Resource item

Management report and analysis of the financial situation and results POINT 2. of operations

Introduction


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   202    1     Form
10-K  .

We are an independent exploration and production company engaged in the
acquisition, exploration and development of properties to produce oil, natural
gas 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 8,200 gross oil and natural gas wells. 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").

Our strategy is to create stockholder value by generating sustainable Free Cash
Flow from our oil and natural gas development and production activities. 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 oil and
natural gas producing activities. We continue to seek opportunities to reduce
cash costs (production, gathering, processing and transportation and general and
administrative) per barrel of oil 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 of all new wells completed beginning in 2021 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 we expect our legacy Marcellus assets to receive
dual certification as responsibly sourced by the end of the second quarter 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 Period, 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
and February 10, 2021 through March 31, 2021 separately, management views our
operating results for the three months ended March 31, 2021 by combining the
results of the 2021 Predecessor Period and the 2021 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
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results formed under applicable regulations, but are presented because we believe they provide the most meaningful comparison of our results with prior periods.

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.

Assignment

On March 25, 2022we finalized the sale of our Powder River Basin active 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 $279 million.

COVID-19 pandemic and impact on global demand for Oil and natural gas

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 governmental restrictions. While we cannot
predict the full impact that COVID-19 and its variants, or the related
significant disruption and volatility in the oil and natural gas 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

202 1 Form 10-K and Part I, Item 1A “Risk Factors” of our

202 1 Form 10-K .

Russia invasion of Ukraine; Volatility of oil, natural gas and NGL prices; and inflationary pressures on costs

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 oil, natural gas 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.

Cash 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 oil and natural gas properties, acquisitions of
additional oil and natural gas properties and return of value to stockholders
through dividends. 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
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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 March 31,
2022, we had $1.252 billion of liquidity available, including $19 million of
cash on hand and $1.233 billion of aggregate unused borrowing capacity available
under the Exit Credit Facility. As of March 31, 2022, we had $500 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 $210 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 May 4, 2022, we declared a quarterly dividend payable of $2.34 per share,
which will be paid on June 2, 2022 to stockholders of record at the close of
business on May 19, 2022. The dividend consists of a base quarterly dividend in
the amount of $0.50 per share and a variable quarterly dividend in the amount of
$1.84 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 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 oil, natural gas 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 oil, natural gas and NGL derivative activities, when
combined with our sales of oil, natural gas 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 March 31, 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 oil, natural gas and NGL to move certain of our production to
market. The estimated gross undiscounted future commitments under these
agreements were approximately $4.4 billion as of March 31, 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   1    3   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. Our borrowing base was reaffirmed in
April 2022, and the next scheduled redetermination will be on or about October
1, 2022. 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.
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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.

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.

Takeover and repayment of the 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 expenditure

For the year ending December 31, 2022, we currently expect to bring or have
online approximately 190 to 220 gross wells across 11 to 14 rigs and plan to
invest approximately $1.5 - $1.8 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.

Sources of Funds

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

                                                                      Successor                          Predecessor
                                                                              Period from                Period from
                                                           Three Months       February 10,             January 1, 2021
                                                              Ended           2021 through                 through
                                                            March 31,          March 31,                 February 9,
                                                               2022               2021                      2021
Cash provided by (used in) operating activities            $     853          $     409                $        (21)
Proceeds from Exit Credit Facility - Tranche A
Loans, net                                                       500                  -                           -
Proceeds from issuance of senior notes                             -                  -                       1,000
Proceeds from issuance of common stock                             -                  -                         600
Proceeds from warrant exercise                                     1                  -                           -
Proceeds from divestitures of property and equipment             403                  4                           -
Total sources of cash and cash equivalents                 $   1,757          $     413                $      1,579


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Cash flow from operating activities

Cash provided by operating activities was $853 million in the 2022 Successor
Period, cash provided by operating activities was $409 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 oil, natural gas 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 $500 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 shares

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.

Uses of funds

The following table shows the uses of our cash and cash equivalents for the successor and predecessor periods:

                                                                        Successor                          Predecessor
                                                                                Period from                Period from
                                                             Three Months       February 10,             January 1, 2021
                                                                Ended           2021 through                 through
                                                              March 31,          March 31,                 February 9,
                                                                 2022               2021                      2021
Oil and Natural Gas Expenditures:
Capital expenditures                                         $     344          $      77                $         66
Other Uses of Cash and Cash Equivalents:
Business combination, net                                        2,006                  -                           -

Exit Credit Facility Payments – Tranche A Loans, Net

                                                                  -                 50                         479
Payments on DIP Facility borrowings                                  -                  -                       1,179

Debt issuance and other financing costs                              -                  3                           8
Cash paid for common stock dividends                               210                  -                           -
Cash paid to repurchase and retire common stock                     83                  -                           -
Other                                                                -                  1                           -
Total other uses of cash and cash equivalents                    2,299                 54                       1,666
Total uses of cash and cash equivalents                      $   2,643          $     131                $      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 primarily in the
Haynesville following the Vine Acquisition.



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Trade suit

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 borrowings under the DIP facility

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 payment for common stock dividends

As part of our dividend program, we paid quarterly common stock base dividends
of $52 million ($0.4375 per share) and paid our first quarterly common stock
variable dividend of $158 million ($1.33 per share) in the 2022 Successor
Period.

Cash paid to redeem and withdraw common shares

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. The
repurchased shares of common stock were retired and recorded as a reduction to
common stock and retained earnings.


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  Table of Contents

Results of Operations

Oil, natural gas and NGL production and average selling prices

                                                                                                               Successor
                                                                                                   Three Months Ended March 31, 2022
                                                             Oil                                     Natural Gas                             NGL                             Total
                                               MBbl                                          MMcf                                   MBbl                             MBoe
                                             per day                       $/Bbl            per day               $/Mcf            per day          $/Bbl           per day          $/Boe
Marcellus                                        -                             -            1,452                  4.66                -               -              242           27.97
Haynesville                                      -                             -            1,625                  4.46                -               -              271           26.73
Eagle Ford                                      52                         95.00              129                  4.04               16           41.09               90           68.67
Powder River Basin                               8                         95.18               41                  5.45                3           53.96               17           63.98
Total                                           60                         95.02            3,247                  4.54               19           43.05              620           34.31

                                                                                                               Successor
                                                                                         Period from February 10, 2021 through March 31, 2021
                                                             Oil                                     Natural Gas                             NGL                             Total
                                               MBbl                                          MMcf                                   MBbl                             MBoe
                                             per day                       $/Bbl            per day               $/Mcf            per day          $/Bbl           per day          $/Boe
Marcellus                                        -                             -            1,283                  2.53                -               -              214           15.21
Haynesville                                      -                             -              524                  2.68                -               -               87           16.09
Eagle Ford                                      66                         61.51              143                  6.04               18           25.72              107           50.07
Powder River Basin                              10                         58.95               57                  4.82                3           34.75               23           42.57
Total                                           76                         61.19            2,007                  2.89               21           27.20              431           25.57

                                                                                                              Predecessor
                                                                                         Period from January 1, 2021 through February 9, 2021
                                                             Oil                                     Natural Gas                             NGL                             Total
                                               MBbl                                          MMcf                                   MBbl                             MBoe
                                             per day                       $/Bbl            per day               $/Mcf            per day          $/Bbl           per day          $/Boe
Marcellus                                        -                             -            1,233                  2.42                -               -              206           14.49
Haynesville                                      -                             -              543                  2.44                -               -               90           14.62
Eagle Ford                                      74                         53.37              165                  2.57               18           23.94              120           40.27
Powder River Basin                              10                         51.96               61                  2.92                4           34.31               24           34.25
Total                                           84                         53.21            2,002                  2.45               22           25.92              440           22.63


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Oil, Natural Gas and NGL Sales

                                                                               Successor
                                                                   Three Months Ended March 31, 2022
                                                     Oil               Natural Gas             NGL              Total
Marcellus                                       $         -          $        609          $      -          $    609
Haynesville                                               -                   652                 -               652
Eagle Ford                                              450                    47                57               554
Powder River Basin                                       66                    20                13                99
Total oil, natural gas and NGL sales            $       516          $      1,328          $     70          $  1,914

                                                                               Successor
                                                          Period from

February 10, 2021 by March 31, 2021

                                                     Oil               Natural Gas             NGL              Total
Marcellus                                       $         -          $        163          $      -          $    163
Haynesville                                               -                    70                 -                70
Eagle Ford                                              206                    43                23               272
Powder River Basin                                       28                    14                 6                48
Total oil, natural gas and NGL sales            $       234          $        290          $     29          $    553

                                                                              Predecessor
                                                          Period from

January 1, 2021 by February 9, 2021

                                                     Oil               Natural Gas             NGL              Total
Marcellus                                       $         -          $        119          $      -          $    119
Haynesville                                               -                    53                 -                53
Eagle Ford                                              159                    17                17               193
Powder River Basin                                       20                     7                 6                33
Total oil, natural gas and NGL sales            $       179          $        196          $     23          $    398

                                                                           Non-GAAP Combined
                                                                   Three Months Ended March 31, 2021
                                                     Oil               Natural Gas             NGL              Total
Marcellus                                       $         -          $        282          $      -          $    282
Haynesville                                               -                   123                 -               123
Eagle Ford                                              365                    60                40               465
Powder River Basin                                       48                    21                12                81
Total oil, natural gas and NGL sales            $       413          $      

486 $52 $951


Oil, natural gas and NGL sales in the 2022 Successor Period increased $963
million compared to the combined 2021 Successor and Predecessor Periods. The
increase includes $569 million due to increased sales volumes, which is
primarily related to the Vine Acquisition and Marcellus Acquisition in November
2021 and March 2022, respectively. The increase also includes $394 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.



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  Table of Contents

Production Expenses

                                                          Successor                                                     Predecessor                           Non-GAAP Combined
                                                                  Period from February 10, 2021                         Period from
                                   Three Months Ended                        through                              January 1, 2021 through                     Three Months Ended
                                     March 31, 2022                      March 31, 2021                               February 9, 2021                          March 31, 2021
                                                   $/Boe                               $/Boe                                            $/Boe                                  $/Boe
Marcellus                     $     13             0.62           $      5             0.50                 $             4             0.50           $         9             0.50
Haynesville                         32             1.32                  6             1.50                               4             1.12                    10             1.32
Eagle Ford                          55             6.87                 24             4.40                              21             4.24                    45             4.32
Powder River Basin                  10             5.63                  5             4.37                               3             3.37                     8             3.91
Total production
expenses                      $    110             1.97           $     40             1.88                 $            32             1.80           $        72             1.85

Production expenses for the 2022 succession period increased $38 million compared to the combined successor and predecessor periods of 2021. The increase is mainly due to the acquisition of Vine in November 2021as well as additional reconditioning and other preventative maintenance in the Eagle Ford.

Collection, processing and transport costs

                                                              Successor                                                         Predecessor                             Non-GAAP Combined
                                                                       Period from February 10, 2021                            Period from
                                      Three Months Ended                          through                                 January 1, 2021 through                       Three Months Ended
                                        March 31, 2022                         March 31, 2021                                 February 9, 2021                            March 31, 2021
                                                      $/Boe                                  $/Boe                                              $/Boe                                    $/Boe
Marcellus                      $      71               3.27           $      42               3.94                 $            34               4.17           $        76               4.04
Haynesville                           65               2.67                  11               2.45                              11               2.93                    22               2.67
Eagle Ford                            84              10.41                  44               8.05                              45               9.32                    89               8.65
Powder River Basin                    22              13.93                  14              12.65                              12              12.53                    26              12.59
Total gathering,
processing and
transportation expenses        $     242               4.34           $     111               5.12                 $           102               5.78           $       213               5.42


Gathering, processing and transportation expenses in the 2022 Successor Period
increased $29 million as compared to the combined 2021 Successor and Predecessor
Periods. Haynesville increased $43 million primarily due to the Vine Acquisition
in November 2021. Marcellus decreased $5 million resulting from a decrease of
$14 million due to contract renegotiations partially offset by an increase of $9
million due to the Marcellus Acquisition in March 2022. Eagle Ford and Powder
River Basin decreased by $5 million and $4 million, respectively, primarily due
to natural declines in production.









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Departure taxes and ad valorem taxes

                                                            Successor                                                       Predecessor                 

Combined Non-GAAP

                                                                      Period from February 10, 2021                         Period from
                                     Three Months Ended                          through                              January 1, 2021 through          

Three months completed

                                       March 31, 2022                        March 31, 2021                               February 9, 2021                          March 31, 2021
                                                       $/Boe                               $/Boe                                            $/Boe                                  $/Boe
Marcellus                     $          4             0.15           $      1             0.09                 $             1             0.07           $         2             0.08
Haynesville                             12             0.54                  2             0.56                               2             0.54                     4             0.55
Eagle Ford                              36             4.49                 16             3.00                              13             2.69                    29             2.86
Powder River Basin                      11             6.52                  5             3.92                               2             2.88                     7             3.44
Total severance and ad
valorem taxes                 $         63             1.13           $     24             1.11                 $            18             1.03           $        42             1.08

Departure and ad valorem taxes in the 2022 succession period have increased $21 million compared to the combined successor and predecessor periods of 2021. Price improvement in the subsequent period resulted in $15 million of the increase, and the balance $6 million is the result of the Vine acquisition.

Gross margin by area of ​​operation

The table below presents the gross margin for each of our business segments. Gross margin by operating area is defined as oil, natural gas and NGL sales less production expenses, gathering, processing and transportation expenses, and severance pay and ad valorem taxes .

                                                               Successor                                                         Predecessor                           Non-GAAP Combined
                                                                         Period from February 10, 2021                           Period from
                                        Three Months Ended                          through                                January 1, 2021 through                     Three Months Ended
                                          March 31, 2022                         March 31, 2021                               February 9, 2021                           March 31, 2021
                                                          $/Boe                                $/Boe                                            $/Boe                                   $/Boe
Marcellus                        $      521             $ 23.93          $     115            10.68                 $            80              9.75           $       195            10.28
Haynesville                             543               22.20                 51            11.58                              36             10.03                    87            10.88
Eagle Ford                              379               46.90                188            34.62                             114             24.02                   302            29.63
Powder River Basin                       56               37.90                 24            21.63                              16             15.47                    40            18.81
Gross margin by operating
area                             $    1,499               26.87          $     378            17.46                 $           246             14.02           $       624            15.90












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Petroleum and natural gas derivatives

                                                                   Successor                            Predecessor
                                                                             Period from                Period from
                                                                            February 10,              January 1, 2021
                                                        Three Months        2021 through                  through
                                                           Ended              March 31,                 February 9,
                                                       March 31, 2022           2021                       2021
Oil derivatives - realized losses                      $      (159)         $      (62)               $        (19)
Oil derivatives - unrealized losses                           (166)                 (6)                       (190)
Total losses on oil derivatives                               (325)                (68)                       (209)

Natural gas derivatives - realized gains
(losses)                                                      (428)                 (6)                          6
Natural gas derivatives - unrealized gains
(losses)                                                    (1,372)                120                        (179)
Total losses on natural gas derivatives                     (1,800)                114                        (173)
Total gains (losses) on oil and natural gas
derivatives                                            $    (2,125)         $       46                $       (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.

General and administrative expenses

                                                                    Successor                            Predecessor
                                                                              Period from                Period from
                                                                             February 10,              January 1, 2021
                                                         Three Months        2021 through                  through
                                                            Ended              March 31,                 February 9,
                                                        March 31, 2022           2021                       2021
Gross compensation and benefits                         $        70          $       35                $         32
Non-labor                                                        25                  12                          12
Allocations and reimbursements                                  (69)                (32)                        (23)

Total general and administrative expenses, net $26

  $       15                $         21

General and administrative expenses, net per boe $0.47

  $     0.68                $       1.19


Gross compensation and benefits and non-labor expenses during the 2022 Successor
Period were consistent with the combined 2021 Successor and Predecessor Periods.
Allocations and reimbursements during the 2022 Successor Period increased $14
million compared to the combined 2021 Successor and Predecessor Periods
primarily due to increased drilling and production activity due to the Vine
Acquisition and Marcellus Acquisition.

Depreciation, depletion and amortization

                                                                     Successor                            Predecessor
                                                                               Period from                Period from
                                                                              February 10,              January 1, 2021
                                                          Three Months        2021 through                  through
                                                             Ended              March 31,                 February 9,
                                                         March 31, 2022           2021                       2021
Depreciation, depletion and amortization                 $       409          $      122                $         72

Depreciation, depletion and amortization per boe $7.33

   $     5.72                $       4.11


The absolute and per unit increase in depreciation, depletion and amortization
for the 2022 Successor Period compared to the 2021 Successor Period is primarily
the result of the Vine Acquisition.
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Other operating expenses (income), net

                                                                     Successor                                Predecessor
                                                                                                              Period from
                                                                                  Period from               January 1, 2021
                                                                                  February 10,                  through
                                                      Three Months Ended          2021 through                February 9,
                                                        March 31, 2022           March 31, 2021                  2021
Other operating expense (income), net                $               23          $         2                $        (12)


In the 2022 Successor Period, we recognized approximately $23 million of costs
related to the Marcellus Acquisition, which included consulting fees, financial
advisory fees, legal fees and change in control expense.

Interest  Expense
                                                                       Successor                                Predecessor
                                                                                     Period from                Period from
                                                                                    February 10,              January 1, 2021
                                                                                    2021 through                  through
                                                         Three Months Ended           March 31,                 February 9,
                                                           March 31, 2021               2021                       2021
Interest expense on debt                               $                38          $       12                $         11
Amortization of premium, issuance costs and
other                                                                   (1)                  1                           -
Capitalized interest                                                    (5)                 (1)                          -
Total interest expense                                 $                32          $       12                $         11


The increase in total interest expense in the 2022 Successor Period compared to
the combined 2021 Successor and Predecessor Periods resulted from 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 in
March 2022 we borrowed $914 million on our Exit Credit Facility to finance, in
part, the Marcellus Acquisition.

Reorganization Items, Net


                                                                          Successor                                 Predecessor
                                                                                       Period from
                                                                                      February 10,
                                                                                      2021 through              Period from January
                                                           Three Months Ended           March 31,                 1, 2021 through
                                                             March 31, 2022               2021                   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 prior period of 2021, we recorded a net gain of $5.569 billion in reorganization items, net related to Chapter 11 Business. 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 a discussion of the adoption of fresh start accounting.

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Income taxes

An income tax benefit of $46 million was recorded for the 2022 Successor Period
as a result of projecting current federal and state income taxes. Although we
are projecting a current federal and state tax liability, a benefit has been
recorded in the 2022 Successor Period due to the application of our estimated
annual effective tax rate to the 2022 Successor Period book net loss before
income taxes. An income tax benefit of $57 million was recorded for the 2021
Predecessor Period. Our effective income tax rate was 5.7% for the 2022
Successor Period, 0.0% 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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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. 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 our business strategy after emerging 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 oil and natural gas and U.S. and world financial
markets;

• the risks associated with the Vine Acquisition, including our ability to successfully integrate the Vine business into the Company and realize the expected synergies from the Vine Acquisition within the expected timeframes;

• the risks associated with the Marcellus Acquisition, including our ability to successfully integrate Chief’s business into the Company and realize the expected synergies from the Marcellus Acquisition within the expected timeframes;

• our ability to meet the covenants of our exit credit facility and other indebtedness;

• our ability to achieve planned reductions in cash costs;

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

•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 replace reserves and maintain production;

• the risks of drilling and exploitation and the resulting responsibilities;

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

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

•our inability to access capital markets on favorable terms;

•the availability of cash flow from operations and other funds to fund cash dividends, fund replacement costs of reserves or meet our debt obligations;

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

•legislative, regulatory and ESG initiatives, including as a result of the
change in the U.S. presidential administration, 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 cyberattacks having a negative impact on our operations;

•the effects of purchase price adjustments and indemnification obligations; and

• other factors which are described under Risk Factors in point 1A of our

202 1 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 SECOND 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 SECOND.

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