I'm Jim Webb, the company's General Counsel. And on behalf of the Board of Directors, the entire management team and 2,400 focused outstanding employees of Chesapeake Energy, welcome to the 2019 Annual Meeting. Safety comes first at Chesapeake. So before we get started, I want to just give a brief safety moment. You received a card that has the evacuation routes in case we run into any issues this morning.
If an emergency does arise, our staff is around to help guide you to the right place. So thank you for joining us this morning.
Energy that's innovating and energy that's moving. We're producing the building blocks to nearly everything that fuels our lives and so much more. Our creativity, grit and determination drive us to never sell, never quit. We are committed to protecting what matters most, home, family, community, and the land we love. The work we do every day matters.
It's not a question, it's a fact. We're raising the bar and fueling lives all around us. The future and opportunity for our country starts with our drill bit.
Good morning, all. Welcome to the 2019 Annual Meeting of Shareholders of Chesapeake Energy. I'm Brad Martin, Chairman of the Board. And at this time, I'd like to call the meeting to order. First, I'd like to introduce to you the nominees in 2019 for election to our Board of Directors as well as some other invited guests.
I'd like to ask each member of the board when I call your name to stand and remain standing until each have been introduced. Our director nominees are Gloria Boylan, Luke Corbett, Mark Edmonds, Scott Diezelman, David Hayes, Leslie Star Keating, Doug Lawler, Pete Miller and Tom Ryan and myself. This is a terrific group of leaders, very committed to the interest of Chesapeake Energy and I'd like to personally thank them for their terrific service and support of Chesapeake Energy. Thank you very much. I would also like to introduce to you our Chairman, Emeritus, Archie Dunham, who is retiring from the Board as of this election.
Archie has served in a very significant enterprise. And Archie, we are eternally grateful to you for your service and your support and your leadership. And we thank you for everything on behalf of the entire Chesapeake team. John McNamara, our engagement partner at PricewaterhouseCoopers. Here, John, where are you?
He'll be available to answer any questions that you might have in the Q and A period with respect to accounting. Don Hager has been appointed to be our Inspector of Election. Here's Don right upfront. Thank you, Don, for your service. I'd now like to present to you our CEO, Doug Lawlor, who will introduce his executive team.
Doug, thank you for your leadership.
So if I could ask you to the members of the executive team, please stand, Mig Delaso, our Chief Financial Officer Frank Patterson, our Executive Vice President for Exploration and Production Jim Webb, our General Counsel and William Bergler, our Chief Accounting Officer. I greatly appreciate all the leadership of the executive team as well as all the other outstanding leaders, employees within the company.
Doug? I'd now like to ask Jim Webb to come back up and walk us through the procedural aspects of the meeting today.
Thank you, Mr. Chairman. So as you entered today, you should have received a document that looks like this that has the agenda and also the rules of conduct. If there's anyone who did not receive this, can you raise your hand so we can get one to you? All right, we're all set.
So all legal requirements to conduct the meeting, Mr. Chairman, have been met. All shareholders of record as of the close of business on March 18, 2019, are entitled to vote. And Mr. Hager has advised me that we have a quorum.
Thanks, Jim. Because we have a quorum, I would declare this meeting to be duly convened for the purpose of transacting such business as may properly come before it. It. It is now 1005 by my watch and the polls are open. Jim, would you discuss the voting procedure?
The shareholders of record may vote by ballot today, and the ballots were available as you came in at this longer sheet. You do not need to vote if you have previously voted. But if you're voting today or you've previously voted and you wish to change your vote, you can go ahead and fill that ballot out and at the appointed time, we will have those collected and delivered to Mr. Hager.
Thank you, sir. The next order of business is a description of the matters to be voted on at today's meeting. The first proposal before the shareholders is the election of 8 directors to serve until the Annual Meeting of 2020 or until their successors are duly elected and qualified or as otherwise provided for in our bylaws. The Board of Directors recommends a vote for the following directors for the reasons stated in the proxy statement: Gloria R. Boylan, Luke R.
Corbett, Mark A. Edmonds, Dot A. Hezelman, David W. Hayes, Leslie Starr Keating, Robert Doug Lawler, R. Brad Martin, Merrill Pete Miller and Thomas L.
Ryan. 2nd proposal is the advisory vote to approve named Executive Officer Compensation. Coopers LLP as our independent registered public accounting firm for the fiscal year that will end December 31, 2019. Your Board of Directors recommend a vote for this proposal for the reasons as stated in the proxy. That concludes the discussion and the proposals that will be submitted to the shareholders for action at this meeting.
Please pass any ballots out to those who might need a ballot and they'll be collected. Does anyone need a ballot to vote today who has not previously voted? So raise your hand. Seeing none, it would appear does anyone have a ballot that they need to turn in that has not been great? If you all would gather that, it would be great.
Anyone else? Okay. I think that is the collection of all the ballots that have been offered. It is now 10:09 by my watch and the polls are closed. The ballots and the proxies are in the possession of Mr.
Hager, our Inspector of Election, who's reviewing the votes.
Jim, Don? The preliminary report from Mr. Hager is as follows. Each of the 10 directors nominated has received the affirmative vote of the majority of the votes cast. The proposal to approve on an advisory basis, the compensation of named executive officers received support from 65.4% of the vote cast.
And the proposal to ratify cast and the proposal to ratify TWC as the company's independent registered public accounting firm for 2019 fiscal year received support from 97.2% of the book.
Thank you, Jim. That will conclude the formal portion of the meeting. So the shareholders meeting itself is now officially adjourned. I'd like to bring Doug back up, our President and CEO, to update you on the business at Chesapeake, and then we'll have time for any questions that you might have.
Thank you, Brad. Good morning, everyone. On behalf of management and all the employees, I'd like to extend our appreciation to Archie Dunham for his service as well. Thank you, Archie. What I'd like to do in the next few minutes is run through a brief presentation to share with our shareholders the status of the company.
I think it's important to highlight the strategy of the company and share with you a little bit of the perspective on some of our performance and our efforts to continually improve to create value for our shareholders. So this presentation will take just a few minutes and then we will open up for questions should anyone wish to ask me or the Board any questions. So our customary Safe Harbor statement up initially. And as I mentioned first, I just would like to highlight the strategic planks or strategic priorities of the company. Each of these 4 planks or pillars have been in place since I started with the company 6 years ago.
What's important to note about in a commodity business that good times or bad times, high prices or low prices, these priorities, these strategies are resilient with commodity price. And you may ask the question, how do we know if this strategy is working? And can we demonstrate this strategy is working? I'm going to share that with you. And just to highlight it real quickly, financial discipline, profitable and efficient growth from our captured resources and exploration focus as well as business development and our portfolio management.
In the near term, we have internally all of our goals and objectives are centered around how do we drive for greater margin enhancement, greater free cash flow, achieving a lower debt level so that we're in a more competitive debt, net debt to EBITDA metric with our competitors and also driving excellence in health, safety and environment as well as regulatory compliance. So as I mentioned, how do we know where do we start 6 years ago on the transformation of Chesapeake Energy? And how do we know that we're making progress and doing the right thing? And so I want to walk through a few slides that demonstrate the progress that companies make and further highlight the things we're doing to add future value to our shareholders. First, I want to start and just note here in 2012, where were the company's staff at that time when we began our transformation?
At that time, we had balance sheet debt as represented in the blue bars of approximately $16,000,000,000 and we had off balance sheet debt that approximated around $25,000,000,000 In total, it was about $41,000,000,000 debt obligation liability commitment framework that the company had. The Board of Directors at that time focused very hard on how can we improve, how can we drive greater value for our shareholders. And you can see across each of the years, the progress that we've made in reducing that debt and reducing that leverage in those commitments of the company. This is tremendous progress. And also note that what's really important to note here is this across a period of time when we started to today, prices were cut in half, commodity price cut in half.
Tremendous improvement here and outstanding accomplishment from our Board and from our employees to continue to improve the financial health of the company. As you look at the capital efficiency as well and the focus that we have on being free cash flow neutral and adding more value for our shareholders, You can see in 2012, there was a significant outspend. The blue bars show the amount of CapEx or a capital program that was invested at that time. It was similar in 2010 2011. In 2012, the company made about $4,000,000,000 in EBITDA and spent about 14 dollars or $15,000,000,000 So you think it's not that time, it was a $41,000,000,000 debt and obligation picture for the company and announced spend on a capital program of about $10,000,000,000 So very significant capital efficiency opportunity.
You can see over the subsequent years, up until today that we have significantly decreased that overspend and are now within range here in the last few years and this year in particular that we can achieve free cash flow neutrality. Why is that important? Well, it's important because we are focused on returning capital to our shareholders. We want to provide the shareholder value creation that we've set out to when we started this transformation. And part of that is generating free cash.
And you can see as you look at 2019, here as we estimate for the year, where we are forecasting and pursuing that we will be right at free cash flow neutrality. And we've also added, if you look at just the oil investments or the oil assets, how they're performing because oil is such a critical part of our financial improvement and focus the next few years. What's also equally important to note is that this green line represents our margin per BOE. And as I mentioned, the margin back in 2012, 2013, this was a time when oil was $100 a barrel. This is also a time when gas was $4 to $4.50 per Mcf.
So across that period, we had a significant reduction in commodity prices to find ourselves today in 2019 with prices significantly less than when we started approximating about the same margin today is what we were yielding back in 20 12 13. So despite lower prices, the capital efficiency and the focus on margins, we saw a significant drop along with commodity prices and we've continued to focus and drive towards creating greater margin value for the company. What's important to note is if you look at this 2019 oil focus that what we're investing in today and how we're driving greater margins, how we're achieving greater free cash flow or we'll achieve greater free cash flow is through our oil investment. And so the company today is about $15 per barrel equivalent on our margin. What we're investing in with 80% of our capital is about $30 per barrel.
So what you can expect from that is a continued improvement in our margins, continued improvement in our cash flow generating capability and a continued appreciation to our stock price as we continue to perform. Across that period as well, you've seen some of these slides before in our materials, but we've had a radical reduction in our production expense and the way that we operate and run our operations in the field. Basically, if you look at the blue bars, you can see we've decreased that production expense from about $1,400,000,000 down today to $400,000,000 or $500,000,000 So you have basically $1,000,000,000 or so that's been taken out of our operating expense on an annual basis across this period. Now granted, during that time, we've sold higher cost assets, but it's all part of driving for greater margins and driving for greater cash flow generation. You can notice here at the tail end, you see a slight uptick on a unit basis, the blue line at the top and just a slight increase in 2019 what we estimate on an absolute basis.
And the reason for that is our portfolio has changed and we are more oil weighted. The cost to operate an oil asset is a little bit higher than that of gas assets. And so the weighting towards oil is resulting in a little bit increase in our cost. But we're still very focused, still highly competitive in this respect. Similarly, when you look at our overhead costs and G and A for the company, the blue bars show the absolute expense, which in 2012 was about $1,700,000,000 per year.
And we brought that down to today about $600,000,000 per year. So a very substantial improvement there as well to the tune of about $1,000,000,000 And so when you think about the transformation and what our board and what management and our employees with the assets that we have accomplished. From when this transformation started, we had around $41,000,000,000 in total debt and leverage. We had an outspend on an average basis for the years prior to the beginning of transformation of about $10,000,000,000 and we had $1,000,000,000 in G and A and LOE costs on an annual basis. It was in excess of a $50,000,000,000 challenge that we took on in this company.
And then where do we sit today? Well, these costs have been taken out. Our capital efficiency, as noted, has increased significantly and is top quartile compared to our peers. And we're taking these costs out now. We have today reduced that $50 plus 1,000,000,000 total challenge to around $16,000,000,000 So what does that mean?
Well, it means that we still, while making great progress, we've eliminated significant amount of debt. We've improved our operations and our cash generating capability. And today, we sit with about $16,000,000,000 of combined leverage balance sheet as well as off balance sheet commitments and obligation. So we're about 2 thirds of the way there. What I'd like to share with all the shareholders is we are not happy with where we sit today.
We believe that with our assets, our employees and with this strategy that what you have seen across the last 5 years, the trajectory is strong and we will continue in that respect. We did not anticipate or have the foresight to see that oil prices would complicate this journey the way that it did. But our confidence and I hope that you can see from these sequential systematic improvements across all aspects of our business, what you can expect from this company is continued improvement, continued value and focus and drive to add value to you, our shareholders. So where do we sit today after this last 5 years? We still have 6 very strong powerful assets with the acquisition of Wildhorse Resources that concluded or was completed on February 1 this year, making that our 6th asset that we now call Brazos Valley.
We have a total production volume of about 484,000 barrels of oil equivalent a day. That number this very day is about 100, so it's a little bit higher than that. Of that 500,000 barrels of oil equivalent per day, approximately 125,000 of that is oil. Chesapeake gets recognized, as you see by the little donut at the right, as being a predominantly gas weighted company. And that's true on a percentage basis, but 125,000 barrels of oil production is quite significant.
And really with the exception of the majors and the larger independents is one we're one of the largest oil producers in the United States. So very, very key. We're focused on this gas oil mix. The focused on it as we continue to invest our capital, as I mentioned earlier, in the oil assets will result in that changing. And I'll talk a little bit more about that in just a minute.
I do want to share the quality and strength of our assets, the quality and strength of our employees. We are very excited about for what the future holds for us. I want to showcase just a couple real quickly, mainly the Brazos Valley asset, which was the WildHorse assets formerly as well as our Powder River. That's not to take away from the high quality of any of the other assets, except this is where we're investing a very large amount of our capital and where we expect to grow our oil. So significant to know when we made this acquisition, we did not forecast that the asset would be free cash flow positive in 2019.
Early development of oil and gas fields typically takes several years for you to start generating a production profile that the asset would be free cash flow positive on the asset level. We're extremely pleased after having it and operating it for now over 90 days that we're forecasting some of the improvements that we will be free cash flow positive in 2019. That's quite significant. We are running 4 rigs in the play. We anticipate to turn several wells in line as you can see on the right about not quite 100 wells this year.
But this is going to play a very key part in To To date in that 90 days, we've already recognized $500,000 per well savings. We see upside potential as much as $1,000,000 or perhaps more on a per well basis, which is quite significant. We're drilling longer laterals that are yielding higher value, greater recoveries, greater production rates in the wells that we're drilling. We're seeing opportunities from the base production that exists within the asset that we're actually recognizing and forecasting additional volumes that we had not included in our original modeling. And just along the way, setting records, bringing Chesapeake's operating expertise, being the world's leading driller of horizontal wells, completing and drilling more wells than any of our peers, and leading on technology and operational improvements to take and applying all of that expertise to the WildHorse asset, seeing improvements in our drilling cycle times and improvements in the completions that we're pumping.
The kind of key performance indicators that we like to share and that we're proud of and we'll continue to be sharing publicly, recognizing higher rates initially from the wells. As I mentioned, increasing the lateral length, seeing our well costs come down on a per foot basis and then also seeing the completion efficiencies on the bottom right with the number of stages pumped per day. These are just key indicators, performance indicators is how we continue to project and believe and have great confidence in what this asset can deliver for the company. We know that this $4,000,000,000 acquisition that was approved by you, our shareholders, that it is a key part of Chesapeake's portfolio. We'll be looking for the opportunity to drive greater cost savings and focusing on those oil margins, how can we deliver better for our shareholders and for profitability of the company.
As I noted, leveraging Chesapeake's technology platform, our operating practices, we believe will continue to yield results that have not yet been incorporated in our forecast. And very key and important to us is maintaining environmental health and safety standards that we are leading the industry with to apply to that asset. So very encouraging, just to highlight more to do and we look forward to continued delivering results from this great asset. In the Powder River Basin, just real quickly, the excitement there is also very high. We intend to spend about $500,000,000 in the Powder River Basin this year.
What we're seeing up there is excellent results. I just want to share a few of those with you because this asset as well is very key along with the Brazos Valley in our oil production growth. We are well into our development program and after drilling some 50 or 60 wells in the Turner formation, we are seeing well production records. As noted on the top left, you can see 4,000 barrels of oil equivalent per day set a record here just recently, of which 3,000 barrels is oil. So you can see that's contributing substantially to the 125,000 barrels of oil production per day that the company is recognizing.
And we're seeing a very good increase and expect this oil volume to double in 2019. And with our investment profile, expect that we should be approximating doubling again in 2020. So very strong oil assets, a lot of confidence, a lot of progress, but what's key and important is that you know that we are not done. We believe that there's still additional opportunity. How do we expect to achieve that?
You can see the actual margins that we're recognizing in the Powder River. Over time, this asset has not contributed substantially to the company's EBITDA, but recognizing that as we increase the oil, the margins we're investing there are at $20 per barrel. It's quite a significant increase and we're using all the expertise that we've learned across the company elsewhere here in the powder to help drive those expanding margins. So it's very exciting. We're very encouraged by that.
Just want to spend a quick minute on our focus on health safety and an environment, an issue that's very key and very important to me and to the company today. We continue to demonstrate the graph on the left, excellent performance on our health excuse me, on our safety record, demonstrating industry leading performance when it comes to our total incident rate, managing the volumes, the fluid volumes that are reportable to state agencies is a very high priority. We've made great progress on that as well as demonstrating absolute compliance with the regulating agencies across the country in the areas in which we operate. That focus has proven to be very strong. It's a part of our culture.
We also are very focused on our role in reducing greenhouse gas emissions and also how do we incorporate into our operations better performance to improve the environment. Things such as using the electric grid for our drilling operations, looking for ways to get away from diesel, to look for ways to lay new pipelines such that we can take trucks off the road, minimize our carbon footprint. What we've recognized to date is a reduction of about 1,500,000 gallons of diesel that would have been burned had we not started down this route to be more environmentally sensitive and to be greater to demonstrate greater environmental stewardship. How are we doing that? The things you're listed, a lot of it is related to automation and being more reactive to ensure that as a company that we are identifying sources of potential methane or greenhouse gas emissions, how do we reduce carbon dioxide, how do we reduce methane, and just a few things that are listed there as I noted around pipelines and automatic detection and being able to react quickly to ensure that Chesapeake Energy with our focus and our respect for the environment that we're doing our part.
So excellent progress there. And they say, well, how do we compare to our peers? And so this slide just highlights many of our large peers, Chesapeake on the left, you can see when you look at a carbon dioxide equivalent per barrel of oil equivalent of emissions, Chesapeake in 2018 had a rating of about 6.9, which is basically half of what our peers are. Again, demonstrating our leadership and our commitment to the environment, it's a strategic priority for us to be compliant and to do everything in our power to operate as environmentally sensitive as we can. So just in conclusion, what you can expect from the company is we're going to continue to deliver, highlighting that you can expect further improvements in our capital efficiency and productivity.
We're constantly pursuing opportunities to reduce our debt and improve our leverage metrics. This is an active part of our board discussion and active part of our strategy to further improve our debt and those debt metrics. We're driving towards free cash flow neutrality in 2019, a very significant accomplishment for the company and we're excited about that. We also look forward to continuing to lead the industry in our health, safety and environmental and regulatory compliance. So the graphs at the bottom just show the focus on trying to increase our margins to drive greater value for our shareholders.
And then the bottom right just shows how we anticipate that oil mix to change over this year from the 18% range to ending 2019, approximately 26%. There will be a continued trend like that in 2020 beyond as we continue to focus on driving greater value for our shareholders. That concludes my presentation. I'll turn it back to Jim.
Thank you, Doug. So it's now time to take questions from the audience. There's 3 ways for you to ask questions this morning. The first is in the echo that's up on the ground floor. As you leave today, you'll have an opportunity to meet face to face and give comments, ask questions of some of the outstanding employees that Doug was referring to before from various parts of the company, and they can answer any questions that you have.
2nd way is the comment card that you received when you came in, this little index card. You can put comments on there, ask questions on there, give them to any of our employees at the close, and we'll respond to those quickly. And the third way is here live in this room. So with that, you have the rules of conduct. And if you have a question for Doug or the Board, I would ask that you raise your hand and one of our spotters will bring you a microphone.
You'll have 2 minutes to ask your questions. There's a little timer that will show up at the bottom right hand side of the screen in front of you. And we'd ask that you would stick to that 2 minute limit. As you speak, if you'd identify yourself, state your name and your affiliation, if any, and then whether you are a shareholder or have a proxy from a shareholder. So with that, the spotters are ready, and we'll take any questions you have.
Terry, Mikelitz from Caddo, Oklahoma. I'm a long term shareholder that's looking for increased future gains. So first of all, I'd like to comment or give you maybe a pushable of atta noise for the wildfire My question today is about the mainly for the Eagle Ford shale program. I know that you acquired a in basin sand mine in the Otter Heart deal. We also got some perhaps expertise from how expensive it was, but maybe you could touch on your views about the formation waters that you recycle that might be important in your house.
More important is you could touch on what you see on the EOR situation in the Eagle Ford. I know that one company has reported 150 wells that they put on the EOR program that's increased their production, their normal production to 20% to 30%. To me that EOR things are game changers. You figure out how to do it in horizontal lateral,
Those are great questions. We thank you for your continued support of the company and ownership in the company. And what I first want to tell you is that through the years, your questions have always been great and we are dedicated and focused on adding more value to you every single day. With respect to WildHorse and the acquisition that we completed and the sand mine, it was a unique opportunity for us as the cost structure for drilling and completing wells continues to come down. The sand mine offers an infield location to source the sand that we use in our operations.
When we first started looking at WildHorse, we considered that to be a nice to have kind of asset with the oil and gas assets. And as we've ramped up the sand production from that facility, recognize that it really does provide a very strong competitive advantage for us to source sand locally for those operations. It also has the capacity to we have the capacity to generate and mine more sand that we can sell to others in the area. I do not see it as ever being a profit center in and of itself or another business segment for Chesapeake. It is an excellent asset for us to have at this point in time to source sand and make our wells more competitive.
Just for reference, so that you're aware, the sand that we pump in any given well has seen a material reduction in price over the past few years. The price per pound of sand has gone from $0.10 to $0.08 to 0 point 06 dollars Now we see it kind of being able to source it in basin there with the Bob Hirsch acquisition in the $0.02 to $0.04 So very competitive, drives a lot of cost out of our completion. We're very excited about that. With respect to water and your question there and how we use produced water, we are focused across the entire portfolio that wherever possible that we reuse, reclaim and actually use the waters that we recycle in our operations in every way possible. If we cannot, if we're in an area where we can't reclaim it or we need to dispose of it, We are compliant with every state and local regulatory body and we are to recycle it so that we don't have to inject it.
We're doing that in every area that we can. We share your excitement with EOR or IOR and what that could potentially mean to Chesapeake. And just so everyone knows, it's essentially a huff and puff process to improve recovery that is a tried and true process in conventional reservoirs has not been implemented to a great extent in unconventional or shale reservoirs. Some of our peers have actually started to implement the IOR process, where they're injecting gas and then it'll flow the gas back and we're seeing a recovery of additional oil when that gas is flowed back or produced back. The reason we have not implemented a program yet is that we still are developing the fields from the initial development plan.
And you can't execute or implement an IOR program until you have clearly completed your first development program. So we see what we plan this year and in 2020 to conduct some experiments. What you see in shale reservoirs is typically for liquids, you can see anywhere from 5% to maybe 12% or as much as 15% recovery of the fluid that's in place, what the IOR presents as an opportunity to potentially double that. So we share your excitement for an area like Eagle Ford and even potentially in the future for Powder River Basin or the Brazos Valley new asset that we have that we are excited about that technology. Also what's as great as that the company has a manufacturing facility south of town here, where we can potentially manufacture some of those compressors more cost effectively to help in that operation.
So a number of very good questions, all key to our continued performance and maximizing our returns to you and also maximizing the capital efficiency and the development of this year. Thank you, sir.
My name is Mary Dearing, and I'm a shareholder. I'm a new Chesapeake shareholder. I just had a brief question about, we get pretty good coverage in Oklahoma on what's going on in local oil and gas industry. Pushback about fracking here in the state of Oklahoma and I've just wondered if there was any particular if you were looking at very many legal issues in Wyoming and Texas as far as regulatory toward fracking.
Thank you, Mary. We appreciate your ownership as well. And I think you got in at a good pricing point because there's a lot of opportunity for us going forward. We are very, very focused on complying with all the local, state and federal regulatory requirements. This is a company that's focused on compliance is something that we live and are committed to every single day.
We do not have any, say, legal exposure at present with our operations around fracking or with water disposal. I just want to highlight that there's popular misconception out there of what could potentially be causing some of these seismicity issues. And what I will tell you is that Chesapeake is cooperating with industry, with the academic world and with all of the agencies to evaluate and monitor and provide good data and make better decisions going forward. We are not presently in our Wyoming operations or in our Texas operations incurring any challenges or problems with respect to fracking operations or with our the water that we do inject in those areas. But we are committed to the compliance and to studying the problems, providing data around seismicity to make sure that we as an industry are doing the right thing in those communities in which we operate.
John Maguire, shareholder. In your slide presentation, one of the last slides here about safety, there were 3 charts on there and it looks to me like between 2017 2019. 2018, there was a little spike. Is there was there a particular reason for that or I was just kind of curious? Sure.
No, it's a great question and happy to address that. We as a company operates on an annual basis about 5000000 to 6000000 man hours. And so that safety for the total recordable incident rate looks at the number of incidents that are recordable by OSHA standards across the total amount of man hours work. Our performance has been so good, as you saw that 0.05 in in 2017. It has been so good that it really comes down to really 1 or 2 incidents across 5,000,000 man hours.
And so to bump up just a little bit, it can be just a single incident. So it's a great question and one that we are all focused on and the work that we've accomplished over the past several years, the last thing we want to do is see any performance metrics, see it reverse and go the other way, whether it's a cost or a safety metric or whatever it might be, capital efficiency. But what I can tell you is that the focus and the training, the good catch programs, the Stop Work Authority initiatives, our focus on safety is very high, but a single incident across 5,000,000 or 6,000,000 man hours didn't result in seeing that change. So going from, say, 4 recordable incidents to 5, that's a big percentage increase on a very low number. And our focus is there is I don't consider it to be an issue.
We are performing very well year to date in 2019 with a PR IR of 0.09, and we are focused every day on eliminating every single accident if we can do so. Correct.
Are there any more questions from me?
Todd Owen, shareholder and my manager. Your production mix is about 20% oil and I guess maybe 26% to 25%. Do you have a long term target? We have not set a long term target. I'll tell you that my personal view of that for a company of our size and our operating scale, to take some of the volatility associated with any one particular commodity, I believe we need to be in that 40, 60 range.
So we are on track to achieve that. It's not a corporate goal. It's more of a reflection of taking some of the volatility and reliance on a single commodity. As we started the year at 2018, we're about 22 now, expect to be 26. We'll be well into the 30s in 2020.
And so we're making good progress against that goal or against that margin or 6% to 4%. What's kind of important to note there as well is that the company produces 2 Bcf net of gas a day. So when we talk about a margin being weighted towards gas, it's a huge gas point. And so it takes a lot of work, a lot of production to move that percentage. What's most important to me is that we are generating the returns and the cash flow from the investments that we're making on the oil side to complement the excellent gas and operating we have with our gas assets.
I see it in the next couple of years, we should be approaching or If we were 60% oil, I'd be happy
with that too. But it is
If we were 60% oil, I'd be happy with that too. But it is not a corporate target. It's how do we drive greater cash flow over the next several years.
And now I'll turn the meeting back over to Mr. Martin.
Thank you, Jim. Thank you, Doug, and thank you for the being no further questions, I hereby conclude the meeting. We thank each of you for attending today, for your continued support of Chesapeake. We look forward to seeing you next year. Meetings adjourn.