howard weil march 2017 final
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2017 SCOTIA HOWARD WEIL ENERGY CONFERENCE
March 28, 2017
FORWARD-LOOKING STATEMENTS
This presentation 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.
Forward-looking statements are statements other than statements of historical fact. They include statements that give our current expectations or forecasts of future events, production
and well connection forecasts, estimates of operating costs, anticipated capital and operational efficiencies, planned development drilling and expected drilling cost reductions, general
and administrative expenses, capital expenditures, the timing of anticipated noncore asset sales and proceeds to be received therefrom, projected cash flow and liquidity, our ability to
enhance our cash flow and financial flexibility, plans and objectives for future operations (including our ability to optimize base production and execute gas gathering agreements), the
ability of our employees, portfolio strength and operational leadership to create long-term value, and the assumptions on which such statements are based. Although we believe the
expectations and forecasts reflected in the forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by
inaccurate or changed assumptions or by known or unknown risks and uncertainties.
Factors that could cause actual results to differ materially from expected results include those described under “Risk Factors” in Item 1A of our annual report on Form 10-K and any
updates to those factors set forth in Chesapeake's subsequent quarterly reports on Form 10-Q or current reports on Form 8-K (available at http://www.chk.com/investors/sec-filings).
These risk factors include the volatility of oil, natural gas and NGL prices; the limitations our level of indebtedness may have on our financial flexibility; our inability to access the capital
markets on favorable terms or at all; the availability of cash flows from operations and other funds to finance reserve replacement costs or satisfy our debt obligations; a further
downgrade in our credit rating requiring us to post more collateral under certain commercial arrangements; write-downs of our oil and natural gas asset carrying values due low
commodity prices; our ability to replace reserves and sustain production; uncertainties inherent in estimating quantities of oil, natural gas and NGL reserves and projecting future rates
of production and the amount and timing of development expenditures; our ability to generate profits or achieve targeted results in drilling and well operations; leasehold terms expiring
before production can be established; commodity derivative activities resulting in lower prices realized on oil, natural gas and NGL sales; the need to secure derivative liabilities and
the inability of counterparties to satisfy their obligations; adverse developments or losses from pending or future litigation and regulatory proceedings, including royalty claims; charges
incurred in response to market conditions and in connection with our ongoing actions to reduce financial leverage and complexity; drilling and operating risks and resulting liabilities;
effects of environmental protection laws and regulation on our business; legislative and regulatory initiatives further regulating hydraulic fracturing; our need to secure adequate
supplies of water for our drilling operations and to dispose of or recycle the water used; impacts of potential legislative and regulatory actions addressing climate change; federal and
state tax proposals affecting our industry; potential OTC derivatives regulation limiting our ability to hedge against commodity price fluctuations; competition in the oil and gas
exploration and production industry; a deterioration in general economic, business or industry conditions; negative public perceptions of our industry; limited control over properties we
do not operate; pipeline and gathering system capacity constraints and transportation interruptions; terrorist activities and cyber-attacks adversely impacting our operations; potential
challenges of our spin-off of Seventy Seven Energy Inc. (SSE) in connection with SSE's recently completed bankruptcy under Chapter 11 of the U.S. Bankruptcy Code; an interruption
in operations at our headquarters due to a catastrophic event; the continuation of suspended dividend payments on our common stock and preferred stock; certain anti-takeover
provisions that affect shareholder rights; and our inability to increase or maintain our liquidity through debt repurchases, capital exchanges, asset sales, joint ventures, farmouts or
other means.
In addition, disclosures concerning the estimated contribution of derivative contracts to our future results of operations are based upon market information as of a specific date. These
market prices are subject to significant volatility. Our production forecasts are also dependent upon many assumptions, including estimates of production decline rates from existing
wells and the outcome of future drilling activity. Expected asset sales may not be completed in the time frame anticipated or at all. We caution you not to place undue reliance on our
forward-looking statements, which speak only as of the date of this presentation, and we undertake no obligation to update any of the information provided in this release or the
accompanying Outlook, except as required by applicable law.
HOWARD WEIL ENERGY CONFERENCE 2
OUR STRATEGYRELEVANT THROUGH COMMODITY PRICE CYCLES
Profitable and Efficient Growth
from Captured Resources
ExplorationBusiness Development
Financial Discipline
HOWARD WEIL ENERGY CONFERENCE 3
Near term focus – What we are doing now
Increased return on capital – shorter cycle times
Margin growth – cost leadership
Base optimization improvement – 11,000+ producing wells
Portfolio management – divestitures, smart additions, reducing debt
Safety and environmental stewardship
30%
15%
10%5%
5%
15%
20%
2017 D&C Asset Funding
Eagle Ford
Utica
Haynesville
Marcellus
OtherPowder
River
Mid-Continent
2017 CAPITAL ALLOCATIONFLEXIBLE PROGRAM – VALUE FOCUSED
HOWARD WEIL ENERGY CONFERENCE 4
Eagle Ford Shale
< $40/bbl breakeven
6 Rigs / 3 Frac Crews
Haynesville Shale
< $2.35/mcf breakeven
3 Rigs / 2 Frac Crews
Mid-Continent
< $40/bbl breakeven
4 Rigs / 2 Frac Crews
Powder River Basin
$35 – $45/bbl breakeven
2 Rigs / 1 Frac Crew
Utica Shale
$2.15/mcf breakeven
2 Rigs / 2 Frac Crews
Marcellus Shale
$2.00/mcf breakeven
1 Rig / 1 Frac Crew
Price Deck: $3/mcf and $60/bbl oil flat
Capital allocation drivers • High margin production growth
• Cash generating capability
• Available infrastructure and operational efficiency
POWDER RIVER BASIN – TURNER SANDSTONEEXCEPTIONAL FIRST WELL
• What we have confirmed
˃ Great rock quality,
higher pressure
˃ Control of thickest pay zone
in southern area
˃ ~300+ undrilled locations
˃ 2,640' spacing assumed
˃ 140,000 net acres prospective
• What does it mean
˃ EUR: ~1,350 mboe (1)
˃ Single well ROR: ~75% (2)
(1) Reflects Turner Oil Phase appraisal type curve
(2) Assumes $3 gas and $60 oil flat
(3) PV10 positive breakeven price assuming $3 gas price and $60 oil price
2,325 boe/d (78% oil)TIL 3/16/2017
7,100' lateral
HOWARD WEIL ENERGY CONFERENCE 5
Teapot
ParkmanE, A, B/C & Deep
Surrey
Sussex
Niobrara
Turner
Frontier
Mowry~$35/bbl(3)
Breakeven
POWDER RIVER BASIN – SUSSEXPRODUCTION ACCELERATION
(1) IHS data
(2) PV10 positive breakeven price assuming $3 gas price and $60 oil price
HOWARD WEIL ENERGY CONFERENCE 6
Moving to developmentActive in 2017 drilling 15 – 25 wells
with 15 – 25 TILs including 3 DUCs
8,100'Extended lateral program
Average length in 2017
150+ locationsAssumes 1,320' spacing
<$40/bbl(2)
Breakeven
Best Sussex in the PRBTeapot
ParkmanE, A, B/C & Deep
Surrey
Sussex
Niobrara
Turner
Frontier
Mowry
3Q 2017 1st production from multi-well pads
POWDER RIVER BASIN2 RIGS AND OPTION TO ACCELERATE
• More Turner results coming
˃ Second Turner completion
underway
• First Parkman result in May
˃ Completion underway
• Mowry results late Q2 – early Q3
˃ Drilling operations in progress
• First Sussex pad results in Q3
HOWARD WEIL ENERGY CONFERENCE 7
Teapot
ParkmanE, A, B/C & Deep
Surrey
Sussex
Niobrara
Turner
Frontier
Mowry
Upcoming
POWDER RIVER BASINOFF TO A GREAT START
90% undevelopedAverage 80% working interest
HOWARD WEIL ENERGY CONFERENCE 8
307,000 acres80% HBP/HBU/HBO
48% Federal acreage
~2.7 bboe Of resource potential
~2,600 risked locations Teapot
ParkmanE, A, B/C & Deep
Surrey
Sussex
Niobrara
Turner
Frontier
Mowry
150 mmboe resource base
150+ undrilled locations
1,450 mmboe resource base
550+ undrilled locations
470 mmboe resource base
575+ undrilled locations
375 mmboe resource base
300+ undrilled locations
175 mmboe resource base
200+ undrilled locations
35%
16%
49%
Resource Mix
Oil NGL Natural Gas
OSWEGO UPDATELOW-COST, HIGH RETURN OIL GROWTH
(1) Price Deck: $3/mcf and $50/bbl oil flat
HOWARD WEIL ENERGY CONFERENCE 9
40 MILES
40 M
ILE
S
Lightle 4-18-6 1HIP 30 = 1,462 boe/d, 88% oil
Hasty 3-18-6 1HIP 30 = 1,033 boe/d, 87% oil
Caldwell 22-18-6 1HIP 30 = 1,813 boe/d, 80% oil
Themer 6-17-6 1HIP 30 = 832 boe/d, 86% oil
Hughes Trust 33-18-7 1HIP 30 = 1,326 boe/d, 95% oil
Farrar 11-18-6 1HIP 30 = 1,059 boe/d, 87% oil
Hill 2-18-6 1HIP 30 = 1,223 boe/d, 86% oil
Eugene 29-18-6 1HIP 30 = 824 boe/d, 79% oil
Morris 31-18-6 2HIP 30 = 938 boe/d, 91% oil Morris 31-18-6 1H
IP 30 = 881 boe/d, 92% oil
~80% ROR at $50 oil (1)
> $3.2MM/well development cost
delivering 400 mboe EUR
(83% liquids)
Rapid and reliable oil growth
> 10 wells averaging IP30 of
1,140 boe/d with 2 rigs drilling
core inventory in 2017
Quick return on investment
> Cycle time 38 days spud to TIL
MID-CONTINENT PORTFOLIO UPDATEOPTIMIZING OUR POSITION FOR MAXIMUM VALUE
Develop
˃ TIL 40 – 50 Wedge wells in 2017
˃ Drill spacing tests
˃ Drill extended laterals
˃ Optimize completion design
Grow
˃ Test new horizons
˃ Bolted-on 19,300 acres in Major County
for $26 million
˃ Farmed-in 6,700 acres in Major County
Divest
˃ Multiple divestment packages currently
in progress south and east of focus area
(1) PR* – Peak Daily rate shown due to well not having 30 days of production
HOWARD WEIL ENERGY CONFERENCE 10
Schoeppel 1HMeramec (St. Genevieve)
IP 30 = 977 boe/d, 50% oil
Hoskins 1HMeramec (St. Genevieve)
IP 30 = 1,185 boe/d, 60% oil
Hunt 1HMeramec (Stack)
IP 30 = 1,050 boe/d, 45% oil
Johnston 1HMeramec (Stack)
IP 30 = 1,360 boe/d, 31% oil
Stephen 1HOsage (Pipeline Constrained)
PR* = 891 boe/d, FTP = 1,804 PSI
Hoskins 2HMeramec (St. Genevieve)
PR* = 1,357 boe/d, 65% oil(1)
GULF COASTTECHNOLOGY DRIVING RENAISSANCE
Continuing to deliver monster IPsGLD 1H – 42 mmcf/d, 8,200' lateral, 1Q 2017 TIL
Six J 1H – 35 mmcf/d, 10,000' lateral, 1Q 2017 TIL
ROTC 1H – 40 mmcf/d, 10,000' lateral, 4Q 2016 TIL
CA 1H – 38 mmcf/d, 10,000' lateral , 2Q 2016 TIL
(1) PV10 positive breakeven price
ROTC 1H
CA 1H
Six J 1H, GLD 1H
HOWARD WEIL ENERGY CONFERENCE 11
1,200+ locationsPost-divestiture and optimized for
longer lateral development
<$2.35/mcf(1)
Breakeven
EAGLE FORDUNDRILLED ACREAGE, POSITIONED FOR GROWTH
(1) Net processed production mix
(2) PV10 positive breakeven price assuming $3 gas price and $60 oil price
~260,000 Net Acres in Eagle Ford – 99% HBP/HBO
56%19%
25%
Production Mix (1)
Oil NGL Natural Gas
<$40(2)
Breakeven
HOWARD WEIL ENERGY CONFERENCE 12
3,200+ locationsLower Eagle Ford standard spacing
5 – 6 rigsActive in 2017 drilling 175 – 195
wells with 155 – 175 TILs
EAGLE FORD LONG LATERAL DEVELOPMENT REDUCES PAYOUT ~45% COMPARED TO STANDARD LATERALS
13HOWARD WEIL ENERGY CONFERENCE
Long laterals improve
capital efficiency
and create shorter
reinvestment cycles0
5
10
15
20
25
30
35
0 50 100 150 200 250 300 350
NO
RM
ALIZ
ED
AV
G.
CU
M O
IL
(MB
O/$
MM
)
DAYS
2 - East
21
EastAvg LL: 12,600’
IP30: 1,346 BOE/D
94% Oil
CentralAvg LL: 12,950’
IP30: 977 BOE/D
92% Oil
0
5
10
15
20
25
30
35
0 50 100 150 200 250 300 350
NO
RM
ALIZ
ED
AV
G.
CU
M O
IL
(MB
O/$
MM
)
DAYS
1 - Central
2017
2016
2013 - 2015
2017
2016
2013 - 2015
APPALACHIA: ONE BASIN, TWO OUTSTANDING ASSETSMARCELLUS & UTICA SHALES – FREE CASH FLOW GROWTH
>$800mm In projected FCF generation
from 2017 – 2018
HOWARD WEIL ENERGY CONFERENCE 14
Maximizing valueYTD performance exceeding plan by optimizing production during favorable pricing
Improving LOE>20% / BOE reduction from Q1 2016 – YTD
97 88100
0
50
100
150
200
250
300
350
400
$-
$100
$200
$300
$400
$500
$600
2016 2017E 2018E
Ne
t p
rod
uctio
n (
mm
bo
e)
($m
m)
2016 – 2018 Projected Free Cash Flow(1)
and Production(Excluding Hedges)
2017 Budget Actual Production (mmboe)
Jan – Feb
Actuals
(1) Assumes $3.15 / $52 for 2017 and $3 / $60 in 2018
Free cash flow defined as net revenue less all operating, gathering, processing and transportation expenses, production taxes and capital expenditures
CHESAPEAKE OPERATING PERFORMANCERELENTLESS FOCUS ON COST MANAGEMENT
HOWARD WEIL ENERGY CONFERENCE 15
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
CHK A B C D E F G H I J K
$/b
oe
2016 Production Expense (1)
$3.05/boe2016 production expense
Base production optimization
Supply chain synergies
Maintaining EHS excellence
(1) Production expense defined as the total of lease operating expenses, ad valorem taxes and other production expenses
Peer Group includes: APC, APA, COP, DVN, ECA, EOG, HES, MRO, MUR, NBL and OXY
CHESAPEAKE CAPITAL EFFICIENCYRELENTLESS FOCUS ON CAPITAL DEPLOYED
HOWARD WEIL ENERGY CONFERENCE 16
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
CHK A B C D E F G H I J K
$/b
oe
2016 Proved F&D Costs (1)
15 mcf to 1 boe
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
CHK A B C D E F G H I J K
$/b
oe
2016 Proved F&D Costs (1)
6 mcf to 1 boe
(1) Source: 2016 10-K filings. Proved reserve F&D costs defined as the sum of the development and exploration costs divided by proved reserves added by extensions, additions and discoveries.
Peer Group includes: APC, APA, COP, DVN, ECA, EOG, HES, MRO, MUR, NBL and OXY
Operational leadership and technical capabilities
provide peer-leading cost management
~$2.35/boe ~$3.40/boe
HOWARD WEIL ENERGY CONFERENCE 17
Resilient, strong, diverse portfolio
Balance sheet and liquidity improvement
Oil growth on track from PRB, Mid-Con and Eagle Ford
Industry-leading operating performance and capital efficiency
Investment Thesis
HOWARD WEIL ENERGY CONFERENCE 18
OPTIMIZING DOWNSTREAM COMMITMENTS
Assumes Seaway and MEP buy down
~$560mm additional commitment reductions
with Seaway and MEP buy down
($mm) 2017 2018 2019 2020 2021 Thereafter
Haynesville 355 149 147 125 114 419
Northeast 373 401 401 401 399 3,580
Eagle Ford 363 334 332 335 255 1,085
Other 248 222 187 127 125 122
Total (1) 1,339 1,107 1,067 989 894 5,205
GP&T Commitments ($ billion)
YE’14 YE’15 YE’16 YE’17
$16.0 $14.0 $11.1 $9.3E
~$7 billion reduction In midstream and marketing
commitments since 2014
Commitment being fully utilized; CHK projects overall estimate of ~90% utilization company-wide
Reducing commitments
HOWARD WEIL ENERGY CONFERENCE 19
Optimizing commitments to further increase EBITDA
DEBT MATURITY PROFILE
Pro forma tender results, OMRs, 6.25% Euro note maturity and 6.50% 2017 redemption
HOWARD WEIL ENERGY CONFERENCE 20
HEDGING POSITION
(1) As of 2/6/16, using midpoints of total production from 2/14/2017 Outlook
Oil2017 (1)
68%
Swaps $50.19/bbl
Natural Gas2017 (1)
71%
68%Swaps
3%Collars
$3.00/$3.48/mcfNYMEX
$3.07/mcfNYMEX
NGL2017 (1)
7%
Ethane Swaps $0.28/gal
HOWARD WEIL ENERGY CONFERENCE 21
~120 bcf hedged in 2018 with swaps at an average price of $3.13
~47 bcf hedged in 2018 with collars at an average price of $3.00/$3.25
CORPORATE INFORMATION
HEADQUARTERS
6100 N. Western Avenue
Oklahoma City, OK 73118
WEBSITE: www.chk.com
CORPORATE CONTACTS
BRAD SYLVESTER, CFA
Vice President – Investor Relations
and Communications
DOMENIC J. DELL’OSSO, JR.
Executive Vice President and
Chief Financial Officer
Investor Relations department
can be reached at ir@chk.com
PUBLICLY TRADED SECURITIES CUSIP TICKER
7.25% Senior Notes due 2018 #165167CC9 CHK18A
3mL + 3.25% Senior Notes due 2019 #165167CM7 CHK19
6.625% Senior Notes due 2020 #165167CF2 CHK20A
6.875% Senior Notes due 2020 #165167BU0 CHK20
6.125% Senior Notes due 2021 #165167CG0 CHK21
5.375% Senior Notes due 2021 #165167CK21 CHK21A
8.00% Senior Secured Second Lien Notes due 2022#165167CQ8 N/A
#U16450AT2 N/A
4.875% Senior Notes due 2022 #165167CN5 CHK22
5.75% Senior Notes due 2023 #165167CL9 CHK23
8.00% Senior Notes due 2025#165167CT2 N/A
#U16450AU99 N/A
5.50% Contingent Convertible Senior Notes due 2026 #165167CR6 N/A
2.75% Contingent Convertible Senior Notes due 2035 #165167BW6 CHK35
2.50% Contingent Convertible Senior Notes due 2037#165167BZ9/
#165167CA3CHK37/ CHK37A
2.25% Contingent Convertible Senior Notes due 2038 #165167CB1 CHK38
4.5% Cumulative Convertible Preferred Stock #165167842 CHK PrD
5.0% Cumulative Convertible Preferred Stock (Series 2005B)#165167834/
N/A#165167826
5.75% Cumulative Convertible Preferred Stock
#U16450204/
N/A#165167776/
#165167768
5.75% Cumulative Convertible Preferred Stock (Series A)
#U16450113/
N/A#165167784/
#165167750
Chesapeake Common Stock #165167107 CHK
HOWARD WEIL ENERGY CONFERENCE 22
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