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United States securities and exchange commission logo
March 21, 2024
Domenic Dell Osso, Jr.
President and Chief Executive Officer
Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, OK 73118
Re: Chesapeake Energy
Corporation
Registration
Statement on Form S-4
Filed February 29,
2024
File No. 333-277555
Dear Domenic Dell Osso, Jr.:
We have conducted a limited review of your registration statement
and have the
following comments.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe a comment applies to your
facts and circumstances
or do not believe an amendment is appropriate, please tell us why in
your response.
After reviewing any amendment to your registration statement and
the information you
provide in response to this letter, we may have additional comments.
Registration Statement on Form S-4
Background of the Merger, page 82
1. Please clarify your
disclosure about the persons involved in negotiations or other
activities. For
example, where the disclosure refers to the Southwestern or Chesapeake
Boards, or to
Southwestern and Chesapeake management teams, or to the executive
management of either or
certain members of executive management of either, or to
advisors of such
bodies, please clarify which individuals in those bodies were present for
the meeting or other
activity and/or which advisor was present.
Domenic Dell Osso, Jr.
FirstName
ChesapeakeLastNameDomenic
Energy CorporationDell Osso, Jr.
Comapany
March NameChesapeake Energy Corporation
21, 2024
March2 21, 2024 Page 2
Page
FirstName LastName
The Merger
Background of the Merger, page 82
2. We note your reference to synergies considered by each of the Boards
of Chesapeake and
Southwestern throughout the negotiation, and under the sections for
"Recommendation"
of the Chesapeake and Southwestern Boards' and their "Reasons for the
Merger." If there
are both "Chesapeake Management Synergies Estimates" disclosed on page
112 and
"Southwestern Projections Synergies" referenced in its advisors
fairness opinion and used
in various analyses, please disclose which synergy projection each
Board relied on in
making its recommendation, and which synergy projections are used in
the "Southwestern
Pro Forma Forecasted Financial Information" on page 110.
Chesapeake Management Synergies Estimates, page 112
3. You disclose that Chesapeake management estimated capital synergies at
an annual run-
rate of $290 million and after-tax P&L synergies of $167 million (with
an assumed annual
cash tax rate of 13%), in each case phased-in 31% in 2024, 73% in 2025
and 100% in
all years thereafter. Please discuss how these synergy projections
compare to
(i) disclosure on page 99 that Chesapeake believes that the Merger is
expected to result in
significant synergies of approximately "$400 million annually" and
(ii) slide 9 of the
"Investor Presentation" from January 11, 2024 filed as Exhibit 99.1 to
a Form 8-K on that
same day by Southwestern which provides a breakdown of $400 million in
annual pro
forma synergies among "Corporate and Regional costs," "D&C Cost
Savings," and "Other
Operating and Capital Savings."
Opinion of Southwestern's Financial Advisor, page 123
4. We note that in rendering the opinion and performing its related
financial analyses,
Goldman Sachs discloses that it reviewed certain operating synergies
projected by the
management of Southwestern to result from the transaction (referred to
in this section as
Southwestern Projections Synergies ). Such synergy projections
appear used in both the
"Illustrative Discounted Cash Flow Analysis Pro Forma Combined
Company" analysis
and the "Illustrative Present Value of Future Share Price Analysis
Pro Forma
Combined Company" analysis. Please disclose the Southwestern
Projections Synergies
shared with and used in various Goldman Sachs' analyses.
The Merger Agreement
Organizational Documents; Directors and Officers, page 146
5. You disclose on page 24 and elsewhere that directors of the combined
company will be a
mix of directors selected by Chesapeake and Southwestern and that
management of
Chesapeake following the completion of the Merger will include
officers and other key
employees from Chesapeake and Southwestern. Please revise to identify
each person who
will serve as a director or an executive officer of the combined
company. With respect to
each person who will serve as a director or executive officer of the
registrant, please also
Domenic Dell Osso, Jr.
Chesapeake Energy Corporation
March 21, 2024
Page 3
provide the information required by Item 19(a)(7) of Form S-4. To the
extent that you
intend to incorporate any such information by reference, we note that
your registration
statement incorporates by reference the Form 10-Ks for Chesapeake and
Southwestern for
the fiscal year ended December 31, 2023. Chesapeake's Form 10-K in turn
incorporates by
reference certain Part III information from a definitive proxy statement
that you have not
yet filed, and Southwestern's 10-K provides that the information
required will be filed as
an amendment to its Form 10-K within 120 days after the end of its
fiscal year. If you
intend to incorporate by reference the information required by Item
19(a)(7) of Form S-4,
please be advised that we cannot accelerate the effective date of your
registration
statement until you and Southwestern Energy have either filed the
definitive proxy
statement or included the officer and director information in the Forms
10-K. For
guidance, please refer to Question 123.01 of the Securities Act Forms
Compliance and
Disclosure Interpretations.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Please contact Michael Purcell at 202-551-5351 or Kevin Dougherty at
202-551-3271
with any questions.
Sincerely,
FirstName LastNameDomenic Dell Osso, Jr.
Division of
Corporation Finance
Comapany NameChesapeake Energy Corporation
Office of Energy &
Transportation
March 21, 2024 Page 3
cc: Ryan Lynch
FirstName LastName