Good day, everyone, and welcome to the Chesapeake Energy Corporation Q3 2017 Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Brad Sylvester. Please go ahead, sir.

Good morning, everyone, and thank you for joining our call today to discuss Chesapeake's financial and operational results for the 2017 third quarter. Hopefully, you've had a chance to review our press release and the updated investor presentation that we posted to our website this morning. 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 earnings release today and in other SEC filings. Please recognize that, 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 help facilitate comparisons across periods and with peers. For any non-GAAP measure we use, a reconciliation to the nearest corresponding GAAP measure can be found on our website and in our earnings release. With me on the call today are Doug Lawler, Nick Dell'Osso, Frank Patterson, and Jason Pigott. Doug will begin the call and then turn the call over to Nick for a review of our financial results before we turn the teleconference over for Q&A. So, with that, thank you, and I will now turn the teleconference over to Doug.

Thanks, Brad. Good morning, everyone. I'd first like to reiterate this morning Chesapeake Energy's strategic priorities. They remain unchanged and drive all of our business activities in every investment. Improving our balance sheet is our top priority and indeed a journey. We've made great progress during the last few years reducing our total leverage through debt and obligation retirement, debt for equity exchanges, and refinancing. We intend to further reduce our leverage and improve our debt to EBITDA multiple through additional asset sales and accretive acquisitions in the near term. Our stated target of free cash flow neutrality is critical to the financial strength of the company and is achievable within the next one to two years due to the quality of our assets and our industry-leading capital efficiency. Enhancing our returns and margins is also key to our financial stability and will be accomplished through increasing our oil volumes as a percentage of total production and aggressive cash cost leadership. Now moving to our performance for the third quarter. I'm pleased to report our production has started to decline as forecasted following the previously announced weather-related operational delays experienced during the quarter. As of October 30, our fuel production reached a daily rate of 584,000 barrels of oil equivalent including 99,000 barrels of oil. Our fourth quarter volumes will be dominated by heavy turn-in-line schedule in South Texas Eagle Ford asset, and we remain on target to deliver our goal of averaging 100,000 barrels of oil per day in the fourth quarter. On the operations front, our people, technology, and portfolio continue to combine to drive improvement in our productivity and value across all of our assets. This effort has most recently been demonstrated in the Marcellus where we've begun deploying enhanced completion techniques on the Upper Marcellus. Results…

Thank you, sir. At this time, we will start the question-and-answer session. And we'll go first to Neal Dingmann with SunTrust.

Morning, guys.

Hi, Neal.

Doug, given that 2017 activity and your new comments on 2018 in the press release, you all have seemed to really lay out a plan that to me appears to show the stable 2018 production, yet as Nick – and you pointed out the moderate to materially lower spending. My question there is how much lower do you believe CapEx really can go next year while still growing oil and keeping overall production relatively flat.

Yeah. Thanks, Neal. It's a great question. And while we aren't providing any guidance today on 2018 in absolute terms our percentage of reduction, what I would like to highlight is just that these capital efficiency numbers that we're providing and the capital discipline that you see across the company is – we're very encouraged by it. And as a result, that's what gives us that ability to further reduce the capital outlay and keep the production flat. So, I'm going to hold off on giving you any further detail other than that Frank, Jason and the teams are doing a really good job, and that's evidenced in each of these well results that we share with you: greater productivity, greater recovery, greater efficiency, and for a lower cost. And that will manifest itself into a lower capital program in 2018.

Okay. And then just one broader question, Doug. I'm just really wondering overall – I haven't asked this in a while – how satisfied you are now with the overall restructuring. Since joining Chesapeake about 4.5 years ago, where you sit now and where you want to be, if you could just give a little bit of broad color on that. Thank you.

Yeah. Sure. Thanks, Neal. When we started this transformation roughly 4.5 years ago, we knew we had a number of significant challenges, and we hit it head on. And then you have low commodity price environment, which further exacerbates or increases that challenge. And what I'll tell you is the same way I felt the first day I walked into this company is that the energy and quality of the assets are outstanding and phenomenal. And while we're on a journey of restoring our balance sheet and working to improve our competitiveness, I'm as encouraged today as I've ever been, and I believe that the opportunity is as great as it's ever been. And while we have made great progress on the debt and made good progress on our profitability in each of our investments, I'll say that we still have a good way to go. And that's what creates the value for our shareholders, and that's what creates the value for other investors. And I think there's tremendous upside in the company, and we'll keep driving to capture that upside.

Thanks so much.

And we'll take our next question from Doug Leggate with Bank of America.

Doug is on the other line, so please go on to the next speaker.

Thank you. And we'll take our next question from Subash Chandra. Sir, please check your mute button. We're unable to hear you. Mr. Chandra, we're unable to hear you. Please check your mute button at this time.

Please go ahead and just take the next question, operator.

Thank you. We'll go next to Charles Meade with Johnson Rice. Charles A. Meade - Johnson Rice & Co. LLC: I think it's confirmed. I can confirm that my mute is off now. You guys can hear me? Domenic J. Dell’Osso - Chesapeake Energy Corp.: Yeah.

Yes, Charles (18:41). Thank you. Charles A. Meade - Johnson Rice & Co. LLC: I appreciate it. Hey. Nick, I appreciate you offered some prepared comments on the state of your divestitures, but I'm wondering if a question from me is enough to get you to elaborate a little bit more on where you are and what we might be thinking about for the next, I don't know, before year-end or into the first quarter of 2018 on that front. Domenic J. Dell’Osso - Chesapeake Energy Corp.: Sure, Charles. Great question and happy to address. It's always difficult to be precise in talking about what we expect in the way of transactions, whether they be divestitures or any other form of transaction because they are hard to predict the timing, hard to predict exactly what will play out. I can assure you that we work tirelessly to continue to reform our balance sheet and the way that that's going to happen is through asset sales. We have always considered asset sales in three buckets. There are truly non-core assets, which this company and every well-run E&P company should sell every year. There are assets that we own a significant position in where we can trim a bit of our position, and still own a good solid position going forward but accelerate value from a part of the play that we wouldn't get to in a reasonable period of time. A great example of that for this company would be the sale that we have had with our Haynesville position, which closed at the beginning of 2017. The last is a full-basin exit. We work all three of those buckets of asset sales every day. We have active discussions going on on those types of transactions every day. Transactions through the middle of 2017 have been challenging. The availability of capital to this industry has been limited, while the broad capital markets across all industries have been very strong, and there have been brief windows where we and others have been able to access the high-yield capital markets and other forms of capital successfully. Broad-based access to capital for growth has been limited. What that results in is a difficulty to bring transactions to fruition, but there are many motivated buyers out there seeking that capital, and we're talking to many of them, and we will remain laser-focused on delivering on our asset sales to reduce our debt. We'll stay away from deadlines that are ultimately somewhat artificial, whether they'd be at the end of this year or the beginning of next year. We'll get that done. We'll get it done at the right time for the right value. We won't be driving for the last dollar, so to speak. We're thinking of the big strategic picture here, but we have to get it done right.

Just to add on top on that. Charles, just if you don't mind, just to add on top of that, so I think Nick answered that extremely well. And as we laid out that $2 billion to $3 billion reduction, we were very careful to note that it was over a few year timeframe that we are going to execute upon that. And the purpose in that timeframe is that we have an extremely strong asset base, and that asset base continues to get better. And while we balance capital, commodity price, and potential to drive the greatest value for our shareholders, we're not in the process of giving away these high-quality assets. We're not going to do it. And the financial strength and improvements in the company position is that we'll continue to work it, we'll find the right opportunity, and we'll execute upon it. As Nick has highlighted many times, we are prudently impatient at the pace in which we're attacking the balance sheet, but that doesn't mean that we're going to sacrifice value given the quality of these assets. Charles A. Meade - Johnson Rice & Co. LLC: Doug and Nick, that's helpful, in fact, particularly in light of the success you guys have had in going to the capital markets yourselves. Doug, I wonder if I can ask my second question. You mentioned the success you've had in a couple of Austin Chalk wells in South Texas, and from the perspective of my seat, we've heard of a number of successes from – you guys have talked about it. Some other companies have talked about it, but it's kind of difficult to piece together a picture of how extensive that play might be and how repeatable it might be. So, I'm wondering if you could just talk a little bit more about what you guys saw with your most recent wells and your view on that looking into 2018.

Hey, Charles. This is Frank Patterson. So, the Austin Chalk, we haven't talked much about the Austin Chalk. We've had the wells on for a couple of months. We went out and took all the industry data that we have seen in the play. It kind of covers the southwest portion or footprint of our acreage and designed a program just to test the concept, and we drilled the wells and put relatively large fracs on them. It took a while for the wells to come back. They were a little bit slow coming back, but now, they've just been climbing, and for the last month, we've seen really good response. We think we can change the frac program and get the same result. You're going to see us and look at potentially a Austin Chalk program that will augment our lower Eagle Ford program next year and the following years. But what it does is it basically gives us a STACK play within our Eagle Ford program, which we really can push on and have a lot of efficiency. It won't interfere with our Eagle Ford program. It will actually be supplemental to that. Charles A. Meade - Johnson Rice & Co. LLC: That's helpful. Thanks a lot, Frank.

And we'll move next to Arun Jayaram with JPMorgan.

Good morning. Nick, as you highlighted kind of a fourth quarter run rate in terms of CapEx at around $500 million, I think you're running 14 rigs. Is that something that we could think about for 2018, that kind of run rate in terms of about $500 million in CapEx, something around that level? Domenic J. Dell’Osso - Chesapeake Energy Corp.: We're going to stay away from any specifics about 2018 like that. All we're wanting to note this morning is that given the current market environment and given our goals, we see it prudent to have less capital in 2018 versus 2017. Remember, 2017, we really needed to restore our level of cash flow generating capability off of a very low investment in 2016. So, we needed to catch up a bit in some areas. We've done that. You can see those wells coming on line here in the fourth quarter. And so, exactly where we level out to a run rate, we're going to hold off. We're still running a lot of scenarios around that at this point, Arun, and prices remain somewhat volatile. We continue to hedge, which we are pleased about is that derisks how we think about that capital program next year. We'll continue to look at what we achieve in the A&D market and all of that will influence – we also look at our well results. All of that will influence the ultimate capital allocation for the portfolio next year. The takeaway that we wanted to leave everybody with this morning is that the inherent capital efficiency of the underlying portfolio and what we've delivered so far this year is that we can spend less money than we did this year and still grow next year. We may not choose to spend that much. We may choose to not grow if prices were to fall apart. If prices were to really run and we could hedge them accordingly, we may choose to spend a little bit more. But don't look for us to chase the strip higher with every move. We are really showing internally that we can do better with some discipline here, and the scenarios we're running highlight that we need to be focused on delivery of these financial goals over time, which is going to result in a – at this point, we think pretty modest capital program next year.

Great. Domenic J. Dell’Osso - Chesapeake Energy Corp.: Again, we'll give more information on that as we get into 2018, and as we firm it up, things could change, but that's what we're looking at right now.

And, Nick, just as a quick follow-up, your limited comments on 2018 were growth relative to on a year-over-year basis, right, not relative to the 4Q exit rate? Domenic J. Dell’Osso - Chesapeake Energy Corp.: That is what I said, Arun, but let me be clear that we pay attention to what that means on an exit to exit. And we wouldn't be excited about a program that dives coming out of 2018, and yet, we could call it flat year-over-year. But I did refer to it as a year-over-year. I'll leave my comments at that, but we wouldn't set up a program that was declining in that way and be proud of that.

Okay. Great. Great. A couple thoughts, you guys have highlighted some optimism around the Turner. We'll have to wait for details in the next couple wells. As you think about potential returns here, Doug, versus single-well NPVs, how do you think about potential returns for a rig line here relative to other opportunities you have in the Eagle Ford or in the Marcellus?

We love it. I think I'm going to let Frank share his passion and excitement about it.

Yeah, Arun. This is Frank again. The Turner is one of the best-performing assets we have to-date. Now, it's early days. We only have a handful of wells, but the rates are good. The wells are holding in. We have a lot of running room. Just to give you a feel for where we are in the portfolio, we've moved the third rig in, and that rig. So, we'll have two rigs focused primarily on the Turner for our 2018 and actually, the remainder of 2017. I've got to give real kudos to the culture and especially the operations team in the Turner. As we went out there, we didn't know much about it. Wells were in excess of 35, 40 days, the initial wells doing some science, and the costs were a little bit higher than we wanted. Since we've gotten the program going, Jason's team has knocked these wells down to under 30 days. We've just bought two wells on this week, our most recent wells, and those two wells we've adjusted the completions, and we knocked $1.5 million off of each of those completions. So, where we are today in the Turner is not where we're going to be tomorrow in the Turner. It's only going to get better. Kudos for the field team as well. They've been stretched pretty thin, and the culture of the company I think is so strong now. We've had people from Mid-Con and Gulf Coast volunteer to go up and help that team out. So, we've got people from all over the country helping us get that Turner program stood up. I'd love Jason to talk about his thoughts on that as well.

Yeah. I mean, you hit most of the highlights there. We're really excited about the program just continuing to evolve. As Doug mentioned, one of our strengths is the way that we use data and information across the company to optimize the asset and each technology from Haynesville and Utica and Eagle Ford and transfer those to these new plays. So, there is nothing but upside and a bright future for. Again, we're early with that. We get better and better with our drilling and completion operations, the more swings we get at the play. So, excited about the future, and it's only going to get better.

Thanks, gents.

And due to time constraints, we'll take our final question today from David Heikkinen with Heikkinen Energy Advisors.

Good morning, guys. Thanks for the time. Just wanted to hit on your capital efficiency in new well designs. Could you just speak through your completed well cost in each region kind of quickly in the third quarter?

Yeah. Again, we're continuing to test our different designs, so those are something that evolved over time. When we start to look at 2018, lateral length is also a big driver for those as well. So, I mean, when we're talking Haynesville, for example, there are 10,000-foot wells that will cost about $11.4 million; Turner wells, 8,700-foot laterals for $9.5 million I'd say right now, but again, expect all those to improve. I'm mean, ultimately rather than going through each one of these wells, well by well, just give us a call back to Brad and we'll try to give you more information on those wells.

Yeah. Three more regions. That's great. Okay. Thanks. We got two out of six. Thanks. Go Astros.

That's right, Dave.

And gentlemen, I'll turn the call back to you for any additional or closing remarks.

Okay. Well, thank you all for joining our call today. As we've highlighted here, the company is focused on the capital discipline, improving our capital efficiency, and our priorities remain unchanged. Our strategic priorities are further reducing our debt, achieving free cash flow neutrality in the near term, and in further enhancing our margins. So, we thank you all for participating. Please feel free to call Brad with further questions. Thank you.

Thank you. And that does conclude today's conference. Thank you for your participation. You may now disconnect.