Chesapeake Energy Corporation

To withdraw your question, please press more than two. Please note this event is being recorded. I would now like to turn the conference over to Chris Ayers, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you, Andrea. Good morning, everyone, and thank you for joining our call today to discuss Chesapeake's first quarter 2023 financial and operating results. Hopefully you've had a chance to review our press release and the updated materials that we posted to our website yesterday. During this morning's call, we will be making forward-looking statements, which consist of statements that cannot be confirmed by reference to existing information, including statements regarding our beliefs, goals, expectations, forecasts, projections, and future performance, and the assumptions underlying such statements. Please note that there are a number of factors that will cause actual results to differ materially from our forward-looking statements, including the factors identified and discussed in our press release yesterday and in other SEC filings. Please recognize that as except as required by applicable law, we undertake no duty to update any forward-looking statements and you should not place undue reliance on such statements. We may also refer to some non-GAAP financial measures, which will help facilitate comparisons across periods and with peers. For any non-GAAP measure, we use a reconciliation to the nearest corresponding GAAP measure that can be found on our website. With me today are Nick Delosso, Mohit Singh, and Josh Vietz. Nick will give a brief overview of our results, and then we will open up the teleconference to Q&A. So with that, thank you again, and now turn it over to Nick.

Good morning, and thank you all for joining our call. I'd like to take a few minutes to highlight our strong quarter of execution and some other recent accomplishments, and then I'll get right to your questions. Our year is off to a strong start. We remain focused on executing on our strategic pillars through our Discipline Capital Program, which maximizes returns and delivers sustainable free cash flow to fund our peer-leading dividend and buyback program. Operationally, we turned in line 53 wells, seeing solid productivity in both the Hainesville and Marcellus with Haynesville IP90s having improved about 8% from 2022, benefiting from new gas gathering offloads and incremental treating capacity put in place in 2022. CapEx was slightly ahead of expectations on the heels of very strong execution from our drilling and completion teams, where we drilled three of the five fastest all-time footage per day wells in the geologically complex southern portion of our Haynesville acreage position. We averaged 690 feet per day in the quarter on this acreage, which is 30% faster than our closest offset operator. In addition, we've deployed a continuous pumping wellhead technology that enabled our teams to pump a record 36 consecutive hours on a Hainesville frac. In the face of a volatile market, we generated $350 million of free cash flow, about $240 million when adjusted for asset sales, which will translate to a total dividend of $1.18 per share for the quarter. When combined with our buyback program year-to-date, we've already returned more than $250 million to shareholders. We also continue to make important progress on our path to be LNG-ready and connect our production to international markets and pricing. Our Gunvor agreement is a great example of our approach to leverage our operational and financial strengths to capture a meaningful share of the incremental LNG capacity coming online by 2025 and beyond. The agreement will ultimately provide up to 2 million tons of LNG per annum indexed to JKM, an important first step for Chesapeake. As market volatility continues to be top of mind for investors, we're very pleased with our position at this point in the year. As I've said before, Chesapeake is built to thrive in this environment. This starts with the strength of our balance sheet, which has only gotten stronger with the closing of our two initial Eagleford sales for $2.8 billion. As of April 30th, we have $1.2 billion of cash on hand and greater than $3 billion of available liquidity. This cash is available to fund our ongoing buyback program, under which we purchased another 1 million shares since our last call, bringing our total buyback under this authorization to greater than $1.1 billion, with $850 million remaining. We remain actively engaged with other parties regarding the remainder of our Eagleford position, which is primarily in the rich gas portion of the play. We're pleased to have recently received a Fitch credit rating upgrade to double B plus with a positive outlook. We now sit one notch below investment grade with Fitch, who attributed the strength of our scale, conservative financial policy, and cash optionality as foundational to our continued rating improvement. Turning to our capital program, as you saw, our capital came in on the low end of guidance as we dropped a rig in the Haynesville and a frat crew in both the Haynesville and Marcellus. Based on the midpoints of our 2Q guidance, we expect DNC capital to decline approximately 10% and natural gas production from the Marcellus and Haynesville to decline approximately 5% quarter over quarter. This decline was part of our plan for the year, which is why we reiterated our full year capital and production guidance today. We will maintain our disciplined approach to executing our capital program in the year ahead, reducing an additional rig in Haynesville and Marcellus in the third quarter as previously announced. We believe our financial flexibility is a competitive strength, and we intend to use it. We were built to thrive in all markets, including this low gas price environment, and we continue to adjust our program as warranted by market conditions. Despite the current market volatility, which we do expect to persist, thanks to the premium rock returns and runway of our portfolio, our best-in-class execution, pristine balance sheet, and the added financial flexibility provided by our Eagleford asset sales Our confidence in the strength of our long-term outlook remains unchanged. I'd like to now turn the call over to questions.