Chesapeake Energy Corporation Reports Financial and Operational Results for the 2012 Fourth Quarter and Full Year

Chesapeake Energy Corporation (NYSE:CHK) today announced financial and
operational results for the 2012 fourth quarter and full year. For the
2012 fourth quarter, Chesapeake reported net income available to common
stockholders of $257 million ($0.39 per fully diluted common share),
ebitda of $1.299 billion (defined as net income (loss) before income
taxes, interest expense and depreciation, depletion and amortization),
operating cash flow of $1.146 billion (defined as cash flow from
operating activities before changes in assets and liabilities) and
production of 362 billion cubic feet of natural gas equivalent (bcfe).
For the 2012 full year, Chesapeake reported a net loss available to
common stockholders of $940 million, or a loss of $1.46 per fully
diluted common share, ebitda of $1.914 billion, operating cash flow of
$4.069 billion and production of 1.422 trillion cubic feet of natural
gas equivalent (tcfe).

The company′s 2012 fourth quarter and full year results include various
items that are generally not included in published estimates of the
company′s financial results by securities analysts. Excluding such
items, Chesapeake reported adjusted net income available to common
stockholders of $153 million, or $0.26 per fully diluted common share,
and adjusted ebitda of $1.089 billion for the 2012 fourth quarter and
adjusted net income available to common stockholders of $285 million, or
$0.61 per fully diluted common share, and adjusted ebitda of $3.754
billion for the 2012 full year. The primary excluded items from the 2012
fourth quarter and full year reported results are the following:

• 
  a noncash after-tax impairment charge of $2.022 billion for the full
  year related to the carrying value of natural gas and oil properties;
  
• 
  an after-tax charge of $122 million related to the full repayment of
  the company′s May 2012 term loans for the fourth quarter and full year;
  
• 
  net unrealized noncash after-tax mark-to-market gains of $78 million
  for the fourth quarter and $347 million for the full year resulting
  from the company′s natural gas, oil and natural gas liquids (NGL) and
  interest rate hedging programs;
  
• 
  net after-tax gains of $166 million for the fourth quarter and $163
  million for the full year related to gains and losses on sales,
  including a $176 million after-tax gain on the sale of the company′s
  midstream subsidiary for the fourth quarter and full year;
  
• 
  noncash after-tax charges of $36 million for the fourth quarter and
  $208 million for the full year related to the impairment of certain
  fixed assets; and
  
• 
  net after-tax gains of $19 million for the fourth quarter and $622
  million for the full year related to certain investments, including a
  $629 million gain for the full year related to the sale of all of the
  company′s interests in Access Midstream Partners, L.P. (NYSE:ACMP).
  

A reconciliation of operating cash flow, ebitda, adjusted ebitda and
adjusted net income to comparable financial measures calculated in
accordance with generally accepted accounting principles is provided on
pages 18 - 21 of this release.

Management Comments

Steven C. Dixon, Chesapeake′s Chief Operating Officer, said, 'We
continue to deliver on our liquids growth targets, led by a
year-over-year increase of nearly 40,000 barrels per day in oil
production. We achieved this despite the sale of nearly 18,000 barrels
per day of oil production associated with our exit from the Permian
Basin during the 2012 third and fourth quarters. We believe this
performance ranks Chesapeake among the top three organic oil growth
stories in the industry for 2012. I am very proud of what our team has
accomplished thus far and look forward to driving further liquids
production growth and capital efficiencies in 2013.?

Domenic J. Dell′Osso, Jr., Chesapeake′s Chief Financial Officer, added,
'Chesapeake delivered strong results during the 2012 fourth quarter. I
am pleased to reaffirm our 2013 guidance for liquids production growth
and drilling and completion capital expenditures, while at the same time
reducing our cost guidance for many significant categories.
Additionally, we are reaffirming the commitment of management and the
Board of Directors to reducing financial leverage of the company through
asset sales. I would also like to note we have protected a substantial
portion of our projected operating cash flows in 2013 through downside
hedge protection on approximately 85% of our projected oil production at
an average price of $95.45 per barrel and approximately 50% of our
projected natural gas production at an average price of $3.62 per mcf.
This equates to approximately 72% of our projected 2013 natural gas, oil
and NGL revenue, after differentials.?

Key Operational and Financial Statistics Summarized

The table below summarizes Chesapeake′s key results during the 2012
fourth quarter and compares them to results during the 2012 third
quarter and the 2011 fourth quarter and also compares the 2012 full year
to the 2011 full year.

Hedging Positions Detailed

The following table summarizes Chesapeake′s downside hedge position
through swaps and collars on its 2013 natural gas and oil production as
of February 20, 2013. The company does not currently have hedges in
place for its NGL production. Depending on changes in natural gas and
oil futures markets and management′s view of underlying supply and
demand trends, Chesapeake may increase or decrease some or all of its
hedging positions at any time in the future without notice.

Details of the company′s year-end hedging positions will be provided in
the company′s Form 10-K filing with the Securities and Exchange
Commission (SEC), and current positions are disclosed in summary format
in management′s Outlook dated February 21, 2013, which is attached to
this release as Schedule 'A,? beginning on page 22. The Outlook has been
updated from the Outlook dated November 1, 2012, attached as Schedule
'B,? which begins on page 25, to reflect various updated information.

2012 Fourth Quarter Average Daily Liquids Production Increases 39%
Year over Year

and 3% Sequentially to 147,500 Bbls; 2012
Fourth Quarter Average Daily Oil

Production Increases 69%
Year over Year and Was Flat Sequentially

at 97,100 Bbls,
Primarily as a Result of Asset Sales

Chesapeake′s daily production for the 2012 fourth quarter averaged 3.931
bcfe, an increase of 9% from the average 3.596 bcfe produced per day in
the 2011 fourth quarter and a decrease of 5% from the average 4.142 bcfe
produced per day in the 2012 third quarter. The decrease was primarily
the result of selling approximately 0.220 bcfe per day of production
associated with the company′s Permian Basin producing assets in
September and October of 2012. Chesapeake′s average daily production of
3.931 bcfe for the 2012 fourth quarter consisted of approximately 3.046
billion cubic feet (bcf) of natural gas (77% on a natural gas equivalent
basis) and approximately 147,500 barrels (bbls) of liquids, consisting
of approximately 97,100 bbls of oil (15% on a natural gas equivalent
basis) and approximately 50,400 bbls of NGL (8% on a natural gas
equivalent basis) (oil and NGL collectively referred to as 'liquids?).

For the 2012 fourth quarter, the company′s year-over-year growth rate of
natural gas production was 3%, or approximately 87 million cubic feet
(mmcf) per day, and its year-over-year growth rate of liquids production
was 39%, or approximately 41,300 bbls per day. Chesapeake′s
year-over-year liquids production growth consisted of oil production
growth of 69%, or approximately 39,600 bbls per day, and NGL production
growth of 4%, or approximately 1,700 bbls per day.

Chesapeake′s daily production for the 2012 full year averaged 3.886
bcfe, a 19% increase from the average 3.272 bcfe produced per day for
the 2011 full year. The company′s average daily production of 3.886 bcfe
for the 2012 full year consisted of approximately 3.084 bcf of natural
gas (80% on a natural gas equivalent basis) and approximately 133,550
bbls of liquids, consisting of approximately 85,420 bbls of oil (13% on
a natural gas equivalent basis) and approximately 48,130 bbls of NGL (7%
on a natural gas equivalent basis).

For the 2012 full year, the company′s year-over-year growth rate of
natural gas production was 12%, or approximately 333 bcf per day, and
its year-over-year growth rate of liquids production was 54%, or
approximately 46,770 bbls per day. Chesapeake′s year-over-year liquids
production growth consisted of oil production growth of 84%, or
approximately 38,950 bbls per day, and NGL production growth of 19%, or
approximately 7,820 bbls per day.

As a result of completed and planned asset sales and the continued shift
in focus in its drilling program from dry gas plays to liquids-rich
plays, Chesapeake is projecting its natural gas production to decline
approximately 7% in 2013 and is projecting its liquids production to
increase approximately 27% in 2013.

During 2012, Company Adds New Net Proved Reserves of 5.0 Tcfe, or 840
Mmboe, through the Drillbit; Total Proved Reserves Decrease 17% to 15.7
Tcfe, or 2.6 Bboe, Primarily Due to Downward Price-Related Revisions and
Net Divestitures

The company's December 31, 2012 estimated proved reserves were 15.690
tcfe, or 2.6 billion barrels of oil equivalent (bboe), a 17% decrease
from year-end 2011. Chesapeake added 5.042 tcfe, or 840 million barrels
of oil equivalent (mmboe), of new proved reserves (net of 1.349 tcfe, or
225 mmboe of nonprice-related revisions) through the drillbit at a
drilling and completion cost of $1.82 per thousand cubic feet of natural
gas equivalent (mcfe), or $10.92 per barrel of oil equivalent (boe),
during 2012.

Primarily as a result of lower natural gas prices, the company recorded
downward price-related revisions of 5.414 tcfe, or 902 mmboe, during
2012. These price revisions were seen primarily with the removal of
proved undeveloped reserves (PUDs) in the company′s Barnett and
Haynesville shale plays. The majority of the downward nonprice-related
revisions of 1.349 tcfe resulted from the continued execution of the
company′s strategy to shift its drilling focus from natural gas to
liquids-rich areas and to drill in the 'core of the core? of its acreage
positions. As rigs were reallocated, PUDs were removed from various
non-core areas resulting in downward revisions. Additionally, during
2012, Chesapeake recorded net divestitures of 1.305 tcfe, or 218 mmboe.

The following table presents Chesapeake′s December 31, 2012 estimated
proved reserves, estimated future net cash flows from proved reserves
(discounted at an annual rate of 10% before income taxes (PV-10)) and
proved developed percentage, each calculated based on the trailing
12-month average price required under SEC rules and the 10-year average
NYMEX strip prices as of December 31, 2012. Additional information
regarding the SEC case can be found on page 14.

Operational Update; Eagle Ford Production Grows 266%

Year
Over Year and 20% Sequentially

Since 2000, Chesapeake has built a leading position in 10 of what it
believes are the Top 15 unconventional plays in the U.S. ? the Eagle
Ford Shale in South Texas; the Marcellus Shale in Pennsylvania and West
Virginia; the Utica Shale in Ohio, West Virginia and Pennsylvania; the
Granite Wash, Cleveland, Tonkawa and Mississippi Lime plays in the
Anadarko Basin in Oklahoma and the Texas Panhandle; the
Haynesville/Bossier shales in western Louisiana and East Texas; the
Barnett Shale in North Texas; and the Niobrara Shale in the Powder River
Basin in Wyoming. These 10 plays represent Chesapeake′s core assets and
are the nearly exclusive focus of the company′s planned future drilling
efforts.

During the past four years, Chesapeake has substantially shifted its
drilling and completion activity to liquids-rich plays in response to
strong U.S. oil prices and relatively weak U.S. natural gas prices.
During 2012, the company invested approximately 84% of its operated
drilling and completion capital expenditures in liquids-rich plays and
projects approximately 86% of such expenditures will be invested in
liquids-rich plays in 2013.

The company continues to achieve strong operational results in its
liquids-rich plays, as highlighted below:

Eagle Ford Shale (South Texas):Chesapeake continues to generate impressive liquids production
growth rates from its 485,000 net acres of leasehold in the Eagle Ford
Shale in South Texas. Net production during the 2012 fourth quarter
averaged 62,500 boe per day (143,200 gross operated boe per day). This
represents an increase of 266% year over year and 20% sequentially.
Approximately 66% of total Eagle Ford production during the 2012 fourth
quarter was oil, 15% was NGL and 19% was natural gas.

As of December 31, 2012, Chesapeake had 534 gross operated producing
wells in the Eagle Ford, of which 405 reached first production in 2012,
including 98 in the fourth quarter. The company is currently operating
17 rigs in the play, down from a peak of 34 rigs in April 2012, and
plans to operate an average of 16 rigs in 2013. Spud-to-spud cycle times
have declined dramatically in the Eagle Ford, from 26 days in the 2011
fourth quarter to only 18 days in the 2012 fourth quarter. Chesapeake
plans to drill fewer Eagle Ford wells in 2013 than in 2012; however, the
planned number of wells turned-to-sales will be roughly equal in both
years. The company remains on pace to have substantially all of its core
and Tier 1 Eagle Ford acreage held by production by the end of 2013.

Of the 98 wells that commenced first production in the 2012 fourth
quarter, 90 wells (or 92%) had peak production rates of more than 500
boe per day, including 27 wells (or 28%) with peak rates of more than
1,000 boe per day.

Three notable wells completed by Chesapeake in the Eagle Ford during the
2012 fourth quarter are as follows:

• 
  The Hahn Dew 1H in DeWitt County, TX achieved a peak rate of
  approximately 1,985 boe per day, which included 550 bbls of oil, 360
  bbls of NGL and 6.4 mmcf of natural gas per day;
  
• 
  The Flat Creek Unit A Dim 2H in Dimmit County, TX achieved a
  peak rate of approximately 1,470 boe per day, which included 1,210
  bbls of oil, 160 bbls of NGL and 0.6 mmcf of natural gas per day; and
  
• 
  The JJ Henry IX M 1H in McMullen County, TX achieved a peak
  rate of approximately 1,275 boe per day, which included 1,160 bbls of
  oil, 55 bbls of NGL and 0.4 mmcf of natural gas per day.
  

As part of its 'core of the core? strategy, Chesapeake is currently
pursuing the sale of a portion of its existing northern Eagle Ford Shale
leasehold and producing assets which are outside its core development
area.

Utica Shale (eastern Ohio, Pennsylvania, West
Virginia):Chesapeake continues to focus on
developing the core wet gas window of the Utica Shale in eastern Ohio, a
play in which the company holds the industry′s largest position,
approximately 1.0 million net acres of leasehold. As of December 31,
2012, Chesapeake has drilled a total of 184 wells in the Utica, which
includes 45 producing wells, 47 additional wells waiting on pipeline
connection and 92 wells in various stages of completion. Chesapeake is
currently operating 14 rigs in the Utica and plans to average 14
operated rigs during 2013. Production growth from the Utica is expected
to accelerate during 2013 when two new third-party natural gas
processing complexes will enable the company to turn a large portion of
its well inventory to sales.

Three notable wells completed by Chesapeake in the Utica during the 2012
fourth quarter are as follows:

• 
  The Houyouse 15-13-5 1H in Carroll County, OH achieved a peak
  rate of approximately 1,730 boe per day, which included 525 bbls of
  oil, 305 bbls of NGL and 5.4 mmcf of natural gas per day;
  
• 
  The Cain South 16-12-4 8H in Jefferson County, OH achieved a
  peak rate of approximately 1,540 boe per day, which included 425 bbls
  of NGL and 6.7 mmcf of natural gas per day; and
  
• 
  The Walters 30-12-5 8H in Carroll County, OH achieved a peak
  rate of approximately 1,140 boe per day, which included 315 bbls of
  oil, 220 bbls of NGL and 3.6 mmcf of natural gas per day.
  

As of December 31, 2012, the company′s remaining drilling and completion
carry from Total E&P USA, Inc. was approximately $1.15 billion.
Chesapeake anticipates using 100% of the remaining carry by year-end
2014, and the carry will pay for 60% of Chesapeake′s drilling and
completion costs during that time.

Marcellus Shale (Pennsylvania, West Virginia):With approximately 1.8 million net acres, Chesapeake is the
industry′s largest leasehold owner in the Marcellus Shale, which spans
from northern West Virginia across much of Pennsylvania into southern
New York.

During the 2012 fourth quarter, Chesapeake′s average daily net
production in the northern dry gas portion of the Marcellus was 645
million cubic feet of natural gas equivalent (mmcfe) per day (1,485
gross operated mmcfe per day), an increase of 135% year over year and
19% sequentially. Chesapeake has reduced its operated rig count to five
rigs in the northern dry gas portion of the Marcellus and anticipates
maintaining that level of activity for the remainder of 2013.

Three notable wells completed by Chesapeake in the northern dry gas
portion of the Marcellus during the 2012 fourth quarter are as follows:

• 
  The Holtan 5H in Susquehanna County, PA achieved a peak rate of
  12.6 mmcf of natural gas per day;
  
• 
  The Lopatofsky 2H in Wyoming County, PA achieved a peak rate of
  11.4 mmcf of natural gas per day; and
  
• 
  The Messersmith S Bra 1H in Bradford County, PA achieved a peak
  rate of 10.5 mmcf of natural gas per day.
  

During the 2012 fourth quarter, Chesapeake′s average daily net
production in the southern wet gas portion of the play was approximately
155 mmcfe per day (260 gross operated mmcfe per day). Management expects
production from the southern Marcellus will remain relatively flat until
the ATEX pipeline, which will carry processed ethane to the Gulf Coast,
comes online in late 2013. Chesapeake is currently drilling with three
operated rigs in the southern wet gas portion of the Marcellus and
anticipates maintaining that level of activity for the remainder of 2013.

Three notable wells completed by Chesapeake in the southern wet gas
portion of the Marcellus during the 2012 fourth quarter are as follows:

• 
  The Mark Hickman 5H in Ohio County, WV achieved an initial test
  rate of approximately 1,195 boe per day, which included 290 bbls of
  oil, 305 bbls of NGL and 3.6 mmcf of natural gas per day;
  
• 
  The Esther Weeks 1H in Ohio County, WV achieved an initial test
  rate of approximately 1,000 boe per day, which included 195 bbls of
  oil, 265 bbls of NGL and 3.3 mmcf of natural gas per day; and
  
• 
  The Michael Southworth 8H in Marshall County, WV achieved an
  initial test rate of approximately 955 boe per day, which included 305
  bbls of oil, 215 bbls of NGL and 2.6 mmcf of natural gas per day.
  

The company is in the process of selling various non-core Marcellus
acreage.

Mississippi Lime (northern Oklahoma, southern
Kansas): Chesapeake′s approximate 2.1 million net
acres of leasehold is the industry′s largest position in the Mississippi
Lime play in northern Oklahoma and southern Kansas. Production for the
2012 fourth quarter averaged approximately 32,500 boe per day (41,600
gross operated boe per day), up 208% year over year and 30%
sequentially. Approximately 45% of total Mississippi Lime production
during the 2012 fourth quarter was oil, 9% was NGL and 46% was natural
gas. As of December 31, 2012, Chesapeake had 273 producing wells in the
Mississippi Lime play, which included 55 wells that reached first
production in the 2012 fourth quarter, compared to 73 in the 2012 third
quarter and 49 in the 2012 second quarter. Also, as of December 31,
2012, Chesapeake had approximately 46 wells drilled, but not yet
producing, that were in various stages of completion and/or waiting on
pipeline connection. Chesapeake is currently operating eight rigs in the
Mississippi Lime and anticipates maintaining that level of activity for
the remainder of 2013.

Three notable wells completed by Chesapeake in the Mississippi Lime
during the 2012 fourth quarter are as follows:

• 
  The Mike 2-28-15 1H in Woods County, OK achieved a peak rate of
  approximately 2,820 boe per day, which included 2,345 bbls of oil, 100
  bbls of NGL and 2.3 mmcf of natural gas per day;
  
• 
  The Roper 1-28-15 1H in Woods County, OK achieved a peak rate
  of approximately 1,985 boe per day, which included 1,645 bbls of oil,
  70 bbls of NGL and 1.6 mmcf of natural gas per day; and
  
• 
  The Thorp 4-24-10 1H in Alfalfa County, OK achieved a peak rate
  of approximately 1,365 boe per day, which included 465 bbls of oil,
  215 bbls of NGL and 4.1 mmcf of natural gas per day.
  

2012 Fourth Quarter and Full Year Financial and Operational Results

Conference
Call Information

A conference call to discuss this release has been scheduled for
Thursday, February 21, 2013 at 9:00 am EST. The telephone number to
access the conference call is 913-981-5550 or toll-free 800-289-0508.
The passcode for the call is 8878841. We encourage those who
would like to participate in the call to place calls between 8:50 and
9:00 am EST. For those unable to participate in the conference call, a
replay will be available for audio playback at 1:00 pm EST on Thursday,
February 21, 2013 and will run through midnight Thursday, March 7, 2013.
The number to access the conference call replay is 719-457-0820
or toll-free 888-203-1112. The passcode for the replay is 8878841.
The conference call will also be webcast live on Chesapeake′s website at www.chk.com
in the 'Events? subsection of the 'Investors? section of the company′s
website. The webcast of the conference will be available on the
company′s website for one year.

This news release and the accompanying Outlooks include
'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 that give our current expectations or
forecasts of future events.They include estimates of natural gas
and liquids reserves, projected production, estimates of operating
costs, planned development drilling and use of joint venture drilling
carries, anticipated asset sales, projected cash flow and liquidity,
business strategy and other plans and objectives for future operations.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.We caution you not to place
undue reliance on our forward-looking statements, which speak only as of
the date of this news release, and we undertake no obligation to update
this information.

Factors that could cause actual results to differ materially from
expected results are described under 'Risk Factors? in Item 1A of our
2011 annual report on Form 10-K filed with the U.S. Securities and
Exchange Commission on February ?29, 2012.These risk factors
include the volatility of natural gas and oil prices; the limitations
our level of indebtedness may have on our financial flexibility;
declines in the values of our natural gas and oil properties resulting
in ceiling test write-downs; the availability of capital on an economic
basis, including through planned asset sales, to fund reserve
replacement costs; our ability to replace reserves and sustain
production; uncertainties inherent in estimating quantities of natural
gas and oil reserves and projecting future rates of production and the
amount and timing of development expenditures; inability to generate
profits or achieve targeted results in drilling and well operations;
leasehold terms expiring before production can be established; hedging
activities resulting in lower prices realized on natural gas and oil
sales; the need to secure hedging liabilities and the inability of
hedging counterparties to satisfy their obligations; drilling and
operating risks, including potential environmental liabilities;
legislative and regulatory changes adversely affecting our industry and
our business, including initiatives related to hydraulic fracturing;
general economic conditions negatively impacting us and our business
counterparties; oilfield services shortages and transportation capacity
constraints and interruptions that could adversely affect our cash flow;
and losses possible from pending or future litigation and regulatory
investigations.We do not have binding agreements for all of our
planned 2013 asset sales. Our ability to consummate each of these
transactions is subject to changes in market conditions and other
factors. If one or more of the transactions is not completed in the
anticipated time frame or at all or for less proceeds than anticipated,
our ability to fund budgeted capital expenditures and reduce our
indebtedness as planned could be adversely affected.

Our production forecasts are dependent upon many assumptions,
including estimates of production decline rates from existing wells and
the outcome of future drilling activity.Although we believe the
expectations and forecasts reflected in these and other forward-looking
statements are reasonable, we can give no assurance they will prove to
have been correct.They can be affected by inaccurate assumptions
or by known or unknown risks and uncertainties.

Chesapeake Energy Corporation (NYSE:CHK) is the second-largest
producer of natural gas, a Top 11 producer of oil and natural gas
liquids and the most active driller of new wells in the U.S.
Headquartered in Oklahoma City, the company's operations are focused on
discovering and developing unconventional natural gas and oil fields
onshore in the U.S. Chesapeake owns leading positions in the Eagle Ford,
Utica, Granite Wash, Cleveland, Tonkawa, Mississippi Lime and Niobrara
unconventional liquids plays and in the Marcellus, Haynesville/Bossier
and Barnett unconventional natural gas shale plays. The company has also
vertically integrated its operations and owns substantial marketing and
oilfield services businesses through its subsidiaries Chesapeake Energy
Marketing, Inc. and Chesapeake Oilfield Operating, L.L.C.Further
information is available at www.chk.com
where Chesapeake routinely posts announcements, updates, events,
investor information, presentations and news releases.

PV-10 is discounted (at 10% per year) future net cash flows before
income taxes. The standardized measure of discounted future net cash
flows includes the effects of estimated future income tax expenses and
is calculated in accordance with Accounting Standards Topic 932.
Management uses PV-10 as one measure of the value of the company's
current proved reserves and to compare relative values among peer
companies without regard to income taxes. The company also understands
that securities analysts and rating agencies use this measure in similar
ways. While PV-10 is based on prices, costs and discount factors which
are consistent from company to company, the standardized measure is
dependent on the unique tax situation of each individual company.

The company′s PV-10 and standardized measure were calculated using
trailing 12-month average first-day-of-the-month prices. As of December
31, 2012 and 2011, the prices used were $2.76 per mcf and $94.84 per bbl
and $4.12 per mcf and $95.97 per bbl, respectively, before field
differential adjustments.