Not surprisingly, volatility continues to be a theme in the oil and gas industry. Following a year of record operating and free cash flows in 2022, 2023 has thus far been defined by lower natural gas prices and volatile crude oil prices. The unjust invasion of Ukraine continues to destabilize an entire nation with devastating and far-reaching impact. A banking crisis combined with record inflation is threatening economies across the globe. Political tensions and division seem to be escalating by the day. Against this backdrop, a reality has emerged: the world is short energy.

Society’s need for energy has never been greater. Meeting this need will require rising above divisive rhetoric and focusing on practical solutions to overcome a prevalent view that society must choose between energy security or lower carbon energy. At Chesapeake, we fundamentally reject that choice, not simply because we aspire for a better future, but because today we are proudly delivering energy that is affordable, reliable AND lower carbon.

Chesapeake was built for this moment. While consumers and policy makers express their demand for affordable, reliable, lower carbon energy, our investors continue to demand attractive free cash flow and returns relative to our peers and other industries. With our low breakeven costs, deep high-quality inventory and proximity to the LNG corridor, we will continue to deliver energy that is not only affordable and reliable, but that also generates leading returns for our shareholders. And with our best-in-class GHG and methane emissions profile, as well as our commitment to achieve net zero, the carbon footprint of the energy we produce will only get smaller.

Playing a leadership role in solving the energy crisis unites our Company. We know we will face hurdles along the way, but we have the talent, the portfolio, and most importantly, the commitment, to help address this challenge. To succeed, we must first and foremost be a strong business and deliver consistent and sustainable results. Chesapeake continues to execute across each of our strategic pillars. Recent accomplishments include:

Superior Capital Returns:

• Returned $2.3 billion to our shareholders in 2022 through our dividend and buyback program

Deep, Attractive Inventory:

• Solidified focus on premier natural gas assets
• High-graded portfolio by closing Vine and Chief transactions and exiting Powder River Basin and majority of Eagle Ford position for aggregated gross proceeds of $3.25 billion

Premier Balance Sheet:

• Maintained investment grade-quality balance sheet
• Exited 2022 with 0.6x net debt-to-EBITDAX

Sustainability Leadership:

• Since 2020, achieved >50% improvement in GHG and methane intensity relative to production

While financial performance is critical, our commitment to sustainability leadership is also paramount to our success. As we drive to achieve our net zero GHG emissions target by 2035, we are guided by our sustainability fundamentals to:

• Deliver energy to sustain economic progress and welfare
• Minimize emissions from our operations
• Invest in low-carbon solutions with adjacent technologies
• Provide transparent disclosures with measurable progress

These fundamentals serve as our roadmap from which we will not stray.

With export capacity scheduled to materially grow by 2025, we are making significant progress on our path to Be LNG Ready and achieve our target of 15% to 20% of our natural gas volumes reaching international markets. The premium rock, returns and runway of our portfolio combined with our track record of operational excellence and pristine balance sheet position Chesapeake as the investment of choice among domestic natural gas producers. We look forward to achieving our vast potential and delivering for all our stakeholders. 

Thank you for your investment in Chesapeake.

Sincerely,

Domenic J. “Nick” Dell’Osso, Jr. President, Chief Executive Officer and Director

Michael A. Wichterich Chairman of the Board