View 2018 Annual Report

DEAR FELLOW SHAREHOLDERS:

In 2018, Chesapeake Energy delivered a strong operational and financial performance. Consistent with our strategic focus on
margin enhancements, we generated our highest adjusted EBITDA per boe since 2014 (a year when oil averaged more than $90 per barrel and natural gas averaged more than $4 per thousand cubic feet). This occurred while significantly reducing net debt and future midstream commitments.

Focusing on increasing oil production resulted in 10% oil production growth in 2018, adjusted for asset sales, led by a 78% increase in annual net oil volumes in the Powder River Basin. Oil comprised 21% of our total production mix in December 2018, up from 17% in December 2017. Further oil growth will come from our acquisition of WildHorse Resource Development Corporation consummated in the first quarter of 2019. Known in our portfolio as Brazos Valley, this high-quality oil asset adds opportunities for significant increased cash flow and value acceleration for Chesapeake.

This progress, combined with additional efficiencies through supply chain savings, reduced controllable downtime, and recovery and development improvements, was the result of outstanding execution by our team members. Our commitment to operating responsibly again led to achieving outstanding health, safety, environmental and regulatory performance.

In 2019, we will continue our focus on reducing debt, enhancing margins and reaching sustainable free cash flow. We expect the Powder River Basin and Brazos Valley assets to drive absolute oil growth of 32% (50% when adjusted for asset sales), as we direct the majority of our drilling and completion capital expenditures to our higher-margin, higher-return oil assets in the Powder River Basin, Brazos Valley and Eagle Ford Shale.

Our leadership and dedicated team members have accomplished much during the past six years — yet there is clearly more to do. With an unwavering commitment to our core values, we will execute on our focused business strategies to create long-term value.

Sincerely,


R. Brad Martin
Chairman of the Board

Robert D. Lawler
President, Chief Executive Officer and Director