CHRD 10-Q
Chord Energy Corp (CHRD)
10-Q
2023-11-02
For: 2023-09-30
View Original
Added on
April 08, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM | ||
| ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2023
or
| ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number: 1-34776
(Exact name of registrant as specified in its charter) | ||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
( (Registrant’s telephone number, including area code) | ||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ý No ¨
Number of shares of the registrant’s common stock outstanding at October 26, 2023: 41,278,429 shares.
TABLE OF CONTENTS
| Page | |||||
Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022 | |||||
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 | |||||
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 | |||||
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 | |||||
20. Leases | |||||
PART I — FINANCIAL INFORMATION
Item 1. — Financial Statements (Unaudited)
Chord Energy Corporation
Condensed Consolidated Balance Sheets (Unaudited)
| September 30, 2023 | December 31, 2022 | ||||||||||
| (In thousands, except share data) | |||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Inventory | |||||||||||
| Prepaid expenses | |||||||||||
| Derivative instruments | |||||||||||
| Other current assets | |||||||||||
| Current assets held for sale | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment | |||||||||||
| Oil and gas properties (successful efforts method) | |||||||||||
| Other property and equipment | |||||||||||
| Less: accumulated depreciation, depletion and amortization | ( | ( | |||||||||
| Total property, plant and equipment, net | |||||||||||
| Derivative instruments | |||||||||||
| Investment in unconsolidated affiliate | |||||||||||
| Long-term inventory | |||||||||||
| Operating right-of-use assets | |||||||||||
| Deferred tax assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Revenues and production taxes payable | |||||||||||
| Accrued liabilities | |||||||||||
| Accrued interest payable | |||||||||||
| Derivative instruments | |||||||||||
| Advances from joint interest partners | |||||||||||
| Current operating lease liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Current liabilities held for sale | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Asset retirement obligations | |||||||||||
| Derivative instruments | |||||||||||
| Operating lease liabilities | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
1
| September 30, 2023 | December 31, 2022 | ||||||||||
| (In thousands, except share data) | |||||||||||
Commitments and contingencies (Note 19) | |||||||||||
| Stockholders’ equity | |||||||||||
Common stock, $ | |||||||||||
Treasury stock, at cost: | ( | ( | |||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Chord Energy Corporation
Condensed Consolidated Statements of Operations (Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Oil, NGL and gas revenues | $ | $ | $ | $ | |||||||||||||||||||
| Purchased oil and gas sales | |||||||||||||||||||||||
| Other services revenues | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Lease operating expenses | |||||||||||||||||||||||
| Gathering, processing and transportation expenses | |||||||||||||||||||||||
| Purchased oil and gas expenses | |||||||||||||||||||||||
| Production taxes | |||||||||||||||||||||||
| Depreciation, depletion and amortization | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Exploration and impairment | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Gain on sale of assets, net | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Net gain (loss) on derivative instruments | ( | ( | |||||||||||||||||||||
| Net gain from investment in unconsolidated affiliate | |||||||||||||||||||||||
| Interest expense, net of capitalized interest | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense) | ( | ||||||||||||||||||||||
| Total other income (expense), net | ( | ( | |||||||||||||||||||||
| Income from continuing operations before income taxes | |||||||||||||||||||||||
| Income tax (expense) benefit | ( | ( | |||||||||||||||||||||
| Net income from continuing operations | |||||||||||||||||||||||
Income (loss) from discontinued operations attributable to Chord, net of income tax | ( | ||||||||||||||||||||||
Net income attributable to Chord | $ | $ | $ | $ | |||||||||||||||||||
Basic earnings attributable to Chord per share: | |||||||||||||||||||||||
| Basic from continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Basic from discontinued operations | ( | ||||||||||||||||||||||
Basic total (Note 18) | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings attributable to Chord per share: | |||||||||||||||||||||||
| Diluted from continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Diluted from discontinued operations | ( | ||||||||||||||||||||||
Diluted total (Note 18) | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
Basic (Note 18) | |||||||||||||||||||||||
Diluted (Note 18) | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Chord Energy Corporation
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
| Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Equity-based compensation and vestings | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Tax withholdings on settlement of equity-based awards | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Dividends | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Share repurchases | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||
| Warrants exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | ( | ||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation and vestings | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Tax withholdings on settlement of equity-based awards | ( | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Dividends | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Share repurchases | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||
| Warrants exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | ( | ||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation and vestings | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Tax withholdings on settlement of equity-based awards | ( | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Dividends | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Share repurchases | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||
| Warrants exercised | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Attributable to Chord | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Non-controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Tax withholdings on settlement of equity-based awards | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Modification of equity-based awards | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividends | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Warrants exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| OMP Merger | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Tax withholdings on settlement of equity-based awards | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Dividends | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Special dividend | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Transfer of equity plan shares from treasury | — | — | ( | ( | — | — | |||||||||||||||||||||||||||||||||||||||||
| Warrants exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in Merger | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Replacement equity awards issued in Merger | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Replacement warrants issued in Merger | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Tax withholdings on settlement of equity-based awards | ( | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividends | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Share repurchases | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Warrants exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Chord Energy Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| (In thousands) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income including non-controlling interests | $ | $ | |||||||||
| Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities: | |||||||||||
| Depreciation, depletion and amortization | |||||||||||
| Gain on sale of assets | ( | ( | |||||||||
| Impairment | |||||||||||
| Deferred income taxes | |||||||||||
| Net (gain) loss on derivative instruments | ( | ||||||||||
| Net gain from investment in unconsolidated affiliate | ( | ( | |||||||||
| Equity-based compensation expenses | |||||||||||
| Deferred financing costs amortization and other | |||||||||||
| Working capital and other changes: | |||||||||||
| Change in accounts receivable, net | ( | ( | |||||||||
| Change in inventory | ( | ||||||||||
| Change in prepaid expenses | |||||||||||
| Change in accounts payable, interest payable and accrued liabilities | |||||||||||
| Change in other assets and liabilities, net | |||||||||||
Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Acquisitions, net of cash acquired | ( | ( | |||||||||
| Proceeds from divestitures, net of cash divested | |||||||||||
| Costs related to divestitures | ( | ||||||||||
| Derivative settlements | ( | ( | |||||||||
| Proceeds from sale of investment in unconsolidated affiliate | |||||||||||
| Distributions from investment in unconsolidated affiliate | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from revolving credit facilities | |||||||||||
| Principal payments on revolving credit facilities | ( | ( | |||||||||
| Cash paid to settle Whiting debt | ( | ||||||||||
| Deferred financing costs | ( | ||||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Tax withholding on vesting of equity-based awards | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Payments on finance lease liabilities | ( | ( | |||||||||
| Proceeds from warrants exercised | |||||||||||
Net cash used in financing activities | ( | ( | |||||||||
| Increase (decrease) in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents: | |||||||||||
| Beginning of period | |||||||||||
| End of period | $ | $ | |||||||||
6
| Nine Months Ended September 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| (In thousands) | |||||||||||
| Supplemental non-cash transactions: | |||||||||||
| Change in accrued capital expenditures | $ | $ | |||||||||
| Change in asset retirement obligations | |||||||||||
| Non-cash consideration exchanged in Merger | |||||||||||
| Investment in unconsolidated affiliate | |||||||||||
| Dividends payable | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
Chord Energy Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Organization and Operations of the Company
Chord Energy Corporation (together with its consolidated subsidiaries, the “Company” or “Chord”) is an independent exploration and production company with quality and sustainable long-lived assets in the Williston Basin. The Company, formerly known as Oasis Petroleum Inc. (“Oasis”), was established upon the completion of the merger of equals (the “Merger”) with Whiting Petroleum Corporation (“Whiting”) on July 1, 2022. Whiting was an independent oil and gas company engaged in the development, production and acquisition of crude oil, natural gas liquids (“NGL”) and natural gas primarily in the Rocky Mountains region of the United States.
The Merger was accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). Accordingly, unless otherwise specifically noted herein, the periods prior to July 1, 2022 report the financial results of legacy Oasis, while the periods as of and subsequent to July 1, 2022 report the financial results of Chord, which include the operating results of Whiting and the associated impacts from the Merger.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the Condensed Consolidated Balance Sheet at December 31, 2022 is derived from audited financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of the Company’s financial position, have been included. Management has made certain estimates and assumptions that affect reported amounts in the unaudited condensed consolidated financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results.
Risks and Uncertainties
As a producer of crude oil, NGLs and natural gas, the Company’s revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for crude oil, NGLs and natural gas, which are dependent upon numerous factors beyond its control such as economic, political and regulatory developments and competition from other energy sources. The energy markets have historically been very volatile, and there can be no assurance that the prices for crude oil, NGLs or natural gas will not be subject to wide fluctuations in the future. A substantial or extended decline in prices for crude oil and, to a lesser extent, NGLs and natural gas, could have a material adverse effect on the Company’s financial position, results of operations, cash flows, the quantities of crude oil, NGL and natural gas reserves that may be economically produced and the Company’s access to capital.
Significant Accounting Policies
8
3. Revenue Recognition
Revenues from contracts with customers were as follows for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Crude oil revenues | $ | $ | $ | $ | |||||||||||||||||||
| Purchased crude oil sales | |||||||||||||||||||||||
| NGL and natural gas revenues | |||||||||||||||||||||||
| Purchased NGL and natural gas sales | |||||||||||||||||||||||
| Other services revenues | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
4. Inventory
| September 30, 2023 | December 31, 2022 | ||||||||||
| (In thousands) | |||||||||||
| Inventory | |||||||||||
| Equipment and materials | $ | $ | |||||||||
| Crude oil inventory | |||||||||||
| Total inventory | |||||||||||
| Long-term inventory | |||||||||||
| Linefill in third-party pipelines | |||||||||||
| Total long-term inventory | |||||||||||
| Total | $ | $ | |||||||||
9
5. Additional Balance Sheet Information
| September 30, 2023 | December 31, 2022 | ||||||||||
| (In thousands) | |||||||||||
| Accounts receivable, net | |||||||||||
| Trade and other accounts | $ | $ | |||||||||
| Joint interest accounts | |||||||||||
| Total accounts receivable | |||||||||||
| Less: allowance for credit losses | ( | ( | |||||||||
| Total accounts receivable, net | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Accrued oil and gas marketing | $ | $ | |||||||||
| Accrued capital costs | |||||||||||
| Accrued lease operating expenses | |||||||||||
| Accrued general and administrative expenses | |||||||||||
| Current portion of asset retirement obligations | |||||||||||
| Accrued dividends | |||||||||||
| Other accrued liabilities | |||||||||||
| Total accrued liabilities | $ | $ | |||||||||
6. Fair Value Measurements
The Company’s financial instruments, including certain cash and cash equivalents, accounts receivable, accounts payable and other payables, are carried at cost, which approximates their respective fair market values due to their short-term maturities. The Company recognizes its non-financial assets and liabilities, such as asset retirement obligations (“ARO”) and properties acquired in a business combination or upon impairment, at fair value on a non-recurring basis.
The following tables set forth by level, within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:
| Fair value at September 30, 2023 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Commodity derivative contracts (see Note 7) | $ | $ | $ | $ | |||||||||||||||||||
Contingent consideration (see Note 7) | |||||||||||||||||||||||
Investment in unconsolidated affiliate (see Note 12) | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
Commodity derivative contracts (see Note 7) | $ | $ | $ | $ | |||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
10
| Fair value at December 31, 2022 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Commodity derivative contracts (see Note 7) | $ | $ | $ | $ | |||||||||||||||||||
Contingent consideration (see Note 7) | |||||||||||||||||||||||
Investment in unconsolidated affiliate (see Note 12) | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
Commodity derivative contracts (see Note 7) | $ | $ | $ | $ | |||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
Commodity derivative contracts. The Company enters into commodity derivative contracts to manage risks related to changes in crude oil, NGL and natural gas prices. The Company’s swaps, collars and basis swaps are valued by a third-party preparer based on an income approach. The significant inputs used are commodity prices, discount rate and the contract terms of the derivative instruments. These assumptions are observable in the marketplace throughout the full term of the contract, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace and are therefore designated as Level 2 within the fair value hierarchy. The Company recorded a credit risk adjustment to increase the fair value of its net derivative liability for these contracts by $0.1 million at September 30, 2023 and to reduce the fair value of its net derivative liability for these contracts by $3.5 million at December 31, 2022. See Note 7—Derivative Instruments for additional information.
Transportation derivative contracts. The Company is a party to certain buy/sell transportation contracts that are derivative contracts for which the Company has not elected the “normal purchase normal sale” exclusion under FASB ASC 815, Derivatives and Hedging. These transportation derivative contracts are valued by a third-party preparer based on an income approach. The significant inputs used are quoted forward prices for commodities, market differentials for crude oil and either the Company’s or the counterparty’s nonperformance risk, as appropriate. The assumptions used in the valuation of these contracts include certain market differential metrics that are unobservable during the term of the contracts. Such unobservable inputs are significant to the contract valuation methodology, and the contracts’ fair values are therefore designated as Level 3 within the fair value hierarchy. See Note 7—Derivative Instruments for additional information.
Contingent consideration. In June 2021, the Company completed the divestiture of oil and gas properties in the Texas region of the Permian Basin. In connection with the divestiture, the Company is entitled to receive up to three earn-out payments of $25.0 60 per barrel for such year (the “Permian Basin Sale Contingent Consideration”). If NYMEX WTI for calendar year 2023 or 2024 is less than $45 per barrel, then each calendar year thereafter the buyer’s obligation to make any remaining earn-out payments is terminated. The fair value of the Permian Basin Sale Contingent Consideration is determined by a third-party preparer using a Monte Carlo simulation model and Ornstein-Uhlenbeck pricing process. The significant inputs used are NYMEX WTI forward price curve, volatility, mean reversion rate and counterparty credit risk adjustment. The Company determined these were Level 2 fair value inputs that are substantially observable in active markets or can be derived from observable data. As of the date of this report, the Company expects to receive approximately $25.0 million in the first quarter of 2024 related to the 2023 contingent payment. See Note 7—Derivative Instruments for additional information.
Investment in unconsolidated affiliate. In connection with the OMP Merger (defined in Note 10—Divestitures and Assets Held for Sale), the Company owns common units in Crestwood Equity Partners LP (“Crestwood”) which are accounted for using the fair value option under FASB ASC 825-10, Financial Instruments. The fair value of the Company’s investment in Crestwood was determined using Level 1 inputs based upon the quoted market price of Crestwood’s publicly traded common units at September 30, 2023 and December 31, 2022. See Note 12—Investment in Unconsolidated Affiliate for additional information.
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Non-Financial Assets and Liabilities
The fair value of the Company’s non-financial assets and liabilities measured on a non-recurring basis are determined using valuation techniques that include Level 3 inputs.
Asset retirement obligations. The initial measurement of ARO at fair value is recorded in the period in which the liability is incurred. Fair value is determined by calculating the present value of estimated future cash flows related to the liability. Estimating the future ARO requires management to make estimates and judgments regarding the timing and existence of a liability, as well as what constitutes adequate restoration when considering current regulatory requirements. Inherent in the fair value calculation are numerous assumptions and judgments, including the ultimate costs, inflation factors, credit-adjusted discount rates, timing of settlement and changes in the legal, environmental and regulatory environments.
2023 Williston Basin Acquisition. On June 30, 2023, the Company completed the 2023 Williston Basin Acquisition (defined in Note 9—Acquisitions). The assets acquired and liabilities assumed were recorded at fair value as of June 30, 2023. The fair value of the oil and gas properties acquired was calculated using an income approach based on the net discounted future cash flows from the oil and gas properties. The inputs utilized in the valuation of the oil and gas properties acquired included mostly unobservable inputs which fall within Level 3 of the fair value hierarchy. Such inputs included estimates of future oil and gas production from the properties’ reserve reports, commodity prices based on forward strip price curves (adjusted for basis differentials), operating and development costs, expected future development plans for the properties and the utilization of a discount rate based on a market-based weighted-average cost of capital. The Company also recorded the ARO assumed from the 2023 Williston Basin Acquisition at fair value. The inputs utilized in valuing the ARO were mostly Level 3 unobservable inputs, including estimated economic lives of oil and natural gas wells as of June 30, 2023, anticipated future plugging and abandonment costs and an appropriate credit-adjusted risk-free rate to discount such costs. See Note 9—Acquisitions for additional information.
7. Derivative Instruments
Commodity derivative contracts. The Company utilizes derivative financial instruments to manage risks related to changes in commodity prices. The Company’s crude oil contracts settle monthly based on the average NYMEX WTI and its natural gas contracts settle monthly based on the average NYMEX Henry Hub natural gas index price.
The Company utilizes fixed-price swaps and two-way and three-way collars to manage risks related to changes in commodity prices. The Company’s fixed-price swaps are designed to establish a fixed price for the volumes under contract. Two-way collars are designed to establish a minimum price (floor) and a maximum price (ceiling) for the volumes under contract. Three-way collars are designed to establish a minimum price (floor), unless the market price falls below the sold put (sub-floor), at which point the minimum price would be the index price plus the difference between the purchased put and the sold put strike price. The sold call establishes a maximum price (ceiling) for the volumes under contract. The Company may, from time to time, restructure existing derivative contracts or enter into new transactions to effectively modify the terms of current contracts in order to improve the pricing parameters in existing contracts.
At September 30, 2023, the Company had the following outstanding commodity derivative contracts:
| Commodity | Settlement Period | Derivative Instrument | Volumes | Weighted Average Prices | |||||||||||||||||||||||||||||||||||||||||||
| Fixed-Price Swaps | Sub-Floor | Floor | Ceiling | ||||||||||||||||||||||||||||||||||||||||||||
| Crude oil | 2023 | Two-way collars | Bbls | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Crude oil | 2023 | Fixed-price swaps | Bbls | $ | |||||||||||||||||||||||||||||||||||||||||||
| Crude oil | 2024 | Two-way collars | Bbls | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Crude oil | 2024 | Three-way collars | Bbls | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Crude oil | 2025 | Two-way collars | Bbls | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Crude oil | 2025 | Three-way collars | Bbls | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Natural gas | 2025 | Fixed-price swaps | MMBtu | $ | |||||||||||||||||||||||||||||||||||||||||||
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Transportation derivative contracts. The Company is a party to two contracts that provide for the transportation of crude oil through a buy/sell structure from North Dakota to either Cushing, Oklahoma or Guernsey, Wyoming. The contracts require the purchase and sale of fixed volumes of crude oil through July 2024 as specified in the agreements. The Company determined that these contracts qualified as derivatives and did not elect the “normal purchase normal sale” exclusion. As of September 30, 2023, the estimated fair value of these contracts was a $2.2 million asset, which was classified as a current derivative asset on the Company’s Condensed Consolidated Balance Sheet. As of December 31, 2022, the estimated fair value of these contracts was a $14.7 million liability, of which $11.9 million was classified as a current derivative liability and $2.8 million was classified as a non-current derivative liability on the Company’s Condensed Consolidated Balance Sheet. The Company records the changes in fair value of these contracts to gathering, processing and transportation (“GPT”) expenses on the Company’s Condensed Consolidated Statement of Operations. Settlements on these contracts are reflected as operating activities on the Company’s Consolidated Statements of Cash Flows and represent cash payments to the counterparties for transportation of crude oil or the net settlement of contract liabilities if the transportation was not utilized, as applicable. See Note 6—Fair Value Measurements for additional information.
Contingent consideration. The Company bifurcated the Permian Basin Sale Contingent Consideration from the host contract and accounted for it separately at fair value. The Permian Basin Sale Contingent Consideration is marked-to-market each reporting period, with changes in fair value recorded in the other income (expense) section of the Company’s Condensed Consolidated Statements of Operations as a net gain or loss on derivative instruments. As of September 30, 2023, the estimated fair value of the Permian Basin Sale Contingent Consideration was $68.1 million, of which $24.5 million was classified as a current derivative asset and $43.6 million was classified as a non-current derivative asset on the Condensed Consolidated Balance Sheet. As of December 31, 2022, the estimated fair value of the Permian Basin Sale Contingent Consideration was $60.9 million, of which $23.0 million was classified as a current derivative asset and $38.0 million was classified as a non-current derivative asset on the Condensed Consolidated Balance Sheet. See Note 6—Fair Value Measurements for additional information.
The following table summarizes the location and amounts of gains and losses from the Company’s derivative instruments recorded in the Company’s Condensed Consolidated Statements of Operations for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
| Derivative Instrument | Statements of Operations Location | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| Commodity derivatives | Net gain (loss) on derivative instruments | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||
Commodity derivatives (buy/sell transportation contracts)(1) | Gathering, processing and transportation expenses | ( | ||||||||||||||||||||||||||||||
| Contingent consideration | Net gain (loss) on derivative instruments | ( | ||||||||||||||||||||||||||||||
__________________
(1) The change in the fair value of the transportation derivative contracts was recorded in GPT expenses as a loss for the three months ended September 30, 2023 and as a gain for the nine months ended September 30, 2023.
In accordance with the FASB’s authoritative guidance on disclosures about offsetting assets and liabilities, the Company is required to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting agreement. The Company’s derivative instruments are presented as assets and liabilities on a net basis by counterparty, as all counterparty contracts provide for net settlement. No margin or collateral balances are deposited with counterparties, and as such, gross amounts are offset to determine the net amounts presented in the Company’s Condensed Consolidated Balance Sheets.
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The following table summarizes the location and fair value of all outstanding derivative instruments recorded in the Company’s Condensed Consolidated Balance Sheets:
| September 30, 2023 | ||||||||||||||||||||||||||
| Derivative Instrument | Balance Sheet Location | Gross Amount | Gross Amount Offset | Net Amount | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Derivatives assets: | ||||||||||||||||||||||||||
| Commodity derivatives | Derivative instruments — current assets | $ | $ | ( | $ | |||||||||||||||||||||
| Contingent consideration | Derivative instruments — current assets | |||||||||||||||||||||||||
| Commodity derivatives (buy/sell transportation contracts) | ||||||||||||||||||||||||||
| Commodity derivatives | Derivative instruments — non-current assets | ( | ||||||||||||||||||||||||
| Contingent consideration | Derivative instruments — non-current assets | |||||||||||||||||||||||||
| Total derivatives assets | $ | $ | ( | $ | ||||||||||||||||||||||
| Derivatives liabilities: | ||||||||||||||||||||||||||
| Commodity derivatives | Derivative instruments — current liabilities | $ | $ | ( | $ | |||||||||||||||||||||
| Commodity derivatives (buy/sell transportation contracts) | ||||||||||||||||||||||||||
| Commodity derivatives | Derivative instruments — non-current liabilities | ( | ||||||||||||||||||||||||
| Total derivatives liabilities | $ | $ | ( | $ | ||||||||||||||||||||||
| December 31, 2022 | ||||||||||||||||||||||||||
| Derivative Instrument | Balance Sheet Location | Gross Amount | Gross Amount Offset | Net Amount | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Derivatives assets: | ||||||||||||||||||||||||||
| Commodity derivatives | $ | $ | ( | $ | ||||||||||||||||||||||
| Contingent consideration | Derivative instruments — current assets | |||||||||||||||||||||||||
| Contingent consideration | Derivative instruments — non-current assets | |||||||||||||||||||||||||
| Total derivatives assets | $ | $ | ( | $ | ||||||||||||||||||||||
| Derivatives liabilities: | ||||||||||||||||||||||||||
| Commodity derivatives | $ | $ | ( | $ | ||||||||||||||||||||||
| Commodity derivatives (buy/sell transportation contracts) | Derivative instruments — current liabilities | |||||||||||||||||||||||||
| Commodity derivatives (buy/sell transportation contracts) | Derivative instruments — non-current liabilities | |||||||||||||||||||||||||
| Total derivatives liabilities | $ | $ | ( | $ | ||||||||||||||||||||||
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8. Property, Plant and Equipment
| September 30, 2023 | December 31, 2022 | ||||||||||
| (In thousands) | |||||||||||
Proved oil and gas properties | $ | $ | |||||||||
| Less: Accumulated depletion | ( | ( | |||||||||
| Proved oil and gas properties, net | |||||||||||
| Unproved oil and gas properties | |||||||||||
Other property and equipment | |||||||||||
| Less: Accumulated depreciation | ( | ( | |||||||||
| Other property and equipment, net | |||||||||||
| Total property, plant and equipment, net | $ | $ | |||||||||
9. Acquisitions
2023 Acquisition
On May 22, 2023, the Company announced that a wholly-owned subsidiary of the Company had entered into a definitive agreement to acquire approximately 62,000 net acres in the Williston Basin from XTO Energy Inc. and affiliates, subsidiaries of Exxon Mobil Corporation (collectively “XTO”), for total cash consideration of $375.0 million, subject to customary purchase price adjustments (the “2023 Williston Basin Acquisition”). The effective date of the 2023 Williston Basin Acquisition was April 1, 2023.
On June 30, 2023, the Company completed the 2023 Williston Basin Acquisition for total cash consideration of $361.6 million, including a deposit of $37.5 million paid to XTO upon execution of the purchase and sale agreement and $324.1 million paid to XTO at closing (including customary purchase price adjustments). The Company funded the 2023 Williston Basin Acquisition with cash on hand. The 2023 Williston Basin Acquisition was accounted for as a business combination and was recorded under the acquisition method of accounting in accordance with ASC 805. The post-acquisition operating results and pro forma revenue and earnings for the 2023 Williston Basin Acquisition were not material to the Company’s condensed consolidated financial statements and have therefore not been presented.
Preliminary purchase price allocation. The Company recorded the assets acquired and liabilities assumed in the 2023 Williston Basin Acquisition at their estimated fair value on June 30, 2023 of $361.6 million. The allocation of the fair value to the identifiable assets acquired and liabilities assumed resulted in no
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The tables below present the total consideration transferred and its allocation to the identifiable assets acquired and liabilities assumed as of the acquisition date on June 30, 2023. As provided under ASC 805, the purchase price allocation may be subject to change for up to one year after June 30, 2023, which may result in a different allocation than what is presented in the tables below.
| Purchase Price Consideration | ||||||||
| (In thousands) | ||||||||
| Cash consideration transferred | $ | |||||||
| Preliminary Purchase Price Allocation | ||||||||
| (In thousands) | ||||||||
| Assets acquired: | ||||||||
| Oil and gas properties | $ | |||||||
| Inventory | ||||||||
| Total assets acquired | $ | |||||||
| Liabilities assumed: | ||||||||
| Asset retirement obligations | $ | |||||||
| Revenue and production taxes payable | ||||||||
| Total liabilities assumed | $ | |||||||
| Net assets acquired | $ | |||||||
2022 Acquisition
On July 1, 2022, the Company completed the Merger with Whiting and issued 22,671,871 shares of common stock and paid $245.4 million of cash to Whiting stockholders. The Merger was accounted for under the acquisition method of accounting in accordance with ASC 805.
Purchase price allocation. Under the acquisition method of accounting, the assets and liabilities of Whiting were recorded at their respective fair values as of the acquisition date on July 1, 2022. The allocation of the fair value to the identifiable assets acquired and liabilities assumed resulted in no
Unaudited pro forma financial information. The results of Whiting’s operations have been included in the Company’s consolidated financial statements since July 1, 2022. The following supplemental unaudited pro forma financial information for the nine months ended September 30, 2022 has been prepared as if the Merger had occurred on January 1, 2022. The information presented below reflects pro forma adjustments based on available information and certain assumptions that the Company believes are factual and supportable. The pro forma financial information includes certain non-recurring pro forma adjustments that were directly attributable to the Merger, including transaction costs incurred by the Company and Whiting. The unaudited pro forma financial information does not purport to be indicative of results of operations that would have occurred had the Merger occurred on the basis assumed above, nor is such information indicative of the Company’s expected future results. The pro forma results of operations did not include any future cost savings or other synergies that may result from the Merger or any estimated costs that have not yet been incurred by the Company to integrate the Whiting assets.
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| Nine Months Ended September 30, 2022 | ||||||||
| (In thousands) | ||||||||
| Revenues | $ | |||||||
| Net income attributable to Chord | ||||||||
| Net income attributable to Chord per share: | ||||||||
| Basic | $ | |||||||
| Diluted | ||||||||
10. Divestitures and Assets Held for Sale
2023 Divestitures and Assets Held for Sale
Non-core properties. During the second and third quarters of 2023, the Company entered into separate agreements with multiple buyers to sell a majority of its non-core properties located outside of the Williston Basin for total estimated net cash proceeds (including purchase price adjustments) of $38.7 33.1 million, subject to customary post-closing adjustments. During the three and nine months ended September 30, 2023, the Company recorded a pre-tax net loss on sale of $0.8 million and $1.7 million, respectively, for the divestiture of these non-core properties.
Assets held for sale. The remainder of the Non-core Asset Sales are expected to close in the fourth quarter of 2023 for estimated net cash proceeds (including purchase price adjustments) of $5.6 million. As of September 30, 2023, the Company classified the assets and liabilities associated with these properties as held for sale on its Condensed Consolidated Balance Sheet.
The following table presents balance sheet data related to the assets held for sale:
| September 30, 2023 | ||||||||
| (In thousands) | ||||||||
| Assets: | ||||||||
| Oil and gas properties | $ | |||||||
| Less: accumulated depreciation, depletion and amortization | ( | |||||||
| Total property, plant and equipment, net | ||||||||
| Inventory | ||||||||
| Total current assets held for sale | $ | |||||||
| Liabilities: | ||||||||
| Assets retirement obligations | $ | |||||||
| Revenues and production taxes payable | ||||||||
| Total current liabilities held for sale | $ | |||||||
| Net liabilities | $ | ( | ||||||
During the three months ended June 30, 2023, the Company recorded an impairment loss of $5.6 million to adjust the carrying value of the assets held for sale to their estimated fair value less costs to sell. The impairment loss was recorded within exploration and impairment expenses on the Condensed Consolidated Statements of Operations. The Company did not record an impairment loss for the three months ended September 30, 2023.
On October 13, 2023, the Company completed the sale of certain of its non-core properties that were classified as assets held for sale as of September 30, 2023, for total net cash proceeds (including purchase price adjustments) of $4.1 million.
Other divestitures. In addition, during the nine months ended September 30, 2023, the Company completed certain non-operated wellbore divestitures in the Williston Basin for total net cash proceeds of $19.8 million.
2022 Divestiture
OMP Merger. On February 1, 2022, the Company completed the merger of Oasis Midstream Partners LP (“OMP”) and OMP GP LLC with and into a subsidiary of Crestwood and received $160.0 million in cash and 20,985,668 common units of Crestwood (the “OMP Merger”). The OMP Merger represented a strategic shift for the Company and qualified for reporting as
OMP Merger. On February 1, 2022, the Company completed the merger of Oasis Midstream Partners LP (“OMP”) and OMP GP LLC with and into a subsidiary of Crestwood and received $
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a discontinued operation under FASB ASC 205-20, Presentation of Financial Statements – Discontinued Operations (“ASC 205-20”).
See Note 11—Discontinued Operations for additional information on amounts reported as discontinued operations. See Note 6—Fair Value Measurements and Note 12—Investment in Unconsolidated Affiliate for additional information on the Company’s investment in Crestwood.
The Company recorded a pre-tax gain on sale of assets of $518.9 million, which included (i) the cash consideration of $160.0 million, (ii) the fair value of the Company’s retained investment in Crestwood of $568.3 million; less (iii) the book value of the Company’s investment in OMP of $198.0 million and (iv) transaction costs of $11.4 million. The gain on sale of assets was reported within income from discontinued operations attributable to Chord, net of income tax on the Company’s Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2022.
The Company had previously entered into long-term, fee-based contractual arrangements with OMP for midstream services, including (i) natural gas gathering, compression, processing and gas lift supply services; (ii) crude oil gathering, terminaling and transportation services; (iii) produced and flowback water gathering and disposal services; and (iv) freshwater distribution services. These contracts were assigned to Crestwood upon closing of the OMP Merger, and the Company has continuing involvement with Crestwood for these midstream services.
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11. Discontinued Operations
The OMP Merger qualified for reporting as discontinued operations on February 1, 2022, in accordance with ASC 205-20. There were no discontinued operations for the three and nine months ended September 30, 2023.
Condensed Consolidated Statement of Operations
The results of operations reported as discontinued operations in connection with the OMP Merger were as follows for the period presented:
| Nine Months Ended September 30, 2022 | |||||
| (In thousands) | |||||
| Revenues | |||||
Purchased oil and gas sales(1) | $ | ( | |||
| Midstream revenues | |||||
| Total revenues | |||||
| Operating expenses | |||||
Lease operating expenses(1) | ( | ||||
| Midstream expenses | |||||
Gathering, processing and transportation expenses(1) | ( | ||||
Purchased oil and gas expenses(1) | ( | ||||
General and administrative expenses(1) | |||||
| Total operating expenses | ( | ||||
| Gain on sale of assets | |||||
| Operating income | |||||
| Other expense | |||||
| Interest expense, net of capitalized interest | ( | ||||
| Other expense | ( | ||||
| Total other expense | ( | ||||
| Income from discontinued operations before income taxes | |||||
Income tax expense(2) | ( | ||||
| Income from discontinued operations, net of income tax | |||||
| Net income attributable to non-controlling interests | |||||
Income from discontinued operations attributable to Chord, net of income tax | $ | ||||
__________________
(1)Includes discontinued intercompany eliminations.
(2)The Company applied the intraperiod tax allocation rules in accordance with FASB ASC 740-20, Intraperiod Tax Allocation (“ASC 740-20”) to determine the allocation of tax expense between continuing operations and discontinued operations. ASC 740-20 generally requires the allocation of tax expense to be based on a comparative calculation of tax expense with and without income from discontinued operations. Prior to the release of a portion of the Company’s valuation allowance in the third quarter of 2022, the Company recorded $41.2 million of income tax expense attributable to discontinued operations during the six months ended June 30, 2022. During the three months ended September 30, 2022, the Company released a portion of its valuation allowance and allocated the majority of the income tax benefit associated with the release of the valuation allowance to continuing operations. The total tax expense associated with the OMP Merger was partially offset by the release of the valuation allowance allocated to discontinued operations, resulting in an incremental tax expense of $59.9 million recorded in the three months ended September 30, 2022, since a smaller portion of the deferred tax liabilities reported in discontinued operations is being offset with deferred tax assets.
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Condensed Consolidated Statement of Cash Flows
Depreciation, depletion and amortization (“DD&A”) attributable to discontinued operations in “Cash flows from operating activities” was immaterial for the nine months ended September 30, 2022. Capital expenditures attributable to discontinued operations included in “Cash flows used in investing activities” was $6.1 million for the nine months ended September 30, 2022. There were no significant non-cash activities from discontinued operations for the nine months ended September 30, 2022.
12. Investment in Unconsolidated Affiliate
As of September 30, 2023 and December 31, 2022, the fair value of the Company’s investment in Crestwood was $102.6 million and $130.6 million, respectively. As of September 30, 2023 and December 31, 2022, the Company owned less than 5
During the three and nine months ended September 30, 2023, the Company recorded a net gain of $13.5 million and $21.4 million, respectively, on its investment in Crestwood, primarily comprised of an unrealized gain for the change in fair value of the investment of $9.7 million and $10.8 million, respectively, and a realized gain for cash distributions received from Crestwood of $2.5 million and $8.5 million, respectively. During the three and nine months ended September 30, 2022, the Company recorded an unrealized gain for the change in the fair value of its investment in Crestwood of $18.4 million and an unrealized loss of $44.6 million, respectively, and a realized gain for cash distributions received from Crestwood of $13.7 million and $40.6 million, respectively.
Related Party Transactions
For the nine months ended September 30, 2022, related party transactions with Crestwood totaled $11.3 million of revenues, $51.1 million of lease operating expenses and $40.7 million of GPT expenses. On September 12, 2022, the Company sold an aggregate of 16,000,000 common units of Crestwood in separate transactions and received net proceeds of $428.2 million. The sale reduced the Company’s ownership of Crestwood’s issued and outstanding common units below 5 %. As such, Crestwood was no longer considered a related party as of September 30, 2022.
13. Long-Term Debt
| September 30, 2023 | December 31, 2022 | ||||||||||
| (In thousands) | |||||||||||
| Senior secured revolving line of credit | $ | $ | |||||||||
Senior unsecured notes | |||||||||||
Less: unamortized deferred financing costs | ( | ( | |||||||||
| Total long-term debt, net | $ | $ | |||||||||
Senior secured revolving line of credit. The Company has a senior secured revolving credit facility (the “Credit Facility”) with a $2.5 billion borrowing base and $1.0 billion of elected commitments that matures on July 1, 2027. At September 30, 2023, the Company had no borrowings outstanding and $6.4 million of outstanding letters of credit issued under the Credit Facility, resulting in an unused borrowing capacity of $993.6 million. At December 31, 2022, the Company had no borrowings outstanding and $6.4 million of outstanding letters of credit issued under the Credit Facility.
On October 31, 2023, the lenders under the Credit Facility and the Company completed the semi-annual borrowing base redetermination and entered into the Fourth Amendment to Amended and Restated Credit Agreement (the “Fourth Amendment”), dated as of October 31, 2023, among Oasis Petroleum North America LLC (the “Borrower”), the Company, Chord Energy LLC, the other guarantors party thereto, each of the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and issuing bank (as amended, the “Credit Agreement”). The Fourth Amendment, among other things (i) reaffirmed the borrowing base of $2.5 billion and maintained the aggregate amount of elected commitments of $1.0 billion and (ii) permits the Borrower to incur term loans in addition to the revolving loans provided under the Credit Agreement, subject to terms to be agreed with the lenders making such term loans and to the terms of the Credit Agreement. The next scheduled redetermination is expected to occur in or around April 2024. The foregoing description of the Fourth Amendment does not purport to be complete and is qualified in its entirety by reference to the text of the Fourth Amendment, a copy of which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.
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During the three and nine months ended September 30, 2023, the weighted average interest rate incurred on borrowings on the Credit Facility was 7.09 4.57
Borrowings are subject to varying rates of interest based on (i) the total outstanding borrowings (including the value of all outstanding letters of credit) in relation to the borrowing base and (ii) whether the loan is a Term SOFR Loan or an ABR Loan (each as defined in the Credit Facility). The Company incurs interest on outstanding loans at their respective interest rate plus a margin rate ranging between 1.75 % to 2.75 % for Term SOFR Loans and 0.75 % to 1.75 % for ABR Loans. In addition, Term SOFR Loans are also subject to a 0.1 % credit spread adjustment. The unused borrowing base is subject to a commitment fee ranging between 0.375 % to 0.500 %.
Senior unsecured notes. At September 30, 2023, the Company had $400.0 million of 6.375 % senior unsecured notes outstanding due June 1, 2026 (the “Senior Notes”). Interest on the Senior Notes is payable semi-annually on June 1 and December 1 of each year. The fair value of the Senior Notes, which are publicly traded among qualified institutional investors and represent a Level 1 fair value measurement, was $393.0 million at September 30, 2023.
Whiting credit facility. Upon consummation of the Merger on July 1, 2022, the Whiting credit facility was terminated, and the Company paid the remaining outstanding accrued interest and other fees of approximately $2.2 million to fully satisfy all such outstanding obligations that were owed under the Whiting credit facility.
14. Asset Retirement Obligations
The following table reflects the changes in the Company’s ARO during the nine months ended September 30, 2023:
| (In thousands) | |||||
| Balance at December 31, 2022 | $ | ||||
| Liabilities incurred during period | |||||
Liabilities incurred through acquisitions(1) | |||||
| Liabilities settled during period | ( | ||||
| Liabilities settled through divestitures | ( | ||||
Accretion expense during period | |||||
Liabilities held for sale(2) | ( | ||||
Balance at September 30, 2023 | $ | ||||
__________________
(1) Includes liabilities that were acquired through the 2023 Williston Basin Acquisition. See Note 9—Acquisitions for additional information.
(2) Includes liabilities related to properties held for sale as of September 30, 2023. See Note 10—Divestitures and Assets Held for Sale for additional information.
Accretion expense is included in DD&A on the Company’s Condensed Consolidated Statements of Operations. At September 30, 2023, the current portion of the total ARO balance was $2.3 million and is included in accrued liabilities on the Company’s Condensed Consolidated Balance Sheet.
15. Income Taxes
The Company’s effective tax rate was 23.9 0.1 )% and (0.3 )% of pre-tax income from continuing operations for the three and nine months ended September 30, 2022, respectively.
The effective tax rate from continuing operations for the three and nine months ended September 30, 2023 was higher than the statutory federal rate of 21% primarily as a result of the impact of state income taxes. The effective tax rate for the three and nine months ended September 30, 2022 was lower than the statutory federal rate of 21% primarily as a result of the Company’s valuation allowance during the three and nine months ended September 30, 2022, substantially all of which was released during the third and fourth quarters of 2022. This was partially offset by state income taxes.
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16. Equity-Based Compensation
The Company has previously granted RSUs, PSUs and LSUs (each as defined below), as well as phantom unit awards under its equity compensation plans.
Equity-based compensation expenses are recognized in general and administrative expenses on the Company’s Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2023, the Company recognized $10.1 million and $37.3 million, respectively, in equity-based compensation expenses related to equity-classified awards. During the three and nine months ended September 30, 2022, the Company recognized $30.7 million and $40.3 million, respectively, in equity-based compensation expenses related to equity-classified awards. During the three and nine months ended September 30, 2023, the Company recognized $0.7 million and $2.9 million, respectively, in equity-based compensation expenses related to liability-classified awards. During the three and nine months ended September 30, 2022, the Company recognized $2.1 million and $2.5 million, respectively, in equity-based compensation expenses related to liability-classified awards.
Restricted stock units. Restricted stock units (“RSUs”) are contingent shares that generally vest on either a cliff or graded basis over a one-year , three-year or four-year period (as applicable) and are subject to a service condition. During the nine months ended September 30, 2023, the Company granted 156,413 RSUs to employees and non-employee directors of the Company with a weighted average grant date value of $136.53 per share.
Performance share units. Performance share units (“PSUs”) are contingent shares that vest on a graded basis over a three-year and four-year period and are subject to a service condition. No
Leveraged stock units. Leveraged stock units (“LSUs”) are contingent shares that cliff vest over a three-year and four-year period and are subject to a service condition. No
Phantom unit awards. Phantom unit awards represent the right to receive a cash payment equal to the fair market value of one share of common stock upon vesting and vest on a graded basis and are subject to a service condition. During the nine months ended September 30, 2023, the Company granted 9,743 phantom unit awards to employees with a weighted average grant date value of $133.15 per share.
17. Stockholders’ Equity
Dividends
The following table summarizes the Company’s fixed and variable dividends declared for the nine months ended September 30, 2023 and 2022, respectively.
| Rate per Share | ||||||||||||||||||||||||||||||||
| Base | Variable | Special | Total | Total Dividends Declared | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| Q3 2023 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Q2 2023 | ||||||||||||||||||||||||||||||||
| Q1 2023 | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Q3 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Q2 2022 | ||||||||||||||||||||||||||||||||
| Q1 2022 | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Total dividends declared in the table above includes $1.4 million and $10.2 million associated with dividend equivalent rights on unvested equity-based compensation awards for the three and nine months ended September 30, 2023, respectively, and $18.4 million and $36.7 million for the three and nine months ended September 30, 2022, respectively.
On November 1, 2023, the Company declared a base-plus-variable cash dividend of $2.50 per share of common stock. The dividend will be payable on November 28, 2023 to shareholders of record as of November 14, 2023.
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Share Repurchase Program
During the nine months ended September 30, 2023, the Company repurchased 1,023,320 shares of common stock at a weighted average price of $154.52 per common share for a total cost of $158.1 million, excluding accrued excise tax of $0.2 million. As of September 30, 2023, there was $114.8 million of capacity remaining under the Company’s $300.0 million program. In October 2023, the Board of Directors authorized a new share repurchase program of $750.0 million of the Company’s common stock, which replaces the existing $300.0 million program.
During the nine months ended September 30, 2022, the Company repurchased 1,174,756 shares of common stock at a weighted average price of $106.25 per common share for a total cost of $124.8 million.
Warrants
The following table summarizes the Company’s outstanding warrants as of September 30, 2023:
Warrants(1) | Exercise Price | |||||||||||||
| Legacy Oasis | $ | |||||||||||||
| Legacy Whiting - Series A | $ | |||||||||||||
| Legacy Whiting - Series B | $ | |||||||||||||
| Total | ||||||||||||||
__________________
During the three and nine months ended September 30, 2023, there were 707,227 and 816,630 warrants exercised, respectively.
18. Earnings (Loss) Per Share
The Company calculates earnings per share under the two-class method. During the third quarter of 2022, the Company granted RSUs which include non-forfeitable rights to dividends and are therefore considered “participating securities.” Accordingly, effective in the third quarter of 2022, the Company began to compute earnings per share under the two-class earnings allocation method. The two-class method is an earnings allocation formula that computes earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.
Basic earnings per share amounts have been computed as (i) net income (loss) (ii) less distributed and undistributed earnings allocated to participating securities (iii) divided by the weighted average number of basic shares outstanding for the periods presented. Diluted earnings per share amounts have been computed as (i) basic net income attributable to common stockholders (ii) plus the reallocation of distributed and undistributed earnings allocated to participating securities (iii) divided by the weighted average number of diluted shares outstanding for the periods presented. The Company calculates diluted earnings per share under both the two-class method and treasury stock method and reports the more dilutive of the two calculations.
23
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| Net income from continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Distributed and undistributed earnings allocated to participating securities | ( | ( | ( | ( | |||||||||||||||||||
| Net income from continuing operations attributable to common stockholders (basic) | |||||||||||||||||||||||
| Reallocation of distributed and undistributed earnings allocated to participating securities | |||||||||||||||||||||||
| Net income from continuing operations attributable to common stockholders (diluted) | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic weighted average common shares outstanding | |||||||||||||||||||||||
Dilutive effect of share-based awards | |||||||||||||||||||||||
| Dilutive effect of warrants | |||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||
| Basic earnings per share from continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Anti-dilutive weighted average common shares: | |||||||||||||||||||||||
| Potential common shares | |||||||||||||||||||||||
For the three and nine months ended September 30, 2023 and 2022, the diluted earnings per share calculation excludes the impact of unvested share-based awards and outstanding warrants that were anti-dilutive.
For the nine months ended September 30, 2022, basic and diluted earnings per share from discontinued operations were $15.88 and $14.97 , respectively.
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19. Commitments and Contingencies
As of September 30, 2023, the Company’s material off-balance sheet arrangements and transactions include $6.4 million in outstanding letters of credit under the Credit Facility and $26.9 million in net surety bond exposure issued as financial assurance on certain agreements.
As of September 30, 2023, there have been no material changes to the Company’s commitments and contingencies disclosed in Note 23 — Commitments and Contingencies in the 2022 Annual Report except as set forth below.
In April 2023, the Company entered into a gas gathering, processing and sale agreement with a requirement to deliver a minimum quantity of unprocessed gas through January 2028 for a total aggregate commitment of approximately $55.6 million. As of September 30, 2023, the Company had a remaining commitment under this contract of $44.0 million. The Company believes its production and reserves are sufficient to fulfill this delivery commitment and therefore expects to avoid any payments for deficiencies under this contract.
In October 2023, the Company entered into a gas gathering, processing and sale agreement with a requirement to deliver a minimum quantity of unprocessed gas through January 2031 for a total aggregate commitment of approximately $29.3 million. The Company believes its production and reserves are sufficient to fulfill this delivery commitment and therefore expects to avoid any payments for deficiencies under this contract.
Whiting Chapter 11 bankruptcy claims. On April 1, 2020, Whiting and certain of its subsidiaries (the “Debtors”) commenced voluntary cases (the “Whiting Chapter 11 Cases”) under chapter 11 of the United States Bankruptcy Code. On June 30, 2020, the Debtors filed their proposed Joint Chapter 11 Plan of Reorganization of Whiting and its Debtor affiliates (as amended, modified and supplemented, the “Whiting Plan”). On August 14, 2020, the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) confirmed the Whiting Plan and on September 1, 2020, the Debtors satisfied all conditions required for plan effectiveness and emerged from the Whiting Chapter 11 Cases.
The filing of the Whiting Chapter 11 Cases allowed Whiting to, upon approval of the Bankruptcy Court, assume, assign or reject certain contractual commitments, including certain executory contracts. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such contract and, subject to certain exceptions, relieves Whiting from performing future obligations under such contract but entitles the counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. To the extent that the Bankruptcy Court allows any unsecured claims against the Company, such claims may have been satisfied through an issuance of the Company’s common stock or other remedy or agreement under and pursuant to the Whiting Plan. In connection with the closing of the Merger on July 1, 2022, the Company assumed Whiting’s obligations with respect to the Whiting Plan and, accordingly, reserved 1,224,840 shares of common stock for potential future distribution to certain general unsecured claimants whose claim values are pending resolution in the Bankruptcy Court. As of October 19, 2023, all claims were resolved and the Company released the previously reserved shares of common stock.
20. Leases
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Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Annual Report”), as well as the unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategic tactics, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “aim,” “mission,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. In particular, the factors discussed below and detailed under “Part II, Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q could affect our actual results and cause our actual results to differ materially from expectations, estimates, or assumptions expressed in, forecasted in, or implied in such forward-looking statements.
These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. Without limiting the generality of the foregoing, certain statements incorporated by reference or included in this Quarterly Report on Form 10-Q constitute forward-looking statements.
Forward-looking statements may include statements about:
•crude oil, natural gas liquids (“NGL”) and natural gas realized prices;
•uncertainty regarding the future actions of foreign oil producers and the related impacts such actions have on the balance between the supply of and demand for crude oil, NGLs and natural gas;
•war between Russia and Ukraine and the potential for escalation of hostilities between Israel and Hamas and surrounding countries in the Middle East and their effect on commodity prices;
•general economic conditions;
•inflation rates and the impact of associated monetary policy responses, including increased interest rates;
•logistical challenges and supply chain disruptions;
•our business strategy;
•the geographic concentration of our operations;
•estimated future net reserves and present value thereof;
•timing and amount of future production of crude oil, NGLs and natural gas;
•drilling and completion of wells;
•estimated inventory of wells remaining to be drilled and completed;
•costs of exploiting and developing our properties and conducting other operations;
•availability of drilling, completion and production equipment and materials;
•availability of qualified personnel;
•infrastructure for produced and flowback water gathering and disposal;
•gathering, transportation and marketing of crude oil, NGLs and natural gas in the Williston Basin and other regions in the United States;
•the possible shutdown of the Dakota Access Pipeline;
•property acquisitions and divestitures;
•integration and benefits of property acquisitions or the effects of such acquisitions on our cash position and levels of indebtedness;
•failing to realize the anticipated benefits or synergies from the Merger (as defined below) in the timeframe expected or at all;
26
•the results of integrating the operations of Oasis Petroleum Inc. (“Oasis”) and Whiting Petroleum Corporation (“Whiting”);
•any litigation relating to the Merger;
•the amount, nature and timing of capital expenditures;
•availability and terms of capital;
•our financial strategic tactics, budget, projections, execution of business plan and operating results;
•cash flows and liquidity;
•our ability to return capital to shareholders;
•our ability to utilize net operating loss carryforwards or other tax attributes in future periods;
•our ability to comply with the covenants under our credit agreement and other indebtedness;
•operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control;
•interruptions in service and fluctuations in tariff provisions of third-party connecting pipelines;
•potential effects arising from cyber threats, terrorist attacks and any consequential or other hostilities;
•compliance with, and, changes in environmental, safety and other laws and regulations, including the Inflation Reduction Act of 2022;
•execution of our environmental, social and governance (“ESG”) initiatives;
•effectiveness of risk management activities;
•competition in the oil and gas industry;
•counterparty credit risk;
•incurring environmental liabilities;
•developments in the global economy as well as any public health crisis similar to or caused by a recurrence of the novel coronavirus 2019 pandemic and resulting demand and supply for crude oil, NGLs and natural gas;
•governmental regulation and the taxation of the oil and gas industry;
•developments in crude oil-producing and natural gas-producing countries;
•technology;
•the effects of accounting pronouncements issued periodically during the periods covered by forward-looking statements;
•uncertainty regarding future operating results;
•our ability to successfully forecast future operating results and manage activity levels with ongoing macroeconomic uncertainty;
•the impact of disruptions in the financial markets, including bank failures, a rising interest rate environment and the potential for a government shutdown in the absence of Congressional approval of an appropriations bill following the expiration of the October 2023 stopgap spending bill;
•plans, objectives, expectations and intentions contained in this Quarterly Report on Form 10-Q that are not historical; and
•certain factors discussed elsewhere in this Quarterly Report on Form 10-Q, in our 2022 Annual Report and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”).
27
All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Quarterly Report on Form 10-Q are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. Some of the key factors which could cause actual results to vary from our expectations include changes in crude oil, NGL and natural gas prices, climatic and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as our ability to access them, inflation, the proximity to and capacity of transportation facilities and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting our business, as well as those factors discussed below and elsewhere in this Quarterly Report on Form 10-Q, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
28
Overview
Chord Energy Corporation (together with its consolidated subsidiaries, the “Company,” “Chord,” “we,” “us,” or “our”) is an independent exploration and production (“E&P”) company with quality and sustainable long-lived assets in the Williston Basin. Our mission is to responsibly produce hydrocarbons while exercising capital discipline, operating efficiently, improving continuously and providing a rewarding environment for our employees. We aim to enhance return on capital and generate strong free cash flow, while striving to be responsible stewards of the communities and environment where we operate.
Merger
On July 1, 2022, we completed a merger of equals transaction with Whiting (the “Merger”). Whiting was an independent oil and gas company engaged in the development, production and acquisition of crude oil, NGLs and natural gas primarily in the Rocky Mountains region of the United States. The Merger impacts the comparability of our financial statements. See “Results of Operations—Comparability of Financial Statements” below for additional information.
Market Conditions and Commodity Prices
Our revenue, profitability and ability to return cash to shareholders depend substantially on factors beyond our control, such as economic, political and regulatory developments as well as competition from other sources of energy. Prices for crude oil, NGLs and natural gas have experienced significant fluctuations in recent years and may continue to fluctuate widely in the future due to a combination of macro-economic factors that impact the supply and demand for crude oil, NGLs and natural gas.
While we are unable to predict future commodity prices, we do not believe that an impairment of our oil and gas properties is reasonably likely to occur in the near future at current price levels; however, we would evaluate the recoverability of the carrying value of our oil and gas properties as a result of a future material or extended decline in the price of crude oil, NGLs or natural gas or a material increase in the costs of labor, materials or services.
In an effort to improve price realizations from the sale of our crude oil, NGLs and natural gas, we manage our commodities marketing activities in-house, which enables us to market and sell our crude oil, NGLs and natural gas to a broader array of potential purchasers. We enter into crude oil, NGL and natural gas sales contracts with purchasers who have access to transportation capacity, utilize derivative financial instruments to manage our commodity price risk and enter into physical delivery contracts to manage our price differentials. Due to the availability of other markets and pipeline connections, we do not believe that the loss of any single customer would have a material adverse effect on our results of operations or cash flows. During the third quarter of 2023, our realized crude oil price was a $0.69 premium to New York Mercantile Exchange (“NYMEX”) West Texas Intermediate crude oil price index (“NYMEX WTI”).
Additionally, we sell a significant amount of our crude oil production through gathering systems connected to multiple pipeline and rail facilities. These gathering systems, which originate at the wellhead, reduce the need to transport barrels by truck from the wellhead, helping remove trucks from local highways and reduce greenhouse gas emissions. As of September 30, 2023, substantially all of our gross operated crude oil and natural gas production were connected to gathering systems.
Recent Developments
Williston Basin Acquisition
On May 22, 2023, we announced that one of our wholly-owned subsidiaries had entered into a definitive agreement to acquire approximately 62,000 net acres in the Williston Basin from XTO Energy Inc. and affiliates, subsidiaries of Exxon Mobil Corporation (collectively, “XTO”), for total cash consideration of $375.0 million, subject to customary purchase price adjustments (the “2023 Williston Basin Acquisition”). The effective date of the 2023 Williston Basin Acquisition was April 1, 2023.
On June 30, 2023, we completed the 2023 Williston Basin Acquisition for total cash consideration of $361.6 million, including a deposit of $37.5 million paid to XTO upon execution of the purchase and sale agreement and $324.1 million paid to XTO at closing (including customary purchase price adjustments). We funded the 2023 Williston Basin Acquisition with cash on hand.
Divestitures
During the second and third quarters of 2023, we entered into separate agreements with multiple buyers to sell a majority of our non-core properties located outside of the Williston Basin for total estimated cash proceeds (including purchase price adjustments) of $38.7 million. As of September 30, 2023, we completed certain of these divestitures and received total cash proceeds (including purchase price adjustments) of $33.1 million, subject to customary post-closing adjustments. The remainder of these non-core property divestitures are expected to close in the fourth quarter of 2023 for estimated net cash proceeds (including purchase price adjustments) of $5.6 million.
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On October 13, 2023, we completed the sale of certain of our non-core properties that were classified as assets held for sale as of September 30, 2023, for total net cash proceeds (including purchase price adjustments) of $4.1 million.
In addition, during the nine months ended September 30, 2023, we completed certain non-operated wellbore divestitures in the Williston Basin for total net cash proceeds of $19.8 million.
Results of Operations
Comparability of Financial Statements
The results of operations presented below relate to the period ended September 30, 2023. Certain financial and operational information set forth herein does not include the activity of Whiting for periods prior to the closing of the Merger on July 1, 2022. The results reported for the three and nine months ended September 30, 2023 and the three months ended June 30, 2023 reflect the consolidated results of Chord, while the results reported for the nine months ended September 30, 2022 reflect the consolidated results of legacy Oasis for the period from January 1 to June 30, 2022 and the consolidated results of Chord from July 1 to September 30, 2022, unless otherwise noted.
As of July 1, 2022, we elected to report crude oil, NGLs and natural gas separately on a three-stream basis. For the periods prior to July 1, 2022, we reported crude oil and natural gas, which included NGLs, on a two-stream basis. This change impacts the comparability with prior periods.
In addition, the merger of Oasis Midstream Partners LP (“OMP”) and OMP GP LLC with and into a subsidiary of Crestwood Equity Partners LP (“Crestwood”) on February 1, 2022 (the “OMP Merger”) qualified for reporting as a discontinued operation. Accordingly, the results of operations of OMP have been classified as discontinued operations in the Condensed Consolidated Statement of Operations for the period from January 1, 2022 to the closing of the OMP Merger on February 1, 2022.
Operational and Financial Highlights
•Production volumes averaged 176,003 barrels of oil equivalent per day (“Boepd”) (58% oil), including crude oil volumes of 101,356 barrels of oil per day (“Bopd”) in the third quarter of 2023.
•E&P and other capital expenditures (excluding capitalized interest) were $254.2 million in the third quarter of 2023.
•Lease operating expenses (“LOE”) were $10.94 per barrel of oil equivalent (“Boe”) in the third quarter of 2023.
•Net cash provided by operating activities was $399.5 million and net income was $209.1 million in the third quarter of 2023.
Shareholder Return Highlights
•Paid $1.36 per share base-plus-variable cash dividend on August 29, 2023.
•Repurchased $112.3 million of common stock in the third quarter of 2023 with $114.8 million remaining under our $300 million share repurchase program.
•In October 2023, the Board of Directors authorized a new $750.0 million share repurchase program.
•Declared a base-plus-variable cash dividend of $2.50 per share of common stock. The dividend will be payable on November 28, 2023 to shareholders of record as of November 14, 2023.
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Revenues
Our crude oil, NGL and natural gas revenues are derived from the sale of crude oil, NGL and natural gas production. These revenues do not include the effects of derivative instruments and may vary significantly from period to period as a result of changes in volumes of production sold or changes in commodity prices. Our revenues for the nine months ended September 30, 2023 increased when compared to the nine months ended September 30, 2022 due to the Merger, which significantly expanded our operations in the Williston Basin. Our purchased oil and gas sales are derived from the sale of crude oil and natural gas purchased through our marketing activities primarily to optimize transportation costs, for blending to meet pipeline specifications or to cover production shortfalls. Revenues and expenses from crude oil and natural gas sales and purchases are generally recorded on a gross basis, as we act as a principal in these transactions by assuming control of the purchased crude oil or natural gas before it is transferred to the counterparty. In certain cases, we enter into sales and purchases with the same counterparty in contemplation of one another, and these transactions are recorded on a net basis.
The following table summarizes our revenues, production and average realized prices for the periods presented:
| Three Months Ended September 30, 2023 | Three Months Ended June 30, 2023 | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | ||||||||||||||||||||
| Revenues (in thousands) | |||||||||||||||||||||||
Crude oil revenues | $ | 775,969 | $ | 647,868 | $ | 2,074,746 | $ | 1,629,033 | |||||||||||||||
NGL revenues(1) | 41,039 | 28,535 | 131,818 | 106,151 | |||||||||||||||||||
Natural gas revenues(1) | 23,617 | 19,023 | 95,687 | 353,031 | |||||||||||||||||||
Purchased oil and gas sales | 282,743 | 216,645 | 629,705 | 542,653 | |||||||||||||||||||
| Other services revenues | — | — | — | 324 | |||||||||||||||||||
| Total revenues | $ | 1,123,368 | $ | 912,071 | $ | 2,931,956 | $ | 2,631,192 | |||||||||||||||
| Production data | |||||||||||||||||||||||
| Crude oil (MBbls) | 9,325 | 8,768 | 26,653 | 16,645 | |||||||||||||||||||
NGLs (MBbls)(1) | 3,315 | 3,280 | 9,541 | 3,560 | |||||||||||||||||||
Natural gas (MMcf)(1) | 21,317 | 19,958 | 61,198 | 46,555 | |||||||||||||||||||
| Oil equivalents (MBoe) | 16,192 | 15,375 | 46,394 | 27,964 | |||||||||||||||||||
| Average daily production (Boepd) | 176,003 | 168,952 | 169,940 | 102,432 | |||||||||||||||||||
| Average daily crude oil production (Bopd) | 101,356 | 96,352 | 97,630 | 60,971 | |||||||||||||||||||
| Average sales prices | |||||||||||||||||||||||
| Crude oil (per Bbl) | |||||||||||||||||||||||
| Average sales price | $ | 83.22 | $ | 73.89 | $ | 77.84 | $ | 97.87 | |||||||||||||||
Effect of derivative settlements(2) | (6.77) | (5.86) | (7.59) | (22.76) | |||||||||||||||||||
Average realized price after the effect of derivative settlements(2) | $ | 76.45 | $ | 68.03 | $ | 70.25 | $ | 75.11 | |||||||||||||||
NGLs (per Bbl)(1) | |||||||||||||||||||||||
| Average sales price | $ | 12.38 | $ | 8.70 | $ | 13.82 | $ | 29.82 | |||||||||||||||
Effect of derivative settlements(2) | — | — | 0.29 | (0.11) | |||||||||||||||||||
Average realized price after the effect of derivative settlements(2) | $ | 12.38 | $ | 8.70 | $ | 14.11 | $ | 29.71 | |||||||||||||||
Natural gas (per Mcf)(1) | |||||||||||||||||||||||
| Average sales price | $ | 1.11 | $ | 0.95 | $ | 1.56 | $ | 7.58 | |||||||||||||||
Effect of derivative settlements(2) | — | 0.01 | (0.11) | (1.12) | |||||||||||||||||||
Average realized price after the effect of derivative settlements(2) | $ | 1.11 | $ | 0.96 | $ | 1.45 | $ | 6.46 | |||||||||||||||
____________________
(1)For periods prior to July 1, 2022, we reported crude oil and natural gas on a two-stream basis, and NGLs were combined with the natural gas stream when reporting revenues, production data and average sales prices. As of July 1, 2022, NGLs were reported separately from the natural gas stream on a three-stream basis. This prospective change impacts the comparability of the periods presented.
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(2)The effect of derivative settlements includes the gains or losses on commodity derivatives for contracts ending in the periods presented. Our commodity derivatives do not qualify for or were not designated as hedging instruments for accounting purposes.
Three months ended September 30, 2023 as compared to three months ended June 30, 2023
Crude oil revenues. Our crude oil revenues increased $128.1 million to $776.0 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023. Our crude oil revenues increased $81.8 million due to higher crude oil realized prices and $46.3 million due to higher crude oil production volumes sold quarter over quarter due to more wells turned-in-line (“TIL”). Average crude oil sales prices, without derivative settlements, increased by $9.33 per barrel quarter over quarter to an average of $83.22 per barrel for the three months ended September 30, 2023.
NGL revenues. Our NGL revenues increased $12.5 million to $41.0 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023. Our NGL revenues increased $12.1 million due to higher NGL realized prices and $0.4 million due to higher volumes due to more TILs. Average NGL sales prices, without derivative settlements, increased by $3.68 per barrel quarter over quarter to an average of $12.38 per barrel for the three months ended September 30, 2023 due primarily to higher index prices at the Conway hub in Kansas.
Natural gas revenues. Our natural gas revenues increased $4.6 million to $23.6 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023. Our natural gas revenues increased $3.2 million due to higher realized natural gas prices and $1.4 million due to increased volumes driven by more TILs. Average natural gas sales prices, without derivative settlements, increased by $0.16 per one thousand cubic feet (“Mcf”) quarter over quarter to $1.11 per Mcf for the three months ended September 30, 2023 due primarily to higher index prices.
Purchased oil and gas sales. Purchased oil and gas sales increased $66.1 million to $282.7 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023. This increase was primarily due to an increase in volumes of crude oil purchased and subsequently sold and higher crude oil prices quarter over quarter.
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Nine months ended September 30, 2023 as compared to nine months ended September 30, 2022
Crude oil revenues. Our crude oil revenues increased $445.7 million to $2,074.7 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. This increase was primarily driven by a $683.2 million increase due to our expanded operations after the Merger. Excluding the impacts attributable to the Merger, our crude oil revenues decreased $237.5 million. This decrease is primarily driven by a decrease of $307.4 million due to lower crude oil realized prices, partially offset by an increase of $69.9 million due to higher crude oil production volumes sold period over period. Average crude oil sales prices, without derivative settlements, decreased by $20.03 per barrel period over period to an average of $77.84 per barrel for the nine months ended September 30, 2023.
NGL and natural gas revenues. Our NGL and natural gas revenues decreased $231.7 million to $227.5 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. Excluding the impacts attributable to the Merger, our NGL and natural gas revenues decreased $298.7 million due to a decrease of $318.3 million driven by lower NGL and natural gas realized prices, partially offset by an increase of $19.6 million due to higher NGL and natural gas production volumes sold period over period. This decrease was partially offset by a $67.0 million increase due to our expanded operations after the Merger.
Average natural gas sales prices, without derivative settlements, were $1.56 per Mcf, and average NGL sales prices, without derivative settlements, were $13.82 per barrel for the nine months ended September 30, 2023. Average natural gas sales prices, without derivative settlements, were $7.58 per Mcf for the nine months ended September 30, 2022 and were reported on a two-stream basis that included the impact of NGL sales in the natural gas stream. The conversion to three-stream reporting did not impact our total reported revenues. The decrease in the average NGL and natural gas sales prices, without derivative settlements, period over period was primarily due to lower index prices, coupled with the impact of incurring a fixed-fee for the majority of our NGL and natural gas marketing contracts.
Purchased oil and gas sales. Purchased oil and gas sales increased $87.1 million to $629.7 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. This increase was primarily due to an increase in the volume of crude oil purchased and subsequently sold and higher crude oil prices period over period.
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Expenses and other income (expense)
The following table summarizes our operating expenses and other income (expense) for the periods presented:
| Three Months Ended September 30, 2023 | Three Months Ended June 30, 2023 | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | ||||||||||||||||||||
| (In thousands, except per Boe of production data) | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Lease operating expenses | $ | 177,115 | $ | 158,554 | $ | 489,077 | $ | 287,318 | |||||||||||||||
| Gathering, processing and transportation expenses | 52,294 | 43,397 | 132,706 | 99,759 | |||||||||||||||||||
| Purchased oil and gas expenses | 281,615 | 216,226 | 627,433 | 546,310 | |||||||||||||||||||
| Production taxes | 72,485 | 58,488 | 191,490 | 159,473 | |||||||||||||||||||
| Depreciation, depletion and amortization | 160,293 | 137,046 | 431,131 | 227,856 | |||||||||||||||||||
| General and administrative expenses | 26,117 | 42,174 | 100,775 | 151,415 | |||||||||||||||||||
| Exploration and impairment | 1,611 | 6,782 | 33,257 | 1,698 | |||||||||||||||||||
| Total operating expenses | 771,530 | 662,667 | 2,005,869 | 1,473,829 | |||||||||||||||||||
| Gain on sale of assets, net | 899 | 1,613 | 3,739 | 2,595 | |||||||||||||||||||
| Operating income | 352,737 | 251,017 | 929,826 | 1,159,958 | |||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Net gain (loss) on derivative instruments | (85,205) | 29,518 | 11,247 | (128,766) | |||||||||||||||||||
| Net gain from investment in unconsolidated affiliate | 13,512 | 10,126 | 21,421 | 38,977 | |||||||||||||||||||
| Interest expense, net of capitalized interest | (7,923) | (7,228) | (22,286) | (22,810) | |||||||||||||||||||
| Other income | 1,651 | 2,293 | 9,137 | 2,186 | |||||||||||||||||||
| Total other income (expense), net | (77,965) | 34,709 | 19,519 | (110,413) | |||||||||||||||||||
| Income from continuing operations before income taxes | 274,772 | 285,726 | 949,345 | 1,049,545 | |||||||||||||||||||
| Income tax (expense) benefit | (65,696) | (69,655) | (227,199) | 3,352 | |||||||||||||||||||
| Net income from continuing operations | 209,076 | 216,071 | 722,146 | 1,052,897 | |||||||||||||||||||
Income from discontinued operations attributable to Chord, net of income tax | — | — | — | 425,696 | |||||||||||||||||||
Net income attributable to Chord | $ | 209,076 | $ | 216,071 | $ | 722,146 | $ | 1,478,593 | |||||||||||||||
| Costs and expenses (per Boe of production) | |||||||||||||||||||||||
| Lease operating expenses | $ | 10.94 | $ | 10.31 | $ | 10.54 | $ | 10.27 | |||||||||||||||
| Gathering, processing and transportation expenses | 3.23 | 2.82 | 2.86 | 3.57 | |||||||||||||||||||
| Production taxes | 4.48 | 3.80 | 4.13 | 5.70 | |||||||||||||||||||
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Three months ended September 30, 2023 as compared to three months ended June 30, 2023
Lease operating expenses. LOE increased $18.6 million to $177.1 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023 primarily due to higher fixed and variable costs driven by an increase in well count and production volumes. LOE per Boe increased $0.63 per Boe to $10.94 per Boe for the three months ended September 30, 2023 primarily due to higher costs quarter over quarter.
Gathering, processing and transportation expenses. Gathering, processing and transportation (“GPT”) expenses increased $8.9 million to $52.3 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023. GPT increased primarily due to an $8.6 million higher loss attributable to the change in fair value of certain derivative transportation contracts quarter over quarter. GPT expenses per Boe increased $0.41 per Boe to $3.23 per Boe for the three months ended September 30, 2023 due to the increase described above.
Purchased oil and gas expenses. Purchased oil and gas expenses increased $65.4 million to $281.6 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023. This increase was primarily due to an increase in the volume of crude oil purchased quarter over quarter and higher crude oil prices quarter over quarter.
Production taxes. Production taxes increased $14.0 million to $72.5 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023 primarily due to higher crude oil, NGL and natural gas sales quarter over quarter. The production tax rate as a percentage of crude oil, NGL and natural gas sales was 8.6% for the three months ended September 30, 2023 compared to 8.4% for the three months ended June 30, 2023.
Depreciation, depletion and amortization. DD&A expenses increased $23.2 million to $160.3 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023. This increase was primarily due to an increase in depletion expense of $23.9 million, primarily including an increase of $16.8 million due to a higher depletion rate quarter over quarter and an increase of $7.1 million due to higher production volumes quarter over quarter. The depletion rate increased $1.04 per Boe quarter over quarter to $9.66 per Boe for the three months ended September 30, 2023 primarily as a result of a decrease in reserves due to lower commodity prices, coupled with higher costs attributable to the oil and gas properties acquired in the 2023 Williston Basin Acquisition.
General and administrative expenses. General and administrative (“G&A”) expenses decreased $16.1 million to $26.1 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023. This decrease was primarily due to lower merger-related costs quarter over quarter of $6.9 million driven by a decrease in severance costs and employee relocation costs. Additionally, stock-based compensation costs decreased by $5.2 million quarter over quarter due to the acceleration of the vesting period for certain equity-based compensation awards during the three months ended June 30, 2023.
Exploration and impairment. Exploration and impairment expenses decreased $5.2 million to $1.6 million for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023. There were no impairment charges recorded during the three months ended September 30, 2023. During the three months ended June 30, 2023, we recorded impairment charges of $5.6 million to adjust the carrying value of non-core properties held for sale to their estimated fair value less costs to sell.
Derivative instruments. We recorded an $85.2 million net loss on derivative instruments for the three months ended September 30, 2023, which was comprised of a net loss of $91.5 million associated with our contracts to manage commodity price risk, offset by an unrealized gain of $6.3 million associated with a contract that includes contingent consideration. The net loss of $91.5 million included a realized loss on settled contracts of $63.1 million, coupled with an unrealized loss of $28.4 million. During the three months ended June 30, 2023, we recorded a $29.5 million net gain on derivative instruments, which primarily included an unrealized gain of $80.8 million, partially offset by a loss on settled contracts of $51.2 million.
Investment in unconsolidated affiliate. We recorded a $13.5 million gain related to our investment in Crestwood for the three months ended September 30, 2023, primarily due to an unrealized gain of $9.7 million as a result of an increase in the fair value of the investment during the three months ended September 30, 2023, coupled with a gain of $2.5 million for a cash distribution received from Crestwood during the three months ended September 30, 2023. During the three months ended June 30, 2023, we recorded a $10.1 million gain on our investment in Crestwood primarily due to an unrealized gain of $6.8 million as a result of an increase in the fair value of the investment, coupled with a gain of $3.0 million for a cash distribution received from Crestwood during the three months ended June 30, 2023.
Income tax expense. Our effective tax rate for the three months ended September 30, 2023 was approximately consistent with the effective tax rate for the three months ended June 30, 2023. Our income tax expense was recorded at 23.9% and 24.4% of pre-tax income from continuing operations for the three months ended September 30, 2023 and for the three months ended June 30, 2023, respectively.
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Nine months ended September 30, 2023 as compared to nine months ended September 30, 2022
Lease operating expenses. LOE increased $201.8 million to $489.1 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. This increase was primarily due to a $169.2 million increase from our expanded operations after the Merger. Excluding the effects of the Merger, LOE increased $32.6 million primarily due to higher workover and fixed costs driven by an increase in well count and production volumes. LOE per Boe increased $0.27 per Boe period over period to $10.54 per Boe for the nine months ended September 30, 2023 primarily due to higher costs.
Gathering, processing and transportation expenses. GPT expenses increased $32.9 million to $132.7 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 primarily due to a $12.5 million increase from our expanded operations after the Merger. Excluding the effects of the Merger, GPT expenses increased primarily due to $9.6 million driven by higher production period over period and $8.4 million due to the change in fair value of certain derivative transportation contracts. GPT expenses per Boe decreased $0.71 per Boe period over period to $2.86 per Boe for the nine months ended September 30, 2023 primarily due to higher production volumes due to our expanded operations after the Merger.
Purchased oil and gas expenses. Purchased oil and gas expenses increased $81.1 million to $627.4 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 primarily due to an increase in the volume of crude oil purchased, partially offset by lower crude oil and natural gas prices.
Production taxes. Production taxes increased $32.0 million to $191.5 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 primarily due to $60.8 million from our expanded operations after the Merger. Excluding the effects of the Merger, production taxes decreased $28.8 million primarily due to a decrease in crude oil revenues period over period. The production tax rate as a percentage of crude oil, NGL and natural gas sales increased to 8.3% for the nine months ended September 30, 2023 as compared to 7.6% for the nine months ended September 30, 2022. This rate increase period over period was primarily due to an increase in natural gas production volumes, coupled with lower average natural gas sales prices.
Depreciation, depletion and amortization. DD&A expenses increased $203.3 million to $431.1 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The increase was primarily due to a $143.2 million increase in DD&A expenses attributable to our expanded operations after the Merger. Excluding the effects of the Merger, DD&A expenses increased $60.1 million primarily driven by an increase in depletion expenses, comprised of an increase of $41.5 million due to a higher depletion rate period over period and $19.2 million due to higher production volumes.
General and administrative expenses. G&A expenses decreased $50.6 million to $100.8 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. This decrease is primarily attributable to a decrease in merger-related costs, partially offset by an increase in compensation and other costs associated with a larger organization after the Merger.
Exploration and impairment. Exploration and impairment expenses increased $31.6 million to $33.3 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. This increase was primarily due to impairment expenses of $29.0 million recorded during the nine months ended September 30, 2023, which primarily included $17.5 million associated with the write-down of the right-of-use asset for our Denver office lease, $5.8 million associated with a lower of cost or market write down of oil-in-tank inventory and $5.6 million to adjust the carrying value of certain non-core properties held for sale to their estimated fair value less costs to sell.
Derivative instruments. During the nine months ended September 30, 2023, we recorded an $11.2 million net gain on derivative instruments, which was primarily comprised of a net gain of $7.2 million associated with a contract that includes contingent consideration and a net gain of $4.1 million associated with commodity derivatives contracts. The net gain of $4.1 million included an unrealized gain of $210.3 million on our commodity derivative contracts, offset by a realized commodity derivatives contracts loss of $206.2 million. During the nine months ended September 30, 2022, we recorded a $128.8 million net loss on derivative instruments, which was primarily comprised of a realized commodity derivative contract loss of $431.3 million, partially offset by an unrealized gain of $295.3 million on commodity derivatives contracts and a $7.3 million gain associated with a contract that includes contingent consideration.
Investment in unconsolidated affiliate. We recorded a $21.4 million gain related to our investment in Crestwood for the nine months ended September 30, 2023, which primarily included an unrealized gain of $10.8 million as a result of an increase in the fair value of the investment during the nine months ended September 30, 2023 and a gain of $8.5 million for cash distributions received from Crestwood during the nine months ended September 30, 2023. During the nine months ended September 30, 2022, we recorded a net gain of $39.0 million related to our investment in Crestwood, including a gain of $43.0 million attributable to our sale of 16,000,000 common units during the third quarter of 2022 and a realized gain of $40.6 million due to cash distributions received from Crestwood during the period, offset by an unrealized loss of $44.6 million due to a decrease in the fair value of the investment.
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Income tax (expense) benefit. Our income tax expense was recorded at 23.9% of pre-tax income from continuing operations for the nine months ended September 30, 2023. Our income tax benefit was recorded at (0.3)% of pre-tax loss from continuing operations for the nine months ended September 30, 2022. Our effective tax rate for the nine months ended September 30, 2023 was higher than the effective tax rate for the nine months ended September 30, 2022 primarily due to the impact of releasing substantially all of the remaining valuation allowance on our net deferred tax assets in the third and fourth quarters of 2022, coupled with the impacts of equity-based compensation windfalls.
Income from discontinued operations attributable to Chord, net of income tax. Income from discontinued operations attributable to Chord, net of income tax of $425.7 million for the nine months ended September 30, 2022 represents income from OMP for the period prior to the completion of the OMP Merger. This was primarily comprised of a gain on sale of $518.9 million and midstream revenues of $23.3 million, offset by income tax expense of $101.1 million, midstream expenses of $13.2 million and interest expense of $3.7 million.
Liquidity and Capital Resources
As of September 30, 2023, we had $1.3 billion of liquidity available, including $265.0 million in cash and cash equivalents and $993.6 million of aggregate unused borrowing capacity available under our senior secured revolving credit facility (the “Credit Facility”). Our primary sources of liquidity are from cash on hand, cash flows from operations and available borrowing capacity under our Credit Facility. Our primary liquidity requirements are for capital expenditures for the development of oil and gas properties, dividend payments, share repurchases and working capital requirements. In addition, we completed the 2023 Williston Basin Acquisition on June 30, 2023 for total cash consideration of $361.6 million with cash on hand.
Capital availability will be affected by prevailing conditions in our industry, the global economy, the global banking and financial markets, stakeholder scrutiny of ESG matters and other factors, many of which are beyond our control. In this regard, the effect of the U.S. bank failures in March 2023 resulted in disruptions to the banking and financial markets. In addition, the Federal Reserve’s recent increases in interest rates and the potential for such rates to increase further or to remain elevated for an extended period of time have created additional economic uncertainty. Although we do not currently have a business relationship with these failed banking institutions and are unable to predict future interest rates, these disruptions to the broader economy and financial markets may reduce our ability to access capital or result in such capital being available on less favorable terms, which could in the future negatively affect our liquidity. We believe, however, we have adequate liquidity to fund our capital expenditures and meet our contractual obligations during the next 12 months and the foreseeable future.
In connection with the Merger, we incurred certain costs for advisory, legal, severance and other third-party fees which were recorded to G&A expenses on the Condensed Consolidated Statements of Operations. During the nine months ended September 30, 2023, we incurred Merger-related costs of $9.7 million, primarily related to employee relocation costs and post-employment benefit costs.
Our material cash requirements from known obligations include repayment of outstanding borrowings and interest payment obligations related to our long-term debt, obligations to plug, abandon and remediate our oil and gas properties at the end of their productive lives, payment of income taxes, obligations associated with outstanding commodity derivative contracts that settle in a loss position, obligations to pay dividends on vested equity awards that include dividend equivalent rights and obligations associated with our leases. In addition, we have announced a return of capital plan pursuant to which we intend to return capital to stockholders through a mix of base and variable dividend payouts, supplemented by opportunistic share repurchases.
We also have contracts which include provisions for the delivery, transport or purchase of a minimum volume of crude oil, NGLs, natural gas and water within specified time frames, the majority of which are ten years or less. Under the terms of these contracts, if we fail to deliver, transport or purchase the committed volumes we will be required to pay a deficiency payment for the volumes not tendered over the duration of the contract. We believe that for the substantial majority of these agreements our future production will be adequate to meet our delivery commitments or that we will be able to purchase sufficient volumes of crude oil, NGLs and natural gas to satisfy our minimum volume commitments. See “Item 1. Financial Statements (Unaudited)—Note 19—Commitments and Contingencies” for additional information on our volume delivery commitments.
Revolving credit facility. We have a Credit Facility with a borrowing base of $2.5 billion and elected commitments of $1.0 billion that is due July 1, 2027. As of September 30, 2023, we had no borrowings outstanding and $6.4 million of outstanding letters of credit, resulting in an unused borrowing capacity of $993.6 million. We were in compliance with the financial covenants under the Credit Facility as of September 30, 2023. See “Item 1. Financial Statements (Unaudited)—Note 13—Long-Term Debt” for additional information.
On October 31, 2023, the semi-annual redetermination was completed which reaffirmed the borrowing base of $2.5 billion and maintained the aggregate amount of elected commitments of $1.0 billion. The next scheduled redetermination is expected to occur in or around April 2024.
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Senior unsecured notes. As of September 30, 2023, we have $400.0 million of 6.375% senior unsecured notes outstanding that mature on June 1, 2026 (the “Senior Notes”). Interest on the Senior Notes is payable semi-annually on June 1 and December 1 of each year. See “Item 1. Financial Statements (Unaudited)—Note 13—Long-Term Debt” for additional information.
Cash Flows
The Condensed Consolidated Statements of Cash Flows have not been recast for discontinued operations, therefore the discussion below concerning cash flows from operating activities, investing activities and financing activities includes the results of both continuing operations and discontinued operations.
Our cash flows for the nine months ended September 30, 2023 and 2022 are presented below:
| Nine Months Ended September 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| (In thousands) | |||||||||||
Net cash provided by operating activities | $ | 1,276,517 | $ | 1,445,634 | |||||||
Net cash used in investing activities | (1,112,318) | (325,699) | |||||||||
Net cash used in financing activities | (492,384) | (635,861) | |||||||||
| Increase (decrease) in cash and cash equivalents | $ | (328,185) | $ | 484,074 | |||||||
Cash flows provided by operating activities
Our net cash flows from operating activities are primarily impacted by commodity prices, production volumes, operating costs and G&A expenses. Net cash provided by operating activities was $1,276.5 million for the nine months ended September 30, 2023. The decrease in net cash provided by operating activities of $169.1 million as compared to the nine months ended September 30, 2022 was primarily due to a decrease in our working capital. See “Results of Operations” above for additional information on the impact of volumes and prices on revenues and for additional information on increases and decreases in certain expenses between periods.
Working Capital. Our working capital is primarily impacted due to the factors discussed above, coupled with the timing of cash receipts and disbursements. Changes in working capital (as reflected in the Condensed Consolidated Statements of Cash Flows) decreased net cash flows from operating activities by $84.3 million during the nine months ended September 30, 2023 and increased net cash flows from operating activities by $59.2 million during the nine months ended September 30, 2022. Changes in working capital associated with our capital expenditure activities and settlement of outstanding commodity derivative instruments impact our cash flows from investing activities.
Our Credit Facility includes a requirement that we maintain a Current Ratio (as defined in the Credit Facility) of no less than 1.0 to 1.0 as of the last day of any fiscal quarter. For purposes of the Current Ratio, the Credit Facility’s definition of total current assets includes unused commitments under the Credit Facility, which were $993.6 million as of September 30, 2023, and excludes current hedge assets, which were $26.8 million as of September 30, 2023. For purposes of the Current Ratio, the Credit Facility’s definition of total current liabilities excludes current hedge liabilities, which were $114.6 million as of September 30, 2023.
Cash flows used in investing activities
Net cash used in investing activities was $1,112.3 million for the nine months ended September 30, 2023. The increase in net cash used in investing activities of $786.6 million as compared to the nine months ended September 30, 2022 was primarily due to the 2023 Williston Basin Acquisition that was completed on June 30, 2023 for total cash consideration of $361.6 million and an increase of $339.4 million of capital expenditures incurred to develop our oil and gas properties, primarily related to our expanded operations following the Merger. These increases were partially offset by a decrease of $284.2 million to settle outstanding commodity derivative contracts during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.
Cash flows used in financing activities
For the nine months ended September 30, 2023, net cash used in financing activities of $492.4 million was primarily attributable to dividends paid to shareholders of $394.7 million and payments to repurchase our common stock of $157.1 million, partially offset by proceeds of $74.6 million from the exercise of outstanding warrants. Net cash used in financing activities for the nine months ended September 30, 2022 of $635.9 million was primarily attributable to dividends paid to shareholders of $500.1 million, coupled with payments of $124.8 million to repurchase our common stock.
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Capital Expenditures
Our capital expenditures are summarized in the following table:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| March 31, 2023 | June 30, 2023 | September 30, 2023 | September 30, 2023 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| E&P | $ | 201,772 | $ | 256,631 | $ | 254,039 | $ | 712,442 | |||||||||||||||
Other capital expenditures(1) | 1,937 | 1,705 | 1,001 | 4,643 | |||||||||||||||||||
Total E&P and other capital expenditures(2) | 203,709 | 258,336 | 255,040 | 717,085 | |||||||||||||||||||
| Acquisitions | — | 361,609 | — | 361,609 | |||||||||||||||||||
Total capital expenditures(3) | $ | 203,709 | $ | 619,945 | $ | 255,040 | $ | 1,078,694 | |||||||||||||||
(1)Other capital expenditures includes items such as infrastructure capital, administrative capital and capitalized interest. Capitalized interest totaled $0.9 million and $3.6 million for the three and nine months ended September 30, 2023, respectively.
(2)Total E&P and other capital expenditures for the nine months ended September 30, 2023 includes $10.9 million related to divested non-operated assets that will be reimbursed.
(3)Total capital expenditures reflected in the table above differs from the amounts shown in the statements of cash flows in our unaudited condensed consolidated financial statements because amounts reflected in the table include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statements of cash flows are presented on a cash basis.
Dividends
On November 1, 2023, we declared a base-plus-variable cash dividend of $2.50 per share of common stock. The dividend will be payable on November 28, 2023 to shareholders of record as of November 14, 2023. See “Item 1. Financial Statements (Unaudited)—Note 17—Stockholders’ Equity” for additional information.
See “Part II. Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Return of Capital Plan” in our 2022 Annual Report for additional information regarding our strategy on future dividend payments. Future dividend payments will depend on the Company’s earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that the Board of Directors deems relevant.
Share Repurchase Program
During the nine months ended September 30, 2023, we repurchased 1,023,320 shares of common stock at a weighted average price of $154.52 per common share for a total cost of $158.1 million under our share repurchase program, excluding accrued excise tax of $0.2 million. In October 2023, our Board of Directors authorized a new share repurchase program of $750.0 million, which replaces the existing $300.0 million program. As of September 30, 2023, we had $114.8 million of capacity remaining under the previous $300.0 million program.
We repurchased 1,174,756 shares of common stock during the nine months ended September 30, 2022.
Fair Value of Financial Instruments
See “Item 1. Financial Statements (Unaudited)—Note 6—Fair Value Measurements” for additional information on our derivative instruments and their related fair value measurements. See also “Item 3. Quantitative and Qualitative Disclosures about Market Risk” below.
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and estimates from those disclosed in our 2022 Annual Report.
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Item 3. — Quantitative and Qualitative Disclosures about Market Risk
We are exposed to a variety of market risks, including commodity price risk, interest rate risk, counterparty and customer risk and inflation risk. We address these risks through a program of risk management, including the use of derivative instruments.
The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risk. The term “market risk” refers to the risk of loss arising from adverse changes in crude oil, NGL and natural gas prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of our market risk-sensitive instruments were entered into for hedging purposes, rather than for speculative trading. The following market risk disclosures should be read in conjunction with the quantitative and qualitative disclosures about market risk contained in our 2022 Annual Report, as well as with the unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.
Commodity price exposure risk. We are exposed to market risk as the prices of crude oil, NGLs and natural gas fluctuate as a result of a variety of factors, including changes in supply and demand and the macroeconomic environment, all of which are typically beyond our control. The markets for crude oil, NGLs and natural gas have been volatile, especially over the last several years, and these prices will likely continue to be volatile in the future. To partially reduce price risk caused by these market fluctuations, we have entered into derivative instruments in the past and expect to enter into derivative instruments in the future to cover a portion of our future production. In addition, entering into derivative instruments could limit the benefit we would receive from increases in the prices for crude oil, NGLs and natural gas. We recognize all derivative instruments at fair value. The credit standing of our counterparties is analyzed and factored into the fair value amounts recognized on our unaudited condensed consolidated balance sheets. Derivative assets and liabilities arising from our derivative contracts with the same counterparty are also reported on a net basis, as all counterparty contracts provide for net settlement. See “Item 1. Financial Statements (Unaudited)—Note 6—Fair Value Measurements” and “Note 7—Derivative Instruments” for additional information regarding our derivative instruments.
The fair value of our unrealized crude oil derivative positions at September 30, 2023 was a net liability position of $94.8 million. A 10% increase in crude oil prices would increase the fair value of this unrealized derivative liability position by approximately $56.2 million, while a 10% decrease in crude oil prices would decrease the fair value of this unrealized derivative liability position by approximately $50.4 million. The fair value of our unrealized natural gas derivative positions at September 30, 2023 was immaterial. A 10% increase in natural gas prices would increase the fair value of this unrealized derivative liability position by approximately $0.2 million, while a 10% decrease in natural gas prices would decrease the fair value of this unrealized derivative liability position by approximately $0.2 million. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Conditions and Commodity Prices,” for further discussion on the commodity price environment. See “Item 1. Financial Statements (Unaudited)—Note 7—Derivative Instruments” for additional information regarding our derivative instruments.
In addition, in connection with the 2021 Permian Basin divestiture, we are entitled to receive up to three earn-out payments of $25.0 million per year for each of 2023, 2024 and 2025 if the average daily settlement price of NYMEX WTI crude oil exceeds $60 per barrel for such year. If the NYMEX WTI crude oil price for calendar year 2023 or 2024 is less than $45 per barrel, then each calendar year thereafter our right to receive any remaining earn-out payments is terminated. As of September 30, 2023, the fair value of this contingent consideration was $68.1 million. We expect to receive approximately $25.0 million in the first quarter of 2024 related to the 2023 contingent payment. See “Item 1. Financial Statements (Unaudited)—Note 7—Derivative Instruments” for additional information.
Interest rate risk. At September 30, 2023, we had $400.0 million of senior unsecured notes at a fixed interest rate of 6.375% per annum. At September 30, 2023, we had no borrowings and $6.4 million of outstanding letters of credit issued under our Credit Facility. Borrowings under the revolving Credit Facility are subject to varying rates of interest based on (i) the total outstanding borrowings (including the value of all outstanding letters of credit) in relation to the borrowing base and (ii) whether the loan is a Term SOFR Loan or an ABR Loan (each as defined in the amended and restated credit agreement). See “Item 1. Financial Statements (Unaudited)—Note 13—Long-Term Debt” for additional information on the interest incurred on our Credit Facility.
We do not currently, but may in the future, utilize interest rate derivatives to mitigate interest rate exposure in an attempt to reduce interest rate expense related to debt issued under our Credit Facility. Interest rate derivatives would be used solely to modify interest rate exposure and not to modify the overall leverage of the debt portfolio.
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Counterparty and customer credit risk. Joint interest receivables arise from billing entities which own partial interest in the wells we operate. These entities participate in our wells primarily based on their ownership in leases on which we choose to drill. We have limited ability to control participation in our wells. For the three and nine months ended September 30, 2023, our credit losses on joint interest receivables were immaterial. We are also subject to credit risk due to concentration of our crude oil, NGL and natural gas receivables with several significant customers. The inability or failure of our significant customers to meet their obligations to us, or their insolvency or liquidation, may adversely affect our financial position and related financial results.
We monitor our exposure to counterparties on crude oil, NGL and natural gas sales primarily by reviewing credit ratings, financial statements and payment history. We extend credit terms based on our evaluation of each counterparty’s credit worthiness. We have not generally required our counterparties to provide collateral to secure crude oil, NGL and natural gas sales receivables owed to us. Historically, our credit losses on crude oil, NGL and natural gas sales receivables have been immaterial.
In addition, our commodity derivative contracts expose us to credit risk in the event of nonperformance by counterparties. However, in order to mitigate the risk of nonperformance, we only enter into derivative contracts with counterparties that are high credit-quality financial institutions. All of the counterparties on our derivative instruments currently in place are lenders under our Credit Facility with investment grade ratings. We are likely to enter into any future derivative instruments with these or other lenders under our Credit Facility, which also carry investment grade ratings. This risk is also managed by spreading our derivative exposure across several institutions and limiting the volumes placed under individual contracts. Furthermore, the agreements with each of the counterparties on our derivative instruments contain netting provisions. As a result of these netting provisions, our maximum amount of loss due to credit risk is limited to the net amounts due to and from the counterparties under the derivative contracts.
Inflation risks. Similar to other companies in our industry, we have experienced an increase in the costs of labor, materials and services due to a combination of factors, including: (i) global supply chain disruptions resulting in limited availability of certain materials and equipment (including drill pipe, casing and tubing), (ii) increased demand for fuel and steel, (iii) increased demand for services coupled with a limited availability of service providers and (iv) labor shortages. We seek to mitigate these inflationary impacts by reviewing our pricing agreements on a regular basis and entering into agreements with our service providers to manage costs and availability of certain services that are utilized in our operations. It is difficult to predict whether such inflationary pressures will have a materially negative impact to our overall financial and operating results in the future; however, such inflationary pressures are not expected to materially impact our overall liquidity position, cash requirements or financial position, or the ability to conduct our day-to-day drilling, completion and production activities. See “Part I. Item 1A. Risk Factors—Our profitability may be negatively impacted by inflation in the cost of labor, materials and services and general economic, business or industry conditions” in our 2022 Annual Report for additional information.
Item 4. — Controls and Procedures
Evaluation of disclosure controls and procedures
As required by Rule 13a-15(b) of the Exchange Act, management, under the supervision and with the participation of our Chief Executive Officer (“CEO”), our principal executive officer, and our Chief Financial Officer (“CFO”), our principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2023. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2023.
Changes in internal control over financial reporting
On July 1, 2022, we completed the Merger. As part of the ongoing integration, we are in the process of incorporating the controls and related procedures of Whiting. Other than incorporating Whiting’s controls, there were no changes in internal control over financial reporting that occurred during the third quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. — Legal Proceedings
See “Part I, Item 1. — Financial Statements (Unaudited)—Note 19—Commitments and Contingencies” which is incorporated herein by reference, for a discussion of material legal proceedings.
Item 1A. — Risk Factors
Our business faces many risks. Any of the risks discussed elsewhere in this Form 10-Q and our other SEC filings could have a material impact on our business, financial position, results of operations or cash flows. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations.
For a discussion of our potential risks and uncertainties, see the information in “Part I. Item 1A. Risk Factors” in our 2022 Annual Report. There have been no material changes in our risk factors from those described in our 2022 Annual Report, except as described below.
Adverse developments affecting the financial markets, such as the bank failures, the Federal Reserve’s recent decision to increase interest rates and the potential for further increases or an extended period of elevated interest rates, as well as the potential for a U.S. government shutdown following the expiration of the October 2023 stopgap spending bill, could adversely affect our current and projected business operations, financial condition, results of operations and liquidity.
Events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Similarly, on March 8, 2023, Silvergate Capital Corporation announced its intent to wind down and liquidate Silvergate Bank, and on March 12, 2023, Signature Bank was swept into receivership. Although we do not have any funds deposited with these banks, we regularly maintain domestic cash deposits in FDIC insured banks, which exceed the FDIC insurance limits. The failure of a bank, or events involving limited liquidity, defaults, non-performance or other adverse conditions in the financial markets impacting the financial institutions with which we conduct business, or concerns or rumors about such events, may lead to disruptions in access to our bank deposits, impair the ability of the banks participating in our current or future credit agreements from honoring their commitments to us or otherwise adversely impact our liquidity and financial performance. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a failure or liquidity crisis.
Disruptions to the broader economy and financial markets, including the Federal Reserve’s recent decision to increase interest rates and the potential for further increases or an extended period of elevated interest rates, as well as the potential for a U.S. government shutdown following the expiration of the October 2023 stopgap spending bill, may also reduce our ability to access capital or result in such capital being available on less favorable terms. Higher interest rates or costs and tighter financial and operating covenants, may make it more difficult to acquire financing on acceptable terms or at all. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors, could have material adverse impacts on our liquidity, financial condition, results of operations and cash flows.
Global geopolitical tensions may create heightened volatility in oil, gas and NGL prices and could adversely affect our business, financial condition and results of operations.
On February 24, 2022, Russian military forces commenced a military operation in Ukraine and the sustained conflict and disruption in the region that has occurred since this date is expected to continue. Additionally, on October 7, 2023, Hamas, a U.S. designated terrorist organization, launched a series of coordinated attacks from the Gaza Strip onto Israel. On October 8, 2023, Israel formally declared war on Hamas, and the armed conflict is ongoing as of the date of this filing. Hostilities between Israel and Hamas could escalate and involve surrounding countries in the Middle East. Although the length, impact and outcome of the military conflicts between Ukraine and Russia and between Israel and Hamas are highly unpredictable, these conflicts could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability and other material and adverse effects on macroeconomic conditions. It is not possible at this time to predict or determine the ultimate consequence of these regional conflicts. These conflicts and their broader impacts could have a lasting impact on the short- and long-term operations and financial condition of our business and the global economy.
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Item 2. — Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered sales of equity securities. There are no sales of unregistered equity securities during the period covered by this report.
Issuer purchases of equity securities. The following table contains information about our acquisition of equity securities during the three months ended September 30, 2023:
| Period | Total Number of Shares Exchanged(1)(2) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) | Maximum Number (or Approximate Dollar Value) of Shares that May Be Purchased Under the Plans or Programs(2)(3) | ||||||||||||||||||||||
| July 1 – July 31, 2023 | 67,920 | $ | 153.10 | 66,972 | $ | 216,829,815 | ||||||||||||||||||||
| August 1 – August 31, 2023 | 174,547 | 158.13 | 174,342 | 189,260,490 | ||||||||||||||||||||||
| September 1 – September 30, 2023 | 462,580 | 161.04 | 462,548 | 114,771,393 | ||||||||||||||||||||||
| Total | 705,047 | $ | 159.55 | 703,862 | ||||||||||||||||||||||
___________________
(1)During the third quarter of 2023, the Company withheld 1,185 shares of common stock to satisfy tax withholding obligations upon vesting of equity-based awards.
(2)During the third quarter of 2023, the Company repurchased 703,862 shares of common stock at a weighted average price of $159.57 per common share for a total cost of $112.3 million, excluding accrued excise tax of $0.2 million, under its publicly announced share repurchase program.
(3)Our Board of Directors had previously authorized a share repurchase program of up to $300 million of the Company’s common stock. In October 2023, the Board of Directors authorized a new share repurchase program covering up to $750 million, which replaces the existing $300 million program.
Item 5. — Other Information
Rule 10b5-1 trading arrangements On September 14, 2023 , Michael H. Lou , Executive Vice President and Chief Financial Officer , adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 20,000 shares of our common stock and a gift transfer of up to 5,000 shares of our common stock (the “Lou Trading Arrangement”). The Lou Trading Arrangement will expire on March 1, 2024, or may be terminated at an earlier date if and when all transactions thereunder are completed or otherwise in accordance with the terms of the provisions thereof.
On October 31, 2023, Chord entered into its Fourth Amendment to Amended and Restated Credit Agreement with its bank syndicate, which reaffirmed the borrowing base of $2.5 billion and maintained the aggregate amount of elected commitments of $1.0 billion. See “Item 1. Financial Statements (Unaudited)—Note 13—Long-Term Debt” for additional information.
Item 6. — Exhibits
| Exhibit No. | Description of Exhibit | |||||||
| Fourth Amendment to Amended and Restated Credit Agreement, dated October 31, 2023, by and among Chord Energy Corporation, Oasis Petroleum North America LLC, Wells Fargo Bank, N.A., and the other parties thereto. | ||||||||
| Sarbanes-Oxley Section 302 certification of Principal Executive Officer. | ||||||||
| Sarbanes-Oxley Section 302 certification of Principal Financial Officer. | ||||||||
| Sarbanes-Oxley Section 906 certification of Principal Executive Officer. | ||||||||
| Sarbanes-Oxley Section 906 certification of Principal Financial Officer. | ||||||||
| 101.INS(a) | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH(a) | XBRL Schema Document. | |||||||
| 101.CAL(a) | XBRL Calculation Linkbase Document. | |||||||
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| 101.DEF(a) | XBRL Definition Linkbase Document. | |||||||
| 101.LAB(a) | XBRL Label Linkbase Document. | |||||||
| 101.PRE(a) | XBRL Presentation Linkbase Document. | |||||||
| 104(a) | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
___________________
(a)Filed herewith.
(b)Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CHORD ENERGY CORPORATION | |||||||||||||||||||||||
| Date: | November 2, 2023 | By: | /s/ Daniel E. Brown | ||||||||||||||||||||
| Daniel E. Brown | |||||||||||||||||||||||
| President and Chief Executive Officer (Principal Executive Officer) | |||||||||||||||||||||||
| By: | /s/ Michael H. Lou | ||||||||||||||||||||||
| Michael H. Lou | |||||||||||||||||||||||
| Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||||||||||||||||||||||
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