Summary
EXPAND ENERGY Corp (EXE), through its affiliate Chesapeake Energy Corporation, announced the establishment of a significant Multi-Counterparty Secured Hedging Facility on June 11, 2009. This new facility consolidates and replaces six existing bilateral commodity hedge agreements, streamlining Chesapeake's hedging operations. The facility is secured by proved reserves and affiliate guarantees, providing a robust framework for managing commodity price and basis risk for natural gas and oil. This strategic move is designed to enhance Chesapeake's ability to engage in financially settled commodity hedges. With an initial capacity of $9.835 billion in mark-to-market exposure and 368,813 contracts in volume-based trading capacity, the Hedge Facility offers substantial flexibility. Chesapeake can increase this capacity by adding more reserves, and can also reduce or eliminate trading capacity under certain conditions. The transition period is expected to involve the transfer of existing commodity hedges into this new consolidated facility.
Key Highlights
- 1Chesapeake Energy Corp. established a Multi-Counterparty Secured Hedging Facility on June 11, 2009.
- 2The new facility replaces six previous bilateral commodity hedge agreements, consolidating hedging operations.
- 3Obligations under the Hedge Facility are primarily secured by Chesapeake's proved reserves and affiliate guarantees.
- 4The facility allows for financially settled hedges of natural gas, oil, and their respective basis.
- 5At inception, the Hedge Facility has a maximum capacity of $9.835 billion in mark-to-market exposure and 368,813 contracts in volume-based trading capacity.
- 6Chesapeake has flexibility to increase trading capacity by adding more reserves and can reduce capacity under certain conditions.
- 7Existing commodity hedges are expected to be transferred into the new facility over the coming months.