	$	1,456	$	186	$	7,691

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	Successor
	Period from February 10, 2021 through September 30, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	772	$	—	$	—	$	772
Haynesville	401		—		—		401
Eagle Ford	127		971		119		1,217
Powder River Basin	51		144		30		225
Total natural gas, oil and NGL sales	$	1,351	$	1,115	$	149	$	2,615
	Predecessor
	Period from January 1, 2021 through February 9, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	119	$	—	$	—	$	119
Haynesville	53		—		—		53
Eagle Ford	17		159		17		193
Powder River Basin	7		20		6		33
Total natural gas, oil and NGL sales	$	196	$	179	$	23	$	398
	Non-GAAP Combined
	Nine Months Ended September 30, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	891	$	—	$	—	$	891
Haynesville	454		—		—		454
Eagle Ford	144		1,130		136		1,410
Powder River Basin	58		164		36		258
Total natural gas, oil and NGL sales	$	1,547	$	1,294	$	172	$	3,013

Natural gas, oil and NGL sales in the 2022 Successor Quarter increased $1,817 million compared to the 2021 Successor Quarter. The increase includes $1,146 million due to increased sales volumes in Haynesville and Marcellus, which is primarily related to the Vine and Marcellus Acquisitions in November 2021 and March 2022, respectively. The increase due to volumes is partially offset by an $89 million decrease in Eagle Ford primarily due to a natural decline in production. The increase in sales also includes $853 million due to higher average prices received. The higher average prices are consistent with the upward trend in index prices for all products throughout the 2022 Successor Quarter. The increases noted above are partially offset by a $93 million decrease due to the Powder River Basin divestiture in March 2022.

Natural gas, oil and NGL sales in the 2022 Successor Period increased $4,678 million compared to the combined 2021 Successor and Predecessor Periods. The increase includes $2,698 million due to increased sales volumes in Haynesville and Marcellus, which is primarily related to the Vine and Marcellus Acquisitions in November 2021 and March 2022, respectively. The increase due to volumes is partially offset by a $389 million decrease in Eagle Ford primarily due to a natural decline in production. The increase in sales also includes $2,528 million due to higher average prices received. The higher average prices are consistent with the upward trend in index prices for all products throughout the 2022 Successor Period. The increases noted above are partially offset by a $159 million decrease due to the Powder River Basin divestiture in March 2022.

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Production Expenses

	Successor
	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
			$/Mcfe			$/Mcfe
Marcellus	$	22	0.12	$	9	0.08
Haynesville	38		0.26	13		0.24
Eagle Ford	61		1.28	49		0.89
Powder River Basin	—		—	9		0.73
Total production expenses	$	121	0.32	$	80	0.33

	Successor						Predecessor			Non-GAAP Combined
	Nine Months Ended September 30, 2022			Period from February 10, 2021 through September 30, 2021			Period from January 1, 2021 through February 9, 2021			Nine Months Ended September 30, 2021
			$/Mcfe			$/Mcfe			$/Mcfe			$/Mcfe
Marcellus	$	54	0.11	$	23	0.08	$	4	0.08	$	27	0.08
Haynesville	109		0.25	30		0.23	4		0.19	34		0.22
Eagle Ford	176		1.22	120		0.82	21		0.71	141		0.80
Powder River Basin	10		0.94	21		0.68	3		0.56	24		0.66
Total production expenses	$	349	0.32	$	194	0.32	$	32	0.30	$	226	0.32

Production expenses in the 2022 Successor Quarter increased $41 million as compared to the 2021 Successor Quarter. The increase was primarily due to the Vine Acquisition in November 2021 and the Marcellus Acquisition in March 2022, as well as additional workovers and other preventative maintenance in Eagle Ford. The increase was partially offset by the divestiture of the Powder River Basin.

Production expenses in the 2022 Successor Period increased $123 million as compared to the combined 2021 Successor and Predecessor Periods. The increase was primarily due to the Vine Acquisition in November 2021 and the Marcellus Acquisition in March 2022, as well as additional workovers and other preventative maintenance in Eagle Ford. The increase was partially offset by the divestiture of the Powder River Basin.

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Gathering, Processing and Transportation Expenses

	Successor
	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
			$/Mcfe			$/Mcfe
Marcellus	$	106	0.58	$	83	0.69
Haynesville	89		0.60	28		0.51
Eagle Ford	91		1.91	85		1.53
Powder River Basin	—		—	23		1.99
Total gathering, processing and   transportation expenses	$	286	0.76	$	219	0.91

	Successor						Predecessor			Non-GAAP Combined
	Nine Months Ended September 30, 2022			Period from February 10, 2021 through September 30, 2021			Period from January 1, 2021 through February 9, 2021			Nine Months Ended September 30, 2021
			$/Mcfe			$/Mcfe			$/Mcfe			$/Mcfe
Marcellus	$	282	0.57	$	204	0.68	$	34	0.70	$	238	0.68
Haynesville	240		0.54	64		0.50	11		0.49	75		0.50
Eagle Ford	258		1.80	211		1.44	45		1.55	256		1.45
Powder River Basin	22		2.32	62		2.00	12		2.09	74		2.01
Total gathering, processing and   transportation expenses	$	802	0.74	$	541	0.89	$	102	0.96	$	643	0.90

Gathering, processing and transportation expenses in the 2022 Successor Quarter increased $67 million as compared to the 2021 Successor Quarter. Haynesville increased $61 million primarily due to the Vine Acquisition in November 2021. Marcellus increased $35 million primarily due to the Marcellus Acquisition in March 2022, partially offset by a decrease of $12 million primarily due to lower rates. Eagle Ford increased $6 million primarily due to increased rates, partially offset by reduced volumes primarily due to a natural decline in production. Powder River Basin decreased by $23 million due to the divestiture in March 2022.

Gathering, processing and transportation expenses in the 2022 Successor Period increased $159 million as compared to the combined 2021 Successor and Predecessor Periods. Haynesville increased $165 million primarily due to the Vine Acquisition in November 2021. Marcellus increased $82 million primarily due to the Marcellus Acquisition in March 2022, partially offset by a decrease of $38 million primarily due to lower rates. Eagle Ford increased $2 million primarily due to increased rates, partially offset by reduced volumes primarily due to a natural decline in production. Powder River Basin decreased by $52 million due to the divestiture in March 2022.

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Severance and Ad Valorem Taxes

	Successor
	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
			$/Mcfe			$/Mcfe
Marcellus	$	5	0.03	$	2	0.02
Haynesville	24		0.17	5		0.09
Eagle Ford	38		0.81	25		0.45
Powder River Basin	—		—	9		0.76
Total severance and ad valorem taxes	$	67	0.18	$	41	0.17

	Successor						Predecessor			Non-GAAP Combined
	Nine Months Ended September 30, 2022			Period from February 10, 2021 through September 30, 2021			Period from January 1, 2021 through February 9, 2021			Nine Months Ended September 30, 2021
			$/Mcfe			$/Mcfe			$/Mcfe			$/Mcfe
Marcellus	$	13	0.03	$	6	0.02	$	1	0.01	$	7	0.02
Haynesville	48		0.11	12		0.09	2		0.09	14		0.09
Eagle Ford	115		0.80	67		0.45	13		0.45	80		0.45
Powder River Basin	11		1.09	21		0.69	2		0.48	23		0.65
Total severance and ad valorem taxes	$	187	0.17	$	106	0.17	$	18	0.17	$	124	0.17

Severance and ad valorem taxes in the 2022 Successor Quarter increased $26 million as compared to the 2021 Successor Quarter. Improved pricing and increases to the Haynesville statutory severance tax rates in the 2022 Successor Quarter drove $19 million of the increase, and an additional $16 million increase was the result of the Vine and Marcellus Acquisitions. These increases were partially offset by a $9 million decrease attributable to the divestiture of the Powder River Basin.

Severance and ad valorem taxes in the 2022 Successor Period increased $63 million as compared to the combined 2021 Successor and Predecessor Periods. Improved pricing and increases to the Haynesville statutory severance tax rates in the 2022 Successor Period drove $46 million of the increase, and an additional $29 million increase was the result of the Vine and Marcellus Acquisitions. These increases were partially offset by a $12 million decrease attributable to the divestiture of the Powder River Basin.

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Adjusted Gross Margin by Operating Area

The tables below present the adjusted gross margin for each of our operating areas. Adjusted gross margin is defined as natural gas, oil and NGL sales less production expenses, gathering, processing and transportation expenses, and severance and ad valorem taxes. Adjusted gross margin is a non-GAAP measure, and a reconciliation of gross margin to adjusted gross margin is presented within the “Non-GAAP Measures” section of this Item 2.

	Successor
	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
			$/Mcfe			$/Mcfe
Marcellus	$	1,191	6.52	$	289	2.41
Haynesville	942		6.37	161		2.97
Eagle Ford	380		7.99	328		5.96
Powder River Basin	—		—	52		4.43
Adjusted gross margin	$	2,513	6.64	$	830	3.45

	Successor						Predecessor			Non-GAAP Combined
	Nine Months Ended September 30, 2022			Period from February 10, 2021 through September 30, 2021			Period from January 1, 2021 through February 9, 2021			Nine Months Ended September 30, 2021
			$/Mcfe			$/Mcfe			$/Mcfe			$/Mcfe
Marcellus	$	2,736	5.56	$	539	1.79	$	80	1.63	$	619	1.77
Haynesville	2,336		5.26	295		2.29	36		1.67	331		2.20
Eagle Ford	1,225		8.53	819		5.57	114		4.00	933		5.32
Powder River Basin	56		6.31	121		3.88	16		2.58	137		3.68
Adjusted gross margin	$	6,353	5.84	$	1,774	2.93	$	246	2.34	$	2,020	2.84

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Natural Gas and Oil Derivatives

	Successor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021
Natural gas derivatives - realized losses	$	(1,096)	$	(163)
Natural gas derivatives - unrealized losses	(110)		(681)
Total losses on natural gas derivatives	$	(1,206)	$	(844)
Oil derivatives - realized losses	$	(132)	$	(128)
Oil derivatives - unrealized gains	309		62
Total gains (losses) on oil derivatives	177		(66)
Total losses on natural gas and oil derivatives	$	(1,029)	$	(910)

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Natural gas derivatives - realized gains (losses)	$	(2,381)	$	(179)	$	6
Natural gas derivatives - unrealized losses	(1,046)		(985)		(179)
Total losses on natural gas derivatives	$	(3,427)	$	(1,164)	$	(173)
Oil derivatives - realized losses	$	(480)	$	(302)	$	(19)
Oil derivatives - unrealized gains (losses)	239		(138)		(190)
Total losses on oil derivatives	(241)		(440)		(209)
Total losses on natural gas and oil derivatives	$	(3,668)	$	(1,604)	$	(382)

See Note 13 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for a discussion of our derivative activity.

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General and Administrative Expenses

	Successor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021
Gross compensation and benefits	$	75	$	68
Non-labor	34		24
Allocations and reimbursements	(69)		(62)
Total G&A, net	$	40	$	30
G&A, net per Mcfe	$	0.11	$	0.12

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Gross compensation and benefits	$	219	$	162	$	32
Non-labor	89		60		12
Allocations and reimbursements	(206)		(153)		(23)
Total G&A, net	$	102	$	69	$	21
G&A, net per Mcfe	$	0.09	$	0.11	$	0.20

Gross compensation and benefits and non-labor expenses during the 2022 Successor Quarter and 2022 Successor Period increased $17 million and $42 million compared to the 2021 Successor Quarter and the combined 2021 Successor and Predecessor Periods, respectively, primarily due to adjustments in employee benefits and compensation and timing of stock award grants as well as increases in transaction-related fees.

Allocations and reimbursements during the 2022 Successor Quarter and the 2022 Successor Period increased $7 million and $30 million compared to the 2021 Successor Quarter and the combined 2021 Successor and Predecessor Periods, respectively, primarily due to increased drilling and production activity due to the Vine and Marcellus Acquisitions.

Separation and Other Termination Costs

During the 2021 Successor Period and 2021 Predecessor Period, we recognized $11 million and $22 million, respectively, of separation and other termination costs related to one-time termination benefits for certain employees. We did not recognize any separation and other termination costs for the 2022 Successor Quarter, 2022 Successor Period or 2021 Successor Quarter.

Depreciation, Depletion and Amortization

	Successor								Predecessor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
DD&A	$	440	$	228	$	1,300	$	579	$	72
DD&A per Mcfe	$	1.16	$	0.95	$	1.19	$	0.95	$	0.68

The absolute and per unit increases in depreciation, depletion and amortization for the 2022 Successor Quarter and 2022 Successor Period compared to the 2021 Successor Quarter and the combined 2021 Successor and Predecessor Periods, respectively, are primarily the result of the Vine and Marcellus Acquisitions.

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Other Operating Expense (Income), Net

	Successor								Predecessor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Other operating expense (income), net	$	1	$	3	$	32	$	1	$	(12)

During the 2022 Successor Period, we recognized approximately $40 million of costs related to our Marcellus Acquisition, which included integration costs, consulting fees, financial advisory fees, legal fees and change in control expense in accordance with Chief’s existing employment agreements.

Interest Expense

	Successor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021
Interest expense on debt	$	49	$	19
Other	13		—
Amortization of premium, discount, issuance costs and other	(1)		1
Capitalized interest	(9)		(3)
Total interest expense	$	52	$	17

	Successor				Predecessor
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Interest expense on debt	$	131	$	50	$	11
Other	13		—		—
Amortization of premium, discount, issuance costs and other	(2)		4		—
Capitalized interest	(22)		(7)		—
Total interest expense	$	120	$	47	$	11

The increase in total interest expense in the 2022 Successor Quarter and 2022 Successor Period compared to the 2021 Successor Quarter and the combined 2021 Successor and Predecessor Periods, respectively, was primarily due to the increase in outstanding debt obligations between periods. In November 2021, we assumed Vine’s $950 million of senior notes as part of the Vine Acquisition, and during the 2022 Successor Quarter and 2022 Successor Period, we had increased borrowings under our Exit Credit Facility, as part of the Marcellus acquisition, compared to the 2021 Successor Quarter and the combined 2021 Successor and Predecessor Periods, respectively. During the 2022 Successor Quarter and 2022 Successor Period, borrowings under the Exit Credit Facility had an average interest rate of 6.6% and 6.0%, respectively. Additionally, $12 million of interest expense was recorded during the 2022 Successor Quarter pertaining to a tax interest assessment.

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Reorganization Items, Net

	Predecessor
	Period from January 1, 2021 through February 9, 2021
Gains on the settlement of liabilities subject to compromise	$	6,443
Accrual for allowed claims	(1,002)
Gain on fresh start adjustments	201
Gain from release of commitment liabilities	55
Professional service provider fees and other	(60)
Success fees for professional service providers	(38)
Surrender of other receivable	(18)
FLLO alternative transaction fee	(12)
Total reorganization items, net	$	5,569

In the 2021 Predecessor Period, we recorded a net gain of $5.569 billion in reorganization items, net related to the Chapter 11 Cases. See Note 2 and Note 3 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for a discussion of the Chapter 11 Cases and for discussion of adoption of fresh start accounting. We did not have any reorganization items, net for the 2022 Successor Quarter, the 2022 Successor Period, the 2021 Successor Quarter or the 2021 Successor Period.

Income Taxes

Income tax expense of $105 million was recorded for the 2022 Successor Period. Of this amount, $84 million is the result of projecting current federal and state income taxes and $19 million is related to an increase to the valuation allowance as a result of the adjustment to the deferred tax liability determined through business combination accounting for the acquisition of Vine. An income tax benefit of $10 million was recorded for the 2021 Successor Period and an income tax benefit of $57 million was recorded for the 2021 Predecessor Period. Our effective income tax rate was 7.2% for the 2022 Successor Period, 2.0% for the 2021 Successor Period, and (1.1%) for the 2021 Predecessor Period. Our effective tax rate can fluctuate as a result of the impact of discrete items, state income taxes and permanent differences. See Note 10 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for a discussion of income taxes.

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Non-GAAP Measures

Management uses adjusted gross margin to assess our operating results and financial performance across assets and periods. We define adjusted gross margin as natural gas, oil and NGL sales less production expenses, gathering, processing and transportation expenses, and severance and ad valorem taxes.

Adjusted gross margin is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for analysis of our results reported under GAAP. Additionally, adjusted gross margin may not be comparable to similarly titled measures used by other companies. We exclude depreciation, depletion and amortization from the calculation of adjusted gross margin as depreciation, depletion and amortization are non-cash expenses that do not necessarily reflect present-day performance. The tables below reconcile gross margin, as defined by GAAP, to adjusted gross margin.

	Successor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021
Gross margin (GAAP)
Natural gas, oil and NGL sales	$	2,987	$	1,170
Less:
Production	(121)		(80)
Gathering, processing and transportation	(286)		(219)
Severance and ad valorem taxes	(67)		(41)
Depreciation, depletion and amortization	(440)		(228)
Gross margin (GAAP)	2,073		602
Add back: Depreciation, depletion and amortization	440		228
Adjusted gross margin (Non-GAAP)	$	2,513	$	830

	Successor				Predecessor		Non-GAAP Combined
	Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021		Nine Months Ended September 30, 2021
Gross margin (GAAP)
Natural gas, oil and NGL sales	$	7,691	$	2,615	$	398	$	3,013
Less:
Production	(349)		(194)		(32)		(226)
Gathering, processing and transportation	(802)		(541)		(102)		(643)
Severance and ad valorem taxes	(187)		(106)		(18)		(124)
Depreciation, depletion and amortization	(1,300)		(579)		(72)		(651)
Gross margin (GAAP)	5,053		1,195		174		1,369
Add back: Depreciation, depletion and amortization	1,300		579		72		651
Adjusted gross margin (Non-GAAP)	$	6,353	$	1,774	$	246	$	2,020

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Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements include our current expectations or forecasts of future events, including matters relating to the continuing effects of the impact of inflation and commodity price volatility resulting from Russia’s invasion of Ukraine, COVID-19 and related supply chain constraints, and the impact of each on our business, financial condition, results of operations and cash flows, the potential effects of the Plan on our operations, management, and employees, actions by, or disputes among or between, members of OPEC+ and other foreign oil-exporting countries, market factors, market prices, our ability to meet debt service requirements, our ability to continue to pay cash dividends, the amount and timing of any cash dividends, and our ESG initiatives. Forward-looking and other statements in this Form 10-Q regarding our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. In this context, forward-looking statements often address our expected future business, financial performance and financial condition, and often contain words such as "expect," “could,” “may,” "anticipate," "intend," "plan," “ability,” "believe," "seek," "see," "will," "would," “estimate,” “forecast,” "target," “guidance,” “outlook,” “opportunity” or “strategy.”

Although we believe the expectations and forecasts reflected in our forward-looking statements are reasonable, they are inherently subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. No assurance can be given that such forward-looking statements will be correct or achieved or that the assumptions are accurate or will not change over time. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

•the ability to execute on our business strategy following emergence from bankruptcy;

•the impact of inflation and commodity price volatility resulting from Russia’s invasion of Ukraine, COVID-19 and related supply chain constraints, along with the effect on our business, financial condition, employees, contractors, vendors and the global demand for natural gas and oil and U.S. and world financial markets;

•risks related to the Vine Acquisition, including our ability to successfully integrate the business of Vine into the Company and achieve the expected synergies from the Vine Acquisition within the expected timeframe;

•risks related to the Marcellus Acquisition, including our ability to successfully integrate the business of Chief into the Company and achieve the expected synergies from the Marcellus Acquisition within the expected timeframe;

•our ability to comply with the covenants under our Exit Credit Facility and other indebtedness;

•our ability to realize anticipated cash cost reductions;

•the volatility of natural gas, oil and NGL prices, which are affected by general economic and business conditions, as well as increased demand for (and availability of) alternative fuels and electric vehicles;

•a deterioration in general economic, business or industry conditions;

•uncertainties inherent in estimating quantities of natural gas, oil and NGL reserves and projecting future rates of production and the amount and timing of development expenditures;

•our ability to replace reserves and sustain production;

•drilling and operating risks and resulting liabilities;

•our ability to generate profits or achieve targeted results in drilling and well operations;

•the limitations our level of indebtedness may have on our financial flexibility;

•our ability to achieve and maintain ESG certifications/goals;

•our inability to access the capital markets on favorable terms;

•the availability of cash flows from operations and other funds to fund cash dividends and repurchases of equity securities, to finance reserve replacement costs and/or satisfy our debt obligations;

•write-downs of our natural gas and oil asset carrying values due to low commodity prices;

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•charges incurred in response to market conditions;

•limited control over properties we do not operate;

•leasehold terms expiring before production can be established;

•commodity derivative activities resulting in lower prices realized on natural gas, oil and NGL sales;

•the need to secure derivative liabilities and the inability of counterparties to satisfy their obligations;

•potential OTC derivatives regulations limiting our ability to hedge against commodity price fluctuations;

•adverse developments or losses from pending or future litigation and regulatory proceedings, including royalty claims;

•our need to secure adequate supplies of water for our drilling operations and to dispose of or recycle the water used;

•pipeline and gathering system capacity constraints and transportation interruptions;

•legislative, regulatory and ESG initiatives, addressing environmental concerns, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring or water disposal;

•terrorist activities and/or cyber-attacks adversely impacting our operations;

•an interruption in operations at our headquarters due to a catastrophic event;

•federal and state tax proposals affecting our industry;

•competition in the natural gas and oil exploration and production industry;

•negative public perceptions of our industry;

•effects of purchase price adjustments and indemnity obligations; and

•other factors that are described under Risk Factors in Item 1A of our 2021 Form 10-K and Risk Factors in Item 1A of Part II of this report.

We caution you not to place undue reliance on the forward-looking statements contained in this report, which speak only as of the filing date, and we undertake no obligation to update this information. We urge you to carefully review and consider the disclosures in this report and our other filings with the SEC that attempt to advise interested parties of the risks and factors that may affect our business.

Information About Us

Investors should note that we make available, free of charge on our website at chk.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also furnish quarterly, annual, and current reports for certain of our subsidiaries free of charge on our website at chk.com. We also post announcements, updates, events, investor information and presentations on our website in addition to copies of all recent news releases. We may use the Investors section of our website to communicate with investors. It is possible that the financial and other information posted on the Investors section of our website could be deemed to be material information. Documents and information on our website are not incorporated by reference herein.

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including Chesapeake, that file electronically with the SEC.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our exposure to market risk. The term market risk relates to our risk of loss arising from adverse changes in natural gas, oil, and NGL prices and interest rates. These disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. The forward-looking information provides indicators of how we view and manage our ongoing market risk exposures.

Commodity Price Risk

Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL, which have historically been volatile. To mitigate a portion of our exposure to adverse price changes, we enter into various derivative instruments. Our natural gas, oil and NGL derivative activities, when combined with our sales of natural gas, oil and NGL, allow us to predict with greater certainty the revenue we will receive. We believe our derivative instruments continue to be highly effective in achieving our risk management objectives.

We determine the fair value of our derivative instruments utilizing established index prices, volatility curves and discount factors. These estimates are compared to counterparty valuations for reasonableness. Derivative transactions are also subject to the risk that counterparties will be unable to meet their obligations. This non-performance risk is considered in the valuation of our derivative instruments, but to date has not had a material impact on the values of our derivatives. Future risk related to counterparties not being able to meet their obligations has been partially mitigated under our commodity hedging arrangements that require counterparties to post collateral if their obligations to us are in excess of defined thresholds. The values we report in our financial statements are as of a point in time and subsequently change as these estimates are revised to reflect actual results, changes in market conditions and other factors. See Note 13 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion of the fair value measurements associated with our derivatives.

For the 2022 Successor Period, natural gas, oil, and NGL revenue, excluding any effect of our derivative instruments, were $6,049 million, $1,456 million and $186 million, respectively. Based on production, natural gas, oil, and NGL revenue for the 2022 Successor Period would have increased or decreased by approximately $605 million, $146 million, and $19 million, respectively, for each 10% increase or decrease in prices. As of September 30, 2022, the fair values of our natural gas and oil derivatives were net liabilities of $2,172 million and $118 million, respectively. A 10% increase in forward natural gas prices would decrease the valuation of natural gas derivatives by approximately $459 million. A 10% decrease in forward natural gas prices would increase the valuation of natural gas derivatives by approximately $454 million. A 10% increase in forward oil prices would decrease the valuation of oil derivatives by approximately $71 million. A 10% decrease in forward oil prices would increase the valuation of oil derivatives by approximately $71 million. See Note 13 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further information on our open derivative positions.

Interest Rate Risk

Our exposure to interest rate changes relates primarily to borrowings under our Exit Credit Facility for the 2022 and 2021 Successor Periods and pre-petition revolving credit facility and DIP Facility for the 2021 Predecessor Period. Interest is payable on borrowings under the Exit Credit Facility, pre-petition revolving credit facility and DIP Facility based on floating rates. See Note 6 of the notes to our condensed consolidated financial statements included in Item 1 of Part 1 of this report for additional information. As of September 30, 2022, we had $450 million in outstanding borrowings under our Exit Credit Facility - Tranche A Loans and $221 million under our Exit Credit Facility - Tranche B Loans. A 1.0% increase in interest rates based on the variable borrowings as of September 30, 2022 would result in an increase in our interest expense of approximately $7 million per year.

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ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of September 30, 2022 that our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

Chapter 11 Proceedings

Commencement of the Chapter 11 Cases automatically stayed the proceedings and actions against us that are referenced below, in addition to actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company’s bankruptcy estates. The Plan in the Chapter 11 Cases, which became effective on February 9, 2021, provided for the treatment of claims against the Company’s bankruptcy estates, including pre-petition liabilities that had not been satisfied or addressed during the Chapter 11 Cases. See Note 2 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for additional information.

Litigation and Regulatory Proceedings

We were involved in a number of litigation and regulatory proceedings as of the Petition Date. Many of these proceedings were in early stages, and many of them sought damages and penalties, the amount of which is currently indeterminate. See Note 7 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for information regarding our estimation and provision for potential losses related to litigation and regulatory proceedings.

Business Operations.

We are involved in various lawsuits and disputes incidental to our business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions. The majority of these prepetition legal proceedings were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process before the Bankruptcy Court. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan.

Environmental Contingencies

The nature of the oil and gas business carries with it certain environmental risks for us and our subsidiaries. We have implemented various policies, programs, procedures, training and audits to reduce and mitigate such environmental risks. We conduct periodic reviews, on a company-wide basis, to assess changes in our environmental risk profile. Environmental reserves are established for environmental liabilities for which economic losses are probable and reasonably estimable. We manage our exposure to environmental liabilities in acquisitions by using an evaluation process that seeks to identify pre-existing contamination or compliance concerns and address the potential liability. Depending on the extent of an identified environmental concern, we may, among other things, exclude a property from the transaction, require the seller to remediate the property to our satisfaction in an acquisition or agree to assume liability for the remediation of the property.

We were recently dismissed as a defendant from numerous lawsuits in Oklahoma alleging that we and other companies engaged in activities that have caused earthquakes. The lawsuits sought compensation for injury to real and personal property, diminution of property value, economic losses due to business interruption, interference with the use and enjoyment of property, annoyance and inconvenience, personal injury and emotional distress. In addition, they sought the reimbursement of insurance premiums and the award of punitive damages, attorneys’ fees, costs, expenses and interest. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan.

Other Matters

Based on management’s current assessment, we are of the opinion that no pending or threatened lawsuit or dispute relating to our business operations is likely to have a material adverse effect on our future consolidated financial position, results of operations or cash flows. The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates.

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ITEM 1A. Risk Factors

Our business has many risks. Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our common stock are described under “Risk Factors” in Item 1A of our 2021 Form 10-K and the additional risk factor provided below, which supplements the risk factors included in our 2021 Form 10-K. This information should be considered carefully, together with other information in this report and other reports and materials we file with the SEC.

The conflict in Ukraine and related price volatility and geopolitical instability could negatively impact our business.

In late February 2022, Russia launched significant military action against Ukraine. The conflict has caused, and could intensify, volatility in natural gas, oil and NGL prices, and the extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have a substantial negative impact on the global economy and/or our business for an unknown period of time. Any such volatility and disruptions may also magnify the impact of other risks described under “Risk Factors” in Item 1A of our 2021 Form 10-K.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

On December 2, 2021, we announced that our Board of Directors authorized the repurchase of up to $1.0 billion in aggregate value of our common stock and/or warrants from time to time. In June 2022, our Board of Directors authorized an increase in the size of the share repurchase program from $1.0 billion to $2.0 billion in aggregate value of our common stock and/or warrants. The repurchase authorization permits repurchases on a discretionary basis as determined by management, subject to market conditions, applicable legal requirements, available liquidity, compliance with the Company’s debt agreements and other appropriate factors. The share repurchase program expires on December 31, 2023. The following table provides information regarding purchases of our common stock made by us during the quarter ended September 30, 2022.

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
July 1 - July 31	749,600	$	92.14	749,600	$	1,333
August 1 - August 31	—	$	—	—	$	1,333
September 1 - September 30	—	$	—	—	$	1,333
Total	749,600	$	92.14	749,600

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

The information concerning mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Form 10-Q.

ITEM 5. Other Information

Not applicable.

69

ITEM 6. Exhibits

The exhibits listed below in the Index of Exhibits are filed, furnished or incorporated by reference pursuant to the requirements of Item 601 of Regulation S-K.

INDEX OF EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	SEC File Number	Exhibit	Filing Date	Filed or Furnished Herewith
2.1	Fifth Amended Joint Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (Exhibit A of the Confirmation Order).	8-K	001-13726	2.1	1/19/2021
2.2	Agreement and Plan of Merger, dated as of August 10, 2021, by and among Chesapeake Energy Corporation, Hannibal Merger Sub, Inc., Hannibal Merger Sub, LLC, Vine Energy Inc. and Vine Energy Holdings LLC.	8-K	001-13726	2.1	8/11/2021
2.3	Partnership Interest Purchase Agreement by and among The Jan & Trevor Rees-Jones Revocable Trust, Rees-Jones Family Holdings, LP, Chief E&D Participants, LP, and Chief E&D (GP) LLC (collectively, as Sellers) and Chesapeake Energy Corporation and its affiliates, dated as of January 24, 2022.	10-K	001-13726	10.36	2/24/2022
2.4	Membership Interest Purchase Agreement by and among Radler 2000 Limited Partnership and Tug Hill, Inc., together as Sellers, and Chesapeake Energy Corporation and its affiliates, dated as of January 24, 2022.	10-K	001-13726	10.37	2/24/2022
2.5	Membership Interest Purchase Agreement by and among Radler 2000 Limited Partnership and Tug Hill, Inc., together as Sellers, and Chesapeake Energy Corporation and its affiliates, dated as of January 24, 2022.	10-K	001-13726	10.38	2/24/2022
3.1	Second Amended and Restated Certificate of Incorporation of Chesapeake Energy Corporation.	8-K	001-13726	3.1	2/9/2021
3.2	Second Amended and Restated Bylaws of Chesapeake Energy Corporation.	8-K	001-13726	3.2	2/9/2021
10.1	Form of Dealer Manager Agreement in connection with exchange offers for Warrants.	S-4	333-266961	10.34	8/18/2022
10.2	Form of Tender and Support Agreement, dated September 12, 2022, in connection with exchange offers for Warrant.	S-4/A	333-266961	10.35	9/12/2022
31.1	Domenic J. Dell’Osso, Jr., President and Chief Executive Officer, Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Mohit Singh, Executive Vice President and Chief Financial Officer, Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1	Domenic J. Dell’Osso Jr., President and Chief Executive Officer, Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2	Mohit Singh, Executive Vice President and Chief Financial Officer, Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
95.1	Mine Safety Disclosure.					X

70

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	SEC File Number	Exhibit	Filing Date	Filed or Furnished Herewith
101 INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.					X
101 SCH	Inline XBRL Taxonomy Extension Schema Document.					X
101 CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					X
101 DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					X
101 LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.					X
101 PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.					X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).					X

71

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CHESAPEAKE ENERGY CORPORATION
Date: November 1, 2022	By:	/s/ DOMENIC J. DELL’OSSO, JR.
		Domenic J. Dell’Osso, Jr. President and Chief Executive Officer
Date: November 1, 2022	By:	/s/ MOHIT SINGH
		Mohit Singh Executive Vice President and Chief Financial Officer

72

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Domenic J. Dell’Osso, Jr., certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Chesapeake Energy Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 1, 2022	By:	/s/ DOMENIC J DELL'OSSO, JR.
		Domenic J. Dell’Osso, Jr.
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mohit Singh, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Chesapeake Energy Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 1, 2022	By:	/s/ MOHIT SINGH
		Mohit Singh
		Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Chesapeake Energy Corporation (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Domenic J. Dell’Osso, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 1, 2022	By:	/s/ DOMENIC J. DELL'OSSO, JR.
		Domenic J. Dell'Osso, Jr. President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Chesapeake Energy Corporation (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mohit Singh, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 1, 2022	By:	/s/ MOHIT SINGH
		Mohit Singh
		Executive Vice President and Chief Financial Officer

EX-95.1

Exhibit 95.1

Mine Safety Disclosures

Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") and Item 104 of Regulation S-K (17 CFR 229.104) require certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934, as amended, that operate mines regulated under the Federal Mine Safety and Health Act of 1977 (as amended by the Mine Improvement and New Emergency Response Act of 2006, the "Mine Act").

Burleson Sand LLC ("Burleson Sand") is a wholly owned subsidiary of Brazos Valley Longhorn, L.L.C. (successor in interest to WildHorse Resource Development Corporation) ("WildHorse"), which is a wholly owned subsidiary of Chesapeake Energy Corporation. On January 4, 2018, Burleson Sand acquired surface and sand rights on approximately 727 acres in Burleson County, Texas to construct and operate an in-field sand mine to support WildHorse's exploration and development operations. Burleson Sand began operations in September 2018 and is subject to regulation by the federal Mine Safety and Health Administration ("MSHA") under the Mine Act. The MSHA inspects mining facilities on a regular basis and issues citations and orders when it believes a violation has occurred under the Mine Act.

The MSHA, upon determination that a violation of the Mine Act has occurred, may issue a citation or an order which generally proposes civil penalties or fines upon the mine operator. Citations and orders may be appealed with the potential of reduced or dismissed penalties.

The table below reflects citations, orders, violations and proposed assessments issued to Burleson Sand by MSHA during the three-month period ended September 30, 2022. Due to timing and other factors, the data may not agree with the mine data retrieval systems maintained by MSHA at www.MSHA.gov.

	Burleson Sand Mine 41-05369
Section 104 significant and substantial citations	—
Section 104(b) orders	—
Section 104(d) citations and orders	—
Section 110(b)(2) violations	—
Section 107(a) orders	—
Total dollar value of MSHA assessments proposed	$	—
Total number of mining related fatalities	—
Received notice of pattern of violations under section 104(e)	No
Received notice of potential to have pattern under section 104(e)	No
Legal actions pending as of last day of period	—
Legal actions initiated during period	—
Legal actions resolved during period	—

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2022	Oct. 28, 2022
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	1-13726
Entity Registrant Name	CHESAPEAKE ENERGY CORPORATION
Entity Incorporation, State or Country Code	OK
Entity Tax Identification Number	73-1395733
Entity Address, Address Line One	6100 North Western Avenue,
Entity Address, City or Town	Oklahoma City,
Entity Address, State or Province	OK
Entity Address, Postal Zip Code	73118
City Area Code	(405)
Local Phone Number	848-8000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		133,971,136
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000895126
Current Fiscal Year End Date	--12-31
Class A Warrants to purchase Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Class A Warrants to purchase Common Stock
Trading Symbol	CHKEW
Security Exchange Name	NASDAQ
Class B Warrants to purchase Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Class B Warrants to purchase Common Stock
Trading Symbol	CHKEZ
Security Exchange Name	NASDAQ
Class C Warrants to purchase Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Class C Warrants to purchase Common Stock
Trading Symbol	CHKEL
Security Exchange Name	NASDAQ
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	CHK
Security Exchange Name	NASDAQ

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 74	$ 905
Restricted cash	56	9
Accounts receivable, net	1,757	1,115
Short-term derivative assets	4	5
Other current assets	168	69
Total current assets	2,059	2,103
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties	11,437	7,682
Unproved properties	2,192	1,530
Other property and equipment	506	495
Total property and equipment	14,135	9,707
Less: accumulated depreciation, depletion and amortization	(2,182)	(908)
Property and equipment held for sale, net	1	3
Total property and equipment, net	11,954	8,802
Other long-term assets	76	104
Total assets	14,089	11,009
Current liabilities:
Accounts payable	539	308
Accrued interest	40	38
Short-term derivative liabilities	1,875	899
Other current liabilities	1,784	1,202
Total current liabilities	4,238	2,447
Long-term debt, net	2,717	2,278
Long-term derivative liabilities	419	249
Asset retirement obligations, net of current portion	350	349
Other long-term liabilities	18	15
Total liabilities	7,742	5,338
Contingencies and commitments (Note 7)
Stockholders' equity:
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,334,663 and 117,917,349 shares issued	1	1
Successor additional paid-in capital	5,627	4,845
Retained earnings	719	825
Total stockholders' equity	6,347	5,671
Total liabilities and stockholders' equity	$ 14,089	$ 11,009

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	450,000,000	450,000,000
Common stock, shares issued (in shares)	121,334,663	117,917,349

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions	1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
Revenues and other:
Natural gas and oil derivatives	$ (382)	$ (1,029)	$ (910)	$ (1,604)	$ (3,668)
Gains (losses) on sales of assets	5	(2)	3	9	298
Total revenues and other	260	3,162	890	2,463	7,617
Operating expenses:
Production	32	121	80	194	349
Gathering, processing and transportation	102	286	219	541	802
Severance and ad valorem taxes	18	67	41	106	187
Exploration	2	2	2	4	14
General and administrative	21	40	30	69	102
Separation and other termination costs	22			11	0
Depreciation, depletion and amortization	72	440	228	579	1,300
Impairments	0			1	0
Other operating expense, net	(12)	1	3	1	32
Total operating expenses	494	2,157	1,228	2,946	6,065
Income (loss) from operations	(234)	1,005	(338)	(483)	1,552
Other income (expense):
Interest expense	(11)	(52)	(17)	(47)	(120)
Other income	2	4	0	31	29
Reorganization items, net	5,569			0	0
Total other income (expense), net	5,560	(48)	(17)	(16)	(91)
Income (loss) before income taxes	5,326	957	(355)	(499)	1,461
Income tax expense (benefit)	(57)	74	(10)	(10)	105
Net income (loss) attributable to Chesapeake	5,383	883	(345)	(489)	1,356
Net income (loss) attributable to Chesapeake	$ 5,383	$ 883	$ (345)	$ (489)	$ 1,356
Earnings (loss) per common share:
Basic (in dollars per share)	$ 550.35	$ 7.29	$ (3.51)	$ (4.99)	$ 11.03
Diluted (in dollars per share)	$ 534.51	$ 6.12	$ (3.51)	$ (4.99)	$ 9.35
Weighted average common shares outstanding (in thousands):
Basic (in shares)	9,781	121,150	98,221	98,040	122,924
Diluted (in shares)	10,071	144,390	98,221	98,040	145,031
Natural gas, oil and NGL
Revenues and other:
Revenue	$ 398	$ 2,987	$ 1,170	$ 2,615	$ 7,691
Marketing
Revenues and other:
Revenue	239	1,206	627	1,443	3,296
Operating expenses:
Expense	$ 237	$ 1,200	$ 625	$ 1,440	$ 3,279

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 5,383	$ 883	$ (345)	$ (489)	$ 1,356
Other comprehensive income, net of income tax:
Reclassification of losses on settled derivative instruments	3	0	0	0	0
Other comprehensive income	3	0	0	0	0
Comprehensive income (loss)	$ 5,386	$ 883	$ (345)	$ (489)	$ 1,356

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	1 Months Ended	8 Months Ended	9 Months Ended
	Feb. 09, 2021	Sep. 30, 2021	Sep. 30, 2022
Cash flows from operating activities:
Net income (loss)	$ 5,383	$ (489)	$ 1,356
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	72	579	1,300
Deferred income tax expense (benefit)	(57)	0	19
Derivative losses, net	382	1,604	3,668
Cash payments on derivative settlements, net	(17)	(437)	(2,845)
Share-based compensation	3	5	16
Gains on sales of assets	(5)	(9)	(298)
Impairments	0	1	0
Non-cash reorganization items, net	(6,680)	0	0
Exploration	2	1	10
Other	45	10	19
Changes in assets and liabilities	851	(19)	(170)
Net cash provided by (used in) operating activities	(21)	1,246	3,075
Cash flows from investing activities:
Capital expenditures	(66)	(404)	(1,299)
Business combination, net	0	0	(1,967)
Proceeds from divestitures of property and equipment	0	9	409
Net cash used in investing activities	(66)	(395)	(2,857)
Cash flows from financing activities:
Proceeds from Exit Credit Facility - Tranche A Loans	0	30	7,255
Payments on Exit Credit Facility - Tranche A Loans	(479)	(80)	(6,805)
Payments on DIP Facility borrowings	(1,179)	0	0
Proceeds from issuance of senior notes, net	1,000	0	0
Proceeds from issuance of common stock	600	0	0
Proceeds from warrant exercise	0	2	3
Debt issuance and other financing costs	(8)	(3)	0
Cash paid to repurchase and retire common stock	0	0	(667)
Cash paid for common stock dividends	0	(67)	(788)
Other	0	(1)	0
Net cash used in financing activities	(66)	(119)	(1,002)
Net increase (decrease) in cash, cash equivalents and restricted cash	(153)	732	(784)
Cash, cash equivalents and restricted cash, beginning of period	279	126	914
Cash, cash equivalents and restricted cash, end of period	126	858	130
Cash and cash equivalents	40	849	74
Restricted cash	86	9	56
Total cash, cash equivalents and restricted cash	126	858	130
Supplemental cash flow information:
Cash paid for reorganization items, net	66	65	0
Interest paid, net of capitalized interest	13	33	107
Income taxes paid, net of refunds received	0	(3)	181
Supplemental disclosure of significant non-cash investing and financing activities:
Put option premium on equity backstop agreement	60	0	0
Common stock issued for business combination	0	0	764
Operating lease obligations recognized	0	0	25
Change in accrued drilling and completion costs
Supplemental disclosure of significant non-cash investing and financing activities:
Change in accrued drilling and completion costs	$ (5)	$ 25	$ 193

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions	Total	Class A Warrants	Class B Warrants	Class C Warrants	Preferred Stock	Common Stock	Additional Paid-in Capital	Additional Paid-in Capital Class A Warrants	Additional Paid-in Capital Class B Warrants	Additional Paid-in Capital Class C Warrants	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Income
Preferred stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2020					5,563,358
Beginning balance (in shares) at Dec. 31, 2020						9,780,547
Beginning balance at Dec. 31, 2020	$ (5,341)				$ 1,631	$ 0	$ 16,937				$ (23,954)	$ 45
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for Marcellus Acquisition	0
Share-based compensation (in shares)						67
Share-based compensation	3						3
Hedging activity	3											3
Net income (loss)	5,383										5,383
Cancellation of Predecessor Equity (in shares)					(5,563,358)	(9,780,614)
Cancellation of Predecessor Equity	(48)				$ (1,631)		(16,940)				18,571	(48)
Issuance of Successor common stock (in shares)						97,907,081
Issuance of Successor common stock	3,331					$ 1	3,330
Issuance of common stock for warrant exercise		$ 93	$ 94	$ 68				$ 93	$ 94	$ 68
Preferred stock, shares outstanding, ending balance (in shares) at Feb. 09, 2021					0
Ending balance (in shares) at Feb. 09, 2021						97,907,081
Ending balance at Feb. 09, 2021	3,586				$ 0	$ 1	3,585				0	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	295										295
Preferred stock, shares outstanding, ending balance (in shares) at Mar. 31, 2021					0
Ending balance (in shares) at Mar. 31, 2021						97,907,081
Ending balance at Mar. 31, 2021	3,881				$ 0	$ 1	3,585				295	0
Preferred stock, shares outstanding, beginning balance (in shares) at Feb. 09, 2021					0
Beginning balance (in shares) at Feb. 09, 2021						97,907,081
Beginning balance at Feb. 09, 2021	3,586				$ 0	$ 1	3,585				0	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for Marcellus Acquisition	0
Hedging activity	0
Preferred stock, shares outstanding, ending balance (in shares) at Sep. 30, 2021					0
Ending balance (in shares) at Sep. 30, 2021						98,286,731
Ending balance at Sep. 30, 2021	3,038				$ 0	$ 1	3,594				(557)	0
Preferred stock, shares outstanding, beginning balance (in shares) at Mar. 31, 2021					0
Beginning balance (in shares) at Mar. 31, 2021						97,907,081
Beginning balance at Mar. 31, 2021	3,881				$ 0	$ 1	3,585				295	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation (in shares)						921
Share-based compensation	3						3
Issuance of common stock for warrant exercise (in shares)						46,035
Issuance of common stock for warrant exercise	2						2
Net income (loss)	(439)										(439)
Dividends on common stock	(34)										(34)
Preferred stock, shares outstanding, ending balance (in shares) at Jun. 30, 2021					0
Ending balance (in shares) at Jun. 30, 2021						97,954,037
Ending balance at Jun. 30, 2021	3,413				$ 0	$ 1	3,590				(178)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation (in shares)						761
Share-based compensation	4						4
Hedging activity	0
Issuance of common stock for warrant exercise (in shares)						6,218
Issuance of common stock for warrant exercise	0
Issuance of reserved common stock and warrants (in shares)						325,715
Issuance of reserved common stock and warrants	0
Net income (loss)	(345)										(345)
Dividends on common stock	(34)										(34)
Preferred stock, shares outstanding, ending balance (in shares) at Sep. 30, 2021					0
Ending balance (in shares) at Sep. 30, 2021						98,286,731
Ending balance at Sep. 30, 2021	3,038				$ 0	$ 1	3,594				(557)	0
Preferred stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2021					0
Beginning balance (in shares) at Dec. 31, 2021						117,917,349
Beginning balance at Dec. 31, 2021	5,671				$ 0	$ 1	4,845				825	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for Marcellus Acquisition (in shares)						9,442,185
Issuance of common stock for Marcellus Acquisition	764						764
Share-based compensation (in shares)						23,169
Share-based compensation	5						5
Issuance of common stock for warrant exercise (in shares)						669,669
Issuance of common stock for warrant exercise	1						1
Repurchase and retirement of common stock (in shares)						(1,000,000)
Repurchase and retirement of common stock	(83)										(83)
Net income (loss)	(764)										(764)
Dividends on common stock	(211)										(211)
Preferred stock, shares outstanding, ending balance (in shares) at Mar. 31, 2022					0
Ending balance (in shares) at Mar. 31, 2022						127,052,372
Ending balance at Mar. 31, 2022	5,383				$ 0	$ 1	5,615				(233)	0
Preferred stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2021					0
Beginning balance (in shares) at Dec. 31, 2021						117,917,349
Beginning balance at Dec. 31, 2021	5,671				$ 0	$ 1	4,845				825	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for Marcellus Acquisition	764
Hedging activity	0
Preferred stock, shares outstanding, ending balance (in shares) at Sep. 30, 2022					0
Ending balance (in shares) at Sep. 30, 2022						121,334,663
Ending balance at Sep. 30, 2022	6,347				$ 0	$ 1	5,627				719	0
Preferred stock, shares outstanding, beginning balance (in shares) at Mar. 31, 2022					0
Beginning balance (in shares) at Mar. 31, 2022						127,052,372
Beginning balance at Mar. 31, 2022	5,383				$ 0	$ 1	5,615				(233)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation (in shares)						146,054
Share-based compensation	3						3
Issuance of common stock for warrant exercise (in shares)						166,606
Issuance of common stock for warrant exercise	1						1
Issuance of reserved common stock and warrants (in shares)						36,951
Issuance of reserved common stock and warrants	0
Repurchase and retirement of common stock (in shares)						(5,811,727)
Repurchase and retirement of common stock	(515)										(515)
Net income (loss)	1,237										1,237
Dividends on common stock	(301)										(301)
Preferred stock, shares outstanding, ending balance (in shares) at Jun. 30, 2022					0
Ending balance (in shares) at Jun. 30, 2022						121,590,256
Ending balance at Jun. 30, 2022	5,808				$ 0	$ 1	5,619				188	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation (in shares)						991
Share-based compensation	7						7
Hedging activity	0
Issuance of common stock for warrant exercise (in shares)						493,016
Issuance of common stock for warrant exercise	$ 1						1
Repurchase and retirement of common stock (in shares)	(750,000)					(749,600)
Repurchase and retirement of common stock	$ (69)										(69)
Net income (loss)	883										883
Dividends on common stock	(283)										(283)
Preferred stock, shares outstanding, ending balance (in shares) at Sep. 30, 2022					0
Ending balance (in shares) at Sep. 30, 2022						121,334,663
Ending balance at Sep. 30, 2022	$ 6,347				$ 0	$ 1	$ 5,627				$ 719	$ 0

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Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

1. Basis of Presentation and Summary of Significant Accounting Policies

Description of Company

Chesapeake Energy Corporation (“Chesapeake”, “we”, “our”, “us” or the “Company”) is a natural gas and oil exploration and production company engaged in the acquisition, exploration and development of properties for the production of natural gas, oil and NGL from underground reservoirs. Our operations are located onshore in the United States. As discussed in Note 2 below, we filed the Chapter 11 Cases on the Petition Date and subsequently operated as a debtor-in-possession, in accordance with applicable provisions of the Bankruptcy Code, until emergence on February 9, 2021. To facilitate our financial statement presentations, we refer to the post-emergence reorganized Company in these condensed consolidated financial statements and footnotes as the “Successor” for periods subsequent to February 9, 2021, and to the pre-emergence Company as “Predecessor” for periods on or prior to February 9, 2021.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Chesapeake were prepared in accordance with 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 our financial position as of September 30, 2022 and December 31, 2021, the three months ended September 30, 2022 (“2022 Successor Quarter”), the nine months ended September 30, 2022 (“2022 Successor Period”), the three months ended September 30, 2021 (“2021 Successor Quarter”), the period of February 10, 2021 through September 30, 2021 (“2021 Successor Period”) and the period of January 1, 2021 through February 9, 2021 (“2021 Predecessor Period”). Our annual report on Form 10-K for the year ended December 31, 2021 (“2021 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 that, 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. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern.

Segments

Operating segments are defined as components of an enterprise that engage in activities from which it may earn revenues and incur expenses for which separate operational financial information is available and is regularly evaluated by the chief operating decision maker for the purpose of allocating an enterprise’s resources and assessing its operating performance. We have concluded that we have only one reportable operating segment due to the similar nature of the exploration and production business across Chesapeake and its consolidated subsidiaries and the fact that our marketing activities are ancillary to our operations.

Restricted Cash

As of September 30, 2022, we had restricted cash of $56 million. Our restricted cash represents funds legally restricted for payment of certain convenience class unsecured claims following our emergence from bankruptcy, as well as for future payment of certain royalties.

Voluntary Filing under Chapter 11 Bankruptcy

On the Petition Date, the Debtors filed the Chapter 11 Cases under the Bankruptcy Code in 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 continued to operate in the ordinary course of business.

The Bankruptcy Court confirmed the Plan and entered the Confirmation Order on January 16, 2021. The Debtors emerged from the Chapter 11 Cases on the Effective Date. The Company’s bankruptcy proceedings and related matters have been summarized below.

During the pendency of the Chapter 11 Cases, we operated our business 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, vendors, suppliers, customers and employees. As a result, we were able to conduct normal business activities and pay all associated obligations for the period following the Petition Date and were also authorized to pay mineral interest owner royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided prior to the Petition Date. During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of business required the prior approval of the Bankruptcy Court.

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 were subject to compromise and discharge under the Bankruptcy Code. The automatic stay was lifted on the Effective Date.

We have applied ASC 852, Reorganizations, in preparing the unaudited condensed consolidated financial statements for the period ended February 9, 2021. ASC 852 requires that the financial statements, for periods subsequent to the Chapter 11 Cases, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses, realized gains and losses and provisions for losses that were realized or incurred during the bankruptcy proceedings, including gain on settlement of liabilities subject to compromise, losses related to executory contracts that have been approved for rejection by the Bankruptcy Court, and unamortized debt issuance costs, premiums and discounts associated with debt classified as liabilities subject to compromise, were recorded as reorganization items, net. See Note 3 for more information regarding reorganization items.

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Chapter 11 Emergence

9 Months Ended

Sep. 30, 2022

Reorganizations [Abstract]

Chapter 11 Emergence

2. Chapter 11 Emergence

As described in Note 1, on the Petition Date, the Debtors filed the Chapter 11 Cases and on September 11, 2020, the Debtors filed the Plan, which was subsequently amended, and entered the Confirmation Order on January 16, 2021. The Debtors then emerged from bankruptcy upon effectiveness of the Plan on the Effective Date. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan.

Plan of Reorganization

In accordance with the Plan confirmed by the Bankruptcy Court, the following significant transactions occurred upon the Company’s emergence from bankruptcy on February 9, 2021:

•On the Effective Date, we issued 97,907,081 shares of New Common Stock, reserved 2,092,918 shares of New Common Stock for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims and reserved 37,174,210 shares of New Common Stock for issuance upon exercise of the Warrants, which were the result of the transactions described below. We also entered into a registration rights agreement, warrant agreements and amended our articles of incorporation and bylaws for the authorization of the New Common Stock and to provide registration rights thereunder, among other corporate governance actions. See Note 11 for further discussion of our post-emergence equity.

•Each holder of an equity interest in the Predecessor, including Predecessor’s common and preferred stock, had such interest canceled, released, and extinguished without any distribution.

•Each holder of obligations under the pre-petition revolving credit facility received, at such holder's prior determined allocation, its pro rata share of either Tranche A Loans or Tranche B Loans, on a dollar for dollar basis.

•Each holder of obligations under the FLLO Term Loan Facility received its pro rata share of 23,022,420 shares of New Common Stock.

•Each holder of an Allowed Second Lien Notes Claim received its pro rata share of 3,635,118 shares of New Common Stock, 11,111,111 Class A Warrants to purchase 11,111,111 shares of New Common Stock, 12,345,679 Class B Warrants to purchase 12,345,679 shares of New Common Stock, and 6,858,710 Class C Warrants to purchase 6,858,710 shares of New Common Stock.

•Each holder of an Allowed Unsecured Notes Claim received its pro rata share of 1,311,089 shares of New Common Stock and 2,473,757 Class C Warrants to purchase 2,473,757 shares of New Common Stock.

•Each holder of an Allowed General Unsecured Claim received its pro rata share of 231,112 shares of New Common Stock and 436,060 Class C Warrants to purchase 436,060 shares of New Common Stock; provided that to the extent such Allowed General Unsecured Claim is a Convenience Claim, such holder instead received its pro rata share of $10 million, which pro rata share shall not exceed five percent of such Convenience Claim.

•Participants in the Rights Offering extending to the applicable classes under the Plan received 62,927,320 shares of New Common Stock.

•In connection with the Rights Offering described above, the Backstop Parties under the Backstop Commitment Agreement received 6,337,031 shares of New Common Stock in respect to the Put Option Premium, and 442,991 shares of New Common Stock were issued in connection with the backstop obligation thereunder to purchase unsubscribed shares of the New Common Stock.

•2,092,918 shares of New Common Stock and 3,948,893 Class C Warrants were reserved for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims. The reserved New Common Stock and Class C Warrants will be issued on a pro rata basis upon the determination of the allowed portion of all disputed General Unsecured Claims and Unsecured Notes Claims.

•The 2021 Long-Term Incentive Plan (the “LTIP”) was approved with a share reserve equal to 6,800,000 shares of New Common Stock.

•Each holder of an Allowed Other Secured Claim will receive, at the Company's option and in consultation with the Required Consenting Stakeholders (as defined in 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 that renders its secured claim unimpaired in accordance with Section 1124 of the Bankruptcy Code.

•Each holder of an Allowed Other Priority Claim will receive cash up to the allowed amount of its claim.

Additionally, pursuant to the Plan confirmed by the Bankruptcy Court, the Company’s post-emergence Board of Directors is comprised of seven directors, including the Company’s Chief Executive Officer, Domenic J. Dell’Osso Jr., the Company’s Executive Chairman, Michael Wichterich, and five non-employee directors, Timothy S. Duncan, Benjamin C. Duster, IV, Sarah Emerson, Matthew M. Gallagher and Brian Steck.

3. Fresh Start Accounting

Fresh Start Accounting

In connection with our emergence from bankruptcy and in accordance with ASC 852, we qualified for and applied fresh start accounting on the Effective Date. We were required to apply fresh start accounting because (i) the holders of existing voting shares of the Company prior to its emergence received less than 50% of the voting shares of the Company outstanding following its emergence from bankruptcy and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan of approximately $6.8 billion was less than the post-petition liabilities and allowed claims of $13.2 billion.

In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair value in conformity with FASB ASC Topic 820 - Fair Value Measurements and FASB ASC Topic 805 - Business Combinations. Accordingly, the consolidated financial statements after February 9, 2021 are not comparable with the consolidated financial statements as of or prior to that date. The Effective Date fair values of the Successor’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor.

Reorganization Value

Reorganization value is derived from an estimate of enterprise value, or fair value of the Company’s interest-bearing debt and stockholders’ equity. Under ASC 852, reorganization value generally approximates fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of a restructuring. As set forth in the disclosure statement, amended for updated pricing, and approved by the Bankruptcy Court, the enterprise value of the Successor was estimated to be between $3.5 billion and $4.9 billion. With the assistance of third-party valuation advisors, we determined the enterprise value and corresponding implied equity value of the Successor using various valuation approaches and methods, including: (i) income approach using a calculation of present value of future cash flows based on our financial projections, (ii) the market approach using selling prices of similar assets and (iii) the cost approach. For GAAP purposes, the Company valued the Successor’s individual assets, liabilities and equity instruments and determined an estimate of the enterprise value within the estimated range. Management concluded that the best estimate of enterprise value was $4.85 billion. Specific valuation approaches and key assumptions used to arrive at reorganization value, and the value of discrete assets and liabilities resulting from the application of fresh start accounting, are described below in greater detail within the valuation process.

The enterprise value and corresponding implied equity value are dependent upon achieving the future financial results set forth in our valuation using an asset-based methodology of estimated proved reserves, undeveloped properties, and other financial information, considerations and projections, applying a combination of the income, cost and market approaches as of the fresh start reporting date of February 9, 2021. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially.

The following table reconciles the enterprise value to the implied fair value of the Successor’s equity as of the Effective Date:

	February 9, 2021
Enterprise Value	$	4,851
Plus: Cash and cash equivalents(a)	48
Less: Fair value of debt	(1,313)
Successor equity value	$	3,586

____________________________________________

(a)Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above.

The following table reconciles the enterprise value to the reorganization value as of the Effective Date:

	February 9, 2021
Enterprise Value	$	4,851
Plus: Cash and cash equivalents(a)	48
Plus: Current liabilities	1,582
Plus: Asset retirement obligations (non-current portion)	236
Plus: Other non-current liabilities	97
Reorganization value of Successor assets	$	6,814

____________________________________________

(a)Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above.

Valuation Process

The fair values of our natural gas and oil properties, other property and equipment, other long-term assets, long-term debt, asset retirement obligations and warrants were estimated as of the Effective Date.

Natural gas and oil properties. The Company’s principal assets are its natural gas and oil properties, which are accounted for under the successful efforts accounting method. The Company determined the fair value of its natural gas and oil properties based on the discounted future net cash flows expected to be generated from these assets. Discounted cash flow models by operating area were prepared using the estimated future revenues and operating costs for all proved developed properties and undeveloped properties comprising the proved and unproved reserves. Significant inputs associated with the calculation of discounted future net cash flows include estimates of (i) recoverable reserves, (ii) production rates, (iii) future operating and development costs, (iv) future commodity prices escalated by an inflationary rate after five years, adjusted for differentials, and (v) a market-based weighted average cost of capital by operating area. The Company utilized NYMEX strip pricing, adjusted for differentials, to value the reserves. The NYMEX strip pricing inputs used are classified as Level 1 fair value assumptions and all other inputs are classified as Level 3 fair value assumptions. The discount rates utilized were derived using a weighted average cost of capital computation, which included an estimated cost of debt and equity for market participants with similar geographies and asset development type by operating area.

Other property and equipment. The fair value of other property and equipment such as buildings, land, computer equipment, and other equipment was determined using the replacement cost method under the cost approach which considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and the ability of those assets to generate cash flow.

Long-term debt. A market approach, based upon quotes from major financial institutions, was used to measure the fair value of the $500 million aggregate principal amount of 5.50% Senior Notes due 2026 (the “2026 Notes”)

and $500 million aggregate principal amount of 5.875% Senior Notes due 2029 (the “2029 Notes” and, together with the 2026 Notes, the “Notes”). The carrying value of borrowings under our Exit Credit Facility approximated fair value as the terms and interest rates are based on prevailing market rates.

Asset retirement obligations. The fair value of the Company’s asset retirement obligations was revalued based upon estimated current reclamation costs for our assets with reclamation obligations, an appropriate long-term inflation adjustment, and our revised credit adjusted risk-free rate. The credit adjusted risk-free rate was based on an evaluation of an interest rate that equates to a risk-free interest rate adjusted for the effect of our credit standing.

Warrants. The fair values of the Warrants issued upon the Effective Date were estimated using a Black-Scholes model, a commonly used option-pricing model. The Black-Scholes model was used to estimate the fair value of the warrants with an implied stock price of $20.52; initial exercise price per share of $27.63, $32.13 and $36.18 for Class A, Class B and Class C Warrants, respectively; expected volatility of 58% estimated using volatilities of similar entities; risk-free rate using a 5-year Treasury bond rate; and an expected annual dividend yield which was estimated to be zero.

Condensed Consolidated Balance Sheet

The following condensed consolidated balance sheet is as of February 9, 2021. This condensed consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Effective Date. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities and warrants.

	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
Assets
Current assets:
Cash and cash equivalents	$	243	$	(203)	(a)	$	—		$	40
Restricted cash	—		86		(b)	—			86
Accounts receivable, net	861		(18)		(c)	—			843
Short-term derivative assets	—		—			—			—
Other current assets	66		(5)		(d)	—			61
Total current assets	1,170		(140)			—			1,030
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties	25,794		—			(21,108)		(o)	4,686
Unproved properties	1,546		—			(1,063)		(o)	483
Other property and equipment	1,755		—			(1,256)		(o)	499
Total property and equipment	29,095		—			(23,427)		(o)	5,668
Less: accumulated depreciation, depletion and amortization	(23,877)		—			23,877		(o)	—
Property and equipment held for sale, net	9		—			(7)		(o)	2
Total property and equipment, net	5,227		—			443		(o)	5,670
Other long-term assets	198		—			(84)		(p)	114
Total assets	$	6,595	$	(140)		$	359		$	6,814

	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	391	$	24	(e)	$	—		$	415
Current maturities of long-term debt, net	1,929		(1,929)		(f)	—			—
Accrued interest	4		(4)		(g)	—			—
Short-term derivative liabilities	398		—			—			398
Other current liabilities	645		124		(h)	—			769
Total current liabilities	3,367		(1,785)			—			1,582
Long-term debt, net	—		1,261		(i)	52		(q)	1,313
Long-term derivative liabilities	90		—			—			90
Asset retirement obligations, net of current portion	139		—			97		(r)	236
Other long-term liabilities	5		2		(j)	—			7
Liabilities subject to compromise	9,574		(9,574)		(k)	—			—
Total liabilities	13,175		(10,096)			149			3,228
Contingencies and commitments (Note 7)
Stockholders’ equity (deficit):
Predecessor preferred stock	1,631		(1,631)		(l)	—			—
Predecessor common stock	—		—			—			—
Predecessor additional paid-in capital	16,940		(16,940)		(l)	—			—
Successor common stock	—		1		(m)	—			1
Successor additional paid-in-capital	—		3,585		(m)	—			3,585
Accumulated other comprehensive income	48		—			(48)		(s)	—
Accumulated deficit	(25,199)		24,941		(n)	258		(t)	—
Total stockholders’ equity (deficit)	(6,580)		9,956			210			3,586
Total liabilities and stockholders’ equity (deficit)	$	6,595	$	(140)		$	359		$	6,814

Reorganization Adjustments

(a)The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan:

Sources:
Proceeds from issuance of the Notes	$	1,000
Proceeds from Rights Offering	600
Proceeds from refunds of interest deposit for the Notes	5
Total sources of cash	$	1,605
Uses:
Payment of roll-up of DIP Facility balance	$	(1,179)
Payment of Exit Credit Facility - Tranche A Loan	(479)
Transfers to restricted cash for professional fee reserve	(76)
Transfers to restricted cash for convenience claim distribution reserve	(10)
Payment of professional fees	(31)
Payment of DIP Facility interest and fees	(12)
Payment of FLLO alternative transaction fee	(12)
Payment of the Notes fees funded out of escrow	(8)
Payment of RBL interest and fees	(1)
Total uses of cash	$	(1,808)
Net cash used	$	(203)

(b)Represents the transfer of funds to a restricted cash account for purposes of funding the professional fee reserve and the convenience claim distribution reserve.

(c)Reflects the removal of an insurance receivable associated with a discharged legal liability.

(d)Reflects the collection of an interest deposit for the senior unsecured notes.

(e)Changes in accounts payable include the following:

Accrual of professional service provider success fees	$	38
Accrual of convenience claim distribution reserve	10
Accrual of professional service provider fees	5
Reinstatement of accounts payable from liabilities subject to compromise	2
Payment of professional fees	(31)
Net impact to accounts payable	$	24

(f)Reflects payment of the pre-petition credit facility for $1.179 billion and transfer of the Tranche A and Tranche B Loans to long-term debt for $750 million.

(g)Reflect payments of accrued interest and fees on the DIP Facility.

(h)Changes in other current liabilities include the following:

Reinstatement of other current liabilities from liabilities subject to compromise	$	191
Accrual of the Notes fees	2
Settlement of Put Option Premium through issuance of Successor Common Stock	(60)
Payment of DIP Facility fees	(9)
Net impact to other current liabilities	$	124

(i)Changes in long-term debt include the following:

Issuance of the Notes	$	1,000
Issuance of Tranche A and Tranche B Loans	750
Payments on Tranche A Loans	(479)
Debt issuance costs for the Notes	(10)
Net impact to long-term debt, net	$	1,261

(j) Reflects reinstatement of a long-term lease liability.

(k) On the Effective Date, liabilities subject to compromise were settled in accordance with the Plan as follows:

Liabilities subject to compromise pre-emergence	$	9,574
To be reinstated on the Effective Date:
Accounts payable	$	(2)
Other current liabilities	(191)
Other long-term liabilities	(2)
Total liabilities reinstated	$	(195)
Consideration provided to settle amounts per the Plan or Reorganization:
Issuance of Successor common stock associated with the Rights Offering and Backstop Commitment and settlement of the Put Option Premium	$	(2,311)
Proceeds from issuance of Successor common stock associated with the Rights Offering and Backstop Commitment	600
Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment	(783)
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment	(124)
Issuance of Successor common stock to unsecured note holders	(45)
Issuance of Successor common stock to general unsecured claims	(8)
Fair value of Class A Warrants	(93)
Fair value of Class B Warrants	(94)
Fair value of Class C Warrants	(68)
Proceeds to holders of general unsecured claims	(10)
Total consideration provided to settle amounts per the Plan	$	(2,936)
Gain on settlement of liabilities subject to compromise	$	6,443

(l)Pursuant to the Plan, as of the Effective Date, all equity interests in Predecessor, including Predecessor’s common and preferred stock, were canceled without any distribution.

(m)Reflects the Successor equity including the issuance of 97,907,081 shares of New Common Stock, 11,111,111 shares of Class A Warrants, 12,345,679 shares of Class B Warrants and 9,768,527 shares of Class C Warrants pursuant to the Plan.

Issuance of Successor equity associated with the Rights Offering and Backstop Commitment	$	2,371
Issuance of Successor equity to holders of the FLLO Term Loan, incremental to the Rights Offering and Backstop Commitment	783
Issuance of Successor equity to holders of the Second Lien Notes, incremental to the Rights Offering and Backstop Commitment	124
Issuance of Successor equity to holders of the unsecured senior notes	45
Issuance of Successor equity to holders of allowed general unsecured claims	8
Fair value of Class A warrants	93
Fair value of Class B warrants	94
Fair value of Class C warrants	68
Total change in Successor common stock and additional paid-in capital	3,586
Less: par value of Successor common stock	(1)
Change in Successor additional paid-in capital	$	3,585

(n) Reflects the cumulative net impact of the effects on accumulated deficit as follows:

    

Gain on settlement of liabilities subject to compromise	$	6,443
Accrual of professional service provider success fees	(38)
Accrual of professional service provider fees	(5)
Surrender of other receivable	(18)
Payment of FLLO alternative transaction fee	(12)
Total reorganization items, net	6,370
Cancellation of predecessor equity	18,571
Net impact on accumulated deficit	$	24,941

Fresh Start Adjustments

(o)Reflects fair value adjustments to our (i) proved natural gas and oil properties, (ii) unproved properties, (iii) other property and equipment and (iv) property and equipment held for sale, and the elimination of accumulated depletion, depreciation and amortization.

(p)Reflects the fair value adjustment to record historical contracts at their fair values.

(q)Reflects the fair value adjustments to the 2026 Notes and 2029 Notes for $22 million and $30 million, respectively.

(r)Reflects the adjustment to our asset retirement obligations using assumptions as of the Effective Date, including an inflation factor of 2% and an average credit-adjusted risk-free rate of 5.18%.

(s)Reflects the fair value adjustment to eliminate the accumulated other comprehensive income of $9 million related to hedging settlements offset by the elimination of $57 million of income tax effects which has resulted in the recording of an income tax benefit of $57 million. See Note 10 for a discussion of income taxes.

(t)Reflects the net cumulative impact of the fresh start adjustments on accumulated deficit as follows:

Fresh start adjustments to property and equipment	$	443
Fresh start adjustments to other long-term assets	(84)
Fresh start adjustments to long-term debt	(52)
Fresh start adjustments to long-term asset retirement obligations	(97)
Fresh start adjustments to accumulated other comprehensive income	(9)
Total fresh start adjustments impacting reorganizations items, net	201
Income tax effects on accumulated other comprehensive income	57
Net impact to accumulated deficit	$	258

Reorganization Items, Net

We incurred significant expenses, gains and losses associated with the reorganization, primarily the gain on settlement of liabilities subject to compromise, 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 accrual for allowed claims primarily represents damages from contract rejections and settlements attributable to the midstream savings requirement as stipulated in the Plan. While the claims reconciliation process is ongoing, we do not believe any existing unresolved claims will result in a material adjustment to the financial statements. The amount of these items, which were incurred in reorganization items, net within our accompanying unaudited condensed consolidated statements of operations, have significantly affected our statements of operations.

We did not have any reorganization items, net for the 2022 Successor Quarter, the 2022 Successor Period, the 2021 Successor Quarter or the 2021 Successor Period. The following table summarizes the components in reorganization items, net included in our unaudited condensed consolidated statements of operations:

	Predecessor
	Period from January 1, 2021 through February 9, 2021
Gains on the settlement of liabilities subject to compromise	$	6,443
Accrual for allowed claims	(1,002)
Gain on fresh start adjustments	201
Gain from release of commitment liabilities	55
Professional service provider fees and other	(60)
Success fees for professional service providers	(38)
Surrender of other receivable	(18)
FLLO alternative transaction fee	(12)
Total reorganization items, net	$	5,569

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Fresh Start Accounting

9 Months Ended

Sep. 30, 2022

Reorganizations [Abstract]

Fresh Start Accounting

2. Chapter 11 Emergence

As described in Note 1, on the Petition Date, the Debtors filed the Chapter 11 Cases and on September 11, 2020, the Debtors filed the Plan, which was subsequently amended, and entered the Confirmation Order on January 16, 2021. The Debtors then emerged from bankruptcy upon effectiveness of the Plan on the Effective Date. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan.

Plan of Reorganization

In accordance with the Plan confirmed by the Bankruptcy Court, the following significant transactions occurred upon the Company’s emergence from bankruptcy on February 9, 2021:

•On the Effective Date, we issued 97,907,081 shares of New Common Stock, reserved 2,092,918 shares of New Common Stock for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims and reserved 37,174,210 shares of New Common Stock for issuance upon exercise of the Warrants, which were the result of the transactions described below. We also entered into a registration rights agreement, warrant agreements and amended our articles of incorporation and bylaws for the authorization of the New Common Stock and to provide registration rights thereunder, among other corporate governance actions. See Note 11 for further discussion of our post-emergence equity.

•Each holder of an equity interest in the Predecessor, including Predecessor’s common and preferred stock, had such interest canceled, released, and extinguished without any distribution.

•Each holder of obligations under the pre-petition revolving credit facility received, at such holder's prior determined allocation, its pro rata share of either Tranche A Loans or Tranche B Loans, on a dollar for dollar basis.

•Each holder of obligations under the FLLO Term Loan Facility received its pro rata share of 23,022,420 shares of New Common Stock.

•Each holder of an Allowed Second Lien Notes Claim received its pro rata share of 3,635,118 shares of New Common Stock, 11,111,111 Class A Warrants to purchase 11,111,111 shares of New Common Stock, 12,345,679 Class B Warrants to purchase 12,345,679 shares of New Common Stock, and 6,858,710 Class C Warrants to purchase 6,858,710 shares of New Common Stock.

•Each holder of an Allowed Unsecured Notes Claim received its pro rata share of 1,311,089 shares of New Common Stock and 2,473,757 Class C Warrants to purchase 2,473,757 shares of New Common Stock.

•Each holder of an Allowed General Unsecured Claim received its pro rata share of 231,112 shares of New Common Stock and 436,060 Class C Warrants to purchase 436,060 shares of New Common Stock; provided that to the extent such Allowed General Unsecured Claim is a Convenience Claim, such holder instead received its pro rata share of $10 million, which pro rata share shall not exceed five percent of such Convenience Claim.

•Participants in the Rights Offering extending to the applicable classes under the Plan received 62,927,320 shares of New Common Stock.

•In connection with the Rights Offering described above, the Backstop Parties under the Backstop Commitment Agreement received 6,337,031 shares of New Common Stock in respect to the Put Option Premium, and 442,991 shares of New Common Stock were issued in connection with the backstop obligation thereunder to purchase unsubscribed shares of the New Common Stock.

•2,092,918 shares of New Common Stock and 3,948,893 Class C Warrants were reserved for future issuance to eligible holders of Allowed Unsecured Notes Claims and Allowed General Unsecured Claims. The reserved New Common Stock and Class C Warrants will be issued on a pro rata basis upon the determination of the allowed portion of all disputed General Unsecured Claims and Unsecured Notes Claims.

•The 2021 Long-Term Incentive Plan (the “LTIP”) was approved with a share reserve equal to 6,800,000 shares of New Common Stock.

•Each holder of an Allowed Other Secured Claim will receive, at the Company's option and in consultation with the Required Consenting Stakeholders (as defined in 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 that renders its secured claim unimpaired in accordance with Section 1124 of the Bankruptcy Code.

•Each holder of an Allowed Other Priority Claim will receive cash up to the allowed amount of its claim.

Additionally, pursuant to the Plan confirmed by the Bankruptcy Court, the Company’s post-emergence Board of Directors is comprised of seven directors, including the Company’s Chief Executive Officer, Domenic J. Dell’Osso Jr., the Company’s Executive Chairman, Michael Wichterich, and five non-employee directors, Timothy S. Duncan, Benjamin C. Duster, IV, Sarah Emerson, Matthew M. Gallagher and Brian Steck.

3. Fresh Start Accounting

Fresh Start Accounting

In connection with our emergence from bankruptcy and in accordance with ASC 852, we qualified for and applied fresh start accounting on the Effective Date. We were required to apply fresh start accounting because (i) the holders of existing voting shares of the Company prior to its emergence received less than 50% of the voting shares of the Company outstanding following its emergence from bankruptcy and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan of approximately $6.8 billion was less than the post-petition liabilities and allowed claims of $13.2 billion.

In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair value in conformity with FASB ASC Topic 820 - Fair Value Measurements and FASB ASC Topic 805 - Business Combinations. Accordingly, the consolidated financial statements after February 9, 2021 are not comparable with the consolidated financial statements as of or prior to that date. The Effective Date fair values of the Successor’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor.

Reorganization Value

Reorganization value is derived from an estimate of enterprise value, or fair value of the Company’s interest-bearing debt and stockholders’ equity. Under ASC 852, reorganization value generally approximates fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of a restructuring. As set forth in the disclosure statement, amended for updated pricing, and approved by the Bankruptcy Court, the enterprise value of the Successor was estimated to be between $3.5 billion and $4.9 billion. With the assistance of third-party valuation advisors, we determined the enterprise value and corresponding implied equity value of the Successor using various valuation approaches and methods, including: (i) income approach using a calculation of present value of future cash flows based on our financial projections, (ii) the market approach using selling prices of similar assets and (iii) the cost approach. For GAAP purposes, the Company valued the Successor’s individual assets, liabilities and equity instruments and determined an estimate of the enterprise value within the estimated range. Management concluded that the best estimate of enterprise value was $4.85 billion. Specific valuation approaches and key assumptions used to arrive at reorganization value, and the value of discrete assets and liabilities resulting from the application of fresh start accounting, are described below in greater detail within the valuation process.

The enterprise value and corresponding implied equity value are dependent upon achieving the future financial results set forth in our valuation using an asset-based methodology of estimated proved reserves, undeveloped properties, and other financial information, considerations and projections, applying a combination of the income, cost and market approaches as of the fresh start reporting date of February 9, 2021. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially.

The following table reconciles the enterprise value to the implied fair value of the Successor’s equity as of the Effective Date:

	February 9, 2021
Enterprise Value	$	4,851
Plus: Cash and cash equivalents(a)	48
Less: Fair value of debt	(1,313)
Successor equity value	$	3,586

____________________________________________

(a)Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above.

The following table reconciles the enterprise value to the reorganization value as of the Effective Date:

	February 9, 2021
Enterprise Value	$	4,851
Plus: Cash and cash equivalents(a)	48
Plus: Current liabilities	1,582
Plus: Asset retirement obligations (non-current portion)	236
Plus: Other non-current liabilities	97
Reorganization value of Successor assets	$	6,814

____________________________________________

(a)Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above.

Valuation Process

The fair values of our natural gas and oil properties, other property and equipment, other long-term assets, long-term debt, asset retirement obligations and warrants were estimated as of the Effective Date.

Natural gas and oil properties. The Company’s principal assets are its natural gas and oil properties, which are accounted for under the successful efforts accounting method. The Company determined the fair value of its natural gas and oil properties based on the discounted future net cash flows expected to be generated from these assets. Discounted cash flow models by operating area were prepared using the estimated future revenues and operating costs for all proved developed properties and undeveloped properties comprising the proved and unproved reserves. Significant inputs associated with the calculation of discounted future net cash flows include estimates of (i) recoverable reserves, (ii) production rates, (iii) future operating and development costs, (iv) future commodity prices escalated by an inflationary rate after five years, adjusted for differentials, and (v) a market-based weighted average cost of capital by operating area. The Company utilized NYMEX strip pricing, adjusted for differentials, to value the reserves. The NYMEX strip pricing inputs used are classified as Level 1 fair value assumptions and all other inputs are classified as Level 3 fair value assumptions. The discount rates utilized were derived using a weighted average cost of capital computation, which included an estimated cost of debt and equity for market participants with similar geographies and asset development type by operating area.

Other property and equipment. The fair value of other property and equipment such as buildings, land, computer equipment, and other equipment was determined using the replacement cost method under the cost approach which considers historical acquisition costs for the assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and the ability of those assets to generate cash flow.

Long-term debt. A market approach, based upon quotes from major financial institutions, was used to measure the fair value of the $500 million aggregate principal amount of 5.50% Senior Notes due 2026 (the “2026 Notes”)

and $500 million aggregate principal amount of 5.875% Senior Notes due 2029 (the “2029 Notes” and, together with the 2026 Notes, the “Notes”). The carrying value of borrowings under our Exit Credit Facility approximated fair value as the terms and interest rates are based on prevailing market rates.

Asset retirement obligations. The fair value of the Company’s asset retirement obligations was revalued based upon estimated current reclamation costs for our assets with reclamation obligations, an appropriate long-term inflation adjustment, and our revised credit adjusted risk-free rate. The credit adjusted risk-free rate was based on an evaluation of an interest rate that equates to a risk-free interest rate adjusted for the effect of our credit standing.

Warrants. The fair values of the Warrants issued upon the Effective Date were estimated using a Black-Scholes model, a commonly used option-pricing model. The Black-Scholes model was used to estimate the fair value of the warrants with an implied stock price of $20.52; initial exercise price per share of $27.63, $32.13 and $36.18 for Class A, Class B and Class C Warrants, respectively; expected volatility of 58% estimated using volatilities of similar entities; risk-free rate using a 5-year Treasury bond rate; and an expected annual dividend yield which was estimated to be zero.

Condensed Consolidated Balance Sheet

The following condensed consolidated balance sheet is as of February 9, 2021. This condensed consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Effective Date. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities and warrants.

	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
Assets
Current assets:
Cash and cash equivalents	$	243	$	(203)	(a)	$	—		$	40
Restricted cash	—		86		(b)	—			86
Accounts receivable, net	861		(18)		(c)	—			843
Short-term derivative assets	—		—			—			—
Other current assets	66		(5)		(d)	—			61
Total current assets	1,170		(140)			—			1,030
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties	25,794		—			(21,108)		(o)	4,686
Unproved properties	1,546		—			(1,063)		(o)	483
Other property and equipment	1,755		—			(1,256)		(o)	499
Total property and equipment	29,095		—			(23,427)		(o)	5,668
Less: accumulated depreciation, depletion and amortization	(23,877)		—			23,877		(o)	—
Property and equipment held for sale, net	9		—			(7)		(o)	2
Total property and equipment, net	5,227		—			443		(o)	5,670
Other long-term assets	198		—			(84)		(p)	114
Total assets	$	6,595	$	(140)		$	359		$	6,814

	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	391	$	24	(e)	$	—		$	415
Current maturities of long-term debt, net	1,929		(1,929)		(f)	—			—
Accrued interest	4		(4)		(g)	—			—
Short-term derivative liabilities	398		—			—			398
Other current liabilities	645		124		(h)	—			769
Total current liabilities	3,367		(1,785)			—			1,582
Long-term debt, net	—		1,261		(i)	52		(q)	1,313
Long-term derivative liabilities	90		—			—			90
Asset retirement obligations, net of current portion	139		—			97		(r)	236
Other long-term liabilities	5		2		(j)	—			7
Liabilities subject to compromise	9,574		(9,574)		(k)	—			—
Total liabilities	13,175		(10,096)			149			3,228
Contingencies and commitments (Note 7)
Stockholders’ equity (deficit):
Predecessor preferred stock	1,631		(1,631)		(l)	—			—
Predecessor common stock	—		—			—			—
Predecessor additional paid-in capital	16,940		(16,940)		(l)	—			—
Successor common stock	—		1		(m)	—			1
Successor additional paid-in-capital	—		3,585		(m)	—			3,585
Accumulated other comprehensive income	48		—			(48)		(s)	—
Accumulated deficit	(25,199)		24,941		(n)	258		(t)	—
Total stockholders’ equity (deficit)	(6,580)		9,956			210			3,586
Total liabilities and stockholders’ equity (deficit)	$	6,595	$	(140)		$	359		$	6,814

Reorganization Adjustments

(a)The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan:

Sources:
Proceeds from issuance of the Notes	$	1,000
Proceeds from Rights Offering	600
Proceeds from refunds of interest deposit for the Notes	5
Total sources of cash	$	1,605
Uses:
Payment of roll-up of DIP Facility balance	$	(1,179)
Payment of Exit Credit Facility - Tranche A Loan	(479)
Transfers to restricted cash for professional fee reserve	(76)
Transfers to restricted cash for convenience claim distribution reserve	(10)
Payment of professional fees	(31)
Payment of DIP Facility interest and fees	(12)
Payment of FLLO alternative transaction fee	(12)
Payment of the Notes fees funded out of escrow	(8)
Payment of RBL interest and fees	(1)
Total uses of cash	$	(1,808)
Net cash used	$	(203)

(b)Represents the transfer of funds to a restricted cash account for purposes of funding the professional fee reserve and the convenience claim distribution reserve.

(c)Reflects the removal of an insurance receivable associated with a discharged legal liability.

(d)Reflects the collection of an interest deposit for the senior unsecured notes.

(e)Changes in accounts payable include the following:

Accrual of professional service provider success fees	$	38
Accrual of convenience claim distribution reserve	10
Accrual of professional service provider fees	5
Reinstatement of accounts payable from liabilities subject to compromise	2
Payment of professional fees	(31)
Net impact to accounts payable	$	24

(f)Reflects payment of the pre-petition credit facility for $1.179 billion and transfer of the Tranche A and Tranche B Loans to long-term debt for $750 million.

(g)Reflect payments of accrued interest and fees on the DIP Facility.

(h)Changes in other current liabilities include the following:

Reinstatement of other current liabilities from liabilities subject to compromise	$	191
Accrual of the Notes fees	2
Settlement of Put Option Premium through issuance of Successor Common Stock	(60)
Payment of DIP Facility fees	(9)
Net impact to other current liabilities	$	124

(i)Changes in long-term debt include the following:

Issuance of the Notes	$	1,000
Issuance of Tranche A and Tranche B Loans	750
Payments on Tranche A Loans	(479)
Debt issuance costs for the Notes	(10)
Net impact to long-term debt, net	$	1,261

(j) Reflects reinstatement of a long-term lease liability.

(k) On the Effective Date, liabilities subject to compromise were settled in accordance with the Plan as follows:

Liabilities subject to compromise pre-emergence	$	9,574
To be reinstated on the Effective Date:
Accounts payable	$	(2)
Other current liabilities	(191)
Other long-term liabilities	(2)
Total liabilities reinstated	$	(195)
Consideration provided to settle amounts per the Plan or Reorganization:
Issuance of Successor common stock associated with the Rights Offering and Backstop Commitment and settlement of the Put Option Premium	$	(2,311)
Proceeds from issuance of Successor common stock associated with the Rights Offering and Backstop Commitment	600
Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment	(783)
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment	(124)
Issuance of Successor common stock to unsecured note holders	(45)
Issuance of Successor common stock to general unsecured claims	(8)
Fair value of Class A Warrants	(93)
Fair value of Class B Warrants	(94)
Fair value of Class C Warrants	(68)
Proceeds to holders of general unsecured claims	(10)
Total consideration provided to settle amounts per the Plan	$	(2,936)
Gain on settlement of liabilities subject to compromise	$	6,443

(l)Pursuant to the Plan, as of the Effective Date, all equity interests in Predecessor, including Predecessor’s common and preferred stock, were canceled without any distribution.

(m)Reflects the Successor equity including the issuance of 97,907,081 shares of New Common Stock, 11,111,111 shares of Class A Warrants, 12,345,679 shares of Class B Warrants and 9,768,527 shares of Class C Warrants pursuant to the Plan.

Issuance of Successor equity associated with the Rights Offering and Backstop Commitment	$	2,371
Issuance of Successor equity to holders of the FLLO Term Loan, incremental to the Rights Offering and Backstop Commitment	783
Issuance of Successor equity to holders of the Second Lien Notes, incremental to the Rights Offering and Backstop Commitment	124
Issuance of Successor equity to holders of the unsecured senior notes	45
Issuance of Successor equity to holders of allowed general unsecured claims	8
Fair value of Class A warrants	93
Fair value of Class B warrants	94
Fair value of Class C warrants	68
Total change in Successor common stock and additional paid-in capital	3,586
Less: par value of Successor common stock	(1)
Change in Successor additional paid-in capital	$	3,585

(n) Reflects the cumulative net impact of the effects on accumulated deficit as follows:

    

Gain on settlement of liabilities subject to compromise	$	6,443
Accrual of professional service provider success fees	(38)
Accrual of professional service provider fees	(5)
Surrender of other receivable	(18)
Payment of FLLO alternative transaction fee	(12)
Total reorganization items, net	6,370
Cancellation of predecessor equity	18,571
Net impact on accumulated deficit	$	24,941

Fresh Start Adjustments

(o)Reflects fair value adjustments to our (i) proved natural gas and oil properties, (ii) unproved properties, (iii) other property and equipment and (iv) property and equipment held for sale, and the elimination of accumulated depletion, depreciation and amortization.

(p)Reflects the fair value adjustment to record historical contracts at their fair values.

(q)Reflects the fair value adjustments to the 2026 Notes and 2029 Notes for $22 million and $30 million, respectively.

(r)Reflects the adjustment to our asset retirement obligations using assumptions as of the Effective Date, including an inflation factor of 2% and an average credit-adjusted risk-free rate of 5.18%.

(s)Reflects the fair value adjustment to eliminate the accumulated other comprehensive income of $9 million related to hedging settlements offset by the elimination of $57 million of income tax effects which has resulted in the recording of an income tax benefit of $57 million. See Note 10 for a discussion of income taxes.

(t)Reflects the net cumulative impact of the fresh start adjustments on accumulated deficit as follows:

Fresh start adjustments to property and equipment	$	443
Fresh start adjustments to other long-term assets	(84)
Fresh start adjustments to long-term debt	(52)
Fresh start adjustments to long-term asset retirement obligations	(97)
Fresh start adjustments to accumulated other comprehensive income	(9)
Total fresh start adjustments impacting reorganizations items, net	201
Income tax effects on accumulated other comprehensive income	57
Net impact to accumulated deficit	$	258

Reorganization Items, Net

We incurred significant expenses, gains and losses associated with the reorganization, primarily the gain on settlement of liabilities subject to compromise, 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 accrual for allowed claims primarily represents damages from contract rejections and settlements attributable to the midstream savings requirement as stipulated in the Plan. While the claims reconciliation process is ongoing, we do not believe any existing unresolved claims will result in a material adjustment to the financial statements. The amount of these items, which were incurred in reorganization items, net within our accompanying unaudited condensed consolidated statements of operations, have significantly affected our statements of operations.

We did not have any reorganization items, net for the 2022 Successor Quarter, the 2022 Successor Period, the 2021 Successor Quarter or the 2021 Successor Period. The following table summarizes the components in reorganization items, net included in our unaudited condensed consolidated statements of operations:

	Predecessor
	Period from January 1, 2021 through February 9, 2021
Gains on the settlement of liabilities subject to compromise	$	6,443
Accrual for allowed claims	(1,002)
Gain on fresh start adjustments	201
Gain from release of commitment liabilities	55
Professional service provider fees and other	(60)
Success fees for professional service providers	(38)
Surrender of other receivable	(18)
FLLO alternative transaction fee	(12)
Total reorganization items, net	$	5,569

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Natural Gas and Oil Property Transactions

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Natural Gas and Oil Property Transactions

4. Natural Gas and Oil Property Transactions

Marcellus Acquisition

On March 9, 2022, we completed the Marcellus Acquisition for total consideration of approximately $2.77 billion, consisting of approximately $2 billion in cash, including working capital adjustments and approximately 9.4 million shares of our common stock, to acquire high quality producing assets and a deep inventory of premium drilling locations in the prolific Marcellus Shale in Northeast Pennsylvania. The Marcellus Acquisition was indebtedness free, effective as of January 1, 2022, subject to customary purchase price adjustments. We funded the cash portion of the consideration with cash on hand and $914 million of borrowings under the Company’s Exit Credit Facility. See Note 6 for further discussion of debt.

Preliminary Marcellus Acquisition Purchase Price Allocation

We have accounted for the Marcellus Acquisition as a business combination, using the acquisition method. The following table represents the preliminary allocation of the total purchase price 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. During the 2022 Successor Quarter, we recognized measurement period adjustments of $39 million to both restricted cash and current liabilities.

	Preliminary Purchase Price Allocation
Consideration:
Cash	$	2,000
Fair value of Chesapeake’s common stock issued in the merger	764
Working capital adjustments	6
Total consideration	$	2,770
Fair Value of Liabilities Assumed:
Current liabilities	$	459
Other long-term liabilities	129
Amounts attributable to liabilities assumed	$	588
Fair Value of Assets Acquired:
Cash, cash equivalents and restricted cash	$	39
Other current assets	218
Proved natural gas and oil properties	2,309
Unproved properties	788
Other property and equipment	1
Other long-term assets	3
Amounts attributable to assets acquired	$	3,358
Total identifiable net assets	$	2,770

Natural Gas and Oil Properties

For the Marcellus Acquisition, we applied applicable guidance, under which an acquirer should recognize the identifiable assets acquired and the liabilities assumed on the acquisition date at fair value. The fair value estimate of proved and unproved natural gas and oil properties as of the acquisition date was based on estimated natural gas and oil reserves and related future net cash flows discounted using a weighted average cost of capital, including estimates of future production rates and future development costs. We utilized NYMEX strip pricing adjusted for inflation to value the reserves. We then applied various discount rates depending on the classification of reserves and other risk characteristics. Management utilized the assistance of a third-party valuation expert to estimate the value of the natural gas and oil properties acquired. Additionally, the fair value estimate of proved and unproved natural gas and oil properties was corroborated by utilizing a market approach, which considers recent comparable transactions for similar assets.

The inputs used to value natural gas and oil properties require significant judgment and estimates made by management and represent Level 3 inputs.

Marcellus Acquisition Revenues and Expenses Subsequent to Acquisition

We included in our condensed consolidated statements of operations natural gas, oil and NGL revenues of $959 million, marketing revenues of $20 million, net losses on natural gas and oil derivatives of $542 million, and direct operating expenses of $329 million, including depreciation, depletion and amortization related to the Marcellus Acquisition businesses for the period from March 10, 2022 (the date immediately following the completion of the Marcellus Acquisition) through September 30, 2022.

Vine Acquisition

On November 1, 2021, we acquired Vine, an energy company focused on the development of natural gas properties in the over-pressured stacked Haynesville and Mid-Bossier shale plays in Northwest Louisiana pursuant to a definitive agreement with Vine dated August 10, 2021, for total consideration of approximately $1.5 billion, consisting of approximately 18.7 million shares of our common stock and $90 million in cash. In conjunction with the Vine Acquisition, Vine’s Second Lien Term Loan was repaid and terminated for $163 million, inclusive of a $13 million make whole premium with cash on hand due to the agreement containing a change in control provision making the term loan callable upon closing. Vine’s reserve based loan facility, which had no borrowings as of November 1, 2021, was terminated at the time of the acquisition. Additionally, Vine’s 6.75% Senior Notes, with a principal amount of $950 million, were assumed by the Company. See Note 6 for additional discussion of the assumed debt. We funded the cash portion of the consideration with cash on hand.

Vine Purchase Price Allocation

We have accounted for the Vine Acquisition as a business combination, using the acquisition method. The following table represents the allocation of the total purchase price of Vine to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date. We finalized the acquisition accounting for this transaction as of September 30, 2022, which resulted in measurement period adjustments of $19 million to both deferred tax liabilities and unproved properties. See Note 10 for additional information regarding the change to deferred tax liabilities.

	Purchase Price Allocation
Consideration:
Cash	$	253
Fair value of Chesapeake’s common stock issued in the merger	1,231
Restricted stock unit replacement awards	6
Total consideration	$	1,490
Fair Value of Liabilities Assumed:
Current liabilities	$	765
Long-term debt	1,021
Deferred tax liabilities	30
Other long-term liabilities	272
Amounts attributable to liabilities assumed	$	2,088
Fair Value of Assets Acquired:
Cash and cash equivalents	$	59
Other current assets	206
Proved natural gas and oil properties	2,181
Unproved properties	1,099
Other property and equipment	1
Other long-term assets	32
Amounts attributable to assets acquired	$	3,578
Total identifiable net assets	$	1,490

Natural Gas and Oil Properties

For the Vine Acquisition, we applied applicable guidance, under which an acquirer should recognize the identifiable assets acquired and the liabilities assumed on the acquisition date at fair value. The fair value estimate of proved and unproved natural gas and oil properties as of the acquisition date was based on estimated natural gas and oil reserves and related future net cash flows discounted using a weighted average cost of capital, including estimates of future production rates and future development costs. We utilized NYMEX strip pricing adjusted for inflation to value the reserves. We then applied various discount rates depending on the classification of reserves and other risk characteristics. Management utilized the assistance of a third-party valuation expert to estimate the value of the natural gas and oil properties acquired. Additionally, the fair value estimate of proved and unproved natural gas and oil properties was corroborated by utilizing a market approach, which considers recent comparable transactions for similar assets.

The inputs used to value natural gas and oil properties require significant judgment and estimates made by management and represent Level 3 inputs.

Financial Instruments and Other

The fair value measurements of long-term debt were estimated based on a market approach using estimates provided by an independent investment data services firm and represent Level 2 inputs.

Restricted Stock Unit Replacement Awards

Included in consideration for the Vine Acquisition is approximately $6 million related to pre-combination service recognized on Vine’s restricted stock unit (“RSU”) awards. For RSUs that were accelerated or transitioned at the time of the merger, we recognized expense for the portion of the award that was accelerated and included in consideration the portion of the award related to pre-combination service.

Vine Revenues and Expenses Subsequent to Acquisition

We included in our condensed consolidated statements of operations natural gas, oil and NGL revenues of $1,480 million, net losses on natural gas and oil derivatives of $846 million, direct operating expenses of $680 million, including depreciation, depletion and amortization, and other expense of $30 million, related to the Vine business for the nine months ended September 30, 2022.

Combined Pro Forma Financial Information

As the Vine Acquisition closed on November 1, 2021, all activity in 2022 is included in Chesapeake’s condensed consolidated statements of operations for the 2022 Successor Quarter and the 2022 Successor Period. The following unaudited pro forma financial information is based on our historical condensed consolidated financial statements adjusted to reflect as if the Marcellus Acquisition and Vine Acquisition had each occurred on February 10, 2021, the date Chesapeake emerged from bankruptcy. See Note 2 for additional information on the bankruptcy. The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including the estimated tax impact of the pro forma adjustments.

	Successor
	Nine Months Ended September 30, 2022
Revenues	$	7,617
Net income available to common stockholders	$	1,252
Earnings per common share:
Basic	$	10.00
Diluted	$	8.50

	Successor
	Three Months Ended September 30, 2021		Period from February 10, 2021 through September 30, 2021
Revenues	$	510	$	2,254
Net loss available to common stockholders	$	(1,159)	$	(1,732)
Loss per common share:
Basic	$	(9.15)	$	(13.70)
Diluted	$	(9.15)	$	(13.70)

Powder River Divestiture

On January 24, 2022, Chesapeake signed an agreement to sell its Powder River Basin assets in Wyoming to Continental Resources, Inc. (NYSE: CLR) for approximately $450 million, subject to customary closing adjustments. The divestiture, which closed on March 25, 2022, resulted in the recognition of a gain of approximately $298 million, which included $18 million of post-close adjustments, based on the difference between the carrying value of the assets and the cash received.

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Earnings Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share

5. Earnings Per Share

Basic earnings (loss) per common share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per common share is calculated in the same manner, but includes the impact of potentially dilutive securities. Potentially dilutive securities during the Successor Periods below consist of issuable shares related to warrants, unvested RSUs, and unvested performance share units (“PSUs”) and during the Predecessor Period have historically consisted of unvested RSUs, contingently issuable shares related to preferred stock and convertible senior notes unless their effect was antidilutive.

The reconciliations between basic and diluted earnings (loss) per share are as follows:

	Successor								Predecessor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Numerator
Net income (loss), basic and diluted	$	883	$	(345)	$	1,356	$	(489)	$	5,383
Denominator (in thousands)
Weighted average common shares outstanding, basic	121,150		98,221		122,924		98,040		9,781
Effect of potentially dilutive securities
Preferred stock	—		—		—		—		290
Warrants	22,794		—		21,692		—		—
Restricted stock units	396		—		368		—		—
Performance share units	50		—		47		—		—
Weighted average common shares outstanding, diluted	144,390		98,221		145,031		98,040		10,071
Earnings (loss) per common share:
Basic	$	7.29	$	(3.51)	$	11.03	$	(4.99)	$	550.35
Diluted	$	6.12	$	(3.51)	$	9.35	$	(4.99)	$	534.51

Successor

During the 2022 Successor Quarter and 2022 Successor Period, the diluted earnings per share calculation excludes the effect of 1,191,877 reserved shares of common stock and 2,248,726 reserved Class C Warrants related to the settlement of General Unsecured Claims associated with the Chapter 11 Cases, as all necessary conditions had not been met for such shares to be considered dilutive shares during the 2022 Successor Quarter and 2022 Successor Period.

During the 2021 Successor Quarter and the 2021 Successor Period, the diluted loss per share calculation excludes the effect of 1,767,203 reserved shares of common stock and 3,334,277 reserved Class C warrants related to the settlement of General Unsecured Claims associated with the Chapter 11 Cases, as all necessary conditions had not been met to be considered dilutive shares during the 2021 Successor Quarter and the 2021 Successor Period. Additionally, as both the 2021 Successor Quarter and the 2021 Successor Period had a net loss, the diluted loss per share calculation excludes the antidilutive effect, calculated using the treasury stock method, of

14,774,330 and 12,851,577 issuable shares related to warrants, 247,220 and 135,350 shares of restricted stock and 5,479 and 3,508 shares related to performance share units, respectively.

Predecessor

We had the option to settle conversions of the 5.50% convertible senior notes due 2026 with cash, shares or common stock or any combination thereof. As the price of our common stock was below the conversion threshold level for any time during the conversion period, there was no impact to diluted earnings per share.

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Debt

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt

6. Debt

Our long-term debt consisted of the following as of September 30, 2022 and December 31, 2021:

	Successor
	September 30, 2022				December 31, 2021
	Carrying Amount		Fair Value(a)		Carrying Amount		Fair Value(a)
Exit Credit Facility - Tranche A Loans	$	450	$	450	$	—	$	—
Exit Credit Facility - Tranche B Loans	221		221		221		221
5.50% senior notes due 2026	500		479		500		526
5.875% senior notes due 2029	500		462		500		535
6.75% senior notes due 2029	950		906		950		1,031
Premiums on senior notes	104		—		116		—
Debt issuance costs	(8)		—		(9)		—
Total long-term debt, net	$	2,717	$	2,518	$	2,278	$	2,313

____________________________________________

(a)The carrying value of borrowings under our Exit Credit Facility approximate fair value as the interest rates are based on prevailing market rates; therefore, they are a Level 1 fair value measurement. For all other debt, a market approach, based upon quotes from major financial institutions, which are Level 2 inputs, is used to measure the fair value.

Successor Debt

Our post-emergence exit financing consists of the Exit Credit Facility, which includes a reserve-based revolving credit facility and a non-revolving loan facility, the Notes and the Vine Notes (as defined below).

Exit Credit Facility. On the Effective Date, pursuant to the terms of the Plan, the Company, as borrower, entered into a reserve-based credit agreement (the “Credit Agreement”) providing for a reserve-based credit facility with an initial borrowing base of $2.5 billion. The borrowing base will be redetermined semiannually on or around May 1 and November 1 of each year. The aggregate initial elected commitments of the lenders under the Exit Credit Facility were $1.75 billion of Tranche A Loans and $221 million of fully funded Tranche B Loans.

The Exit Credit Facility provides for a $200 million sublimit of the aggregate commitments that are available for the issuance of letters of credit. The Exit Credit Facility bears interest at the ABR (alternate base rate) or LIBOR, at our election, plus an applicable margin (ranging from 2.25–3.25% per annum for ABR loans and 3.25–4.25% per annum for LIBOR loans, subject to a 1.00% LIBOR floor), depending on the percentage of the borrowing base then being utilized. The Tranche A Loans mature three years after the Effective Date and the Tranche B Loans mature four years after the Effective Date. The Tranche B Loans can be repaid if no Tranche A Loans are outstanding. Our borrowings under the Exit Credit Facility bore interest at an average interest rate of 6.0% during the 2022 Successor Period.

The Credit Agreement contains financial covenants that require the Company and the guarantors party thereto, on a consolidated basis, to maintain (i) a first lien leverage ratio of not more than 2.75 to 1:00, (ii) a total leverage ratio of not more than 3.50 to 1:00, (iii) a current ratio of not less than 1.00 to 1:00 and (iv) at any time additional secured debt is outstanding, an asset coverage ratio of not less than 1.50 to 1:00, defined as PV-10 of proved

developed producing reserves to total secured debt. The Company has no additional secured debt outstanding as of September 30, 2022.

The Credit Agreement also contains customary affirmative and negative covenants, including, among other things, as to compliance with laws (including environmental laws and anti-corruption laws), delivery of quarterly and annual financial statements, conduct of business, maintenance of property, maintenance of insurance, restrictions on the incurrence of liens, indebtedness, asset dispositions, fundamental changes, restricted payments, and other customary covenants.

The Company is required to pay a commitment fee of 0.50% per annum on the average daily unused portion of the current aggregate commitments under the Tranche A Loans. The Company is also required to pay customary letter of credit and fronting fees.

Outstanding Senior Notes. On February 2, 2021, Chesapeake Escrow Issuer LLC, then an indirect wholly owned subsidiary of the Company, issued $500 million aggregate principal amount of its 2026 Notes and $500 million aggregate principal amount of its 2029 Notes. The Notes included a $52 million premium to reflect fair value adjustments at the date of emergence.

The Notes are guaranteed on a senior unsecured basis by each of the Company’s subsidiaries that guarantee the Exit Credit Facility.

The Notes were issued pursuant to an indenture, dated as of February 5, 2021, among the Issuer, the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee.

Interest on the Notes is payable semi-annually, on February 1 and August 1 of each year to holders of record on the immediately preceding January 15 and July 15.

Vine Senior Notes. As a result of the completion of the Vine Acquisition, the Company and certain of its subsidiaries entered into a supplemental indenture pursuant to which the Company assumed the obligations under Vine’s $950 million aggregate principal amount of 6.75% senior notes due 2029 (the “Vine Notes”) issued under the indenture dated April 7, 2021 with Wilmington Trust, National Association, as Trustee (the “Vine Indenture”). The Vine Notes included a $71 million premium to reflect fair value adjustments at the date of acquisition.

The Company and certain of its subsidiaries have agreed to guarantee such obligations under the Vine Indenture. Additionally, certain subsidiaries of Vine entered into a supplemental indenture to the Company’s existing indenture, dated February 5, 2021 with Deutsche Bank Trust Company Americas as trustee (the “CHK Indenture”), pursuant to which such subsidiaries of Vine have agreed to guarantee obligations under the CHK Indenture.

Interest on the Vine Notes is payable semi-annually, on April 15 and October 15 of each year to holders of record on the immediately preceding April 1 and October 1.

The Notes and the Vine Notes are the Company’s senior unsecured obligations. Accordingly, they rank (i) equal in right of payment to all existing and future senior unsecured indebtedness, (ii) effectively subordinate in right of payment to all existing and future secured indebtedness, including indebtedness under the Exit Credit Facility, to the extent of the value of the collateral securing such indebtedness, (iii) structurally subordinate in right of payment to all existing and future indebtedness and other liabilities of any future subsidiaries that do not guarantee the Notes and any entity that is not a subsidiary that does not guarantee the Notes and (iv) senior in right of payment to all future subordinated indebtedness. Each guarantee of the Notes by a guarantor is a general, unsecured, senior obligation of such guarantor. Accordingly, the guarantees (i) rank equally in right of payment with all existing and future senior indebtedness of such guarantor (including such guarantor’s guarantee of indebtedness under the Exit Credit Facility), (ii) are subordinated to all existing and future secured indebtedness of such guarantor, including such guarantor’s guarantee of indebtedness under our Exit Credit Facility, to the extent of the value of the collateral of such guarantor securing such secured indebtedness, (iii) are structurally subordinated to all indebtedness and other liabilities of any future subsidiaries of such guarantor that do not guarantee the notes and (iv) rank senior in right of payment to all future subordinated indebtedness of such guarantor.

Phase-Out of LIBOR

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The purpose of ASU 2020-04 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide

migration away from Interbank Offered Rates such as LIBOR, which is expected to be phased out for most U.S. dollar settings on June 30, 2023, to alternative reference rates. ASU 2020-04 applies only to contracts, hedging relationships, debt arrangements and other transactions that reference a benchmark reference rate expected to be discontinued because of reference rate reform. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 and can be applied prospectively to contract modifications through December 31, 2022. The adoption of this guidance will not have a material impact on our condensed consolidated financial statements and related disclosures.

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Contingencies and Commitments

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Commitments

7. Contingencies and Commitments

Contingencies

Chapter 11 Proceedings

Commencement of the Chapter 11 Cases automatically stayed the proceedings and actions against us that are referenced below, in addition to actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company’s bankruptcy estates. The Plan in the Chapter 11 Cases, which became effective on February 9, 2021, provided for the treatment of claims against the Company’s bankruptcy estates, including pre-petition liabilities that had not been satisfied or addressed during the Chapter 11 Cases. See Note 2 for additional information.

Litigation and Regulatory Proceedings

We were involved in a number of litigation and regulatory proceedings as of the Petition Date. Many of these proceedings were in early stages, and many of them sought damages and penalties, the amount of which is indeterminate. Our total accrued liability in respect of litigation and regulatory proceedings is determined on a case-by-case basis and represents an estimate of probable losses after considering, among other factors, the progress of each case or proceeding, our experience and the experience of others in similar cases or proceedings, and the opinions and views of legal counsel. Significant judgment is required in making these estimates and our final liabilities may ultimately be materially different.

We are involved in, and expect to continue to be involved in, various lawsuits and disputes incidental to our business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions. The majority of the prepetition legal proceedings were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process before the Bankruptcy Court. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan.

Environmental Contingencies

The nature of the natural gas and oil business carries with it certain environmental risks for us and our subsidiaries. We have implemented various policies, programs, procedures, training and audits to reduce and mitigate such environmental risks. We conduct periodic reviews, on a company-wide basis, to assess changes in our environmental risk profile. Environmental reserves are established for environmental liabilities for which economic losses are probable and reasonably estimable. We manage our exposure to environmental liabilities in acquisitions by using an evaluation process that seeks to identify pre-existing contamination or compliance concerns and address the potential liability. Depending on the extent of an identified environmental concern, we may, among other things, exclude a property from the transaction, require the seller to remediate the property to our satisfaction in an acquisition or agree to assume liability for the remediation of the property.

We were recently dismissed as a defendant from numerous lawsuits in Oklahoma alleging that we and other companies engaged in activities that have caused earthquakes. The lawsuits sought compensation for injury to real and personal property, diminution of property value, economic losses due to business interruption, interference with the use and enjoyment of property, annoyance and inconvenience, personal injury and emotional distress. In addition, they sought the reimbursement of insurance premiums and the award of punitive damages, attorneys’ fees, costs, expenses and interest. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan.

Other Matters

Based on management’s current assessment, we are of the opinion that no pending or threatened lawsuit or dispute relating to our business operations is likely to have a material adverse effect on our future consolidated financial position, results of operations or cash flows. The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates.

Commitments

Gathering, Processing and Transportation Agreements

We have contractual commitments with midstream service companies and pipeline carriers for future gathering, processing and transportation of natural gas, oil and NGL to move certain of our production to market. Working interest owners and royalty interest owners, where appropriate, will be responsible for their proportionate share of these costs. Commitments related to gathering, processing and transportation agreements are not recorded as obligations in the accompanying condensed consolidated balance sheets; however, they are reflected in our estimates of proved reserves.

The aggregate undiscounted commitments under our gathering, processing and transportation agreements, excluding any reimbursement from working interest and royalty interest owners, credits for third-party volumes or future costs under cost-of-service agreements, are presented below:

	Successor
	September 30, 2022
Remainder of 2022	$	151
2023	546
2024	514
2025	444
2026	403
2027-2036	2,094
Total	$	4,152

In addition, we have entered into long-term agreements for certain natural gas gathering and related services within specified acreage dedication areas in exchange for cost-of-service based fees redetermined annually, or tiered fees based on volumes delivered relative to scheduled volumes. Future gathering fees may vary with the applicable agreement.

Other Commitments

As part of our normal course of business, we enter into various agreements providing, or otherwise arranging for, financial or performance assurances to third parties on behalf of our wholly owned guarantor subsidiaries. These agreements may include future payment obligations or commitments regarding operational performance that effectively guarantee our subsidiaries’ future performance.

In connection with acquisitions and divestitures, our purchase and sale agreements generally provide indemnification to the counterparty for liabilities incurred as a result of a breach of a representation or warranty by the indemnifying party and/or other specified matters. These indemnifications generally have a discrete term and are intended to protect the parties against risks that are difficult to predict or cannot be quantified at the time of entering into or consummating a particular transaction. For divestitures of natural gas and oil properties, our purchase and sale agreements may require the return of a portion of the proceeds we receive as a result of uncured title or environmental defects.

While executing our strategic priorities, we have incurred certain cash charges, including contract termination charges, financing extinguishment costs and charges for unused natural gas transportation and gathering capacity.

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Other Current Liabilities

9 Months Ended

Sep. 30, 2022

Other Liabilities Disclosure [Abstract]

Other Current Liabilities

8. Other Current Liabilities

Other current liabilities as of September 30, 2022 and December 31, 2021 are detailed below:

	Successor
	September 30, 2022		December 31, 2021
Revenues and royalties due others	$	938	$	617
Accrued drilling and production costs	324		142
Accrued hedging costs	114		113
Accrued compensation and benefits	74		91
Other accrued taxes	156		86
Operating leases	36		29
Joint interest prepayments received	23		14
Other	119		110
Total other current liabilities	$	1,784	$	1,202

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Revenue

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue

9. Revenue

The following table shows revenue disaggregated by operating area and product type:

	Successor
	Three Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
Marcellus	$	1,324	$	—	$	—	$	1,324
Haynesville	1,093		—		—		1,093
Eagle Ford	79		437		54		570
Natural gas, oil and NGL revenue	$	2,496	$	437	$	54	$	2,987
Marketing revenue	$	827	$	328	$	51	$	1,206

	Successor
	Three Months Ended September 30, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	383	$	—	$	—	$	383
Haynesville	207		—		—		207
Eagle Ford	53		379		55		487
Powder River Basin	21		58		14		93
Natural gas, oil and NGL revenue	$	664	$	437	$	69	$	1,170
Marketing revenue	$	240	$	326	$	61	$	627

	Successor
	Nine Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
Marcellus	$	3,085	$	—	$	—	$	3,085
Haynesville	2,733		—		—		2,733
Eagle Ford	211		1,390		173		1,774
Powder River Basin	20		66		13		99
Natural gas, oil and NGL revenue	$	6,049	$	1,456	$	186	$	7,691
Marketing revenue	$	1,872	$	1,231	$	193	$	3,296

	Successor
	Period from February 10, 2021 through September 30, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	772	$	—	$	—	$	772
Haynesville	401		—		—		401
Eagle Ford	127		971		119		1,217
Powder River Basin	51		144		30		225
Natural gas, oil and NGL revenue	$	1,351	$	1,115	$	149	$	2,615
Marketing revenue	$	483	$	828	$	132	$	1,443

	Predecessor
	Period from January 1, 2021 through February 9, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	119	$	—	$	—	$	119
Haynesville	53		—		—		53
Eagle Ford	17		159		17		193
Powder River Basin	7		20		6		33
Natural gas, oil and NGL revenue	$	196	$	179	$	23	$	398
Marketing revenue	$	78	$	141	$	20	$	239

Accounts Receivable

Our accounts receivable are primarily from purchasers of natural gas, oil and NGL and from exploration and production companies that own interests in properties we operate. This industry concentration could affect our overall exposure to credit risk, either positively or negatively, because our purchasers and joint working interest owners may be similarly affected by changes in economic, industry or other conditions. We monitor the creditworthiness of all our counterparties and we generally require letters of credit or parent guarantees for receivables from parties deemed to have sub-standard credit, unless the credit risk can otherwise be mitigated. We utilize an allowance method in accounting for bad debt based on historical trends in addition to specifically identifying receivables that we believe may be uncollectible.

Accounts receivable as of September 30, 2022 and December 31, 2021 are detailed below:

	Successor
	September 30, 2022		December 31, 2021
Natural gas, oil and NGL sales	$	1,477	$	922
Joint interest	268		158
Other	14		38
Allowance for doubtful accounts	(2)		(3)
Total accounts receivable, net	$	1,757	$	1,115

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Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

We estimate our annual effective tax rate (“AETR”) for continuing operations in recording our interim quarterly income tax provision for the various jurisdictions in which we operate. The tax effects of statutory rate changes, significant unusual or infrequently occurring items, and certain changes in the assessment of the realizability of deferred tax assets are excluded from the determination of our estimated AETR as such items are recognized as discrete items in the quarter in which they occur. Our estimated AETR for the 2022 Successor Period is 5.9% as a result of projecting current federal and state income taxes and a full valuation allowance against our anticipated net deferred asset position at December 31, 2022.

Our estimated AETR for the 2021 Successor Period was 2.0% as a result of maintaining a full valuation allowance against our net deferred asset position. The income tax provision for the 2021 Predecessor Period was determined based on actual results for the period ended February 9, 2021, including those resulting from fresh start accounting. The effective tax rate for the 2021 Predecessor Period was (1.1%) which resulted from the elimination of the income tax effects associated with hedging settlements from accumulated other comprehensive income as part of fresh start accounting. We recorded an income tax benefit of $57 million in the 2021 Predecessor Period for the elimination of such income tax effects. Any changes to our deferred tax assets and liabilities for the 2021 Predecessor Period (whether resulting from Reorganization Adjustments, Fresh Start Adjustments or otherwise) were completely offset with a corresponding adjustment to our valuation allowance which resulted in the low

effective tax rate. Accordingly, there are no balances shown for deferred tax assets or liabilities in the condensed consolidated balance sheet table shown in Note 3.

As of December 31, 2021, we were in a net deferred tax asset position and anticipate being in a net deferred tax asset position as of December 31, 2022. Based on all available positive and negative evidence, including projections of future taxable income, we believe it is more likely than not that our deferred tax assets will not be realized. As such, a full valuation allowance was recorded against our net deferred tax asset position for federal and state purposes as of September 30, 2022 and December 31, 2021. A significant piece of objectively verifiable negative evidence evaluated is the cumulative loss incurred throughout the last several quarters. Should future results of operations demonstrate a trend of profitability, additional weight may be placed upon other evidence, such as forecasts of future taxable income. Additionally, future events and new evidence, such as the integration and realization of profit from recently acquired assets, could lead to increased weight being placed upon future forecasts and the conclusion that some or all of the deferred tax assets are more likely than not to be realizable. Therefore, we believe that there is a possibility that some or all of the valuation allowance could be released in the foreseeable future.

Our ability to utilize net operating loss (“NOL”) carryforwards, disallowed business interest carryforwards, tax credits and possibly other tax attributes to reduce future taxable income and federal income tax is subject to various limitations under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). The utilization of such attributes may be subject to an annual limitation under Section 382 of the Code should transactions involving our equity result in a cumulative shift of more than 50% in the beneficial ownership of our stock during any three-year testing period (an “Ownership Change”).

As a result of emergence from bankruptcy on February 9, 2021, the Company did experience an Ownership Change. We did not qualify for the exception under Section 382(l)(5) of the Code, and therefore an annual limitation was determined under Section 382(l)(6) of the Code, which is based on the post-emergence value of our equity multiplied by the adjusted federal long-term rate in effect for the month in which the ownership change occurred. The amount of the annual limitation has been computed to be $54 million. The limitation applies to our NOL carryforwards, disallowed business interest carryforwards and general business credits until such attributes expire or are fully utilized. As we believe we were in an overall net unrealized built-in loss position at the Effective Date, the limitation also applies to any recognized built-in losses incurred for a period of five years but only to the extent of the overall net unrealized built-in loss. Recognized built-in losses include a portion of our tax depreciation, depletion, and amortization deductions along with a portion of our realized hedging losses. We incurred sufficient recognized built-in losses during the 2021 tax year such that we have no further restriction on the company’s deductions for such items. Some states impose similar limitations on tax attribute utilization upon experiencing an ownership change.

In Chapter 11 bankruptcy cases, the cancellation of debt income (“CODI”) realized upon emergence from bankruptcy is excludible from taxable income but results in a reduction of tax attributes in accordance with the attribute reduction and ordering rules of Section 108 of the Code. The amount of our CODI was $5 billion, all of which reduced our NOL carryforwards. As a result of the Section 382 limitation, $593 million of federal NOLs remaining after the CODI reduction were estimated to expire before they would become utilizable and, as such, were removed from our deferred tax assets. The states we operate in generally have similar rules for attribute reduction and Section 382 limitation which resulted in the reduction of certain of our state NOL carryforwards.

On November 1, 2021, we completed the acquisition of Vine. For federal income tax purposes, the transaction qualified as a tax-free merger under Section 368 of the Code and, as a result, we acquired carryover tax basis in Vine’s assets and liabilities. In the 2021 Successor Period, we recorded a $49 million net deferred tax liability determined through business combination accounting. Upon the completion of Vine’s tax returns in the 2022 Successor Period, the net deferred tax liability was adjusted to $30 million. As a result of this adjustment to the deferred tax liability, we increased our valuation allowance and recorded $19 million of income tax expense in the 2022 Successor Period.

On August 16, 2022, the President of the United States signed into law the Inflation Reduction Act of 2022 (“IRA”), which includes provisions for a 15% corporate alternative minimum tax on book income for companies whose average book income exceeds $1 billion for any three consecutive years preceding the tax year and a 1% excise tax on stock buybacks. These changes are generally in effect for tax years beginning after December 31, 2022. We are in the process of evaluating the potential impact of the IRA.

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Equity

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Equity

11. Equity

New Common Stock

As discussed in Note 2, on the Effective Date, we issued an aggregate of 97,907,081 shares of New Common Stock, par value $0.01 per share, to the holders of allowed claims, and 2,092,918 shares of New Common Stock were reserved for future distributions under the Plan. During the 2022 Successor Period, 36,951 reserved shares were issued to resolve allowed General Unsecured Claims.

On November 1, 2021 we completed the Vine Acquisition and issued 18,709,399 shares of New Common Stock. On March 9, 2022, we completed the Marcellus Acquisition and issued 9,442,185 shares of New Common Stock. See further discussion of both acquisitions in Note 4.

Dividends

In May 2021, we initiated a new annual dividend on our shares of common stock, expected to be paid quarterly. The following table summarizes our dividend payments in the 2022 Successor Period.

Payment Date	Stockholders of Record Date	Dividend Payment		Rate Per Share
March 22, 2022	March 7, 2022	$	210	$	1.7675
June 2, 2022	May 19, 2022	$	298	$	2.34
September 1, 2022	August 17, 2022	$	280	$	2.32

On November 1, 2022, we declared a quarterly dividend payable of $3.16 per share, which will be paid on December 1, 2022 to stockholders of record at the close of business on November 15, 2022. The dividend consists of a base quarterly dividend in the amount of $0.55 per share and a variable quarterly dividend in the amount of $2.61 per share.

Share Repurchase Program

As of December 2, 2021, the Company was authorized to purchase up to $1 billion of the Company’s common stock and/or warrants under a share repurchase program. In June 2022, our Board of Directors authorized an expansion of the share repurchase program by $1.0 billion, bringing the total authorized share repurchase amount to $2.0 billion for stock and/or warrants. The share repurchase program will expire on December 31, 2023.

In March 2022, we commenced our share repurchase program and repurchased 1 million shares of common stock for an aggregate price of $83 million. In June 2022, we repurchased 5.8 million shares of common stock for an aggregate price of $515 million, inclusive of shares for which cash settlement occurred in early July. During the 2022 Successor Quarter, we repurchased 0.75 million shares of common stock for an aggregate price of $69 million. The shares of common stock that were repurchased during the 2022 Successor Period were retired and recorded as a reduction to common stock and retained earnings.

Warrants

	Class A Warrants	Class B Warrants	Class C Warrants(a)
Outstanding as of December 31, 2021	10,856,852	12,313,273	11,388,371
Converted into New Common Stock(b)	(1,036,606)	(22,392)	(13,845)
Outstanding as of March 31, 2022	9,820,246	12,290,881	11,374,526
Converted into New Common Stock(b)	(68,300)	(111)	(161,849)
Issued for General Unsecured Claims	—	—	69,720
Outstanding as of June 30, 2022	9,751,946	12,290,770	11,282,397
Converted into New Common Stock(b)	(500,450)	(31)	(97,403)
Outstanding as of September 30, 2022	9,251,496	12,290,739	11,184,994

_________________________________________

(a)As of September 30, 2022, we had 2,248,726 of reserved Class C Warrants.

(b)During the 2022 Successor Period, we issued 1,329,292 shares of New Common Stock as a result of Warrant exercises.

As discussed in Note 2, on the Effective Date, we issued 11,111,111 Class A Warrants, 12,345,679 Class B Warrants and 9,768,527 Class C Warrants that are initially exercisable for one share of New Common Stock per Warrant at initial exercise prices of $27.63, $32.13 and $36.18 per share, respectively, subject to adjustments pursuant to the terms of the Warrants. The Warrants are exercisable from the Effective Date until February 9, 2026. The Warrants contain customary anti-dilution adjustments in the event of any stock split, reverse stock split, reclassification, stock dividend or other distributions. The exercise prices of the Warrants were adjusted to prevent the dilution of rights for the effects of the quarterly dividend distribution on September 1, 2022, and the adjusted exercise prices are $25.10, $29.18, and $32.86 per share for the Class A, Class B and Class C Warrants, respectively. Additionally, we have recalculated the number of shares of New Common Stock issuable upon the exercise of each of the Class A, Class B and Class C Warrants, respectively, and as a result, 1.12 shares are issuable upon the exercise of a Class A, Class B or Class C Warrant.

On August 18, 2022, we announced exchange offers relating to our outstanding Class A Warrants, Class B Warrants and Class C Warrants. The exchange offers expired on October 7, 2022 and resulted in the issuance of 16,305,984 shares of our New Common Stock in exchange for the cancellation of (i) 4,752,207 Class A Warrants, (ii) 7,879,030 Class B Warrants and (iii) 7,252,004 Class C Warrants. Under the exchange offers, the Warrants were exchanged in a cashless transaction and were converted to shares of our New Common Stock at a ratio of 0.8636 for Class A Warrants, 0.8224 for Class B Warrants and 0.7890 for Class C Warrants, respectively.

Chapter 11 Proceedings

Upon emergence from Chapter 11 on February 9, 2021, as discussed in Note 2, Predecessor common stock and preferred stock were canceled and released under the Plan without receiving any recovery on account thereof.

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Share-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

12. Share-Based Compensation

As discussed in Note 2, on the Effective Date, our Predecessor common stock was canceled and New Common Stock was issued. Accordingly, our then existing share-based compensation awards were also canceled, which resulted in the recognition of any previously unamortized expense related to the canceled awards on the date of cancellation. Share-based compensation for the Predecessor and Successor Periods is not comparable.

Successor Share-Based Compensation

As of the Effective Date, the Board of Directors adopted the 2021 Long-Term Incentive Plan (the “LTIP”) with a share reserve equal to 6,800,000 shares of New Common Stock. The LTIP provides for the grant of RSUs, restricted stock awards, stock options, stock appreciation rights, performance awards and other stock awards to the Company’s employees and non-employee directors.

Restricted Stock Units. In the 2021 and 2022 Successor Periods, we granted RSUs to employees and non-employee directors under the LTIP, which will vest over a three-year period. The fair value of RSUs is based on the closing sales price of our common stock on the date of grant, and compensation expense is recognized ratably over the requisite service period. A summary of the changes in unvested RSUs is presented below:

	Unvested Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2021	775	$	46.77
Granted	520	$	76.38
Vested	(293)	$	47.78
Forfeited	(103)	$	53.63
Unvested as of September 30, 2022	899	$	62.78

The aggregate intrinsic value of RSUs that vested during the 2022 Successor Period was approximately $26 million based on the stock price at the time of vesting.

As of September 30, 2022, there was approximately $45 million of total unrecognized compensation expense related to unvested RSUs. The expense is expected to be recognized over a weighted average period of approximately 2.22 years.

Performance Share Units. In the 2021 and 2022 Successor Periods, we granted PSUs to senior management under the LTIP, which will generally vest over a three-year period and will be settled in shares. The performance criteria include total shareholder return (“TSR”) and relative TSR (“rTSR”), and could result in a total payout between 0% - 200% of the target units. For the PSUs granted in 2021, the performance criteria also include share price hurdles which could result in a total payout between 0% - 100% of the target units. The fair value of the PSUs was measured on the grant date using a Monte Carlo simulation, and compensation expense is recognized ratably over the requisite service period because these awards depend on a combination of service and market criteria.

The following table presents the assumptions used in the valuation of the PSUs granted in 2022.

Assumption	TSR, rTSR
Risk-free interest rate	2.00	%
Volatility	70.2	%

A summary of the changes in unvested PSUs is presented below:

	Unvested Performance Share Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2021	183	$	66.12
Granted	133	$	109.65
Vested	—	$	—
Forfeited	(35)	$	59.09
Unvested as of September 30, 2022	281	$	87.56

As of September 30, 2022, there was approximately $18 million of total unrecognized compensation expense related to unvested PSUs. The expense is expected to be recognized over a weighted average period of approximately 2.23 years.

Predecessor Share-Based Compensation

Our Predecessor share-based compensation program consisted of RSUs, stock options, PSUs and cash restricted stock units (“CRSUs”) granted to employees and RSUs granted to non-employee directors under our long-term incentive plans. The RSUs and stock options were equity-classified awards and the PSUs and CRSUs were liability-classified awards.

Restricted Stock Units. We granted RSUs to employees and non-employee directors. A summary of the changes in unvested RSUs is presented below:

	Unvested Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2020	1	$	616.57
Granted	—	$	—
Vested	—	$	—
Forfeited/canceled	(1)	$	611.47
Unvested as of February 9, 2021	—	$	—

Stock Options. In the year ended December 31, 2020, we granted members of management stock options that vested ratably over a three-year period. Each stock option award had an exercise price equal to the closing price of our common stock on the grant date. Outstanding options expired seven years to ten years from the date of grant.

We utilized the Black-Scholes option-pricing model to measure the fair value of stock options. The expected life of an option was determined using the simplified method. Volatility assumptions were estimated based on the average historical volatility of Chesapeake stock over the expected life of an option. The risk-free interest rate was based on the U.S. Treasury rate in effect at the time of the grant over the expected life of the option. The dividend yield was based on an annual dividend yield, taking into account our dividend policy, over the expected life of the option.

The following table provides information related to stock option activity:

	Number of Shares Underlying   Options	Weighted Average Exercise Price Per Share		Weighted   Average Contract Life in Years	Aggregate   Intrinsic Value(a)
	(in thousands)
Outstanding as of December 31, 2020	20	$	1,429.11	4.27	$	—
Granted	—	$	—
Exercised	—	$	—		$	—
Expired	(1)	$	741.86
Forfeited/canceled	(19)	$	1,452.40
Outstanding as of February 9, 2021	—	$	—	—	$	—
Exercisable as of February 9, 2021	—	$	—	—	$	—

___________________________________________

(a)The intrinsic value of a stock option is the amount by which the current market value or the market value upon exercise of the underlying stock exceeds the exercise price of the option.

Restricted Stock Units, Stock Option, and PSU Compensation.

We recognized the following compensation costs, net of actual forfeitures, related to RSUs, stock options, and PSUs for the periods presented:

	Successor								Predecessor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
General and administrative expenses	$	5	$	2	$	14	$	4	$	3
Natural gas and oil properties	1		1		3		2		—
Production expense	1		1		2		1		—
Total RSU, stock option and PSU compensation	$	7	$	4	$	19	$	7	$	3

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Derivative and Hedging Activities

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative and Hedging Activities

13. Derivative and Hedging Activities

We use derivative instruments to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility. These commodity derivative financial instruments include financial price swaps, basis protection swaps, collars, three-way collars, options and swaptions. All of our natural gas and oil derivative instruments are net settled based on the difference between the fixed-price payment and the floating-price payment, resulting in a net amount due to or from the counterparty. We do not intend to hold or issue derivative financial instruments for speculative trading purposes and have elected not to designate any of our derivative instruments for hedge accounting treatment.

The estimated fair values of our natural gas and oil derivative instrument assets (liabilities) as of September 30, 2022 and December 31, 2021 are provided below: 

	Successor
	September 30, 2022			December 31, 2021
	Notional Volume	Fair Value		Notional Volume	Fair Value
Natural gas (Bcf):
Fixed-price swaps	449	$	(1,413)	637	$	(675)
Collars	547	(664)		205	(82)
Three-way collars	10	(29)		—	—
Call options	18	(63)		18	(17)
Swaptions	7	(19)		—	—
Basis protection swaps	398	16		252	(11)
Total natural gas	1,429	(2,172)		1,112	(785)
Oil (MMBbls):
Fixed-price swaps	4	(136)		13	(356)
Collars	6	23		—	—
Basis protection swaps	10	(5)		9	(2)
Total oil	20	(118)		22	(358)
Total estimated fair value		$	(2,290)		$	(1,143)

Effect of Derivative Instruments – Condensed Consolidated Balance Sheets

The following table presents the fair value and location of each classification of derivative instrument included in the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 on a gross basis and after same-counterparty netting:

	Gross Fair Value(a)		Amounts Netted in the Consolidated Balance Sheets		Net Fair Value Presented in the Consolidated Balance Sheets
Successor
As of September 30, 2022
Commodity Contracts:
Short-term derivative asset	$	118	$	(114)	$	4
Long-term derivative asset	28		(28)		—
Short-term derivative liability	(1,989)		114		(1,875)
Long-term derivative liability	(447)		28		(419)
Total derivatives	$	(2,290)	$	—	$	(2,290)
As of December 31, 2021
Commodity Contracts:
Short-term derivative asset	$	56	$	(51)	$	5
Short-term derivative liability	(950)		51		(899)
Long-term derivative liability	(249)		—		(249)
Total derivatives	$	(1,143)	$	—	$	(1,143)

___________________________________________

(a)These financial assets (liabilities) are measured at fair value on a recurring basis utilizing significant other observable inputs; see further discussion on fair value measurements below.

Fair Value

The fair value of our derivatives is based on third-party pricing models, which utilize inputs that are either readily available in the public market, such as natural gas, oil and NGL forward curves and discount rates, or can be corroborated from active markets or broker quotes, and, as such, are classified as Level 2. These values are compared to the values given by our counterparties for reasonableness. Derivatives are also subject to the risk that either party to a contract will be unable to meet its obligations. We factor non-performance risk into the valuation of our derivatives using current published credit default swap rates. To date, this has not had a material impact on the values of our derivatives.

Credit Risk Considerations

Our derivative instruments expose us to our counterparties’ credit risk. To mitigate this risk, we enter into derivative contracts only with counterparties that are highly rated or deemed by us to have acceptable credit strength and deemed by management to be competent and competitive market-makers, and we attempt to limit our exposure to non-performance by any single counterparty. As of September 30, 2022, our natural gas and oil derivative instruments were spread among 13 counterparties.

Hedging Arrangements

Certain of our hedging arrangements are with counterparties that are also lenders (or affiliates of lenders) under our Exit Credit Facility. The contracts entered into with these counterparties are secured by the same collateral that secures the Exit Credit Facility. The counterparties’ obligations must be secured by cash or letters of credit to the extent that any mark-to-market amounts owed to us exceed defined thresholds. As of September 30, 2022, we did not have any cash or letters of credit posted as collateral for our commodity derivatives.

Effect of Derivative Instruments – Accumulated Other Comprehensive Income

A reconciliation of the changes in accumulated other comprehensive income in our condensed consolidated statements of stockholders’ equity related to our terminated cash flow hedges is presented below:

	Predecessor
	Period from January 1, 2021 through February 9, 2021
	Before Tax		After Tax
Balance, beginning of period	$	(12)	$	45
Losses reclassified to income(a)	3		3
Fresh start adjustments	9		9
Elimination of tax effects	—		(57)
Balance, end of period	$	—	$	—

___________________________________________

(a)These losses were included as a component of total natural gas and oil derivatives.

Our accumulated other comprehensive loss balance represented the net deferred loss associated with commodity derivative contracts that were previously designated as cash flow hedges for which the original contract months were yet to occur. The remaining deferred gain or loss amounts were to be recognized in earnings in the month for which the original contract months were to occur. In connection with our adoption of fresh start accounting we recorded a fair value adjustment to eliminate the accumulated other comprehensive income related to hedging settlements including the elimination of tax effects. See Note 3 for a discussion of fresh start accounting adjustments. We did not have any changes or items impacting other comprehensive income for the 2022 Successor Quarter, the 2022 Successor Period, the 2021 Successor Quarter or the 2021 Successor Period.

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Other Operating Expense (Income), Net

9 Months Ended

Sep. 30, 2022

Other Income and Expenses [Abstract]

Other Operating Expense (Income), Net

14. Other Operating Expense (Income), Net

During the 2022 Successor Period, we recognized approximately $40 million of costs related to our Marcellus Acquisition, which included integration costs, consulting fees, financial advisory fees, legal fees and change in control expense in accordance with Chief’s existing employment agreements.

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Basis of Presentation and Summary of Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of PresentationThe accompanying unaudited condensed consolidated financial statements of Chesapeake were prepared in accordance with GAAP and the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures have been condensed or omitted.

Segments

Segments

Operating segments are defined as components of an enterprise that engage in activities from which it may earn revenues and incur expenses for which separate operational financial information is available and is regularly evaluated by the chief operating decision maker for the purpose of allocating an enterprise’s resources and assessing its operating performance. We have concluded that we have only one reportable operating segment due to the similar nature of the exploration and production business across Chesapeake and its consolidated subsidiaries and the fact that our marketing activities are ancillary to our operations.

Restricted Cash

Restricted Cash

As of September 30, 2022, we had restricted cash of $56 million. Our restricted cash represents funds legally restricted for payment of certain convenience class unsecured claims following our emergence from bankruptcy, as well as for future payment of certain royalties.

New Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The purpose of ASU 2020-04 is to provide optional guidance to ease the potential effects on financial reporting of the market-wide migration away from Interbank Offered Rates such as LIBOR, which is expected to be phased out for most U.S. dollar settings on June 30, 2023, to alternative reference rates. ASU 2020-04 applies only to contracts, hedging relationships, debt arrangements and other transactions that reference a benchmark reference rate expected to be discontinued because of reference rate reform. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 and can be applied prospectively to contract modifications through December 31, 2022. The adoption of this guidance will not have a material impact on our condensed consolidated financial statements and related disclosures.

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Fresh Start Accounting (Tables)

9 Months Ended

Sep. 30, 2022

Reorganizations [Abstract]

Schedule of fresh start accounting adjustments

The following table reconciles the enterprise value to the implied fair value of the Successor’s equity as of the Effective Date:

	February 9, 2021
Enterprise Value	$	4,851
Plus: Cash and cash equivalents(a)	48
Less: Fair value of debt	(1,313)
Successor equity value	$	3,586

____________________________________________

(a)Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above.

The following table reconciles the enterprise value to the reorganization value as of the Effective Date:

	February 9, 2021
Enterprise Value	$	4,851
Plus: Cash and cash equivalents(a)	48
Plus: Current liabilities	1,582
Plus: Asset retirement obligations (non-current portion)	236
Plus: Other non-current liabilities	97
Reorganization value of Successor assets	$	6,814

____________________________________________

(a)Cash and cash equivalents includes $8 million that was initially classified as restricted cash as of the Effective Date but subsequently released from escrow and returned to the Successor. Restricted cash exclusive of the $8 million is not included in the table above.

The following condensed consolidated balance sheet is as of February 9, 2021. This condensed consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Effective Date. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets, liabilities and warrants.

	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
Assets
Current assets:
Cash and cash equivalents	$	243	$	(203)	(a)	$	—		$	40
Restricted cash	—		86		(b)	—			86
Accounts receivable, net	861		(18)		(c)	—			843
Short-term derivative assets	—		—			—			—
Other current assets	66		(5)		(d)	—			61
Total current assets	1,170		(140)			—			1,030
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties	25,794		—			(21,108)		(o)	4,686
Unproved properties	1,546		—			(1,063)		(o)	483
Other property and equipment	1,755		—			(1,256)		(o)	499
Total property and equipment	29,095		—			(23,427)		(o)	5,668
Less: accumulated depreciation, depletion and amortization	(23,877)		—			23,877		(o)	—
Property and equipment held for sale, net	9		—			(7)		(o)	2
Total property and equipment, net	5,227		—			443		(o)	5,670
Other long-term assets	198		—			(84)		(p)	114
Total assets	$	6,595	$	(140)		$	359		$	6,814

	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	391	$	24	(e)	$	—		$	415
Current maturities of long-term debt, net	1,929		(1,929)		(f)	—			—
Accrued interest	4		(4)		(g)	—			—
Short-term derivative liabilities	398		—			—			398
Other current liabilities	645		124		(h)	—			769
Total current liabilities	3,367		(1,785)			—			1,582
Long-term debt, net	—		1,261		(i)	52		(q)	1,313
Long-term derivative liabilities	90		—			—			90
Asset retirement obligations, net of current portion	139		—			97		(r)	236
Other long-term liabilities	5		2		(j)	—			7
Liabilities subject to compromise	9,574		(9,574)		(k)	—			—
Total liabilities	13,175		(10,096)			149			3,228
Contingencies and commitments (Note 7)
Stockholders’ equity (deficit):
Predecessor preferred stock	1,631		(1,631)		(l)	—			—
Predecessor common stock	—		—			—			—
Predecessor additional paid-in capital	16,940		(16,940)		(l)	—			—
Successor common stock	—		1		(m)	—			1
Successor additional paid-in-capital	—		3,585		(m)	—			3,585
Accumulated other comprehensive income	48		—			(48)		(s)	—
Accumulated deficit	(25,199)		24,941		(n)	258		(t)	—
Total stockholders’ equity (deficit)	(6,580)		9,956			210			3,586
Total liabilities and stockholders’ equity (deficit)	$	6,595	$	(140)		$	359		$	6,814

Reorganization Adjustments

(a)The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan:

Sources:
Proceeds from issuance of the Notes	$	1,000
Proceeds from Rights Offering	600
Proceeds from refunds of interest deposit for the Notes	5
Total sources of cash	$	1,605
Uses:
Payment of roll-up of DIP Facility balance	$	(1,179)
Payment of Exit Credit Facility - Tranche A Loan	(479)
Transfers to restricted cash for professional fee reserve	(76)
Transfers to restricted cash for convenience claim distribution reserve	(10)
Payment of professional fees	(31)
Payment of DIP Facility interest and fees	(12)
Payment of FLLO alternative transaction fee	(12)
Payment of the Notes fees funded out of escrow	(8)
Payment of RBL interest and fees	(1)
Total uses of cash	$	(1,808)
Net cash used	$	(203)

(b)Represents the transfer of funds to a restricted cash account for purposes of funding the professional fee reserve and the convenience claim distribution reserve.

(c)Reflects the removal of an insurance receivable associated with a discharged legal liability.

(d)Reflects the collection of an interest deposit for the senior unsecured notes.

(e)Changes in accounts payable include the following:

Accrual of professional service provider success fees	$	38
Accrual of convenience claim distribution reserve	10
Accrual of professional service provider fees	5
Reinstatement of accounts payable from liabilities subject to compromise	2
Payment of professional fees	(31)
Net impact to accounts payable	$	24

(f)Reflects payment of the pre-petition credit facility for $1.179 billion and transfer of the Tranche A and Tranche B Loans to long-term debt for $750 million.

(g)Reflect payments of accrued interest and fees on the DIP Facility.

(h)Changes in other current liabilities include the following:

Reinstatement of other current liabilities from liabilities subject to compromise	$	191
Accrual of the Notes fees	2
Settlement of Put Option Premium through issuance of Successor Common Stock	(60)
Payment of DIP Facility fees	(9)
Net impact to other current liabilities	$	124

(i)Changes in long-term debt include the following:

Issuance of the Notes	$	1,000
Issuance of Tranche A and Tranche B Loans	750
Payments on Tranche A Loans	(479)
Debt issuance costs for the Notes	(10)
Net impact to long-term debt, net	$	1,261

(j) Reflects reinstatement of a long-term lease liability.

(k) On the Effective Date, liabilities subject to compromise were settled in accordance with the Plan as follows:

Liabilities subject to compromise pre-emergence	$	9,574
To be reinstated on the Effective Date:
Accounts payable	$	(2)
Other current liabilities	(191)
Other long-term liabilities	(2)
Total liabilities reinstated	$	(195)
Consideration provided to settle amounts per the Plan or Reorganization:
Issuance of Successor common stock associated with the Rights Offering and Backstop Commitment and settlement of the Put Option Premium	$	(2,311)
Proceeds from issuance of Successor common stock associated with the Rights Offering and Backstop Commitment	600
Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment	(783)
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment	(124)
Issuance of Successor common stock to unsecured note holders	(45)
Issuance of Successor common stock to general unsecured claims	(8)
Fair value of Class A Warrants	(93)
Fair value of Class B Warrants	(94)
Fair value of Class C Warrants	(68)
Proceeds to holders of general unsecured claims	(10)
Total consideration provided to settle amounts per the Plan	$	(2,936)
Gain on settlement of liabilities subject to compromise	$	6,443

(l)Pursuant to the Plan, as of the Effective Date, all equity interests in Predecessor, including Predecessor’s common and preferred stock, were canceled without any distribution.

(m)Reflects the Successor equity including the issuance of 97,907,081 shares of New Common Stock, 11,111,111 shares of Class A Warrants, 12,345,679 shares of Class B Warrants and 9,768,527 shares of Class C Warrants pursuant to the Plan.

Issuance of Successor equity associated with the Rights Offering and Backstop Commitment	$	2,371
Issuance of Successor equity to holders of the FLLO Term Loan, incremental to the Rights Offering and Backstop Commitment	783
Issuance of Successor equity to holders of the Second Lien Notes, incremental to the Rights Offering and Backstop Commitment	124
Issuance of Successor equity to holders of the unsecured senior notes	45
Issuance of Successor equity to holders of allowed general unsecured claims	8
Fair value of Class A warrants	93
Fair value of Class B warrants	94
Fair value of Class C warrants	68
Total change in Successor common stock and additional paid-in capital	3,586
Less: par value of Successor common stock	(1)
Change in Successor additional paid-in capital	$	3,585

(n) Reflects the cumulative net impact of the effects on accumulated deficit as follows:

    

Gain on settlement of liabilities subject to compromise	$	6,443
Accrual of professional service provider success fees	(38)
Accrual of professional service provider fees	(5)
Surrender of other receivable	(18)
Payment of FLLO alternative transaction fee	(12)
Total reorganization items, net	6,370
Cancellation of predecessor equity	18,571
Net impact on accumulated deficit	$	24,941

Fresh Start Adjustments

(o)Reflects fair value adjustments to our (i) proved natural gas and oil properties, (ii) unproved properties, (iii) other property and equipment and (iv) property and equipment held for sale, and the elimination of accumulated depletion, depreciation and amortization.

(p)Reflects the fair value adjustment to record historical contracts at their fair values.

(q)Reflects the fair value adjustments to the 2026 Notes and 2029 Notes for $22 million and $30 million, respectively.

(r)Reflects the adjustment to our asset retirement obligations using assumptions as of the Effective Date, including an inflation factor of 2% and an average credit-adjusted risk-free rate of 5.18%.

(s)Reflects the fair value adjustment to eliminate the accumulated other comprehensive income of $9 million related to hedging settlements offset by the elimination of $57 million of income tax effects which has resulted in the recording of an income tax benefit of $57 million. See Note 10 for a discussion of income taxes.

(t)Reflects the net cumulative impact of the fresh start adjustments on accumulated deficit as follows:

Fresh start adjustments to property and equipment	$	443
Fresh start adjustments to other long-term assets	(84)
Fresh start adjustments to long-term debt	(52)
Fresh start adjustments to long-term asset retirement obligations	(97)
Fresh start adjustments to accumulated other comprehensive income	(9)
Total fresh start adjustments impacting reorganizations items, net	201
Income tax effects on accumulated other comprehensive income	57
Net impact to accumulated deficit	$	258

Schedule of reorganization items

The following table summarizes the components in reorganization items, net included in our unaudited condensed consolidated statements of operations:

	Predecessor
	Period from January 1, 2021 through February 9, 2021
Gains on the settlement of liabilities subject to compromise	$	6,443
Accrual for allowed claims	(1,002)
Gain on fresh start adjustments	201
Gain from release of commitment liabilities	55
Professional service provider fees and other	(60)
Success fees for professional service providers	(38)
Surrender of other receivable	(18)
FLLO alternative transaction fee	(12)
Total reorganization items, net	$	5,569

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Natural Gas and Oil Property Transactions (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of preliminary allocation of the total purchase price

We have accounted for the Marcellus Acquisition as a business combination, using the acquisition method. The following table represents the preliminary allocation of the total purchase price 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. During the 2022 Successor Quarter, we recognized measurement period adjustments of $39 million to both restricted cash and current liabilities.

	Preliminary Purchase Price Allocation
Consideration:
Cash	$	2,000
Fair value of Chesapeake’s common stock issued in the merger	764
Working capital adjustments	6
Total consideration	$	2,770
Fair Value of Liabilities Assumed:
Current liabilities	$	459
Other long-term liabilities	129
Amounts attributable to liabilities assumed	$	588
Fair Value of Assets Acquired:
Cash, cash equivalents and restricted cash	$	39
Other current assets	218
Proved natural gas and oil properties	2,309
Unproved properties	788
Other property and equipment	1
Other long-term assets	3
Amounts attributable to assets acquired	$	3,358
Total identifiable net assets	$	2,770

The following table represents the allocation of the total purchase price of Vine to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date. We finalized the acquisition accounting for this transaction as of September 30, 2022, which resulted in measurement period adjustments of $19 million to both deferred tax liabilities and unproved properties. See Note 10 for additional information regarding the change to deferred tax liabilities.

	Purchase Price Allocation
Consideration:
Cash	$	253
Fair value of Chesapeake’s common stock issued in the merger	1,231
Restricted stock unit replacement awards	6
Total consideration	$	1,490
Fair Value of Liabilities Assumed:
Current liabilities	$	765
Long-term debt	1,021
Deferred tax liabilities	30
Other long-term liabilities	272
Amounts attributable to liabilities assumed	$	2,088
Fair Value of Assets Acquired:
Cash and cash equivalents	$	59
Other current assets	206
Proved natural gas and oil properties	2,181
Unproved properties	1,099
Other property and equipment	1
Other long-term assets	32
Amounts attributable to assets acquired	$	3,578
Total identifiable net assets	$	1,490

Schedule of pro forma financial information

The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including the estimated tax impact of the pro forma adjustments.

	Successor
	Nine Months Ended September 30, 2022
Revenues	$	7,617
Net income available to common stockholders	$	1,252
Earnings per common share:
Basic	$	10.00
Diluted	$	8.50

	Successor
	Three Months Ended September 30, 2021		Period from February 10, 2021 through September 30, 2021
Revenues	$	510	$	2,254
Net loss available to common stockholders	$	(1,159)	$	(1,732)
Loss per common share:
Basic	$	(9.15)	$	(13.70)
Diluted	$	(9.15)	$	(13.70)

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of earnings per share, basic and diluted

The reconciliations between basic and diluted earnings (loss) per share are as follows:

	Successor								Predecessor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
Numerator
Net income (loss), basic and diluted	$	883	$	(345)	$	1,356	$	(489)	$	5,383
Denominator (in thousands)
Weighted average common shares outstanding, basic	121,150		98,221		122,924		98,040		9,781
Effect of potentially dilutive securities
Preferred stock	—		—		—		—		290
Warrants	22,794		—		21,692		—		—
Restricted stock units	396		—		368		—		—
Performance share units	50		—		47		—		—
Weighted average common shares outstanding, diluted	144,390		98,221		145,031		98,040		10,071
Earnings (loss) per common share:
Basic	$	7.29	$	(3.51)	$	11.03	$	(4.99)	$	550.35
Diluted	$	6.12	$	(3.51)	$	9.35	$	(4.99)	$	534.51

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Debt (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of long-term debt

Our long-term debt consisted of the following as of September 30, 2022 and December 31, 2021:

	Successor
	September 30, 2022				December 31, 2021
	Carrying Amount		Fair Value(a)		Carrying Amount		Fair Value(a)
Exit Credit Facility - Tranche A Loans	$	450	$	450	$	—	$	—
Exit Credit Facility - Tranche B Loans	221		221		221		221
5.50% senior notes due 2026	500		479		500		526
5.875% senior notes due 2029	500		462		500		535
6.75% senior notes due 2029	950		906		950		1,031
Premiums on senior notes	104		—		116		—
Debt issuance costs	(8)		—		(9)		—
Total long-term debt, net	$	2,717	$	2,518	$	2,278	$	2,313

____________________________________________

(a)The carrying value of borrowings under our Exit Credit Facility approximate fair value as the interest rates are based on prevailing market rates; therefore, they are a Level 1 fair value measurement. For all other debt, a market approach, based upon quotes from major financial institutions, which are Level 2 inputs, is used to measure the fair value.

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Contingencies and Commitments (Tables)

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Schedule of contractual obligation

The aggregate undiscounted commitments under our gathering, processing and transportation agreements, excluding any reimbursement from working interest and royalty interest owners, credits for third-party volumes or future costs under cost-of-service agreements, are presented below:

	Successor
	September 30, 2022
Remainder of 2022	$	151
2023	546
2024	514
2025	444
2026	403
2027-2036	2,094
Total	$	4,152

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Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2022

Other Liabilities Disclosure [Abstract]

Other current liabilities

Other current liabilities as of September 30, 2022 and December 31, 2021 are detailed below:

	Successor
	September 30, 2022		December 31, 2021
Revenues and royalties due others	$	938	$	617
Accrued drilling and production costs	324		142
Accrued hedging costs	114		113
Accrued compensation and benefits	74		91
Other accrued taxes	156		86
Operating leases	36		29
Joint interest prepayments received	23		14
Other	119		110
Total other current liabilities	$	1,784	$	1,202

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Revenue (Tables)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of revenue

The following table shows revenue disaggregated by operating area and product type:

	Successor
	Three Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
Marcellus	$	1,324	$	—	$	—	$	1,324
Haynesville	1,093		—		—		1,093
Eagle Ford	79		437		54		570
Natural gas, oil and NGL revenue	$	2,496	$	437	$	54	$	2,987
Marketing revenue	$	827	$	328	$	51	$	1,206

	Successor
	Three Months Ended September 30, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	383	$	—	$	—	$	383
Haynesville	207		—		—		207
Eagle Ford	53		379		55		487
Powder River Basin	21		58		14		93
Natural gas, oil and NGL revenue	$	664	$	437	$	69	$	1,170
Marketing revenue	$	240	$	326	$	61	$	627

	Successor
	Nine Months Ended September 30, 2022
	Natural Gas		Oil		NGL		Total
Marcellus	$	3,085	$	—	$	—	$	3,085
Haynesville	2,733		—		—		2,733
Eagle Ford	211		1,390		173		1,774
Powder River Basin	20		66		13		99
Natural gas, oil and NGL revenue	$	6,049	$	1,456	$	186	$	7,691
Marketing revenue	$	1,872	$	1,231	$	193	$	3,296

	Successor
	Period from February 10, 2021 through September 30, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	772	$	—	$	—	$	772
Haynesville	401		—		—		401
Eagle Ford	127		971		119		1,217
Powder River Basin	51		144		30		225
Natural gas, oil and NGL revenue	$	1,351	$	1,115	$	149	$	2,615
Marketing revenue	$	483	$	828	$	132	$	1,443

	Predecessor
	Period from January 1, 2021 through February 9, 2021
	Natural Gas		Oil		NGL		Total
Marcellus	$	119	$	—	$	—	$	119
Haynesville	53		—		—		53
Eagle Ford	17		159		17		193
Powder River Basin	7		20		6		33
Natural gas, oil and NGL revenue	$	196	$	179	$	23	$	398
Marketing revenue	$	78	$	141	$	20	$	239

Schedule of accounts receivable

Accounts receivable as of September 30, 2022 and December 31, 2021 are detailed below:

	Successor
	September 30, 2022		December 31, 2021
Natural gas, oil and NGL sales	$	1,477	$	922
Joint interest	268		158
Other	14		38
Allowance for doubtful accounts	(2)		(3)
Total accounts receivable, net	$	1,757	$	1,115

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Equity (Tables)

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Schedule of dividends

In May 2021, we initiated a new annual dividend on our shares of common stock, expected to be paid quarterly. The following table summarizes our dividend payments in the 2022 Successor Period.

Payment Date	Stockholders of Record Date	Dividend Payment		Rate Per Share
March 22, 2022	March 7, 2022	$	210	$	1.7675
June 2, 2022	May 19, 2022	$	298	$	2.34
September 1, 2022	August 17, 2022	$	280	$	2.32

Schedule of warrants

Warrants

	Class A Warrants	Class B Warrants	Class C Warrants(a)
Outstanding as of December 31, 2021	10,856,852	12,313,273	11,388,371
Converted into New Common Stock(b)	(1,036,606)	(22,392)	(13,845)
Outstanding as of March 31, 2022	9,820,246	12,290,881	11,374,526
Converted into New Common Stock(b)	(68,300)	(111)	(161,849)
Issued for General Unsecured Claims	—	—	69,720
Outstanding as of June 30, 2022	9,751,946	12,290,770	11,282,397
Converted into New Common Stock(b)	(500,450)	(31)	(97,403)
Outstanding as of September 30, 2022	9,251,496	12,290,739	11,184,994

_________________________________________

(a)As of September 30, 2022, we had 2,248,726 of reserved Class C Warrants.

(b)During the 2022 Successor Period, we issued 1,329,292 shares of New Common Stock as a result of Warrant exercises.

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Summary of the changes in unvested restricted stock

A summary of the changes in unvested RSUs is presented below:

	Unvested Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2021	775	$	46.77
Granted	520	$	76.38
Vested	(293)	$	47.78
Forfeited	(103)	$	53.63
Unvested as of September 30, 2022	899	$	62.78

A summary of the changes in unvested RSUs is presented below:

	Unvested Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2020	1	$	616.57
Granted	—	$	—
Vested	—	$	—
Forfeited/canceled	(1)	$	611.47
Unvested as of February 9, 2021	—	$	—

Schedule valuation assumptions

The following table presents the assumptions used in the valuation of the PSUs granted in 2022.

Assumption	TSR, rTSR
Risk-free interest rate	2.00	%
Volatility	70.2	%

Summary of the changes in unvested performance share

A summary of the changes in unvested PSUs is presented below:

	Unvested Performance Share Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2021	183	$	66.12
Granted	133	$	109.65
Vested	—	$	—
Forfeited	(35)	$	59.09
Unvested as of September 30, 2022	281	$	87.56

Schedule of stock option activity

The following table provides information related to stock option activity:

	Number of Shares Underlying   Options	Weighted Average Exercise Price Per Share		Weighted   Average Contract Life in Years	Aggregate   Intrinsic Value(a)
	(in thousands)
Outstanding as of December 31, 2020	20	$	1,429.11	4.27	$	—
Granted	—	$	—
Exercised	—	$	—		$	—
Expired	(1)	$	741.86
Forfeited/canceled	(19)	$	1,452.40
Outstanding as of February 9, 2021	—	$	—	—	$	—
Exercisable as of February 9, 2021	—	$	—	—	$	—

___________________________________________

(a)The intrinsic value of a stock option is the amount by which the current market value or the market value upon exercise of the underlying stock exceeds the exercise price of the option.

Share-Based Payment Arrangement, Cost by Plan

We recognized the following compensation costs, net of actual forfeitures, related to RSUs, stock options, and PSUs for the periods presented:

	Successor								Predecessor
	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Period from February 10, 2021 through September 30, 2021		Period from January 1, 2021 through February 9, 2021
General and administrative expenses	$	5	$	2	$	14	$	4	$	3
Natural gas and oil properties	1		1		3		2		—
Production expense	1		1		2		1		—
Total RSU, stock option and PSU compensation	$	7	$	4	$	19	$	7	$	3

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Derivative and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of estimated fair values of oil, natural gas and NGL derivative instruments

The estimated fair values of our natural gas and oil derivative instrument assets (liabilities) as of September 30, 2022 and December 31, 2021 are provided below: 

	Successor
	September 30, 2022			December 31, 2021
	Notional Volume	Fair Value		Notional Volume	Fair Value
Natural gas (Bcf):
Fixed-price swaps	449	$	(1,413)	637	$	(675)
Collars	547	(664)		205	(82)
Three-way collars	10	(29)		—	—
Call options	18	(63)		18	(17)
Swaptions	7	(19)		—	—
Basis protection swaps	398	16		252	(11)
Total natural gas	1,429	(2,172)		1,112	(785)
Oil (MMBbls):
Fixed-price swaps	4	(136)		13	(356)
Collars	6	23		—	—
Basis protection swaps	10	(5)		9	(2)
Total oil	20	(118)		22	(358)
Total estimated fair value		$	(2,290)		$	(1,143)

Schedule of effect of derivative instruments, condensed consolidated balance sheets

The following table presents the fair value and location of each classification of derivative instrument included in the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 on a gross basis and after same-counterparty netting:

	Gross Fair Value(a)		Amounts Netted in the Consolidated Balance Sheets		Net Fair Value Presented in the Consolidated Balance Sheets
Successor
As of September 30, 2022
Commodity Contracts:
Short-term derivative asset	$	118	$	(114)	$	4
Long-term derivative asset	28		(28)		—
Short-term derivative liability	(1,989)		114		(1,875)
Long-term derivative liability	(447)		28		(419)
Total derivatives	$	(2,290)	$	—	$	(2,290)
As of December 31, 2021
Commodity Contracts:
Short-term derivative asset	$	56	$	(51)	$	5
Short-term derivative liability	(950)		51		(899)
Long-term derivative liability	(249)		—		(249)
Total derivatives	$	(1,143)	$	—	$	(1,143)

___________________________________________

(a)These financial assets (liabilities) are measured at fair value on a recurring basis utilizing significant other observable inputs; see further discussion on fair value measurements below.

Schedule of effect of derivative instruments, accumulated other comprehensive income (loss)

A reconciliation of the changes in accumulated other comprehensive income in our condensed consolidated statements of stockholders’ equity related to our terminated cash flow hedges is presented below:

	Predecessor
	Period from January 1, 2021 through February 9, 2021
	Before Tax		After Tax
Balance, beginning of period	$	(12)	$	45
Losses reclassified to income(a)	3		3
Fresh start adjustments	9		9
Elimination of tax effects	—		(57)
Balance, end of period	$	—	$	—

___________________________________________

(a)These losses were included as a component of total natural gas and oil derivatives.

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Basis of Presentation and Summary of Significant Accounting Policies (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($) segment	Dec. 31, 2021 USD ($)
Accounting Policies [Abstract]
Number of reportable segments | segment	1
Restricted cash | $	$ 56	$ 9

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Chapter 11 Emergence (Details) $ in Millions	Feb. 09, 2021 USD ($) boardMember shares	Sep. 30, 2022 shares
Directors
Debt Instrument [Line Items]
Number of individuals elected in Board of Directors (in individuals) | boardMember	7
Non-Employee Directors
Debt Instrument [Line Items]
Number of individuals elected in Board of Directors (in individuals) | boardMember	5
2021 Long Term Incentive Plan
Debt Instrument [Line Items]
Common stock, reserved for future issuance (in shares)	6,800,000
Class C Warrants
Debt Instrument [Line Items]
Common stock, reserved for future issuance (in shares)		2,248,726
New Common Stock
Debt Instrument [Line Items]
Stock issued during period, new issues (in shares)	97,907,081
Common stock, reserved for future issuance (in shares)	2,092,918
New Common Stock | Rights Offering
Debt Instrument [Line Items]
Stock issued during period, new issues (in shares)	62,927,320
New Common Stock | Backstop Parties, Put Option Premium
Debt Instrument [Line Items]
Stock issued during period, new issues (in shares)	6,337,031
New Common Stock | Backstop Parties, Obligations
Debt Instrument [Line Items]
Stock issued during period, new issues (in shares)	442,991
New Common Stock | Class A Warrants
Debt Instrument [Line Items]
Warrants issued (in shares)	11,111,111
New Common Stock | Class B Warrants
Debt Instrument [Line Items]
Warrants issued (in shares)	12,345,679
New Common Stock | Class C Warrants
Debt Instrument [Line Items]
Common stock, reserved for future issuance (in shares)	3,948,893
Warrants issued (in shares)	9,768,527
New Common Stock | FLLO Term Loan Facility
Debt Instrument [Line Items]
Stock issued during period, new issues (in shares)	23,022,420
New Common Stock | Second Lien Notes
Debt Instrument [Line Items]
Stock issued during period, new issues (in shares)	3,635,118
New Common Stock | Second Lien Notes | Class A Warrants
Debt Instrument [Line Items]
Common stock, reserved for future issuance (in shares)	11,111,111
New Common Stock | Second Lien Notes | Class B Warrants
Debt Instrument [Line Items]
Common stock, reserved for future issuance (in shares)	12,345,679
New Common Stock | Second Lien Notes | Class C Warrants
Debt Instrument [Line Items]
Common stock, reserved for future issuance (in shares)	6,858,710
Warrants issued (in shares)	6,858,710
New Common Stock | Allowed Unsecured Notes
Debt Instrument [Line Items]
Stock issued during period, new issues (in shares)	1,311,089
New Common Stock | Allowed Unsecured Notes | Class C Warrants
Debt Instrument [Line Items]
Common stock, reserved for future issuance (in shares)	2,473,757
Warrants issued (in shares)	2,473,757
New Common Stock | Allowed General Unsecured Claim
Debt Instrument [Line Items]
Stock issued during period, new issues (in shares)	231,112
Pro rata share received by holder | $	$ 10
Percent of convenience claim	5.00%
New Common Stock | Allowed General Unsecured Claim | Class C Warrants
Debt Instrument [Line Items]
Common stock, reserved for future issuance (in shares)	436,060
Warrants issued (in shares)	436,060
New Common Stock | Upon Exercise of Warrants
Debt Instrument [Line Items]
Common stock, reserved for future issuance (in shares)	37,174,210

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Fresh Start Accounting - Additional Information (Details) - USD ($) $ in Millions	Feb. 09, 2021	Sep. 30, 2022	Dec. 31, 2021
Reorganization, Chapter 11 [Line Items]
Assets	$ 6,814	$ 14,089	$ 11,009
Liabilities	3,228	$ 7,742	$ 5,338
Enterprise value	4,851
Long-term debt, net	1,313
DIP Facility
Reorganization, Chapter 11 [Line Items]
Payment of roll-up of DIP Facility balance	1,179
Payment of roll-up of DIP Facility balance	1,179
Predecessor
Reorganization, Chapter 11 [Line Items]
Assets	6,595
Liabilities	13,175
Long-term debt, net	0
Fresh Start Adjustments
Reorganization, Chapter 11 [Line Items]
Assets	359
Liabilities	149
Long-term debt, net	52
Minimum | Fresh Start Adjustments
Reorganization, Chapter 11 [Line Items]
Enterprise value	$ 3,500
Maximum
Reorganization, Chapter 11 [Line Items]
Percent of voting shares received by holders	50.00%
Maximum | Fresh Start Adjustments
Reorganization, Chapter 11 [Line Items]
Enterprise value	$ 4,900

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Fresh Start Accounting - Successor’s Equity (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Feb. 09, 2021
Reorganization, Chapter 11 [Line Items]
Enterprise Value				$ 4,851
Plus: Cash and cash equivalents	$ 74	$ 905	$ 849	40
Less: Fair value of debt				(1,313)
Successor equity value	$ 6,347	$ 5,671		3,586
Restricted cash				86
Fresh Start Adjustments
Reorganization, Chapter 11 [Line Items]
Plus: Cash and cash equivalents				48
Less: Fair value of debt				(52)
Successor equity value				210
Restricted cash				$ 8

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Fresh Start Accounting - Enterprise Value Reconciliation (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Feb. 09, 2021
Reorganization, Chapter 11 [Line Items]
Enterprise Value				$ 4,851
Plus: Cash and cash equivalents	$ 74	$ 905	$ 849	40
Plus: Current liabilities	4,238	2,447		1,582
Plus: Asset retirement obligations (non-current portion)	350	349		236
Plus: Other non-current liabilities				7
Assets	$ 14,089	$ 11,009		6,814
Restricted cash				86
Fresh Start Adjustments
Reorganization, Chapter 11 [Line Items]
Plus: Cash and cash equivalents				48
Plus: Current liabilities				0
Plus: Asset retirement obligations (non-current portion)				97
Plus: Other non-current liabilities				97
Assets				359
Restricted cash				$ 8

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Fresh Start Accounting - Debt and Warrants (Details) - USD ($)	Sep. 30, 2022	Feb. 09, 2021	Feb. 02, 2021
Debt Instrument [Line Items]
Implied stock price (in dollars per share)		$ 20.52
Expected volatility rate		58.00%
Expected dividend yield rate		0.00%
Long-term debt, net		$ 1,313,000,000
Class A Warrants
Debt Instrument [Line Items]
Warrant, exercise price (in dollars per share)	$ 25.10	$ 27.63
Class B Warrants
Debt Instrument [Line Items]
Warrant, exercise price (in dollars per share)	29.18	32.13
Class C Warrants
Debt Instrument [Line Items]
Warrant, exercise price (in dollars per share)	$ 32.86	$ 36.18
Senior Notes | 5.50% senior notes due 2026
Debt Instrument [Line Items]
Debt instrument, principal amount		$ 500,000,000	$ 500,000,000
Interest rate, stated percentage	5.50%	5.50%
Senior Notes | 5.875% senior notes due 2029
Debt Instrument [Line Items]
Debt instrument, principal amount		$ 500,000,000	$ 500,000,000
Interest rate, stated percentage	5.875%	5.875%
Secured Debt | Debtor-in-Possession Credit Agreement
Debt Instrument [Line Items]
Long-term debt, net		$ 750,000,000

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Fresh Start Accounting - Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Feb. 09, 2021
Current assets:
Cash and cash equivalents	$ 74	$ 905	$ 849	$ 40
Restricted cash				86
Accounts receivable, net				843
Short-term derivative assets	4	5		0
Other current assets				61
Total current assets	2,059	2,103		1,030
Property and equipment:
Proved natural gas and oil properties	11,437	7,682		4,686
Unproved properties	2,192	1,530		483
Other property and equipment	506	495		499
Total property and equipment	14,135	9,707		5,668
Less: accumulated depreciation, depletion and amortization	(2,182)	(908)		0
Property and equipment held for sale, net	1	3		2
Total property and equipment, net	11,954	8,802		5,670
Other long-term assets	76	104		114
Total assets	14,089	11,009		6,814
Current liabilities:
Accounts payable	539	308		415
Current maturities of long-term debt, net				0
Accrued interest	40	38		0
Short-term derivative liabilities	1,875	899		398
Other current liabilities	1,784	1,202		769
Total current liabilities	4,238	2,447		1,582
Long-term debt, net				1,313
Long-term derivative liabilities	419	249		90
Asset retirement obligations, net of current portion	350	349		236
Other long-term liabilities				7
Liabilities subject to compromise				0
Total liabilities	7,742	5,338		3,228
Contingencies and commitments (Note 7)
Stockholders’ equity (deficit):
Predecessor preferred stock				0
Successor additional paid-in capital	5,627	4,845
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,334,663 and 117,917,349 shares issued	1	1		1
Successor additional paid-in-capital				3,585
Accumulated other comprehensive income				0
Retained earnings	719	825		0
Total stockholders' equity	6,347	5,671		3,586
Total liabilities and stockholders' equity	$ 14,089	$ 11,009		6,814
Predecessor
Current assets:
Cash and cash equivalents				243
Restricted cash				0
Accounts receivable, net				861
Short-term derivative assets				0
Other current assets				66
Total current assets				1,170
Property and equipment:
Proved natural gas and oil properties				25,794
Unproved properties				1,546
Other property and equipment				1,755
Total property and equipment				29,095
Less: accumulated depreciation, depletion and amortization				(23,877)
Property and equipment held for sale, net				9
Total property and equipment, net				5,227
Other long-term assets				198
Total assets				6,595
Current liabilities:
Accounts payable				391
Current maturities of long-term debt, net				1,929
Accrued interest				4
Short-term derivative liabilities				398
Other current liabilities				645
Total current liabilities				3,367
Long-term debt, net				0
Long-term derivative liabilities				90
Asset retirement obligations, net of current portion				139
Other long-term liabilities				5
Liabilities subject to compromise				9,574
Total liabilities				13,175
Contingencies and commitments (Note 7)
Stockholders’ equity (deficit):
Predecessor preferred stock				1,631
Successor additional paid-in capital				16,940
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,334,663 and 117,917,349 shares issued				0
Successor additional paid-in-capital				0
Accumulated other comprehensive income				48
Retained earnings				(25,199)
Total stockholders' equity				(6,580)
Total liabilities and stockholders' equity				6,595
Reorganization Adjustments
Current assets:
Cash and cash equivalents				(203)
Restricted cash				86
Accounts receivable, net				(18)
Short-term derivative assets				0
Other current assets				(5)
Total current assets				(140)
Property and equipment:
Proved natural gas and oil properties				0
Unproved properties				0
Other property and equipment				0
Total property and equipment				0
Less: accumulated depreciation, depletion and amortization				0
Property and equipment held for sale, net				0
Total property and equipment, net				0
Other long-term assets				0
Total assets				(140)
Current liabilities:
Accounts payable				24
Current maturities of long-term debt, net				(1,929)
Accrued interest				(4)
Short-term derivative liabilities				0
Other current liabilities				124
Total current liabilities				(1,785)
Long-term debt, net				1,261
Long-term derivative liabilities				0
Asset retirement obligations, net of current portion				0
Other long-term liabilities				2
Liabilities subject to compromise				(9,574)
Total liabilities				(10,096)
Contingencies and commitments (Note 7)
Stockholders’ equity (deficit):
Predecessor preferred stock				(1,631)
Successor additional paid-in capital				(16,940)
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,334,663 and 117,917,349 shares issued				1
Successor additional paid-in-capital				3,585
Accumulated other comprehensive income				0
Retained earnings				24,941
Total stockholders' equity				9,956
Total liabilities and stockholders' equity				(140)
Fresh Start Adjustments
Current assets:
Cash and cash equivalents				48
Restricted cash				8
Accounts receivable, net				0
Short-term derivative assets				0
Other current assets				0
Total current assets				0
Property and equipment:
Proved natural gas and oil properties				(21,108)
Unproved properties				(1,063)
Other property and equipment				(1,256)
Total property and equipment				(23,427)
Less: accumulated depreciation, depletion and amortization				23,877
Property and equipment held for sale, net				(7)
Total property and equipment, net				443
Other long-term assets				(84)
Total assets				359
Current liabilities:
Accounts payable				0
Current maturities of long-term debt, net				0
Accrued interest				0
Short-term derivative liabilities				0
Other current liabilities				0
Total current liabilities				0
Long-term debt, net				52
Long-term derivative liabilities				0
Asset retirement obligations, net of current portion				97
Other long-term liabilities				97
Liabilities subject to compromise				0
Total liabilities				149
Contingencies and commitments (Note 7)
Stockholders’ equity (deficit):
Predecessor preferred stock				0
Successor additional paid-in capital				0
Successor common stock, $0.01 par value, 450,000,000 shares authorized: 121,334,663 and 117,917,349 shares issued				0
Successor additional paid-in-capital				0
Accumulated other comprehensive income				(48)
Retained earnings				258
Total stockholders' equity				210
Total liabilities and stockholders' equity				$ 359

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Fresh Start Accounting - Sources and Uses of Cash (Details) - USD ($) $ in Millions		1 Months Ended	8 Months Ended	9 Months Ended
	Feb. 09, 2021	Feb. 09, 2021	Sep. 30, 2021	Sep. 30, 2022
Sources:
Proceeds from issuance of the Notes		$ 1,000	$ 0	$ 0
Reorganization Adjustments
Sources:
Proceeds from issuance of the Notes	$ 1,000
Proceeds from Rights Offering	600
Proceeds from refunds of interest deposit for the Notes	5
Total sources of cash	1,605
Uses:
Payment of roll-up of DIP Facility balance	(1,179)
Payment of Exit Credit Facility - Tranche A Loan	(479)
Transfers to restricted cash for professional fee reserve	(76)
Transfers to restricted cash for convenience claim distribution reserve	(10)
Payment of professional fees	(31)
Payment of DIP Facility interest and fees	(12)
Payment of FLLO alternative transaction fee	(12)
Payment of the Notes fees funded out of escrow	(8)
Payment of RBL interest and fees	(1)
Total uses of cash	(1,808)
Net cash used	$ (203)

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Fresh Start Accounting - Changes in Accounts Payable (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Feb. 09, 2021
Reorganization, Chapter 11 [Line Items]
Net impact to accounts payable	$ 539	$ 308	$ 415
Reorganization Adjustments
Reorganization, Chapter 11 [Line Items]
Accrual of professional service provider success fees			38
Accrual of convenience claim distribution reserve			10
Accrual of professional service provider fees			5
Reinstatement of accounts payable from liabilities subject to compromise			2
Payment of professional fees			(31)
Net impact to accounts payable			$ 24

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Fresh Start Accounting - Changes in Other Current Liabilities (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Feb. 09, 2021
Reorganization, Chapter 11 [Line Items]
Total other current liabilities	$ 1,784	$ 1,202	$ 769
Reorganization Adjustments
Reorganization, Chapter 11 [Line Items]
Reinstatement of other current liabilities from liabilities subject to compromise			191
Accrual of the Notes fees			2
Settlement of Put Option Premium through issuance of Successor Common Stock			(60)
Payment of DIP Facility fees			(9)
Total other current liabilities			$ 124

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Fresh Start Accounting - Changes in Long-Term Debt (Details) $ in Millions	Feb. 09, 2021 USD ($)
Reorganization, Chapter 11 [Line Items]
Long-term debt, net	$ 1,313
Reorganization Adjustments
Reorganization, Chapter 11 [Line Items]
Issuance of the Notes	1,000
Chesapeake revolving credit facility	750
Payments on Tranche A Loans	(479)
Debt issuance costs for the Notes	(10)
Long-term debt, net	$ 1,261

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Fresh Start Accounting - Liabilities Subject to Compromise (Details) $ in Millions	Feb. 09, 2021 USD ($)
Reorganization, Chapter 11 [Line Items]
Liabilities subject to compromise	$ 0
Consideration provided to settle amounts per the Plan or Reorganization:
Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment	(783)
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment	(124)
Issuance of Successor common stock to unsecured note holders	(45)
Issuance of Successor common stock to general unsecured claims	(8)
Class A Warrants
Consideration provided to settle amounts per the Plan or Reorganization:
Warrants	93
Class B Warrants
Consideration provided to settle amounts per the Plan or Reorganization:
Warrants	94
Class C Warrants
Consideration provided to settle amounts per the Plan or Reorganization:
Warrants	68
Predecessor
Reorganization, Chapter 11 [Line Items]
Liabilities subject to compromise	9,574
To be reinstated on the Effective Date:
Accounts payable	(2)
Other current liabilities	(191)
Other long-term liabilities	(2)
Total liabilities reinstated	(195)
Consideration provided to settle amounts per the Plan or Reorganization:
Issuance of Successor common stock associated with the Rights Offering and Backstop Commitment and settlement of the Put Option Premium	(2,311)
Proceeds from issuance of Successor common stock associated with the Rights Offering and Backstop Commitment	600
Issuance of Successor common stock to FLLO Term Loan holders, incremental to the Rights Offering and Backstop Commitment	(783)
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment	(124)
Issuance of Successor common stock to unsecured note holders	(45)
Issuance of Successor common stock to general unsecured claims	(8)
Proceeds to holders of general unsecured claims	(10)
Total consideration provided to settle amounts per the Plan	(2,936)
Gains on the settlement of liabilities subject to compromise	6,443
Predecessor | Class A Warrants
Consideration provided to settle amounts per the Plan or Reorganization:
Warrants	(93)
Predecessor | Class B Warrants
Consideration provided to settle amounts per the Plan or Reorganization:
Warrants	(94)
Predecessor | Class C Warrants
Consideration provided to settle amounts per the Plan or Reorganization:
Warrants	$ (68)

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Fresh Start Accounting - Equity Issuance (Details) - New Common Stock	Feb. 09, 2021 shares
Debt Instrument [Line Items]
Stock issued during period, new issues (in shares)	97,907,081
Class A Warrants
Debt Instrument [Line Items]
Warrants issued (in shares)	11,111,111
Class B Warrants
Debt Instrument [Line Items]
Warrants issued (in shares)	12,345,679
Class C Warrants
Debt Instrument [Line Items]
Warrants issued (in shares)	9,768,527

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Fresh Start Accounting - Change in Successor Additional Paid-in Capital (Details) - USD ($) $ in Millions	Feb. 09, 2021	Sep. 30, 2022	Dec. 31, 2021
Class of Stock [Line Items]
Issuance of Successor equity associated with the Rights Offering and Backstop Commitment	$ 2,371
Issuance of Successor equity to holders of the FLLO Term Loan, incremental to the Rights Offering and Backstop Commitment	783
Issuance of Successor common stock to Second Lien Note holders, incremental to the Rights Offering and Backstop Commitment	124
Issuance of Successor common stock to unsecured note holders	45
Issuance of Successor common stock to general unsecured claims	8
Total change in Successor common stock and additional paid-in capital	3,586
Less: par value of Successor common stock	(1)	$ (1)	$ (1)
Change in Successor additional paid-in capital	3,585
Class A Warrants
Class of Stock [Line Items]
Warrants	93
Class B Warrants
Class of Stock [Line Items]
Warrants	94
Class C Warrants
Class of Stock [Line Items]
Warrants	$ 68

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Fresh Start Accounting - Cumulative Net Impact on Accumulated Deficit (Details) - USD ($)		1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Feb. 09, 2021	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022	Dec. 31, 2021
Reorganization, Chapter 11 [Line Items]
Total reorganization items, net		$ (5,569,000,000)			$ 0	$ 0
Net impact on accumulated deficit	$ 0	0	$ 719,000,000			719,000,000	$ 825,000,000
Reorganization Adjustments
Reorganization, Chapter 11 [Line Items]
Gains on the settlement of liabilities subject to compromise	6,443,000,000	6,443,000,000
Accrual of professional service provider success fees	(38,000,000)	(38,000,000)
Accrual of professional service provider fees	(5,000,000)	(5,000,000)
Surrender of other receivable	(18,000,000)	18,000,000
Payment of FLLO alternative transaction fee	(12,000,000)
Total reorganization items, net	6,370,000,000	(5,569,000,000)	$ 0	$ 0	$ 0	$ 0
Cancellation of predecessor equity	18,571,000,000	18,571,000,000
Net impact on accumulated deficit	$ 24,941,000,000	$ 24,941,000,000

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Fresh Start Accounting - Fresh Start Adjustments (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Feb. 09, 2021	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
Reorganization, Chapter 11 [Line Items]
Inflation factor	2.00%	2.00%
Average credit-adjusted risk-free rate	5.18%	5.18%
Income tax effects on accumulated other comprehensive income	$ 57	$ 57
Income tax benefit	57	57	$ (74)	$ 10	$ 10	$ (105)
Fresh Start Adjustments
Reorganization, Chapter 11 [Line Items]
Fresh start adjustments to accumulated other comprehensive income	9	9
Income tax effects on accumulated other comprehensive income	57	57
Senior Notes | 5.50% senior notes due 2026
Reorganization, Chapter 11 [Line Items]
Debt, fair value adjustments	22	22
Senior Notes | 5.875% senior notes due 2029
Reorganization, Chapter 11 [Line Items]
Debt, fair value adjustments	$ 30	$ 30

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Fresh Start Accounting - Impact on Accumulated Deficit (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Feb. 09, 2021
Reorganization, Chapter 11 [Line Items]
Total property and equipment, net	$ 11,954	$ 8,802	$ 5,670
Other long-term assets	76	104	114
Long-term debt, net			(1,313)
Asset retirement obligations, net of current portion	$ (350)	$ (349)	(236)
Income tax effects on accumulated other comprehensive income			57
Fresh Start Adjustments
Reorganization, Chapter 11 [Line Items]
Total property and equipment, net			443
Other long-term assets			(84)
Long-term debt, net			(52)
Asset retirement obligations, net of current portion			(97)
Fresh start adjustments to accumulated other comprehensive income			(9)
Total fresh start adjustments impacting reorganizations items, net			201
Income tax effects on accumulated other comprehensive income			57
Net impact to accumulated deficit			$ 258

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Fresh Start Accounting - Reorganization Items, Net (Details) - USD ($)		1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Feb. 09, 2021	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
Reorganization, Chapter 11 [Line Items]
Total reorganization items, net		$ 5,569,000,000			$ 0	$ 0
Reorganization Adjustments
Reorganization, Chapter 11 [Line Items]
Gains on the settlement of liabilities subject to compromise	$ 6,443,000,000	6,443,000,000
Accrual for allowed claims		(1,002,000,000)
Gain on fresh start adjustments		201,000,000
Gain from release of commitment liabilities		55,000,000
Professional service provider fees and other		(60,000,000)
Success fees for professional service providers		(38,000,000)
Surrender of other receivable	18,000,000	(18,000,000)
FLLO alternative transaction fee		(12,000,000)
Total reorganization items, net	$ (6,370,000,000)	$ 5,569,000,000	$ 0	$ 0	$ 0	$ 0

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Natural Gas and Oil Property Transactions - Narrative (Details) - USD ($) shares in Millions				1 Months Ended	3 Months Ended		6 Months Ended	7 Months Ended	8 Months Ended	9 Months Ended
	Mar. 25, 2022	Mar. 09, 2022	Nov. 01, 2021	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022
Business Acquisition [Line Items]
Natural gas and oil derivatives				$ 382,000,000	$ 1,029,000,000	$ 910,000,000			$ 1,604,000,000	$ 3,668,000,000
Costs and expenses				494,000,000	2,157,000,000	1,228,000,000			2,946,000,000	6,065,000,000
Nonoperating expense				(5,560,000,000)	48,000,000	17,000,000			16,000,000	91,000,000
Share-based compensation				3,000,000					5,000,000	16,000,000
Natural gas, oil and NGL
Business Acquisition [Line Items]
Revenue				398,000,000	2,987,000,000	1,170,000,000			2,615,000,000	7,691,000,000
Marketing
Business Acquisition [Line Items]
Revenue				$ 239,000,000	$ 1,206,000,000	$ 627,000,000			$ 1,443,000,000	$ 3,296,000,000
6.75% senior notes due 2029 | Senior Notes
Business Acquisition [Line Items]
Interest rate, stated percentage			6.75%		6.75%		6.75%	6.75%		6.75%
Debt assumed			$ 950,000,000
Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestitures of property and equipment	$ 450,000,000
Gain (loss) on sale of oil and natural gas properties							$ 18,000,000			$ 298,000,000
Marcellus
Business Acquisition [Line Items]
Consideration transferred		$ 2,770,000,000
Cash		$ 2,000,000,000
Shares issued in acquisition (in shares)		9.4
Measurement period adjustments, cash and current liabilities		$ 39,000,000
Natural gas and oil derivatives								$ 542,000,000
Costs and expenses								329,000,000
Marcellus | Natural gas, oil and NGL
Business Acquisition [Line Items]
Revenue								959,000,000
Marcellus | Marketing
Business Acquisition [Line Items]
Revenue								$ 20,000,000
Marcellus | Exit credit facility
Business Acquisition [Line Items]
Borrowings		$ 914,000,000
Vine Energy Corporation (Vine)
Business Acquisition [Line Items]
Consideration transferred			1,490,000,000
Cash			$ 253,000,000
Natural gas and oil derivatives										846,000,000
Costs and expenses										680,000,000
Nonoperating expense										30,000,000
Common stock issued in the merger (in shares)			18.7
Extinguishment of debt			$ 163,000,000
Premium paid with cash			13,000,000
Measurement period adjustments, deferred tax liabilities and unproved properties			19,000,000
Share-based compensation			6,000,000
Vine Energy Corporation (Vine) | Natural gas, oil and NGL
Business Acquisition [Line Items]
Revenue										$ 1,480,000,000
Vine Energy Corporation (Vine) | New RBL
Business Acquisition [Line Items]
Borrowings			0
Vine Energy Corporation (Vine) | Scenario, Plan
Business Acquisition [Line Items]
Cash			$ 90,000,000

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Natural Gas and Oil Property Transactions - Purchase Price Allocation (Details) - USD ($) $ in Millions			1 Months Ended	8 Months Ended	9 Months Ended
	Mar. 09, 2022	Nov. 01, 2021	Feb. 09, 2021	Sep. 30, 2021	Sep. 30, 2022
Consideration:
Restricted stock unit replacement awards			$ 3	$ 5	$ 16
Marcellus
Consideration:
Cash	$ 2,000
Fair value of Chesapeake’s common stock issued in the merger	764
Working capital adjustments	6
Total consideration	2,770
Fair Value of Liabilities Assumed:
Current liabilities	459
Other long-term liabilities	129
Amounts attributable to liabilities assumed	588
Fair Value of Assets Acquired:
Cash, cash equivalents and restricted cash	39
Other current assets	218
Proved natural gas and oil properties	2,309
Unproved properties	788
Other property and equipment	1
Other long-term assets	3
Amounts attributable to assets acquired	3,358
Total identifiable net assets	$ 2,770
Vine Energy Corporation (Vine)
Consideration:
Cash		$ 253
Fair value of Chesapeake’s common stock issued in the merger		1,231
Restricted stock unit replacement awards		6
Total consideration		1,490
Fair Value of Liabilities Assumed:
Current liabilities		765
Long-term debt		1,021
Deferred tax liabilities		30		$ 49	$ 30
Other long-term liabilities		272
Amounts attributable to liabilities assumed		2,088
Fair Value of Assets Acquired:
Cash and cash equivalents		59
Other current assets		206
Proved natural gas and oil properties		2,181
Unproved properties		1,099
Other property and equipment		1
Other long-term assets		32
Amounts attributable to assets acquired		3,578
Total identifiable net assets		$ 1,490

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Natural Gas and Oil Property Transactions - Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	8 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
Business Acquisition [Line Items]
Revenues	$ 510	$ 2,254	$ 7,617
Net income (loss) available to common stockholders	$ (1,159)	$ (1,732)	$ 1,252
Earnings (loss) per common share, basic (in dollars per share)	$ (9.15)	$ (13.70)	$ 10.00
Earnings (loss) per common share, diluted (in dollars per share)	$ (9.15)	$ (13.70)	$ 8.50

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Earnings Per Share - Reconciliation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
Earnings Per Share [Abstract]
Net income (loss), basic	$ 5,383	$ 883	$ (345)	$ (489)	$ 1,356
Net income (loss), diluted	$ 5,383	$ 883	$ (345)	$ (489)	$ 1,356
Weighted average common shares outstanding, basic (in shares)	9,781	121,150	98,221	98,040	122,924
Effect of potentially dilutive securities
Preferred stock (in shares)	290	0	0	0	0
Warrants (in shares)	0	22,794	0	0	21,692
Restricted stock (in shares)	0	396	0	0	368
Performance share units (in shares)	0	50	0	0	47
Weighted average common shares outstanding, diluted (in shares)	10,071	144,390	98,221	98,040	145,031
Basic (in dollars per share)	$ 550.35	$ 7.29	$ (3.51)	$ (4.99)	$ 11.03
Diluted (in dollars per share)	$ 534.51	$ 6.12	$ (3.51)	$ (4.99)	$ 9.35

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Earnings Per Share - Additional Information (Details) - shares	3 Months Ended		8 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022	Feb. 09, 2021
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from the calculation of diluted EPS (in shares)		14,774,330	12,851,577
Restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from the calculation of diluted EPS (in shares)		247,220	135,350
Performance share units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from the calculation of diluted EPS (in shares)		5,479	3,508
Class C Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from the calculation of diluted EPS (in shares)	2,248,726	3,334,277	3,334,277	2,248,726
Senior Notes | 5.50% senior notes due 2026
Debt Instrument [Line Items]
Interest rate, stated percentage	5.50%			5.50%	5.50%
COMMON STOCK
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from the calculation of diluted EPS (in shares)	1,191,877	1,767,203	1,767,203	1,191,877

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Debt - Long-Term Debt Table (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Nov. 01, 2021	Feb. 09, 2021	Feb. 02, 2021
Debt Instrument [Line Items]
Long-term debt, fair value	$ 2,518	$ 2,313
Debt issuance costs	(8)	(9)
Total long-term debt, net	2,717	2,278
Line of Credit | Exit Credit Facility - Tranche A Loans
Debt Instrument [Line Items]
Chesapeake revolving credit facility	450	0
Long-term debt, fair value	450	0
Line of Credit | Exit Credit Facility - Tranche B Loans
Debt Instrument [Line Items]
Chesapeake revolving credit facility	221	221
Long-term debt, fair value	221	221
Senior Notes
Debt Instrument [Line Items]
Premiums on senior notes	$ 104	116			$ 52
Senior Notes | 5.50% senior notes due 2026
Debt Instrument [Line Items]
Interest rate, stated percentage	5.50%			5.50%
Outstanding borrowings	$ 500	500
Long-term debt, fair value	$ 479	526
Senior Notes | 5.875% senior notes due 2029
Debt Instrument [Line Items]
Interest rate, stated percentage	5.875%			5.875%
Outstanding borrowings	$ 500	500
Long-term debt, fair value	$ 462	535
Senior Notes | 6.75% senior notes due 2029
Debt Instrument [Line Items]
Interest rate, stated percentage	6.75%		6.75%
Outstanding borrowings	$ 950	950
Long-term debt, fair value	906	$ 1,031
Premiums on senior notes	$ 71

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Debt - Successor Debt (Details) - USD ($)	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021	Nov. 01, 2021	Feb. 09, 2021	Feb. 02, 2021
Line of Credit | Exit Credit Facility - Tranche A Loans
Debt Instrument [Line Items]
Maximum borrowing capacity				$ 1,750,000,000
Term	3 years
Unused capacity, commitment fee percentage	0.50%
Line of Credit | Exit Credit Facility - Tranche B Loans
Debt Instrument [Line Items]
Maximum borrowing capacity				221,000,000
Term	4 years
Line of Credit | Exit credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity				2,500,000,000
LIBOR Floor	1.00%
Interest rate	6.00%
Line of Credit | Exit credit facility | Minimum
Debt Instrument [Line Items]
Current ratio	1.00
Asset coverage ratio	1.50
Line of Credit | Exit credit facility | Maximum
Debt Instrument [Line Items]
First lien leverage ratio	2.75
Leverage ratio	3.50
Line of Credit | Exit credit facility | Alternative Base Rate | Minimum
Debt Instrument [Line Items]
Variable rate percentage	2.25%
Line of Credit | Exit credit facility | Alternative Base Rate | Maximum
Debt Instrument [Line Items]
Variable rate percentage	3.25%
Line of Credit | Exit credit facility | LIBOR | Minimum
Debt Instrument [Line Items]
Variable rate percentage	3.25%
Line of Credit | Exit credit facility | LIBOR | Maximum
Debt Instrument [Line Items]
Variable rate percentage	4.25%
Line of Credit | Exit credit facility | Letter of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 200,000,000
Secured Debt, Other
Debt Instrument [Line Items]
Outstanding borrowings	0
Senior Notes
Debt Instrument [Line Items]
Unamortized premium	104,000,000	$ 116,000,000			$ 52,000,000
Senior Notes | 5.50% senior notes due 2026
Debt Instrument [Line Items]
Outstanding borrowings	$ 500,000,000	500,000,000
Debt instrument, principal amount				$ 500,000,000	500,000,000
Interest rate, stated percentage	5.50%			5.50%
Senior Notes | 5.875% senior notes due 2029
Debt Instrument [Line Items]
Outstanding borrowings	$ 500,000,000	500,000,000
Debt instrument, principal amount				$ 500,000,000	$ 500,000,000
Interest rate, stated percentage	5.875%			5.875%
Senior Notes | 6.75% senior notes due 2029
Debt Instrument [Line Items]
Outstanding borrowings	$ 950,000,000	$ 950,000,000
Debt instrument, principal amount	950,000,000
Unamortized premium	$ 71,000,000
Interest rate, stated percentage	6.75%		6.75%

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Contingencies and Commitments (Details) - Gathering, processing and transportation agreement $ in Millions	Sep. 30, 2022 USD ($)
Other Commitments [Line Items]
Remainder of 2022	$ 151
2023	546
2024	514
2025	444
2026	403
2027-2036	2,094
Total	$ 4,152

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Other Current Liabilities (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Feb. 09, 2021
Other Liabilities Disclosure [Abstract]
Revenues and royalties due others	$ 938	$ 617
Accrued drilling and production costs	324	142
Accrued hedging costs	114	113
Accrued compensation and benefits	74	91
Other accrued taxes	156	86
Operating leases	36	29
Joint interest prepayments received	23	14
Other	119	110
Total other current liabilities	$ 1,784	$ 1,202	$ 769

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Revenue - Disaggregated Revenue (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
Total
Disaggregation of Revenue [Line Items]
Revenue	$ 398	$ 2,987	$ 1,170	$ 2,615	$ 7,691
Total | Marcellus
Disaggregation of Revenue [Line Items]
Revenue	119	1,324	383	772	3,085
Total | Haynesville
Disaggregation of Revenue [Line Items]
Revenue	53	1,093	207	401	2,733
Total | Eagle Ford
Disaggregation of Revenue [Line Items]
Revenue	193	570	487	1,217	1,774
Total | Powder River Basin
Disaggregation of Revenue [Line Items]
Revenue	33		93	225	99
Natural Gas
Disaggregation of Revenue [Line Items]
Revenue	196	2,496	664	1,351	6,049
Natural Gas | Marcellus
Disaggregation of Revenue [Line Items]
Revenue	119	1,324	383	772	3,085
Natural Gas | Haynesville
Disaggregation of Revenue [Line Items]
Revenue	53	1,093	207	401	2,733
Natural Gas | Eagle Ford
Disaggregation of Revenue [Line Items]
Revenue	17	79	53	127	211
Natural Gas | Powder River Basin
Disaggregation of Revenue [Line Items]
Revenue	7		21	51	20
Oil
Disaggregation of Revenue [Line Items]
Revenue	179	437	437	1,115	1,456
Oil | Marcellus
Disaggregation of Revenue [Line Items]
Revenue	0	0	0	0	0
Oil | Haynesville
Disaggregation of Revenue [Line Items]
Revenue	0	0	0	0	0
Oil | Eagle Ford
Disaggregation of Revenue [Line Items]
Revenue	159	437	379	971	1,390
Oil | Powder River Basin
Disaggregation of Revenue [Line Items]
Revenue	20		58	144	66
NGL
Disaggregation of Revenue [Line Items]
Revenue	23	54	69	149	186
NGL | Marcellus
Disaggregation of Revenue [Line Items]
Revenue	0	0	0	0	0
NGL | Haynesville
Disaggregation of Revenue [Line Items]
Revenue	0	0	0	0	0
NGL | Eagle Ford
Disaggregation of Revenue [Line Items]
Revenue	17	54	55	119	173
NGL | Powder River Basin
Disaggregation of Revenue [Line Items]
Revenue	6		14	30	13
Marketing
Disaggregation of Revenue [Line Items]
Revenue	239	1,206	627	1,443	3,296
Natural Gas
Disaggregation of Revenue [Line Items]
Revenue	78	827	240	483	1,872
Oil
Disaggregation of Revenue [Line Items]
Revenue	141	328	326	828	1,231
NGL
Disaggregation of Revenue [Line Items]
Revenue	$ 20	$ 51	$ 61	$ 132	$ 193

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Revenue - Accounts Receivable (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Allowance for doubtful accounts	$ (2)	$ (3)
Total accounts receivable, net	1,757	1,115
Natural gas, oil and NGL sales
Disaggregation of Revenue [Line Items]
Accounts receivable, gross	1,477	922
Joint interest
Disaggregation of Revenue [Line Items]
Accounts receivable, gross	268	158
Other
Disaggregation of Revenue [Line Items]
Accounts receivable, gross	$ 14	$ 38

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Income Taxes (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended	11 Months Ended	12 Months Ended
	Feb. 09, 2021	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2022	Nov. 01, 2021
Business Acquisition [Line Items]
Effective income tax rate		(1.10%)					2.00%
Income tax expense (benefit)	$ (57)	$ (57)	$ 74	$ (10)	$ (10)	$ 105
Deferred tax asset, operating loss carryforward, limitations			54			54
Cancellation of debt income	5,000
Vine Energy Corporation (Vine)
Business Acquisition [Line Items]
Income tax expense (benefit)						19
Deferred tax liabilities			$ 30	$ 49	$ 49	$ 30			$ 30
Federal
Business Acquisition [Line Items]
Operating loss carryforwards, removed	$ 593	$ 593
Forecast
Business Acquisition [Line Items]
Effective income tax rate								5.90%

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Equity - Additional Information (Details) $ / shares in Units, $ in Millions					1 Months Ended		3 Months Ended
	Oct. 13, 2022 shares	Mar. 09, 2022 shares	Nov. 01, 2021 shares	Feb. 09, 2021 $ / shares shares	Jun. 30, 2022 USD ($) shares	Mar. 31, 2022 USD ($) shares	Sep. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Nov. 01, 2022 $ / shares	Dec. 31, 2021 $ / shares shares	Dec. 02, 2021 USD ($)
Class of Stock [Line Items]
Common stock, par value (in usd per share) | $ / shares							$ 0.01				$ 0.01
Common stock, shares issued (in shares)							121,334,663				117,917,349
Authorized amount | $							$ 2,000					$ 1,000
Additional authorized amount | $					$ 1,000			$ 1,000
Repurchase and retirement of common stock (in shares)					5,800,000	1,000,000	750,000
Repurchase and retirement of common stock | $					$ 515	$ 83	$ 69	$ 515	$ 83
Number of shares issuable upon exercise each warrant							1.12
Class A Warrants
Class of Stock [Line Items]
Warrant, exercise price (in dollars per share) | $ / shares				$ 27.63			$ 25.10
Class B Warrants
Class of Stock [Line Items]
Warrant, exercise price (in dollars per share) | $ / shares				32.13			$ 29.18
Class C Warrants
Class of Stock [Line Items]
Common stock, reserved for future issuance (in shares)							2,248,726
Warrant, exercise price (in dollars per share) | $ / shares				$ 36.18			$ 32.86
Subsequent Event
Class of Stock [Line Items]
Dividends payable (in dollars per share) | $ / shares										$ 3.16
Dividends payable, base (in dollars per share) | $ / shares										0.55
Dividends payable, variable (in dollars per share) | $ / shares										$ 2.61
Subsequent Event | Class A Warrants
Class of Stock [Line Items]
Number of warrants exchanged for common stock (in shares)	4,752,207
Warrants exchange ratio	0.8636
Subsequent Event | Class B Warrants
Class of Stock [Line Items]
Number of warrants exchanged for common stock (in shares)	7,879,030
Warrants exchange ratio	0.8224
Subsequent Event | Class C Warrants
Class of Stock [Line Items]
Number of warrants exchanged for common stock (in shares)	7,252,004
Warrants exchange ratio	0.7890
Vine Energy Corporation (Vine)
Class of Stock [Line Items]
Common stock issued in the merger (in shares)			18,700,000
New Common Stock
Class of Stock [Line Items]
Stock issued during period, new issues (in shares)				97,907,081
Common stock, par value (in usd per share) | $ / shares				$ 0.01
Common stock, reserved for future issuance (in shares)				2,092,918
Common stock, shares issued (in shares)							36,951
Number of shares initially exercisable for warrants (in shares)				1
New Common Stock | Class A Warrants
Class of Stock [Line Items]
Warrants issued (in shares)				11,111,111
New Common Stock | Class B Warrants
Class of Stock [Line Items]
Warrants issued (in shares)				12,345,679
New Common Stock | Class C Warrants
Class of Stock [Line Items]
Common stock, reserved for future issuance (in shares)				3,948,893
Warrants issued (in shares)				9,768,527
New Common Stock | Subsequent Event
Class of Stock [Line Items]
Conversion of stock, shares issued (in shares)	16,305,984
New Common Stock | Vine Energy Corporation (Vine)
Class of Stock [Line Items]
Common stock issued in the merger (in shares)			18,709,399
New Common Stock | Marcellus
Class of Stock [Line Items]
Common stock issued in the merger (in shares)		9,442,185

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Equity - Schedule of Dividends (Details) - USD ($) $ / shares in Units, $ in Millions	Sep. 01, 2022	Jun. 02, 2022	Mar. 22, 2022
Equity [Abstract]
Dividend Payment	$ 280	$ 298	$ 210
Common stock, dividends declared (in dollars per share)	$ 2.32	$ 2.34	$ 1.7675

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Equity - Schedule of Warrants (Details) - shares	3 Months Ended			9 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2022
Warrant
Warrants and Rights Outstanding [Roll Forward]
Conversion of stock, shares issued (in shares)				1,329,292
Class A Warrants
Warrants and Rights Outstanding [Roll Forward]
Outstanding, begging balance (in shares)	9,751,946	9,820,246	10,856,852	10,856,852
Converted into New Common Stock (in shares)	(500,450)	(68,300)	(1,036,606)
Issued for General Unsecured Claims (in shares)		0
Outstanding, ending balance (in shares)	9,251,496	9,751,946	9,820,246	9,251,496
Class B Warrants
Warrants and Rights Outstanding [Roll Forward]
Outstanding, begging balance (in shares)	12,290,770	12,290,881	12,313,273	12,313,273
Converted into New Common Stock (in shares)	(31)	(111)	(22,392)
Issued for General Unsecured Claims (in shares)		0
Outstanding, ending balance (in shares)	12,290,739	12,290,770	12,290,881	12,290,739
Class C Warrants
Warrants and Rights Outstanding [Roll Forward]
Outstanding, begging balance (in shares)	11,282,397	11,374,526	11,388,371	11,388,371
Converted into New Common Stock (in shares)	(97,403)	(161,849)	(13,845)
Issued for General Unsecured Claims (in shares)		69,720
Outstanding, ending balance (in shares)	11,184,994	11,282,397	11,374,526	11,184,994

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Share-Based Compensation - Narrative (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020	Feb. 09, 2021
Performance share units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 18
Share-based compensation expense, weighted average period for recognition	2 years 2 months 23 days
Performance share units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total shareholder return and relative total shareholder return, percent of payout of target units	0.00%	0.00%
Performance share units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total shareholder return and relative total shareholder return, percent of payout of target units	200.00%	100.00%
Performance share units | Management
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, award vesting period	3 years
Stock option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, award vesting period			3 years
Stock option | Management | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period			7 years
Stock option | Management | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period			10 years
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, award vesting period	3 years
Intrinsic value of restricted stock, vested	$ 26
Unrecognized compensation expense	$ 45
Share-based compensation expense, weighted average period for recognition	2 years 2 months 19 days
2021 Long Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, reserved for future issuance (in shares)				6,800,000

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Share-Based Compensation - Restricted Stock (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands	1 Months Ended	9 Months Ended
	Feb. 09, 2021	Sep. 30, 2022
Unvested Restricted Stock Units
Unvested restricted stock, beginning balance (in shares)	1	775
Granted (in shares)	0	520
Vested (in shares)	0	(293)
Forfeited (in shares)	(1)	(103)
Unvested restricted stock, ending balance (in shares)	0	899
Weighted Average Grant Date Fair Value Per Share
Unvested restricted stock, beginning balance (in dollars per share)	$ 616.57	$ 46.77
Granted (in dollars per share)	0	76.38
Vested (in dollars per share)	0	47.78
Forfeited (in dollars per share)	611.47	53.63
Unvested restricted stock, ending balance (in dollars per share)	$ 0	$ 62.78

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Share-Based Compensation - Assumptions (Details) - Performance share units - TSR, rTSR	9 Months Ended
	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	2.00%
Volatility	70.20%

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Share-Based Compensation - Performance Share (Details) - Performance share units shares in Thousands	9 Months Ended
	Sep. 30, 2022 $ / shares shares
Unvested Restricted Stock Units
Unvested restricted stock, beginning balance (in shares) | shares	183
Granted (in shares) | shares	133
Vested (in shares) | shares	0
Forfeited (in shares) | shares	(35)
Unvested restricted stock, ending balance (in shares) | shares	281
Weighted Average Grant Date Fair Value Per Share
Unvested restricted stock, beginning balance (in dollars per share) | $ / shares	$ 66.12
Granted (in dollars per share) | $ / shares	109.65
Vested (in dollars per share) | $ / shares	0
Forfeited (in dollars per share) | $ / shares	59.09
Unvested restricted stock, ending balance (in dollars per share) | $ / shares	$ 87.56

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Share-Based Compensation - Stock Option Activity Table (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	1 Months Ended	12 Months Ended
	Feb. 09, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, beginning balance (in shares)	20
Granted (in shares)	0
Exercised (in shares)	0
Expired (in shares)	(1)
Forfeited/canceled (in shares)	(19)
Outstanding, ending balance (in shares)	0	20
Exercisable (in shares)	0
Weighted Average Exercise Price Per Share
Outstanding, beginning (in dollars per share)	$ 1,429.11
Granted (in dollars per share)	0
Exercised (in dollars per share)	0
Expired (in dollars per share)	741.86
Forfeited/canceled (in dollars per share)	1,452.4
Outstanding, ending (in dollars per share)	0	$ 1,429.11
Weighted average exercise price, exercisable (in dollars per share)	$ 0
Weighted average contract life, outstanding		4 years 3 months 7 days
Aggregate intrinsic value, outstanding	$ 0	$ 0
Aggregate intrinsic value, exercised	0
Aggregate intrinsic value, exercisable	$ 0

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Share-Based Compensation - Compensation Expense (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 3	$ 7	$ 4	$ 7	$ 19
General and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	3	5	2	4	14
Natural gas and oil properties
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	0	1	1	2	3
Production expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 0	$ 1	$ 1	$ 1	$ 2

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Derivative and Hedging Activities - Derivative Instruments (Details) - Energy related derivative $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2022 USD ($) MMBbls Bcf	Dec. 31, 2021 USD ($) Bcf MMBbls
Derivative [Line Items]
Fair Value	$ (2,290)	$ (1,143)
Natural gas
Derivative [Line Items]
Notional Volume | Bcf	1,429	1,112
Fair Value	$ (2,172)	$ (785)
Natural gas | Fixed-price swaps
Derivative [Line Items]
Notional Volume | Bcf	449	637
Fair Value	$ (1,413)	$ (675)
Natural gas | Collars
Derivative [Line Items]
Notional Volume | Bcf	547	205
Fair Value	$ (664)	$ (82)
Natural gas | Three-way collars
Derivative [Line Items]
Notional Volume | Bcf	10	0
Fair Value	$ (29)	$ 0
Natural gas | Call options
Derivative [Line Items]
Notional Volume | Bcf	18	18
Fair Value	$ (63)	$ (17)
Natural gas | Swaptions
Derivative [Line Items]
Notional Volume | Bcf	7	0
Fair Value	$ (19)	$ 0
Natural gas | Basis protection swaps
Derivative [Line Items]
Notional Volume | Bcf	398	252
Fair Value	$ 16	$ (11)
Oil
Derivative [Line Items]
Notional Volume | MMBbls	20	22
Fair Value	$ (118)	$ (358)
Oil | Fixed-price swaps
Derivative [Line Items]
Notional Volume | MMBbls	4	13
Fair Value	$ (136)	$ (356)
Oil | Collars
Derivative [Line Items]
Notional Volume | MMBbls	6	0
Fair Value	$ 23	$ 0
Oil | Basis protection swaps
Derivative [Line Items]
Notional Volume | MMBbls	10	9
Fair Value	$ (5)	$ (2)

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Derivative and Hedging Activities - Derivative Instruments in Balance Sheet Table (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Feb. 09, 2021
Derivatives, Fair Value [Line Items]
Short-term derivative assets	$ 4	$ 5	$ 0
Short-term derivative liability	(1,875)	(899)	(398)
Long-term derivative liability	(419)	(249)	$ (90)
Not designated as hedging instrument | Commodity contract
Derivatives, Fair Value [Line Items]
Derivative asset (liability), fair value, gross asset (liability)	(2,290)	(1,143)
Derivative asset (liability) fair value, net asset (liability), netted	0	0
Short-term derivative assets	4	5
Long-term derivative assets	0
Short-term derivative liability	(1,875)	(899)
Long-term derivative liability	(419)	(249)
Total derivatives	2,290	1,143
Not designated as hedging instrument | Commodity contract | Short-term derivative asset
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross asset	118	56
Derivative asset, fair value, gross liability, netted	(114)	(51)
Not designated as hedging instrument | Commodity contract | Long-term derivative asset
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross asset	28
Derivative asset, fair value, gross liability, netted	(28)
Not designated as hedging instrument | Commodity contract | Short-term derivative liability
Derivatives, Fair Value [Line Items]
Derivative liability, fair value, gross liability	(1,989)	(950)
Derivative liability, fair value, gross asset, netted	114	51
Not designated as hedging instrument | Commodity contract | Long-term derivative liability
Derivatives, Fair Value [Line Items]
Derivative liability, fair value, gross liability	(447)	(249)
Derivative liability, fair value, gross asset, netted	$ 28	$ 0

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Derivative and Hedging Activities - Cash Flow Hedges Components of AOCI (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Feb. 09, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022
AOCI Attributable to Parent, Net of Tax [Roll Forward]
AOCI, after tax, beginning of period				$ 0
Losses reclassified to income, after tax	$ 3	$ 0	$ 0	0	$ 0
AOCI, after tax, end of period	0
Cash flow hedging
AOCI Attributable to Parent, Net of Tax [Roll Forward]
AOCI, before tax, beginning of period	(12)			0
Losses reclassified to income, before tax	3
Fresh start adjustments, before tax	9
Elimination of tax effects, before tax	0
AOCI, before tax, end of period	0
AOCI, after tax, beginning of period	45			$ 0
Losses reclassified to income, after tax	3
Fresh start adjustments, after tax	9
Elimination of tax effects, after tax	(57)
AOCI, after tax, end of period	$ 0

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Derivative and Hedging Activities - Narrative (Details)	Sep. 30, 2022 counterparty
Energy related derivative
Derivative [Line Items]
Number of counterparties (in counterparties)	13

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Other Operating Expense (Income), Net (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)
Marcellus
Business Acquisition [Line Items]
Acquisition related costs	$ 40