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Change in Accounting Principle | 12 Months Ended
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Dec. 31, 2019
Accounting Changes and Error Corrections [Abstract] |
Change in Accounting Principle | Change in Accounting Principle In the first quarter of 2019, we voluntarily changed our method of accounting for oil and natural gas exploration and development activities from the full cost method to the successful efforts method. Accordingly, financial information for prior periods presented herein has been recast to reflect retrospective application of the successful efforts method. In general, under the successful efforts method, exploration costs such as exploratory dry holes, exploratory geophysical and geological costs, delay rentals, unproved leasehold impairments and exploration overhead are charged against earnings as incurred, versus being capitalized under the full cost method of accounting. The successful efforts method also provides for the assessment of potential property impairments by comparing the net carrying value of oil and natural gas properties to associated projected undiscounted pre-tax future net cash flows. If the expected undiscounted pre-tax future net cash flows are lower than the unamortized capitalized costs, the capitalized costs are reduced to fair value. Under the full cost method of accounting, a write-down would be required if the net carrying value of oil and natural gas properties exceeds a full cost ceiling using an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months. In addition, gains or losses, if applicable, are generally recognized on the disposition of oil and natural gas property and equipment under the successful efforts method, as opposed to an adjustment to the net carrying value of the assets remaining under the full cost method. Our consolidated financial statements have been recast to reflect these differences. The following tables present the effects of the change to the successful efforts method of accounting in the consolidated balance sheets:
|  | December 31, 2019
CONSOLIDATED BALANCE SHEETS |  | Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Proved oil and natural gas properties ($488 and $755 attributable to our VIE) |  | $ | 75,148 |  |  | $ | (44,383 | ) |  | $ | 30,765 |
Unproved properties |  | $ | 3,203 |  |  | $ | (1,030 | ) |  | $ | 2,173 |
Total Property and Equipment, at Cost |  | $ | 80,161 |  |  | $ | (45,413 | ) |  | $ | 34,748 |
Less: accumulated depreciation, depletion and amortization (($468) and ($713) attributable to our VIE) |  | $ | (66,626 | ) |  | $ | 46,624 |  |  | $ | (20,002 | )
Total Property and Equipment, Net |  | $ | 13,545 |  |  | $ | 1,211 |  |  | $ | 14,756 |
Total Assets |  | $ | 14,982 |  |  | $ | 1,211 |  |  | $ | 16,193 |
Other current liabilities |  | $ | 1,377 |  |  | $ | 55 |  |  | $ | 1,432 |
Total Current Liabilities |  | $ | 2,337 |  |  | $ | 55 |  |  | $ | 2,392 |
Other long-term liabilities |  | $ | 116 |  |  | $ | 9 |  |  | $ | 125 |
Total Long-Term Liabilities |  | $ | 9,391 |  |  | $ | 9 |  |  | $ | 9,400 |
Accumulated deficit |  | $ | (15,451 | ) |  | $ | 1,231 |  |  | $ | (14,220 | )
Total Chesapeake Stockholders’ Equity |  | $ | 3,133 |  |  | $ | 1,231 |  |  | $ | 4,364 |
Noncontrolling interests |  | $ | 121 |  |  | $ | (84 | ) |  | $ | 37 |
Total Equity |  | $ | 3,254 |  |  | $ | 1,147 |  |  | $ | 4,401 |
Total Liabilities and Equity |  | $ | 14,982 |  |  | $ | 1,211 |  |  | $ | 16,193 |
|  | December 31, 2018
CONSOLIDATED BALANCE SHEETS |  | As Reported Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Proved oil and natural gas properties ($488 and $755 attributable to our VIE) |  | $ | 69,642 |  |  | $ | (44,235 | ) |  | $ | 25,407 |
Unproved properties |  | $ | 2,337 |  |  | $ | (776 | ) |  | $ | 1,561 |
Total Property and Equipment, at Cost |  | $ | 73,700 |  |  | $ | (45,011 | ) |  | $ | 28,689 |
Less: accumulated depreciation, depletion and amortization (($461) and ($707) attributable to our VIE) |  | $ | (64,685 | ) |  | $ | 46,799 |  |  | $ | (17,886 | )
Total Property and Equipment, Net |  | $ | 9,030 |  |  | $ | 1,788 |  |  | $ | 10,818 |
Total Assets |  | $ | 10,947 |  |  | $ | 1,788 |  |  | $ | 12,735 |
Other current liabilities |  | $ | 1,540 |  |  | $ | 59 |  |  | $ | 1,599 |
Total Current Liabilities |  | $ | 2,828 |  |  | $ | 59 |  |  | $ | 2,887 |
Other long-term liabilities |  | $ | 156 |  |  | $ | 63 |  |  | $ | 219 |
Total Long-Term Liabilities |  | $ | 7,652 |  |  | $ | 63 |  |  | $ | 7,715 |
Accumulated deficit |  | $ | (15,660 | ) |  | $ | 1,748 |  |  | $ | (13,912 | )
Total Chesapeake Stockholders’ Equity |  | $ | 344 |  |  | $ | 1,748 |  |  | $ | 2,092 |
Noncontrolling interests |  | $ | 123 |  |  | $ | (82 | ) |  | $ | 41 |
Total Equity |  | $ | 467 |  |  | $ | 1,666 |  |  | $ | 2,133 |
Total Liabilities and Equity |  | $ | 10,947 |  |  | $ | 1,788 |  |  | $ | 12,735 |
The following tables present the effects of the change to the successful efforts method of accounting in the consolidated statements of operations:
|  | Year Ended December 31, 2019
CONSOLIDATED STATEMENTS OF OPERATIONS |  | Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Other revenues |  | $ | — |  |  | $ | 63 |  |  | $ | 63 |
Gain on sale of assets |  | $ | — |  |  | $ | 43 |  |  | $ | 43 |
Total revenues |  | $ | 8,489 |  |  | $ | 106 |  |  | $ | 8,595 |
Exploration expense |  | $ | — |  |  | $ | 84 |  |  | $ | 84 |
General and administrative |  | $ | 258 |  |  | $ | 57 |  |  | $ | 315 |
Depreciation, depletion and amortization |  | $ | 1,616 |  |  | $ | 648 |  |  | $ | 2,264 |
Gain on sale of oil and natural gas properties |  | $ | (15 | ) |  | $ | 15 |  |  | $ | — |
Impairments |  | $ | 344 |  |  | $ | (333 | ) |  | $ | 11 |
Other operating expense |  | $ | 94 |  |  | $ | (2 | ) |  | $ | 92 |
Total operating expenses |  | $ | 8,157 |  |  | $ | 469 |  |  | $ | 8,626 |
Income (loss) from operations |  | $ | 332 |  |  | $ | (363 | ) |  | $ | (31 | )
Interest expense |  | $ | (487 | ) |  | $ | (164 | ) |  | $ | (651 | )
Other income |  | $ | 31 |  |  | $ | 8 |  |  | $ | 39 |
Total other expense |  | $ | (452 | ) |  | $ | (156 | ) |  | $ | (608 | )
Loss before income taxes |  | $ | (120 | ) |  | $ | (519 | ) |  | $ | (639 | )
Net income (loss) |  | $ | 211 |  |  | $ | (519 | ) |  | $ | (308 | )
Net income attributable to noncontrolling interest |  | $ | (2 | ) |  | $ | 2 |  |  | $ | — |
Net income (loss) attributable to Chesapeake |  | $ | 209 |  |  | $ | (517 | ) |  | $ | (308 | )
Net income (loss) available to common stockholders |  | $ | 101 |  |  | $ | (517 | ) |  | $ | (416 | )
Earnings (loss) per common share basic |  | $ | 0.06 |  |  | $ | (0.31 | ) |  | $ | (0.25 | )
Earnings (loss) per common share diluted |  | $ | 0.06 |  |  | $ | (0.31 | ) |  | $ | (0.25 | )
|  | Year Ended December 31, 2018
CONSOLIDATED STATEMENTS OF OPERATIONS |  | As Reported Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Other revenues |  | $ | — |  |  | $ | 63 |  |  | $ | 63 |
Loss on sale of assets |  | $ | — |  |  | $ | (264 | ) |  | $ | (264 | )
Total revenues |  | $ | 10,231 |  |  | $ | (201 | ) |  | $ | 10,030 |
Exploration expense |  | $ | — |  |  | $ | 162 |  |  | $ | 162 |
General and administrative |  | $ | 280 |  |  | $ | 55 |  |  | $ | 335 |
Depreciation, depletion and amortization |  | $ | 1,145 |  |  | $ | 592 |  |  | $ | 1,737 |
Loss on sale of oil and natural gas properties |  | $ | 578 |  |  | $ | (578 | ) |  | $ | — |
Impairments |  | $ | 53 |  |  | $ | 78 |  |  | $ | 131 |
Other operating expenses |  | $ | 10 |  |  | $ | (10 | ) |  | $ | — |
Total operating expenses |  | $ | 9,349 |  |  | $ | 299 |  |  | $ | 9,648 |
Income from operations |  | $ | 882 |  |  | $ | (500 | ) |  | $ | 382 |
Interest expense |  | $ | (487 | ) |  | $ | (146 | ) |  | $ | (633 | )
Other income |  | $ | 70 |  |  | $ | (3 | ) |  | $ | 67 |
Total other expense |  | $ | (15 | ) |  | $ | (149 | ) |  | $ | (164 | )
Income before income taxes |  | $ | 867 |  |  | $ | (649 | ) |  | $ | 218 |
Net income |  | $ | 877 |  |  | $ | (649 | ) |  | $ | 228 |
Net income attributable to noncontrolling interest |  | $ | (4 | ) |  | $ | 2 |  |  | $ | (2 | )
Net income attributable to Chesapeake |  | $ | 873 |  |  | $ | (647 | ) |  | $ | 226 |
Earnings allocated to participating securities |  | $ | (6 | ) |  | $ | 5 |  |  | $ | (1 | )
Net income available to common stockholders |  | $ | 775 |  |  | $ | (642 | ) |  | $ | 133 |
Earnings per common share basic |  | $ | 0.85 |  |  | $ | (0.70 | ) |  | $ | 0.15 |
Earnings per common share diluted |  | $ | 0.85 |  |  | $ | (0.70 | ) |  | $ | 0.15 |
|  | Year Ended December 31, 2017
CONSOLIDATED STATEMENTS OF OPERATIONS |  | As Reported Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Other revenues |  | $ | — |  |  | $ | 67 |  |  | $ | 67 |
Gain on sales of assets |  | $ | — |  |  | $ | 476 |  |  | $ | 476 |
Total revenues |  | $ | 9,496 |  |  | $ | 543 |  |  | $ | 10,039 |
Exploration expense |  | $ | — |  |  | $ | 235 |  |  | $ | 235 |
General and administrative |  | $ | 262 |  |  | $ | 71 |  |  | $ | 333 |
Depreciation, depletion and amortization |  | $ | 995 |  |  | $ | 702 |  |  | $ | 1,697 |
Impairments |  | $ | 5 |  |  | $ | 809 |  |  | $ | 814 |
Other operating expenses |  | $ | 413 |  |  | $ | 3 |  |  | $ | 416 |
Total operating expenses |  | $ | 8,357 |  |  | $ | 1,820 |  |  | $ | 10,177 |
Income (loss) from operations |  | $ | 1,139 |  |  | $ | (1,277 | ) |  | $ | (138 | )
Interest expense |  | $ | (426 | ) |  | $ | (175 | ) |  | $ | (601 | )
Other income |  | $ | 9 |  |  | $ | (3 | ) |  | $ | 6 |
Total other expense |  | $ | (184 | ) |  | $ | (178 | ) |  | $ | (362 | )
Income (loss) before income taxes |  | $ | 955 |  |  | $ | (1,455 | ) |  | $ | (500 | )
Net income (loss) |  | $ | 953 |  |  | $ | (1,455 | ) |  | $ | (502 | )
Net income attributable to noncontrolling interest |  | $ | (4 | ) |  | $ | 1 |  |  | $ | (3 | )
Net income (loss) attributable to Chesapeake |  | $ | 949 |  |  | $ | (1,454 | ) |  | $ | (505 | )
Earnings allocated to participating securities |  | $ | (10 | ) |  | $ | 10 |  |  | $ | — |
Net income (loss) available to common stockholders |  | $ | 813 |  |  | $ | (1,444 | ) |  | $ | (631 | )
Earnings (loss) per common share basic |  | $ | 0.90 |  |  | $ | (1.60 | ) |  | $ | (0.70 | )
Earnings (loss) per common share diluted |  | $ | 0.90 |  |  | $ | (1.60 | ) |  | $ | (0.70 | )
The following tables present the effects of the change to the successful efforts method of accounting in the consolidated statements of comprehensive income:
|  | Year Ended December 31, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |  | Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Net income (loss) |  | $ | 211 |  |  | $ | (519 | ) |  | $ | (308 | )
Comprehensive income (loss) |  | $ | 246 |  |  | $ | (519 | ) |  | $ | (273 | )
Comprehensive income attributable to noncontrolling interests |  | $ | (2 | ) |  | $ | 2 |  |  | $ | — |
Comprehensive income (loss) attributable to Chesapeake |  | $ | 244 |  |  | $ | (517 | ) |  | $ | (273 | )
|  | Year Ended December 31, 2018
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |  | As Reported Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Net income |  | $ | 877 |  |  | $ | (649 | ) |  | $ | 228 |
Comprehensive income |  | $ | 911 |  |  | $ | (649 | ) |  | $ | 262 |
Comprehensive income attributable to noncontrolling interests |  | $ | (4 | ) |  | $ | 2 |  |  | $ | (2 | )
Comprehensive income attributable to Chesapeake |  | $ | 907 |  |  | $ | (647 | ) |  | $ | 260 |
|  | Year Ended December 31, 2017
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |  | As Reported Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Net income (loss) |  | $ | 953 |  |  | $ | (1,455 | ) |  | $ | (502 | )
Comprehensive income (loss) |  | $ | 992 |  |  | $ | (1,455 | ) |  | $ | (463 | )
Comprehensive income attributable to noncontrolling interests |  | $ | (4 | ) |  | $ | 1 |  |  | $ | (3 | )
Comprehensive income (loss) attributable to Chesapeake |  | $ | 988 |  |  | $ | (1,454 | ) |  | $ | (466 | )
The following tables present the effects of the change to the successful efforts method of accounting in the consolidated statements of cash flows:
|  | Year Ended December 31, 2019
CONSOLIDATED STATEMENTS OF CASH FLOWS |  | Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Net income (loss) |  | $ | 211 |  |  | $ | (519 | ) |  | $ | (308 | )
Depreciation, depletion and amortization |  | $ | 1,616 |  |  | $ | 648 |  |  | $ | 2,264 |
Gain on sale of oil and gas properties |  | $ | (15 | ) |  | $ | 15 |  |  | $ | — |
Gain on sales of assets |  | $ | — |  |  | $ | (43 | ) |  | $ | (43 | )
Impairments |  | $ | 344 |  |  | $ | (333 | ) |  | $ | 11 |
Exploratory dry hole expense and leasehold impairments |  | $ | — |  |  | $ | 49 |  |  | $ | 49 |
Other |  | $ | (2 | ) |  | $ | (2 | ) |  | $ | (4 | )
(Decrease) increase in accounts payable, accrued liabilities and other |  | $ | (567 | ) |  | $ | (63 | ) |  | $ | (630 | )
Net cash provided by operating activities |  | $ | 1,871 |  |  | $ | (248 | ) |  | $ | 1,623 |
Drilling and completion costs |  | $ | (2,260 | ) |  | $ | 80 |  |  | $ | (2,180 | )
Acquisition of proved and unproved properties |  | $ | (203 | ) |  | $ | 168 |  |  | $ | (35 | )
Net cash used by investing activities |  | $ | (2,728 | ) |  | $ | 248 |  |  | $ | (2,480 | )
|  | Year Ended December 31, 2018
CONSOLIDATED STATEMENTS OF CASH FLOWS |  | As Reported Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Net income |  | $ | 877 |  |  | $ | (649 | ) |  | $ | 228 |
Depreciation, depletion and amortization |  | $ | 1,145 |  |  | $ | 592 |  |  | $ | 1,737 |
Loss on sale of oil and gas properties |  | $ | 578 |  |  | $ | (578 | ) |  | $ | — |
Losses on sales of assets |  | $ | — |  |  | $ | 264 |  |  | $ | 264 |
Impairments |  | $ | 53 |  |  | $ | 78 |  |  | $ | 131 |
Exploratory dry hole expense and leasehold impairments |  | $ | — |  |  | $ | 96 |  |  | $ | 96 |
Other |  | $ | (108 | ) |  | $ | (10 | ) |  | $ | (118 | )
Increase in accounts payable, accrued liabilities and other |  | $ | 138 |  |  | $ | (63 | ) |  | $ | 75 |
Net cash provided by operating activities |  | $ | 2,000 |  |  | $ | (270 | ) |  | $ | 1,730 |
Drilling and completion costs |  | $ | (1,958 | ) |  | $ | 110 |  |  | $ | (1,848 | )
Acquisition of proved and unproved properties |  | $ | (288 | ) |  | $ | 160 |  |  | $ | (128 | )
Net cash provided by investing activities |  | $ | 185 |  |  | $ | 270 |  |  | $ | 455 |
|  | Year Ended December 31, 2017
CONSOLIDATED STATEMENTS OF CASH FLOWS |  | As Reported Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Net income (loss) |  | $ | 953 |  |  | $ | (1,455 | ) |  | $ | (502 | )
Depreciation, depletion and amortization |  | $ | 995 |  |  | $ | 702 |  |  | $ | 1,697 |
Gains on sales of assets |  | $ | — |  |  | $ | (476 | ) |  | $ | (476 | )
Impairments |  | $ | 5 |  |  | $ | 809 |  |  | $ | 814 |
Exploratory dry hole expense and leasehold impairments |  | $ | — |  |  | $ | 214 |  |  | $ | 214 |
Other |  | $ | (135 | ) |  | $ | 3 |  |  | $ | (132 | )
Decrease in accounts payable, accrued liabilities and other |  | $ | (308 | ) |  | $ | (67 | ) |  | $ | (375 | )
Net cash provided by operating activities |  | $ | 745 |  |  | $ | (270 | ) |  | $ | 475 |
Drilling and completion costs |  | $ | (2,186 | ) |  | $ | 73 |  |  | $ | (2,113 | )
Acquisition of proved and unproved properties |  | $ | (285 | ) |  | $ | 197 |  |  | $ | (88 | )
Net cash used in investing activities |  | $ | (1,188 | ) |  | $ | 270 |  |  | $ | (918 | )
The following tables present the effects of the change to the successful efforts method of accounting in the consolidated statements of stockholders’ equity:
|  | Year Ended December 31, 2019
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY |  | Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Accumulated deficit, beginning of period |  | $ | (15,660 | ) |  | $ | 1,748 |  |  | $ | (13,912 | )
Net income (loss) attributable to Chesapeake |  | $ | 209 |  |  | $ | (517 | ) |  | $ | (308 | )
Accumulated deficit, end of period |  | $ | (15,451 | ) |  | $ | 1,231 |  |  | $ | (14,220 | )
Total Chesapeake stockholders’ equity |  | $ | 3,133 |  |  | $ | 1,231 |  |  | $ | 4,364 |
Noncontrolling interests, beginning of period |  | $ | 123 |  |  | $ | (82 | ) |  | $ | 41 |
Net income attributable to noncontrolling interests |  | $ | 2 |  |  | $ | (2 | ) |  | $ | — |
Noncontrolling interests, end of period |  | $ | 121 |  |  | $ | (84 | ) |  | $ | 37 |
Total equity |  | $ | 3,254 |  |  | $ | 1,147 |  |  | $ | 4,401 |
|  | Year Ended December 31, 2018
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY |  | As Reported Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Accumulated deficit, beginning of period |  | $ | (16,525 | ) |  | $ | 2,395 |  |  | $ | (14,130 | )
Net income attributable to Chesapeake |  | $ | 873 |  |  | $ | (647 | ) |  | $ | 226 |
Accumulated deficit, end of period |  | $ | (15,660 | ) |  | $ | 1,748 |  |  | $ | (13,912 | )
Total Chesapeake stockholders’ equity |  | $ | 344 |  |  | $ | 1,748 |  |  | $ | 2,092 |
Noncontrolling interests, beginning of period |  | $ | 124 |  |  | $ | (80 | ) |  | $ | 44 |
Net income attributable to noncontrolling interests |  | $ | 4 |  |  | $ | (2 | ) |  | $ | 2 |
Noncontrolling interests, end of period |  | $ | 123 |  |  | $ | (82 | ) |  | $ | 41 |
Total equity |  | $ | 467 |  |  | $ | 1,666 |  |  | $ | 2,133 |
|  | Year Ended December 31, 2017
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY |  | As Reported Under Full Cost |  | Adjustment |  | As Reported Under Successful Efforts
|  | ($ in millions except per share data)
Accumulated deficit, beginning of period |  | $ | (17,474 | ) |  | $ | 3,849 |  |  | $ | (13,625 | )
Net income (loss) attributable to Chesapeake |  | $ | 949 |  |  | $ | (1,454 | ) |  | $ | (505 | )
Accumulated deficit, end of period |  | $ | (16,525 | ) |  | $ | 2,395 |  |  | $ | (14,130 | )
Total Chesapeake stockholders’ equity (deficit) |  | $ | (496 | ) |  | $ | 2,395 |  |  | $ | 1,899 |
Noncontrolling interests, beginning of period |  | $ | 128 |  |  | $ | (79 | ) |  | $ | 49 |
Net income attributable to noncontrolling interests |  | $ | 4 |  |  | $ | (1 | ) |  | $ | 3 |
Noncontrolling interests, end of period |  | $ | 124 |  |  | $ | (80 | ) |  | $ | 44 |
Total equity (deficit) |  | $ | (372 | ) |  | $ | 2,315 |  |  | $ | 1,943 |

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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