Chord Energy Corp

Results of Operations

Operational and Financial Highlights

•Production volumes averaged 168,424 Boepd (59% oil), including crude oil volumes of 99,036 Bopd in the first quarter of 2024.

•E&P and other capital expenditures (excluding capitalized interest) were $257.7 million in the first quarter of 2024.

•Lease operating expenses (“LOE”) were $10.39 Boe in the first quarter of 2024.

•Net cash provided by operating activities was $406.7 million, and net income was $199.4 million in the first quarter of 2024.

Shareholder Return Highlights

•Paid $3.25 per share base-plus-variable cash dividend on March 19, 2024.

•Repurchased $30.0 million of common stock in the first quarter of 2024 with $653.0 million remaining under our $750 million share repurchase program.

•Declared a base-plus-variable cash dividend of $2.94 per share of common stock. The dividend will be payable on June 5, 2024 to shareholders of record as of May 22, 2024.

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 purchased oil and gas sales are derived from the sale of crude oil, NGLs 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, NGL 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:

(1)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 March 31, 2024 as compared to three months ended December 31, 2023

Crude oil revenues. Our crude oil revenues decreased $82.4 million to $678.9 million for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023. Our crude oil revenues decreased $57.4 million due to lower crude oil production volumes sold quarter over quarter driven by inclement weather conditions in the first quarter of 2024 and $25.0 million due to lower crude oil realized prices. Average crude oil sales prices, without derivative settlements, decreased by $2.56 per barrel quarter over quarter to an average of $75.32 per barrel for the three months ended March 31, 2024 due to a decrease in NYMEX WTI and lower price differentials.

NGL revenues. Our NGL revenues increased $1.4 million to $47.3 million for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023. Our NGL revenues increased $7.0 million due to higher NGL realized prices, partially offset by $5.6 million due to lower volumes sold quarter over quarter driven by inclement weather conditions in the first quarter of 2024. Average NGL sales prices, without derivative settlements, increased by $2.00 per barrel quarter over quarter to an average of $15.09 per barrel for the three months ended March 31, 2024 primarily due to higher index prices at the Conway hub in Kansas.

Natural gas revenues. Our natural gas revenues decreased $1.0 million to $22.1 million for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023. Our natural gas revenues decreased $3.1 million due to decreased volumes sold quarter over quarter, partially offset by $2.2 million due to higher realized natural gas prices. Average natural gas sales prices, without derivative settlements, increased by $0.10 per Mcf quarter over quarter to $1.16 per Mcf for the three months ended March 31, 2024 primarily due to higher index prices.

Purchased oil and gas sales. Purchased oil and gas sales increased $202.6 million to $337.1 million for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023. This increase was primarily due to an increase in volumes of crude oil purchased and subsequently sold.

Three months ended March 31, 2024 as compared to three months ended March 31, 2023

Crude oil revenues. Our crude oil revenues increased $27.9 million to $678.9 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Our crude oil revenues increased $34.1 million due to higher crude oil production volumes sold period over period due to more wells TIL’d during the last twelve months, partially offset by a decrease of $6.2 million due to lower crude oil realized prices. Average crude oil sales prices, without derivative settlements, decreased by $0.72 per barrel period over period to an average of $75.32 per barrel for the three months ended March 31, 2024 driven by lower price differentials.

NGL revenues. Our NGL revenues decreased $15.0 million to $47.3 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This decrease was primarily driven by a $17.8 million decrease due to lower NGL realized prices, partially offset by a $2.8 million increase due to higher production volumes sold period over period. Average NGL sales prices, without derivative settlements, decreased by $6.04 per barrel period over period to an average of $15.09 for the three months ended March 31, 2024 due to the impact of incurring a fixed fee for the majority of our NGL marketing contracts beginning in the second quarter of 2023.

Natural gas revenues. Our natural gas revenues decreased $31.0 million to $22.1 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to lower realized gas prices. Average natural gas sales prices, without derivative settlements, decreased by $1.50 per Mcf period over period to $1.16 per Mcf for the three months ended March 31, 2024 primarily due to the impact of incurring a fixed fee for the majority of our natural gas marketing contracts beginning in the second quarter of 2023, coupled with lower index prices.

Purchased oil and gas sales. Purchased oil and gas sales increased $206.8 million to $337.1 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This increase was primarily due to an increase in the volume of crude oil purchased and subsequently sold.

Expenses and other income (expense)

The following table summarizes our operating expenses and other income (expense) for the periods presented:

Three months ended March 31, 2024 as compared to three months ended December 31, 2023

Lease operating expenses. LOE decreased $10.7 million to $159.2 million for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023 primarily due to lower fixed and variable costs driven by a decrease in production volumes quarter over quarter. LOE per Boe increased $0.34 per Boe to $10.39 per Boe for the three months ended March 31, 2024 primarily due to lower production volumes quarter over quarter.

Gathering, processing and transportation expenses. GPT expenses increased $6.5 million to $54.0 million for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023. GPT increased primarily due to a $7.0 million higher loss attributable to the change in fair value of certain derivative transportation contracts quarter over quarter. GPT expenses per Boe increased $0.71 per Boe to $3.52 per Boe for the three months ended March 31, 2024 due to the increase described above.

Purchased oil and gas expenses. Purchased oil and gas expenses increased $201.9 million to $335.8 million for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023 driven by an increase in the volume of crude oil purchased quarter over quarter.

Depreciation, depletion and amortization. Depreciation, depletion and amortization (“DD&A”) expense remained relatively consistent for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023. Depletion expense decreased $0.7 million, driven by a decrease of $15.3 million due to lower production volumes quarter over quarter, mostly offset by an increase of $14.6 million due to a higher depletion rate quarter over quarter. The depletion rate increased $0.95 per Boe quarter over quarter to $10.62 per Boe for the three months ended March 31, 2024.

General and administrative expenses. General and administrative (“G&A”) expenses increased $0.2 million to $25.7 million for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023. This increase was primarily due to an increase in merger-related costs quarter over quarter of $8.1 million due to the Arrangement, mostly offset by a decrease of $5.3 million due to lower current expected credit losses and a decrease in stock-based compensation costs of $4.1 million due to the vesting of certain equity-based compensation awards during the three months ended December 31, 2023.

Exploration and impairment. Exploration and impairment expenses increased $4.1 million to $6.2 million for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023 primarily as a result of a lower of cost or net realizable value write down of oil-in-tank inventory during the three months ended March 31, 2024. There were no impairment expenses recorded during the three months ended December 31, 2023.

Derivative instruments. We recorded a $27.6 million net loss on derivative instruments for the three months ended March 31, 2024, which was comprised of a net loss of $31.0 million associated with our contracts to manage commodity price risk, partially offset by an unrealized gain of $3.4 million associated with a contract that includes contingent consideration. The net loss of $31.0 million on commodity derivative contracts included an unrealized loss of $29.6 million related to the change in fair value of our commodity derivative contracts and a realized loss of $1.4 million on settled commodity derivative contracts. During the three months ended December 31, 2023, we recorded a $51.9 million net gain on derivative instruments, which primarily included a gain of $52.3 million associated with our contracts to manage commodity price risk. The net gain of $52.3 million on commodity derivative contracts included an unrealized gain of $102.8 million related to the change in fair value of our commodity derivative contracts, partially offset by a realized loss of $50.5 million on settled commodity derivative contracts.

Investment in unconsolidated affiliate. We recorded a $16.3 million gain related to our investment in Energy Transfer LP (“Energy Transfer”) for the three months ended March 31, 2024, primarily due to an unrealized gain of $14.0 million as a result of an increase in the fair value of the investment during the period, coupled with a gain of $2.3 million for a cash distribution received from Energy Transfer. During the three months ended December 31, 2023, we recorded a $0.1 million loss on our investment in Energy Transfer due to an unrealized loss of $2.4 million as a result of a decrease in the fair value of the investment during the period, offset by a gain of $2.3 million for a cash distribution received from Energy Transfer.

Income tax expense. Our effective tax rate for the three months ended March 31, 2024 was relatively consistent with the effective tax rate for the three months ended December 31, 2023. Our income tax expense was recorded at 22.4% and 22.6% of pre-tax income for the three months ended March 31, 2024 and December 31, 2023, respectively.

Three months ended March 31, 2024 as compared to three months ended March 31, 2023

Lease operating expenses. LOE increased $5.8 million to $159.2 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. LOE increased primarily due to $11.7 million of higher fixed and variable costs driven by an increase in well count and production volumes period over period, partially offset by a decrease in workover costs of $5.0 million. LOE per Boe increased $0.04 per Boe period over period to $10.39 per Boe for the three months ended March 31, 2024 primarily due to higher costs described above.

Gathering, processing and transportation expenses. GPT expenses increased $17.0 million to $54.0 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 due to an increase of $14.4 million due to a higher loss attributable to the change in fair value of certain derivative transportation contracts period over period. GPT expenses per Boe increased $1.02 per Boe period over period to $3.52 per Boe for the three months ended March 31, 2024 due to the increase described above.

Purchased oil and gas expenses. Purchased oil and gas expenses increased $206.2 million to $335.8 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to an increase in the volume of crude oil purchased.

Depreciation, depletion and amortization. DD&A expense increased $35.1 million to $168.9 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to an increase of $28.7 million driven by a higher depletion rate period over period and $4.4 million due to higher production volumes. The depletion rate increased $1.87 per Boe period over period to $10.62 per Boe for the three months ended March 31, 2024.

General and administrative expenses. G&A expenses decreased $6.8 million to $25.7 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This decrease was due to a decrease in stock-based compensation costs of $7.1 million due to the vesting for certain equity-based compensation awards during the three months ended December 31, 2023, as well as higher credits of $4.4 million related to billable overhead. These decreases were partially offset by an increase in merger-related costs of $5.3 million related to the Arrangement.

Exploration and impairment. Exploration and impairment expenses decreased $18.7 million to $6.2 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. During the three months ended March 31, 2024, we recorded an impairment charge of $3.9 million associated with a lower of cost or net realizable value write down of oil-in-tank inventory. During the three months ended March 31, 2023, impairment expenses totaled $23.3 million, which was primarily comprised of $17.5 million associated with the write-down of the right-of-use asset for our Denver office lease and $5.8 million associated with a lower of cost or net realizable value write down of oil-in-tank inventory.

Derivative instruments. We recorded a $27.6 million net loss on derivative instruments for the three months ended March 31, 2024, which was comprised of a net loss of $31.0 million associated with our contracts to manage commodity price risk, partially offset by an unrealized gain of $3.4 million associated with a contract that includes contingent consideration. The net loss of $31.0 million on commodity derivative contracts included an unrealized loss of $29.6 million related to the change in fair value of our commodity derivative contracts and a realized loss of $1.4 million on settled commodity derivative contracts. During the three months ended March 31, 2023, we recorded a $66.9 million net gain on derivative instruments, which was primarily due to a net gain of $65.8 million associated with our contracts to manage commodity price risk that was comprised of an unrealized gain of $157.7 million related to the change in fair value of our commodity derivative contracts, partially offset by a realized loss of $91.9 million on settled commodity derivative contracts.

Investment in unconsolidated affiliate. We recorded a $16.3 million gain related to our investment in Energy Transfer for the three months ended March 31, 2024, which primarily included an unrealized gain of $14.0 million as a result of an increase in the fair value of the investment during the period, coupled with a gain of $2.3 million for a cash distribution received from Energy Transfer. During the three months ended March 31, 2023, we recorded a net loss of $2.2 million primarily due to a loss of $5.7 million as a result of a decrease in the fair value of the investment during the period, partially offset by a gain of $3.0 million for a cash distribution received from Energy Transfer.

Income tax expense. Our effective tax rate for the three months ended March 31, 2024 was recorded at 22.4% of pre-tax income as compared to 23.6% of pre-tax income for the three months ended March 31, 2023. The decrease in our effective tax rate period over period was primarily due to the impact of equity-based compensation windfalls.