Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Chesapeake Energy Corporation (NYSE:CHK)

May 14, 2012 8:30 am ET

Executives

Jeffrey L. Mobley - Senior Vice President of Investor Relations & Research

Aubrey K. McClendon - Co-Founder, Chief Executive Officer, President, Director and Chairman of Employee Compensation & Benefits Committee

Domenic J. Dell’Osso - Chief Financial Officer and Executive Vice President

Analysts

Brian Singer - Goldman Sachs Group Inc., Research Division

David W. Kistler - Simmons & Company International, Research Division

Douglas George Blyth Leggate - BofA Merrill Lynch, Research Division

David R. Tameron - Wells Fargo Securities, LLC, Research Division

Marshall H. Carver - Capital One Southcoast, Inc., Research Division

Jason Gilbert - Goldman Sachs Group Inc., Research Division

Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division

Biju Z. Perincheril - Jefferies & Company, Inc., Research Division

Jeffrey W. Robertson - Barclays Capital, Research Division

Scott Hanold - RBC Capital Markets, LLC, Research Division

Joseph D. Allman - JP Morgan Chase & Co, Research Division

Timothy Rezvan - Sterne Agee & Leach Inc., Research Division

Gregg Brody - JP Morgan Chase & Co, Research Division

Gary Stromberg - Barclays Capital, Research Division

Michael Kelly - Global Hunter Securities, LLC, Research Division

Operator

Good day, and welcome to the Chesapeake Energy Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jeff Mobley. Please go ahead, sir.

Jeffrey L. Mobley

Good morning, and thank you for joining our conference call today. With me are Aubrey McClendon, our Chief Executive Officer; Nick Dell'Osso, our Chief Financial Officer; and from the Investor Relations Research Team, John Kilgallon and Gary Clark. I'll now turn the call over to Aubrey.

Aubrey K. McClendon

Good morning, and thank you for joining us today. As you know, we filed our 10-Q on Friday afternoon and announced the $3 billion term loan a few hours later. We knew there would be some questions in the marketplace about both items, so we wanted to provide this opportunity to address them with you.

The Goldman and Jefferies term loan provides Chesapeake with greatly enhanced financial flexibility. We firmly believe this term loan answers the most important question about Chesapeake in the marketplace today. Will we have enough financial firepower to be able to complete our pending asset sales and to finish our transition to a more liquids-focused producer, thereby generating much higher returns on capital than we've been able to deliver in the past, as primarily a natural gas producer?

We now have substantially enhanced our liquidity, and that will ensure that we can conduct our asset monetization transactions from a position of strength. We greatly appreciate the support of our financial advisors, Goldman and Jefferies and the confidence they have demonstrated in the value of our assets and our ability to achieve our asset sale objectives. We remain focused and committed on delivering the $9.5 billion to $11 billion in asset sales we have scheduled to complete during the remainder of 2012.

I would also like to address some of the confusion in the market on Friday afternoon around the filing of our 10-Q. I can assure you that management, the board, our advisors and our auditors all worked diligently to be able to file the 10-Q timely on Thursday afternoon, but we simply did not have enough time to get all the work done on time. We did file it as soon as we were able to do so on Friday afternoon, which along with closing the Goldman and Jefferies loan later that day, made it an extremely busy day for all of us.

The asset sale language in our 10-Q on Friday apparently led some readers to conclude that our Permian sale and Miss Lime JV were somehow in jeopardy. To the contrary, those transactions remain on track. We expect those transactions to close in the third quarter, and we will use the proceeds to pay off the Goldman and Jefferies loan.

The language in the 10-Q was actually referring to our decision last week to delay or even cancel VPP 11, which represents approximately $1 billion of potential sale proceeds. We had discussed this VPP on our last conference call as a key element of our second quarter financial plan as we waited on the bigger asset sale to kick in during the second half of 2012. Accordingly, our 10-Q had to address the new decision concerning the VPP.

In addition to the Permian sale and Miss Lime JV, we've identified a number of other assets that are non-core to us. And we will sell enough of those in the second half of 2012 to reach our asset sales target of $9.5 billion to $11 billion for the remainder of the year. We also plan to sell sufficient non-core assets in 2013 to make sure we are well funded next year, as we complete our natural gas to liquids transition and reach our goal of being free cash flow positive in 2014. Believe me, Chesapeake's management team is very, very focused on getting these funding gap issues behind us once and for all and as early as possible.

At some point this morning, I do hope you will take the time to calculate the value of what we will still own after our non-core asset sales. Just including our #1 and #2 positions in the Eagle Ford, Utica, Marcellus, Haynesville, Bossier, Barnett, Granite Wash, Cleveland, Tonkawa, Miss Lime and Powder River Niobrara and then adding in our midstream and service assets, we believe Chesapeake owned assets easily identifiable as being worth at least $50 billion to $60 billion against today's entire enterprise value of less than half of that. Plus, when gas prices recover in 2013 and beyond, these asset values should be significantly higher. Quite simply, we built the industry's best asset base, and we will deliver its value to our shareholders.

You might ask, how are we so sure we can do that? It's because Chesapeake's strategy is undergoing its fourth transition since the company was founded in 1989. 2012 is the year we move from a strategy of asset capture to a strategy of asset harvest. During the past 7 years of what I call the great American unconventional resource revolution, we have positioned Chesapeake to be able to take full advantage of the effects of this revolution. As a result, today, Chesapeake is widely recognized as the world's leader in unconventional resource development. It has been exceedingly hard work, and it has sometimes made the company, its strategy and its funding of that strategy more controversial than I would have ever dreamed possible. But we will soon be leaving those days behind us. What lies ahead is actually far easier to manage, and I'm confident will be far easier to invest in as well.

In addition, it's also not been easy to make this strategy transition happen, with gas prices at 10-year lows. However, we will complete this transition despite today's low gas prices. And please remember that today's unsustainably low gas prices have created the environment for a major gas price recovery in 2013 and beyond. As a consequence of this hard work and focused execution of our business strategy during the past 7 years, I'd like to restate that Chesapeake owns the #1 and #2 position in 10 great American resource plays. We believe no other company in the industry can come close to matching the overall quality and size of Chesapeake's assets.

On the strong foundation of these 10 key plays, Chesapeake's focus going forward will be on ever more efficiently developing the assets that we already own. We set out to win a race 7 years ago to build the industry's best asset base. We now believe we have won that race and now are singularly focused on harvesting best-in-industry returns from these best-in-industry assets.

A very visible way to see this ongoing strategy transformation is through our lease acquisition budget. For example, in 2013, it has been reduced 90% from our leasehold acquisition budget in 2010. This is an enormous change, and we are very eager to show investors in the remaining 3 quarters of 2012 how our leasehold spending is ramping down quickly.

Another way to examine our commitment to moving into harvest mode is to examine what we have done to dismantle the Chesapeake land machine. We have reduced third-party brokers dedicated to researching title and buying new leases from 3,400 at our peak to only 1,300 today, and we will be down to 650 or so by the end of 2012. That's a reduction of 80%, which will save us approximately $350 million per year. The land machine served its purpose in helping us build the best assets in the industry. But now we love what we own and now it's time to drill it all up and deliver the value to our investors.

A second proof of the company's ongoing transformation is to study our liquids production growth. In just the past 2 years, our liquids production has increased from 30,000 barrels per day to almost 4 times that at 114,000 barrels per day. And by year-end 2014, we expect to double this production. It will be a remarkable transformation of such a large gas company's asset base in such a short period of time and the payoff for our shareholders should be very significant.

I'll close by assuring you that there could be no CEO in America today more determined and motivated than I am to deliver the value of a company's assets to its shareholders. I do understand fully where we are and where we have been and also where we are going. And I am 100% confident that our asset harvest strategy will deliver great value to Chesapeake's investors in the quarters and years ahead.

I'll now turn the call over to Nick and let him address a few things in more detail. Nick?

Domenic J. Dell’Osso

Thanks, Aubrey. I'll start by addressing the term loan we closed last Friday afternoon. We thought it was prudent to proceed with this transaction to increase our financial flexibility through the summer months and greatly enhance our liquidity during this period of low gas prices. We're very appreciative of the support that our asset sale advisors have provided us, as we execute on our strategy and know that it will enable us to drive for the best possible results on those sales for all of our stakeholders.

I'm sure you've seen that we filed an 8-K summarizing the deal and the loan agreement this morning. It was drafted based on our existing corporate revolver, though this new agreement does not have any maintenance covenants and is pre-payable at par at any time until the end of the year. We are viewing this new loan as a bridge to asset sales and expect to use proceeds from our significant asset sales to repay this facility prior to year end. In the interim, the proceeds of the loan will be used to repay borrowings under our revolving credit facility. It should be noted that our revolving credit facility stand -- remains outstanding in full and is available to us.

As to our 10-Q filing on Friday afternoon, as Aubrey noted, it was slightly delayed, but we got the document on file as soon as it was ready. In that filing, we included additional disclosure around our asset sale considerations, that we are closely monitoring how these sales will be treated under existing covenants contained in our revolving credit facility. Given the decline in natural gas prices and resulting decrease in our projected EBITDA for the year, we felt that providing additional disclosure around this matter was appropriate. We have chosen to, at least temporarily, defer Eagle Ford VPP. Given that VPPs are declining assets, there is a relatively high amount of near-term production and cash flow associated with the property, and we chose to keep that for now.

In coming months, this transaction may make more sense, and we'll continue to revisit at what commodity prices and overall environment such a transaction would be beneficial to our stakeholders. We do not expect to have a covenant issue this year, but again thought the disclosure around our focus on this was helpful.

Remember, our only maintenance covenants are in our revolving credit facility, which is a $4 billion facility secured by a relatively small subset of our $50 billion to $60 billion asset value that Aubrey referred to earlier. These covenants are 4x debt to trailing EBITDA limitation and a 70% debt-to-capitalization ratio. We do not have maintenance financial covenants in our senior note indentures. We are very much looking forward to completing significant asset sales in the second half of the year, and we are very pleased to have incremental liquidity from Friday's term loan to add flexibility in our approach and ensure the best outcome.

Operator, we'll now open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] We'll go first to Brian Singer from Goldman Sachs.

Brian Singer - Goldman Sachs Group Inc., Research Division

Beyond the fall in VPP valuations that you just mentioned in terms of delaying the Eagle Ford VPP, with all the volatility in the last few weeks, can you talk to any impact from this volatility that you're seeing in negotiating asset sale valuations and moving forward with planned monetizations?

Aubrey K. McClendon

When you say volatility, Brian, are you referring to oil price volatility or...

Brian Singer - Goldman Sachs Group Inc., Research Division

Volatility in the shares.

Aubrey K. McClendon

Oh shares, no. A fair question, obviously, no, asset buyers, I think, are focused on what the assets are worth, and we've seen no impact. In fact, we've had to basically limit the number of people who can come through our Permian data room and to a double-digit number, and that process is underway. I think our data room opened last Monday and had, I think, 3 companies in last week. And full every day for I think the next month or so, as we run everybody through. So you see, the only impact, I would say, is that people would be more eager to prove to us that they could close quickly assuming that, that would be a value to us.

Brian Singer - Goldman Sachs Group Inc., Research Division

Great. And then you mentioned the reduction in some of your land acquisition spending, is that already guided to in your 2013 guidance? And then can you refresh us on whether there's any flexibility you may have in your planned 2013 proved/unproved property well cost budget, given the context of other commitments that you've made? And whether you see any low-hanging fruit in which you could reduce the budget without materially impacting your cash flow?

Aubrey K. McClendon

Yes, Brian. First of all, just to remind you, we've already cut the 2013 leasehold budget to $500 million, that's a 90% reduction from 2010. So if I take your question correctly, I think it's can we reduce it further from that? And...

Brian Singer - Goldman Sachs Group Inc., Research Division

I was referring more to the drilling and completion budget versus the leasehold acquisition budget.

Aubrey K. McClendon

Okay, sorry. At this point, we haven't done any changes to our 2013 budget other than what we referred to in our last outlook, which we did cut it. Look, we can always cut it further, but at this point, 90-plus percent of our drilling is focused on liquids-rich plays. And so we're trying to make this transition from gas to oil, and we think that's the best thing. Unfortunately, it creates a funding gap when gas prices are $2. But if we had failed to make this transition, I think we’d have a perpetual funding gap, and I think we'd really be an unattractive company with an asset base that's simply one that is managed passively just as gas prices come and go. We decided to take a more active role and to change of the nature of the company's asset base towards liquids, and so that's what we're doing this year and next year. And the payoff should be that in 2014, our operating cash flow will be some multiples higher than it is today, and we think that's the right thing to do. Unfortunately, you know it's tough to pull off in a $2 gas world, where everybody's concerned about how you get from here to there, but we will get from here to there. And again, it's always a little challenging for us when questions arise about will you be able to sell enough assets? When you're sitting on top of $50 billion or $60 billion of assets and you see what people pay routinely for Eagle Ford assets, or this morning Permian assets. There's clearly enough assets around the company to sell off $3 billion, $4 billion, $5 billion in 2013, if that's what we need to do. But we think we can do that from non-core assets and still be left with these 10 key fields that we think give us a position to deliver really industry-leading returns in the years ahead.

Operator

We'll go next to Dave Kistler from Simmons & Company.

David W. Kistler - Simmons & Company International, Research Division

Real quickly, just to get a handle on this for us, as we think about modeling it. The VPP that you were looking at doing in the Eagle Ford, what was the EBITDA contribution of that? Or what was the planned EBITDA contribution of that, because it seems like postponing that relative to the language you mentioned about staying in compliance with covenants is where the issue exists?

Domenic J. Dell’Osso

I'm not sure the issue is quite that specific, Dave. Certainly, directionally, we felt it was better to keep that production and cash flow in our portfolio this year. It's -- as you know, VPPs are declining assets, so the highest amount of cash flow in production occurs within the first 12 months of the VPP. This was intended to be a very short tender VPP, and so on a multiple of that cash flow basis of the first year, it would have been relatively low multiple in proceeds received. But at the end of the day it wasn’t -- it’s not that tight and not that crisp of an analysis to say that, that's what makes the difference here. We just thought, directionally, given the drop in oil prices and given where our cash flow is this year, it's better to hang on to that for the time being.

David W. Kistler - Simmons & Company International, Research Division

Okay, I appreciate that color. Maybe juxtaposing that against your decision to stick with the 20/25 Plan, can you maybe talk about the decision to stick with that plan versus potentially just delaying it a year and not going out and getting the $3 billion loan that you just secured?

Aubrey K. McClendon

This is Aubrey. I couldn't hear exactly. I don't know don't know if you referred to it as 20/25 or 25/25, but...

David W. Kistler - Simmons & Company International, Research Division

25/25, yes.

Aubrey K. McClendon

Great, sorry. At this point, it's still our plan. And we've obviously read the letter from our largest shareholder, Southeastern, who has encouraged us to either push the debt reduction part of that out into 2013 or beyond. At this point, it's still our plan. We intend to have conversations with them and, of course, others. But given what we see from our asset monetizations, we're still committed to that plan. Until we see that it's not the best path forward, we'll remain committed to it.

Operator

We'll go next to Doug Leggate from Bank of America Merrill Lynch.

Douglas George Blyth Leggate - BofA Merrill Lynch, Research Division

Nick, if -- your comments around -- you said you don't expect any covenant issues this year. Looking at your CapEx plan, looking at your own projections for cash flow that you gave on the last call, I'm looking at your cumulative, I guess, trailing fourth quarter EBITDA by the end of the third quarter, can you walk us through how you don't see the 4x trailing EBITDA issue becoming a problem? Because if you're overspending, just when -- if you do the math between now and the end of the third quarter, I'm just curious how the $3 billion gets you where you need to be?

Domenic J. Dell’Osso

Sure. It's really not about spending at the end of the day, Dave. And our spending, as we noted, on our earnings call should be -- sorry, our spending on our earnings call should be decreasing, as we move through the year. But it's really about the fact that we'll be selling assets and reducing debt this year, and that's really what's driving our comfort in that and our look ahead.

Douglas George Blyth Leggate - BofA Merrill Lynch, Research Division

But in terms of the visibility on the asset sales, if you don't get done by September 30, don't you hit your covenant limits?

Domenic J. Dell’Osso

That's not altogether clear. We have a lot of options in front of us, and there's a number of things that would not create that. There's certainly scenarios in lower commodity price environment or a number of scenarios where we could theoretically need to consider those covenants, and that's really the reason for the language that we put in our Q. But no, we think we have plenty of tools in front of us and plenty of transactions in between now and then that will clear those issues, and we don't anticipate being there as of now.

Aubrey K. McClendon

And Doug, this is Aubrey. To imagine that assets are unsellable in the Permian Basin, which is the world's hottest acquisition basin, today is really unthinkable, so we will get our asset sales done. And obviously the fact that the 2 people advising us on that sale process -- or 2 companies advising us on that process also provided $3 billion of capital unsecured basis should give you a pretty good look into what their assessment of the market is.

Douglas George Blyth Leggate - BofA Merrill Lynch, Research Division

Great. Just another couple of quick things, and I'll jump off. The VPP, I guess, following on -- up in the earlier question, can you -- your production guidance, I guess, was after presumed asset sales, so if you assume now that Permian and Miss Lime are maybe back-end loaded this year and the VPP's off the table, how does your production guidance change, or will it change?

Domenic J. Dell’Osso

We're not issuing new outlook this morning. We will probably wait and issue a new outlook at the time of our next earnings call, which is our typical cycle. If we continue to have the view that we won't sell the VPP, then those volumes would be added back in this year.

Aubrey K. McClendon

And Doug also, I would say that the -- at time of the first quarter outlook, we had planned on the Miss and Permian sales at the same time that we plan on them today. So there's no change to our outlook from them based on what we see in the calendar today from our asset sales. The only toggle point is the VPP.

Douglas George Blyth Leggate - BofA Merrill Lynch, Research Division

Last one from me, is, it’s probably -- I don't know if you'll be prepared to answer it or not. There's a bit of speculation this morning that there may be another right to the shareholder looking at the company. Is there anything you can share there? And I'll leave it at that.

Aubrey K. McClendon

If you're referring to Carl Icahn, we've seen that and wouldn't be surprised if Carl became a large shareholder. He did in 2010, within 6 months, I believe the stock went up 50%. He made, I think over $500 million, and he called me to thank me when it was all over. So I have a good relationship with Carl, and if he comes in, I'm pretty confident that he'll make a lot of money.

Operator

We'll go next to David Tameron from Wells Fargo.

David R. Tameron - Wells Fargo Securities, LLC, Research Division

Most of my questions have been answered, but a quick question on -- can you still draw against the revolver with this term loan in place? Are there any restrictions there?

Domenic J. Dell’Osso

No restrictions there whatsoever, David.

Marshall H. Carver - Capital One Southcoast, Inc., Research Division

Okay. And are you able to give us -- can you tell us what the current revolver balance is?

Domenic J. Dell’Osso

It was in our Q as of March 31. I don't have it in front of me here today. Obviously, it's $3 billion less drawn this morning than it was on Friday, so...

Operator

We'll go next to Jason Gilbert from Goldman Sachs.

Jason Gilbert - Goldman Sachs Group Inc., Research Division

I was wondering if you could give us maybe an update on the nature and scope of the informal FCC investigation. Is there anything new there?

Aubrey K. McClendon

Really not at liberty to talk about it, Jason. It is informal, and we'll just have to leave it at that.

Jason Gilbert - Goldman Sachs Group Inc., Research Division

Okay. And can you maybe -- can you give us a little more detail on the leverage covenant in the bank facility? Just wondering what the current level is per your calculation. And have you somewhere published the exact calculation, because the language is a little opaque on doing that?

Domenic J. Dell’Osso

Yes. No, we don't publish that. We were well in compliance with it at March 31. And again, it's a 4x covenant. We were at about 2.67x at March 31. It's not something we typically publish. We won't provide that detail going forward either, but just to give you a sense as to where we were then. So it's something that we just pay attention to and we think about, as we consider all of the things that we're doing every day. And again, we feel like we have plenty of flexibility to stay within it this year.

Jason Gilbert - Goldman Sachs Group Inc., Research Division

And then one last one, if you don't mind. Have you had any recent discussions with the rating agencies on this loan?

Domenic J. Dell’Osso

Not specifically on the loan, yet. We traded some emails with some of them over the weekend. And frankly, most of them -- most of the emails look like they're pleased with the additional liquidity the company has in short term.

Operator

We'll go next to Neal Dingmann from SunTrust.

Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division

Aubrey, just one quick one. If you could give maybe a little bit more flavor -- I don't know if you can or not -- around the non -- additional non-core assets that you mentioned. Is this -- would you look at -- consider some of the gassy assets, or just kind of trying to get an idea of maybe what you're alluding to?

Aubrey K. McClendon

Neal, at this point, we're just focused on delivering sales of the Miss Lime JV and the Permian into the marketplace. We definitely have plans for what we want to do in 2012 and 2013. But I think it just gets too confusing in the marketplace to specifically enumerate everything we want to do. And plus, we've already said that our oilfield service monetizations are going to be subject to market conditions. And while we, heretofore, have planned on trying to finish those in the fourth quarter of 2012, they may well form the core of our 2013 asset monetization plan instead, and we'll replace them in the fourth quarter with something else. Again, identifying assets to sell around here is perhaps the easiest job that we have, given the huge amount of assets and given that at least half of our assets are given no value whatsoever in enterprise value. There’s just lots of options and lots of levers to pull. So we would -- specifically, to your question as to gas, we would basically not be trying to sell gas assets. We'd be looking for assets that are what we would call non-core to our mission. And we'll stay focused on that. And I think people will be very pleasantly surprised at what we emerge from in 2013 with the #1 or #2 position in 10 key fields, about half of which will be gas and half of which will be liquids. And going forward, there's no reason why we won't be able to deliver industry-best returns from industry-best assets.

Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division

Okay, and then just lastly, Aubrey. Maybe just remind me, I think I know the answer to this. As far as just on your gas assets, I think you had previously said most are HBPs, is that correct? You really don't have a significant amount that expire in the next year or so?

Aubrey K. McClendon

No, only in the Marcellus do we have expiration issues, but we've addressed most of that by exercising options or negotiating renewals. Basically, we're in the same boat as our mineral owners, where many of them today would prefer not to rush out and drill gas wells in this kind of environment. So we are seeing a fair amount of cooperation from folks in the Marcellus and working with us to defer some of that. And that's one of the reasons why we still have to spend leasehold going forward is that we want to spend a little bit of money to defer a lot more money on the drilling side. But the fact that we are going to 2 rigs in the Barnett and 2 rigs in the Haynesville is pretty ample evidence that we are virtually completely HBP in those areas.

Operator

We'll go next to Biju Perincheril from Jefferies.

Biju Z. Perincheril - Jefferies & Company, Inc., Research Division

Following up on that previous question, can you talk about the $500 million that you're budgeting for leasehold acquisition in next year? How much of that is for renewal?

Aubrey K. McClendon

Biju, I don't have that specifically. I think about it more in terms of where the money is going to be spent. And again, this is off the top of my head. But I'm pretty sure that about 35% to 40% of that is in the Utica. And then next after that would be in the Miss Lime and in the Anadarko Basin, Cleveland, Tonkawa and Granite Wash. And basically it's all now just finishing out wellbore paths, finishing out units. You can't go to 0, because your leasehold position isn't perfect. You've got to trade around, you've got to take care of holdouts in your wells, so -- but going forward, obviously, greatly reduced. We are not active in any new play identification. And again, we're moving to harvest, and along with that, should be able to greatly reduce our leasehold spend from the past.

Biju Z. Perincheril - Jefferies & Company, Inc., Research Division

Okay, so should we think about the $500 million then as more of a normalized level, absent any new plays?

Aubrey K. McClendon

No. I would look at a 2014 or '15 number for that, because in 2013, we'll still have a fair amount of Utica cleanup to do, so I don't have that number off the top, but my guess is it's probably 30% or 40% less than that $500 million, in terms of kind of purely a maintenance. But in some respects, I don't know, because we've never been there, basically. And during the past 7 years, we've been involved in an unprecedented asset identification and capture mode, and now we're transitioning to asset harvest. And having never been there, I'm not exactly sure what it requires. But I'm pretty sure that it will drop below the $500 million, because I know how much of the $500 million is being spent in the Miss Lime and in the Utica. And over time, as we finish out our wellbore paths there, we should be able to reduce it even further.

Biju Z. Perincheril - Jefferies & Company, Inc., Research Division

Okay. And Nick, if I could, one more question on the covenants. When you said with the asset sales that you don't see issue with the covenants, are you only including the Permian and the Mississippian JV? Are you considering only those 2 when you make that statement? Or are there additional sales that needs to get done?

Domenic J. Dell’Osso

Biju, there's a number of things in our forecast. Those are the 2 that we focus the Street on and told you guys about, because they're the most significant. And so they're the keys to the analysis I'd say.

Operator

We'll go next to Jeff Robertson from Barclays.

Jeffrey W. Robertson - Barclays Capital, Research Division

Nick, on the VPP and the Eagle Ford, have you all ever said what amount of the production, I think you all were doing 23,000 BOE a day in the first quarter, might have been included in that VPP?

Domenic J. Dell’Osso

No, we did not give a specific production amount into the VPP.

Aubrey K. McClendon

You should be able to see it, Jeff, whenever we adjust our outlook, either the next time we sell a significant asset or I think the -- obviously, the latest would be with our second quarter earnings release.

Jeffrey W. Robertson - Barclays Capital, Research Division

Okay. Nick, just on the VPPs, can you talk about how you all account for the costs associated with delivering the production both in your financial statements and also in your SEC PV-10 calculations?

Domenic J. Dell’Osso

Yes, sure. So the way that we account for VPPs as a full-cost company, of course, is as a true asset sale. And so we take cash in, and we show the production and proved reserves as off of our balance sheet, just as we would any asset sale. What we are left with, of course, is a higher cost structure on the retained asset that we have. And so that higher cost structure is baked into our reserve report, and therefore is a function of our PV-10. And so we have all of the costs in our PV-10, which is in our standard measure calculation in our filings, of course. And that's a part of our assets calculation at the end of the day.

Aubrey K. McClendon

It's also in our LOE projection going forward, Jeff. So I'd advise all listeners to not learn about VPPs from reading the newspapers also.

Jeffrey W. Robertson - Barclays Capital, Research Division

And is any of that in your realized gas price you all report in a play like the Barnett, where it's burdened by the high transportation urban areas? Is that also affected?

Domenic J. Dell’Osso

It is affected slightly, and the reason for that, of course, is that we -- it's only affected to the extent that actual transportation costs differ from the transportation costs that were assumed at the time of the VPP. And so if there's higher transportation costs as a result, then that's burdened on the volumes that we produce. And so that's where it shows up.

Jeffrey W. Robertson - Barclays Capital, Research Division

Nick, just on your covenants, I think you said you all have debt-to-book cap covenant of 70%. Can you talk about how noncash write-downs affect that, if they do? Or are there -- or are factored into that?

Domenic J. Dell’Osso

Yes. We -- it excludes ceiling tests from that calculation. We were able to get that changed a couple years ago.

Jeffrey W. Robertson - Barclays Capital, Research Division

Okay. And then just one question on the assets. Aubrey, in the Permian Basin, can you all talk a little bit about how much of your acreage out there is held by production? And what kind of lease obligations people who may be looking at those assets might be facing?

Aubrey K. McClendon

And Jeff, again, I don't have that right with me, but a large part of our -- no, the Permian side or the -- sorry, the Midland Basin side though, it's pretty well HBP. The other, we have presented in our data room various drilling schedules that the new owner can adopt to make sure that all the acreage get HBP. So it's clearly something that's doable. It just needs to be done by somebody, who has more resources than we have to put to work on those assets. We've only got 12 rigs in the Permian right now, and given the size of our asset base there, you probably need about 3 times that. And when you split it up in 3 different packages and you see how many Permian players are running 30, 40 rigs out there, there's nothing overly daunting about what -- the plan that we've laid out or the various plans that we've laid out. In addition, we're willing to continue to operate the asset for somebody for quite some time. You may recall that in the Fayetteville sale, we operated the asset for a year on behalf of BHP to allow them to get geared up, so we're willing to do that as well. So final statement there is just that this is probably going to be the biggest Permian asset sale in quite a long time and perhaps a long time in the future. So for a company that wants to get bigger in the Permian or wants to get in the Permian, this is the best opportunity they've seen in a long time and are likely to see in a long time. And I think that's reflected in the interest that we've seen to date in the asset.

Operator

We'll go next to Scott Hanold from RBC Capital Markets.

Scott Hanold - RBC Capital Markets, LLC, Research Division

Could you talk about what the revolver was prior to the loan? How much is drawn on it?

Domenic J. Dell’Osso

We've given our revolver balance as of the end of the quarter. I don't have what's drawn on it this morning here with me. But obviously, we have nearly $3 billion of proceeds from the loan on Friday that went to reduce borrowings there.

Scott Hanold - RBC Capital Markets, LLC, Research Division

So basically, if I'm reading into what you're saying -- correct me if I'm wrong, but there's probably in excess of $3 billion drawn on the revolver prior to the unsecured loan. Is that a fair statement?

Domenic J. Dell’Osso

It's possible. I don't recall exactly what we had drawn on Friday, but there's in excess of $3 billion available now.

Scott Hanold - RBC Capital Markets, LLC, Research Division

Okay, understood. And in looking at your spending over the course of '12 and '13. Clearly, there's a fair amount of discretionary spending in your budget, and could you give us a sense of how much that is? And I'm not questioning your capability of executing your sales, because you do have that track record. But what is sort of the ability to rein in spending, if you need to do that, let's say, if oil prices kind of worked against you and everybody else?

Aubrey K. McClendon

Yes, just like any other company in the business there’s enormous discretion. The question is simply one of what's the right plan? And for us, we feel like the plan is to try to move our asset base away from low return gas assets to high return oil assets. And it takes money to make money is the old adage, and that's the case here. So we could lengthen this transition and make it a 4- or 5-year transition if we wanted to. But in my view, that's not what we should do. We committed 2 years ago to make the transition as quickly as possible, and that's what we're doing. If in the case that you talk about, we need to reduce drilling further, we can certainly do so. It's within our power and within our scope. But even oil prices going to $80 a barrel from $100 a barrel, really at the end of the day, doesn't change our returns very much from most of the projects that we're involved in. And at this point, rather than trying to fiddle with the dial on 5 or 10 rigs around the margin, our best strategy is to look at our asset base and see that we've got $50 billion or $60 billion of assets, of which at least half are given no value. So we ought to go sell some of those and get our balance sheet in shape and then at some point, even consider buying back stock. That's what you need to do when you have such an enormous disconnect between your obvious and easily calculable asset value, and what the market says your company's worth. So we've got a lot of tools, we've got a lot of assets, and we'll be using all those tools to drive these returns to investors going forward. And we've got lots of different ways to go about that.

Scott Hanold - RBC Capital Markets, LLC, Research Division

Okay. So what I'm hearing, again correct me if I'm wrong, is to slow that transition process that you referred to, it would take a pretty significant change in the oil price to have you make an adjustment?

Aubrey K. McClendon

I think that's fair to say, yes.

Operator

We'll go next to Joe Allman from JPMorgan.

Joseph D. Allman - JP Morgan Chase & Co, Research Division

So Aubrey, what's the status -- or Nick, what's the status of any potential borrowing base or credit facility redeterminations? Are the banks looking at that soon? Or has it been redetermined recently?

Domenic J. Dell’Osso

Yes, it was redetermined in the spring of this year based on our year-end reserve report and won't be redetermined again until the spring of next year on our year-end '12 reserve report.

Joseph D. Allman - JP Morgan Chase & Co, Research Division

Okay. That's helpful, Nick. And then Nick, in terms of the drawn on revolver, I mean I know you don't necessarily want to answer it, but I mean was it close to $4 billion? And was that really the trigger that caused you to get the $3 billion loan?

Domenic J. Dell’Osso

No. We -- it was somewhere probably north of $3 billion. Like I said, I don't have the exact number as to what it was. It was perfectly comfortable with where we were. And we were ready to do something whether it was the VPP or this, and we chose to pull this trigger.

Aubrey K. McClendon

Joe, the VPP would have been a $1 billion transaction. We had -- we have some other things planned for June. And we just took a step back and said, "Look, why do we want to go from $1 billion transaction and have people be concerned about liquidity during the time when we’re making this transition from gas to oil during a very low gas price environment?" And so, starting a couple of weeks ago, we took a step back, called in our biggest advisors, who happened to also be advising us on the Permian sale and the Miss Lime deal, and we said, "Look, what's the right way to address the concerns in the marketplace about the company's financial capabilities?" And we decided that this unsecured $3 billion term loan, which will provide a long runway into 2012 and allow us to complete our asset monetizations or sales from a position of strength was the right way to go. So that's what we've done. We've applied the proceeds to our revolver. We've got a lot of run room. We've got things planned in June. We have things planned in the third quarter. And we'll just play it on out. But again, what this company has, more than any other company in the business today, is we are very long, very good assets. So the question is when do we sell them? What's the right price? And the buyers are manifold, and they are large, and they are -- there's a large number of them as well. So this was a way to say to the marketplace, try and take a step back from being so close to the situation and being worried about, as we move from one $1-billion transaction to another, until we get into a big-time transaction, let's take a step back, and see if we can provide a little clarity, so people can get more comfortable about executing on the asset sales program that we have. And we hope we've done that, and we hope in the days and weeks ahead, people will gain even more confidence about the value and strength of that plan.

Joseph D. Allman - JP Morgan Chase & Co, Research Division

So Aubrey, I mean, the fact that you announced the $3 billion loan on Friday evening gives people the idea that maybe there's some scrambling going on, so could you just address that perception?

Aubrey K. McClendon

Yes, Joe. Sure, I get that question. And we could have honestly, probably had -- would have waited until this morning to do it, but the market reaction to the 10-Q issue was so extreme and so completely, frankly, overwrought to what we said in the Q that we did want to go ahead and get it finished up on Friday morning, and get it -- rather, Friday afternoon and get it released Friday evening, rather than wait to this morning. And we wanted to stand up in front of investors this morning and take everybody's questions. So but we've been working on it for multiple weeks, obviously, to get a $3 billion term loan done that's unsecured at a time when your company is subject to some pretty relentless negative publicity is not the easiest thing to get done, but thanks to the stamina and fortitude of our advisors and the management team's capabilities here, we've pulled it together and put it out in the marketplace as soon as we thought we should based on Friday afternoon's response. In a perfect world, Joe, would have lined them up, boom, boom, boom, but we didn't have the opportunity to do that based on a number of things that had to get done on Friday. And so we wanted to start this morning off, rather than with a press release that would have not answered questions -- or that answered questions that would have been out there all weekend. We didn't want people to sit there and try and divine what we really meant in our 10-Q over the weekend. We wanted to address it head-on.

Joseph D. Allman - JP Morgan Chase & Co, Research Division

That's helpful. And then are you looking to amend those maintenance covenants?

Aubrey K. McClendon

Well, I think we could, if we wanted to. I mean, bank covenants are amended all the time. I think our bank revolver has 35 banks or so in it. It's been led by a number of banks that we've been in business with for at least, in one case, almost 20 years. So Joe, if it got to that, I mean, it's certainly a pretty routine thing that happens in the E&P world. Again, we don't anticipate that, but you don't have to look very far to find times in the past when companies have just paid a fee for a waiver for some period of time. And clearly, when you run 2013 gas prices through our model, there's no aspect of any of the covenants that would give us any problems in 2013 or beyond. This certainly emphasizes -- this is again a 2012 issue, and we will work around it by the fact that we'll get our debt paid down through these asset sales.

Joseph D. Allman - JP Morgan Chase & Co, Research Division

That's helpful. And in terms of the Permian sale, I think you first mentioned the Permian sale in February, which is 3 months ago, and I think between then and now, you've actually indicated there's been a high level of interest and not just with your first quarter earnings call but even before that. So what has precluded you from actually closing a deal on that -- a big deal or 1 of the 3 smaller deals? And are you likely to sell in 3 parts, or do you think you’re more likely to sell it in one chunk?

Aubrey K. McClendon

Yes, good questions, Joe. We did start to talk about it early in the year, because we wanted to -- we knew we had a big funding gap. We knew people would want some specificity on where we were going, so we wanted to say we are driving towards this asset. And reason that we're selling the Permian compared to some other assets is first of all, it's in a basin that is the hottest in the world, plenty of buyers, deep buyers, big buyers. And also it's just a basin that we're never -- we could see a way -- we could not see a way, where we could fund it properly. Again, with 12 rigs out there, that is only roughly 6% or 7% of our drilling -- total company drilling activity today. And as -- actually, that's not quite right, sorry. It's about 4% of our drilling activity today. And it just needs more capital. It needs a bigger company. It needs a company that doesn't have the Eagle Ford, the Utica, that doesn't have the Cleveland, the Tonkawa, the Granite Wash, the Mississippi Lime. And we've got plenty of oil assets. And we want to be #1 or #2 in everything that we do. And right now, we're #3 in leasehold in the basin, and we are #12, I think, in terms of production. So the asset needs to be owned by somebody else. So we identified it in, call it, January or February, and then you've got to go get the asset ready for sale, and that takes months. I mean, this -- last time I checked, Joe, the data room shows 25,000 drilling locations. And they've all got to be supported, they've all got to be loaded up in the reserve report, they've all got to be scheduled for drilling. You've got to be able to prove the land to it. So it's taken us about 90 days to get the data room ready. Data room's open last week, and we've got the thundering herd coming through. So this thing will get announced and done in the third quarter. I'd love it to be faster, but if it can be, it will be. But one of the things we want to make sure we do is conduct a full process to make sure we get full value. And that's another reason for the term loan to make sure that any bidders out there don't feel like we have to be pressured into the first acceptable offer that comes in. Your final question was whether or not we'd sell it in 3 parts or 1? I don't know. We split it up into 3, so that smaller bidders could take a look at it. But obviously, it's easier to do one deal than 3 deals, but we'll do whatever is best to maximize the value from the asset sale.

Joseph D. Allman - JP Morgan Chase & Co, Research Division

Are we -- how's the search for the board Chairman going?

Aubrey K. McClendon

Joe, it's not in my hands, it's in the hands of the nominating and governance committee. So I'm sure as the process plays out it'll be made clear to everyone which direction they're headed. But again, that's being driven by a committee on the board, not by me.

Joseph D. Allman - JP Morgan Chase & Co, Research Division

Got you. And then lastly, Aubrey, do the commitments that you have, the pipeline commitments and leasehold and other commitments, do they preclude you from reducing your drilling CapEx a whole lot?

Aubrey K. McClendon

No, not really, Joe. Obviously, first -- when you think about our leasehold, and that's one of the reasons why we do JVs, is we reduce our leasehold cost basis sometimes to below 0. So it's a lot easier to not be emotionally attached to your leasehold, if your cost base is pretty low. At the same time, your partners want to see it drilled, and that's the reason why they give you the capital to do it. So those commitments, whether it be firm transport, which everybody deals with, or whether it be leasehold commitments, those are tails on a dog, and at the end of the day, we look at the overall strength of the company, the overall best strategy for the company going forward, and those are minor considerations in terms of what guides us. The one exception I would say is that when we curtail production, obviously, we look for areas whereby curtailing that production, we don't expose ourselves to large payments as a result of that curtailed production.

Operator

We'll go next to Tim Rezvan from Sterne Agee.

Timothy Rezvan - Sterne Agee & Leach Inc., Research Division

I just wanted to try, I guess, a question that's been asked here. I'll try it a little different way. The major concern around the company seems to be this high level of cash burn and the perpetual kind of run up in the credit facility. So can you -- and I'm not saying you would go to this number, but can you quantify a maintenance CapEx level, regardless of whether you intend to go there or not, can you reassure investors that there is a nominal level of spending that you could go to in the near term if you had to?

Aubrey K. McClendon

Sure, Tim. The way I like to look at that is just to look at our production forecast for, let's say, what year do you want to think about, 2013, is that the easiest for you perhaps?

Timothy Rezvan - Sterne Agee & Leach Inc., Research Division

Sure.

Aubrey K. McClendon

Okay, Jeff, where is our 2013 production guidance? Anybody help me here? So I think it's around 1.1 Tcfe, but I'll let some guys look it up for you real quick. And so then you say what's our -- got it right here. So we're looking at 2013 -- sorry, around -- this should make the math easy, and it's around 1.3 Tcfe. The midpoint is actually 1.332 Tcfe. And so our finding costs, Jeff, in the first quarter were...

Jeffrey L. Mobley

It's around $1.19.

Aubrey K. McClendon

$1.19, so I would just multiply, round it to $1.20 and let's even go even further and say, well, your costs as you find more oil are probably going to be higher in the future. So if you want say $1.40, $1.50, multiply that by 1.3, it's $2 billion of what I would call maintenance CapEx. And if you define maintenance CapEx in terms of what creates a steady-state system here, your reserves are flat, your production are flat, that's around $2 billion. And then you have some leasehold spending on top of that and some others. So point is we can stay inside of cash flow if we just want to stay with the cards that we've been dealt already, and that's absolutely an option. I just don't think it's the right option. And the better option is to get the company transformed as quickly as possible. And look, it's painful. We wouldn't be having this conversation today if we hadn't had the warmest winter in 100 years. And gas prices would be $4 today, and we'd be making this transition with a lot more elegance and a lot less noise than what we have right now, but we are where we are. We understand it. We've got $2 gas. And I think, it's pretty remarkable that the company's able to make this transition from gas to oil in a $2 gas world, lowest gas prices in 10 years, still reduce debt and not issue shares. I mean that's pretty strong work, and we're proud of being able to do that. And I would have loved to have done it without all the noise of the past month, but we've taken that on in stride, and we'll take on whatever noise comes our way in the future, and we will get this executed. And we're not that far away. Joe's question of, "Well, you started with Permian sales process in February, you're 3 months into it." Well, we've got the data room open now. And I would guess that within 60 to 90 days we'll have something pretty significant to advance there. And who knows we might have a couple of things to talk about before we get to that point from some other things as well. So is that helpful then on the maintenance CapEx side of things?

Timothy Rezvan - Sterne Agee & Leach Inc., Research Division

That is, that is. And then just lastly on the Oilfield Services segment there was information in the 10-Q that the credit facility was curtailed due to leverage. Can you speak to that? And how, if at all, that would kind of impact what you think the proceeds could be from a partial IPO?

Domenic J. Dell’Osso

Sure. Yes, I think that language is being misunderstood as well. Go back and look at our 10-K, you'll see that basically what we have there is a credit agreement that allows for a maximum size greater than the borrowing base that's there today, not uncommon when you see a new credit facility put in place on a rapidly growing company. So we have commitments from banks that as our EBITDA grows, the borrowing base in that entity will grow. The borrowing base at year end for Oilfield Services was, I think, $290 million, and then in -- on March 31 was $450 million, so as that entity grows and its EBITDA grows, the borrowing base increases. So $450 million is less than the max commitments that we have from our bank group, but it's growing as the cash flow in the business grows.

Operator

We'll go next to Gregg Brody from JPMorgan.

Gregg Brody - JP Morgan Chase & Co, Research Division

I was just curious, with respect to the term loan, what's your anticipated net proceeds from the loan? And is there a variable component to that based on how the syndication process goes?

Domenic J. Dell’Osso

Well, certainly, it does rely a bit on the syndication process, so we don't have the number to give you all today. Obviously, we anticipate that Goldman and Jefferies are going to have great success in syndicating the loan.

Gregg Brody - JP Morgan Chase & Co, Research Division

No, what I mean is that did you get $3 billion or -- less net proceeds, less your fees, or is there a discount to the loan, if you were to get the $3 billion?

Domenic J. Dell’Osso

Well, look, there's an underwriting spread, which is typical of any loan or bond, and then there's ultimately the proceeds from selling the loan. There is a floor on what that could be, but for obvious reasons, I'm not going to disclose what that is.

Gregg Brody - JP Morgan Chase & Co, Research Division

Okay, that's helpful. And then just as you think about the term loan, can you review just the step-up language associated with the pricing? And then really just in the context of how do you think about paying that down? At what point will you be comfortable doing that? Clearly you have spending to do in '13 as well.

Domenic J. Dell’Osso

Yes. We think it'll be paid down in the third and fourth quarter of this year. And the way the loan is structured, if it's not paid down at that time due to any unforeseen reasons then we'd probably refinance it out.

Gregg Brody - JP Morgan Chase & Co, Research Division

Okay. And then my last question for you is from just some -- my initial read is that if you're tapping the unsecured market, potentially because your borrowing base you can grow it. Is there -- obviously, you haven't disclosed this information, but between the hedging facility and the borrowing base facility, what's your sense of the available collateral based on the test that your banks do? And is there room to grow it?

Domenic J. Dell’Osso

Yes, we maintain a, what we call a pool of collateral that's required under our credit facility to maintain, which is unencumbered, and that's a reasonably large pool. The reason we went to the unsecured market here is that we have a secured facility in place for our revolver, and we have a secured facility in place for our hedge facility. And so we have covenants about doing additional secured debt, which is possible but easier to do in the unsecured market. And so we have ample excess assets around here to have done secured debt, but unsecured is more flexible, it comes with less covenants, and it comes with prepay ability, in a way, in this loan that we found to be very attractive.

Gregg Brody - JP Morgan Chase & Co, Research Division

Do you have the flexibility to grow the revolver throughout the year if you had to create borrowing base, as well as your hedging position?

Domenic J. Dell’Osso

Well, again, we do have excess assets here that can be pledged. We would have to go -- the borrowing base is the size of our maximum facility now, so we would have to go and ask the bank group if we wanted to increase the capacity of it. Those things are always possible, but we don't plan to do that this year.

Aubrey K. McClendon

Yes. And the easier and probably better thing to do from just a corporate finance perspective is to go finance out into the high-yield market, something if we wanted to go -- if we wanted to add permanent financing to the balance sheet. I think to just increase the revolver from $4 billion to $5 billion doesn't really help that much because, again, people consider that to be more short-term debt, even though it's got a longer-term duration to it. It does have a few covenants in it than obviously people worry about from time-to-time. So the high-yield market is absolutely open to us, as you know, it's red-hot right now. And if we were to, for some reason, view that we wanted to go term this out using that device rather than asset sale, we could do that. But again we don't expect this facility to be out at the end of the year, we expect to get it paid back in the third quarter.

Operator

We'll go next to Gary Stromberg from Barclays.

Gary Stromberg - Barclays Capital, Research Division

Most of my questions were answered, just 2 left. First 2013 guidance, does that account for the $5 billion in plan monetizations?

Aubrey K. McClendon

Yes, it does in terms of are there asset sales out of it. If that’s your question, the answer is yes.

Gary Stromberg - Barclays Capital, Research Division

In terms of production.

Aubrey K. McClendon

Yes.

Gary Stromberg - Barclays Capital, Research Division

Okay. And then finally, CHKM, any thoughts of divesting that in entirety, or any prohibitions against doing so?

Aubrey K. McClendon

Certainly, no prohibitions against it, but we're looking at our whole asset lining up, and so it is not fair to comment on one asset over another. We've got tens of billions of dollars of assets to look at.

Operator

We'll go next to Mike Kelly from Global Hunter Securities.

Michael Kelly - Global Hunter Securities, LLC, Research Division

Aubrey, as your corporate strategy shifts from acreage captured to development, I'm interested to hear if how you'll assess the company's corporate performance has changed going forward? And also how management's incentives are aligned with generating, in your words, industry-best returns going forward as well?

Aubrey K. McClendon

Yes, in our proxy, our new compensation program is outlined there. It has a very big dose of TSR in it. So as the stock price goes, and as stock price goes relative to our peers, so goes our compensation. So I encourage you to look at -- I think we filed it Friday morning, the proxy. And I think, it's a big improvement from where we were before, which we had a lot of objectivity to it. But as it was written, it always seemed overly subjective to people, so starting last year, we engaged a corporate compensation consultant and have a new plan that we like quite a bit, because it’s tied to the company's performance. So at the end of the day, that's the best marker, how we do both on an absolute basis, and how we do on a relative basis, and that's going to be the lion's share of how we get paid going forward. And I think, people will like that and we're -- and plenty motivated in the past, and we think we've had our interest well aligned with other shareholders now. It's just in a much more easily quantifiable way, will people be able to see that and to see the calculations that go into our pay as well, a lot more transparency into that.

Michael Kelly - Global Hunter Securities, LLC, Research Division

Okay. But in terms of just your absolute performance metrics, and what you're going to look at kind of on a quarterly basis, your peers across town, Devon, focus on cash flow per debt-adjusted share. I was wondering if you guys will turn to any metrics like that to really assess how you’re doing?

Aubrey K. McClendon

Well, I think there's a whole range of metrics that's certainly a good one. Net income we think is important. We think net asset value growth is important. So have we found every -- we look at EBITDA multiples. We look at lots of things. We'll always -- and until gas prices rebound, we're going to start off a little bit behind, where some of our peers start in terms of gas prices at $4 versus -- or $3 versus oil prices at $89 or near $100. So that's -- that will be somewhat of a drag until gas prices recover to a level that are more competitive. One of the reasons that we're driven to change the nature of our asset base, so that we don't start off basically carrying around a natural gas ball and chain every year. So even despite -- starting with that, we think that our gas assets are very high quality, they're low cost, located in the very best basins in the country. And going forward, we'll be very pleased and proud I think to compare our results with those of our peers. And let the market make the decision on how well we've done, and our pay will be based on how well we've done.

Okay, I think that's it for us today, and thanks for tuning in. And if you have follow-up questions, Jeff, John and Gary are available. Thanks again.

Operator

That does conclude today's conference. We thank you for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Chesapeake Energy's CEO Announces Increase of Term Loan to $4.0 Billion (Transcript)
This Transcript
All Transcripts