DEAR FELLOW SHAREHOLDERS:
2017 was a year of continued progress in the transformation of Chesapeake Energy. Since assuming responsibilities for the management of Chesapeake in 2013, our leadership team has executed significant financial, operational and cultural improvements at the company. Total leverage has declined by approximately 50%, cash costs have been significantly reduced and capital efficiency is permitting the company to generate stable levels of production with significantly less investment. These actions, combined with divestitures of non-core assets, have positioned the company to achieve its goal of generating positive cash flow in 2018.
During the year, overall production grew by 3%, and our oil production grew by approximately 2% year over year, adjusted for asset sales. This occurred with approximately $500 million, or $0.58 per boe, being eliminated from our cost structure. Over the past three years, midstream transportation commitments have been reduced by nearly $7 billion, and, as a result, have changed the economic value of a number of our major assets.
Chesapeake’s commitment to operating responsibly and safely was reflected again in 2017, showing significant improvement in our safety and environmental metrics and resulting in the best achievement levels in the company’s history.
The accomplishments over the past five years have occurred because of the passionate commitment of our employees and their relentless drive to execute the business strategies of Chesapeake Energy, and to do so with a complete commitment to our core values. The foundation has been built to create significant value in the future.
We appreciate your investment in Chesapeake Energy.
R. Brad Martin
Chairman of the Board
Robert D. Lawler
President, Chief Executive Officer and Director