Chesapeake Energy Corporation (NASDAQ:CHK) Q4 2022 Earnings Call Transcript

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Subash Chandra: Okay. Okay. Thank you. That’s helpful. And then, I guess, second, so the investment Marcellus versus Haynesville sort of the inverse of the economics of the two places, right, Marcellus being superior, and I suppose that part of your LNG-ready strategy, is there a point though where that may be the carrying costs of those €“ of the relative economics is too great, and we see additional changes to CapEx?

Nick Dell’Osso: I’m not sure exactly what you’re asking me, Subash. Do you think €“ are you asking me if we pull back more capital in the Haynesville in favor of more capital in the Marcellus?

Subash Chandra: Yes. I think so the Marcellus being superior economics, I think it’s guiding €“ you’re guiding for declining volumes there, but flat volumes in the Haynesville. Is that fair? And if that’s the case, the Marcellus economics is superior, which might argue that you keep volumes there flat allow Haynesville to dissipate, but you’re probably not because of the LNG-ready strategy? And if at some point, you reconsider those economics?

Nick Dell’Osso: Yes, I don’t think that’s actually right. We’re looking at a pretty €“ it’s closer to flat in the Marcellus with a little bit of a decline in the Haynesville. So maybe we can walk you through that math after the call. But directionally, we’re, I would say, following the economics right now, but the one rig pullback in the Marcellus is it’s as much about optimizing how we spend and managing the logistics of development and then pressures in the gathering system as it is anything else. So we expect a very modest change in flow there.

Subash Chandra: Okay. Never mind. That makes a ton more sense, and just finally, is there a cash on hand sort of number that we could be €“ we should be looking at?

Mohit Singh: Yes. I mean the minimum €“ since we have ample liquidity, which is available through our revolving credit facility, I mean, the minimum cash balance that we’d like to keep on hand is the minimum, Subash.

Subash Chandra: Okay, thank you.

Operator: The next question comes from Noel Parks with Tuohy Brothers. Please go ahead.

Noel Parks: Hi, good morning.

Nick Dell’Osso: Good morning, Noel.

Noel Parks: Just a couple of things. I wondered with the Eagle Ford divestiture happening as we go through the year. I just wonder, do you have any thoughts on just what the pacing might be like with G&A, I don’t know if there are transaction costs that will be embedded that might be in the mix for a while. But maybe if you have a rough idea of what quarter we might get to serve a pretty normalized G&A after the divestments are taken into account?

Mohit Singh: No. We will have a handful of changes to our business as a result of the sale of this size. We do have a very long transition services agreement with INEOS that will be in place. They do not have a material upstream business in the U.S. And so we will be aiding them as they create that organization. So it will take a while for us to sort through all of that. But we will have some underlying changes to our business as a result, and you’ll see that play through.

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