Chord Energy Corp

Results of Operations

Comparability of Financial Statements

The results of operations presented below relate to the periods ended June 30, 2024 and 2023. The results reported for the three and six months ended June 30, 2024 reflect the consolidated results of Chord, including combined operations with Enerplus beginning on May 31, 2024, while the results reported for the three and six months ended June 30, 2023 reflect the consolidated results of Chord, excluding the impact from the business combination with Enerplus and the 2023 acquisition of acreage in the Williston Basin, unless otherwise noted.

Operational and Financial Highlights

•Production volumes averaged 207,187 Boepd (57% oil), including crude oil volumes of 118,143 Bopd in the second quarter of 2024.

•E&P and other capital expenditures (excluding capitalized interest) were $314.3 million in the second quarter of 2024.

•Lease operating expenses (“LOE”) were $9.37 Boe in the second quarter of 2024.

•Net cash provided by operating activities was $460.9 million and net income was $213.4 million in the second quarter of 2024.

Shareholder Return Highlights

•Paid $2.94 per share base-plus-variable cash dividend on June 5, 2024.

•Repurchased $61.7 million of common stock in the second quarter of 2024 with $591.3 million remaining under our $750 million share repurchase program.

•Declared a base-plus-variable cash dividend of $2.52 per share of common stock. The dividend will be payable on September 5, 2024 to shareholders of record as of August 21, 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 revenues for the three and six months ended June 30, 2024 increased due to the Arrangement, which expanded our operations primarily in the Williston Basin. 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)Natural gas production volumes from the Marcellus Shale were 3,764 MMcf for both the three and six months ended June 30, 2024, and the realized natural gas price related to this production was $1.66 per Mcf (prior to the effect of derivative settlements).

(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 June 30, 2024 as compared to three months ended March 31, 2024

Crude oil revenues. Our crude oil revenues increased $169.3 million to $848.1 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024. Our expanded operations after the Arrangement contributed $127.0 million of additional crude oil revenues quarter over quarter. Excluding the impacts of the Arrangement, our crude oil revenues increased $42.3 million due to an increase of $38.7 million driven by higher crude oil realized prices quarter over quarter, coupled with an increase of $3.6 million due to higher crude oil production volumes sold. Average crude oil sales prices, without derivative settlements, increased by $3.57 per barrel quarter over quarter to an average of $78.89 per barrel for the three months ended June 30, 2024 primarily due to an increase in NYMEX WTI.

NGL revenues. Our NGL revenues decreased $10.5 million to $36.8 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024. Our expanded operations after the Arrangement were not material to NGL revenues quarter over quarter. The decrease was primarily driven by a $16.0 million decrease due to lower NGL realized prices, partially offset by a $5.5 million increase due to higher production volumes sold quarter over quarter. Average NGL sales prices, without derivative settlements, decreased by $5.10 per barrel quarter over quarter to an average of $9.99 per barrel for the three months ended June 30, 2024 primarily due to lower index prices at the Conway hub in Kansas as well as widening differentials.

Natural gas revenues. Our natural gas revenues decreased $4.3 million to $17.8 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024. Our expanded operations after the Arrangement contributed $6.5 million of additional natural gas revenues quarter over quarter. Excluding the impacts of the Arrangement, our natural gas revenues decreased $10.8 million primarily due to lower natural gas realized prices quarter over quarter. Average natural gas sales prices, without derivative settlements, decreased by $0.49 per Mcf quarter over quarter to $0.67 per Mcf for the three months ended June 30, 2024 primarily due to lower index prices.

Purchased oil and gas sales. Purchased oil and gas sales increased $20.9 million to $358.0 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024. This increase was primarily due to an increase in the price of crude oil purchased and subsequently sold quarter over quarter.

Six months ended June 30, 2024 as compared to six months ended June 30, 2023

Crude oil revenues. Our crude oil revenues increased $228.2 million to $1,527.0 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Our expanded operations after the Arrangement contributed $127.0 million of additional crude oil revenues period over period. Excluding the impacts of the Arrangement, our crude oil revenues increased $101.2 million due to higher production volumes sold of $57.5 million coupled with higher crude oil realized prices of $43.7 million. Production volumes period over period increased in part due to the 2023 acquisition of acreage in the Williston Basin. Average crude oil sales prices, without derivative settlements, increased by $2.31 per barrel period over period to an average of $77.26 per barrel for the six months ended June 30, 2024 primarily due to an increase in NYMEX WTI.

NGL revenues. Our NGL revenues decreased $6.8 million to $84.0 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Our expanded operations after the Arrangement were not material to NGL revenues period over period. The decrease was primarily due to lower NGL realized prices of $14.0 million, partially offset by higher production volumes sold of $7.2 million period over period. Average NGL sales prices, without derivative settlements, decreased by $2.25 per barrel period over period to an average of $12.33 per barrel for the six months ended June 30, 2024 primarily due to the impact of incurring a fixed fee for the majority of our NGL marketing contracts beginning in the second quarter of 2023, partially offset by higher index prices.

Natural gas revenues. Our natural gas revenues decreased $32.2 million to $39.9 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Our expanded operations after the Arrangement contributed $6.5 million of additional natural gas revenues period over period. Excluding the impacts of the Arrangement, our natural gas revenues decreased $38.7 million primarily due to lower natural gas realized prices period over period. Average natural gas sales prices, without derivative settlements, decreased by $0.94 per Mcf period over period to $0.87 per Mcf for the six months ended June 30, 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 $348.1 million to $695.1 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. This increase was primarily due to an increase in the volume of crude oil purchased and subsequently sold period over period.

Expenses and other income (expense)

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

Three months ended June 30, 2024 as compared to three months ended March 31, 2024

Lease operating expenses. LOE increased $17.4 million to $176.6 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024. Our expanded operations after the Arrangement contributed $22.9 million of additional LOE quarter over quarter. Excluding the impacts of the Arrangement, LOE decreased $5.5 million primarily due to lower workover costs quarter over quarter. LOE per Boe decreased $1.02 per Boe quarter over quarter to $9.37 per Boe for the three months ended June 30, 2024 primarily due to lower workover costs coupled with higher production volumes quarter over quarter.

Gathering, processing and transportation expenses. GPT expenses increased $9.1 million to $63.1 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024. Our expanded operations after the Arrangement contributed $10.7 million of additional GPT quarter over quarter. Excluding the impacts of the Arrangement, GPT remained relatively consistent quarter over quarter. GPT expenses per Boe decreased $0.17 per Boe to $3.35 per Boe for the three months ended June 30, 2024.

Purchased oil and gas expenses. Purchased oil and gas expenses increased $20.6 million to $356.4 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024 driven by an increase in the price of crude oil purchased and subsequently sold quarter over quarter.

Production taxes. Production taxes increased $15.6 million to $79.5 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024. Our expanded operations after the Arrangement contributed $11.1 million of additional production taxes quarter over quarter. Excluding the impacts of the Arrangement, production taxes increased $4.5 million primarily due to higher crude oil sales quarter over quarter. The production tax rate as a percentage of crude oil, NGL and natural gas sales was 8.8% for the three months ended June 30, 2024 as compared to 8.5% for the three months ended March 31, 2024. This rate increase quarter over quarter was primarily due to a decrease in natural gas and NGL sales revenues as a result of lower realized prices.

Depreciation, depletion and amortization. DD&A expense increased $59.0 million to $227.9 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024. Our expanded operations after the Arrangement contributed $40.4 million of additional DD&A quarter over quarter. Excluding the impacts of the Arrangement, DD&A expense increased $18.6 million primarily due to a higher depletion rate quarter over quarter. The depletion rate increased $1.21 per Boe quarter over quarter to $11.83 per Boe for the three months ended June 30, 2024 primarily due to the addition of oil and gas properties acquired in the Arrangement.

General and administrative expenses. G&A expenses increased $56.4 million to $82.1 million for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024. Our expanded operations after the Arrangement contributed $50.7 million of additional G&A expenses quarter over quarter, including merger-related costs of $46.6 million and other G&A expenses of $4.1 million.

Gain on sale of assets, net. During the three months ended June 30, 2024 and March 31, 2024, we recorded a net gain on sale of assets of $15.5 million and $1.3 million, respectively, primarily related to the divestitures of certain non-operated properties within each quarter.

Derivative instruments. We recorded a $4.6 million net gain on derivative instruments for the three months ended June 30, 2024, which was comprised of a net gain of $4.0 million associated with our contracts to manage commodity price risk and an unrealized gain of $0.6 million associated with a contract that includes contingent consideration. The net gain of $4.0 million on commodity derivative contracts included an unrealized gain of $7.9 million related to the change in fair value of our commodity derivative contracts, partially offset by a realized loss of $3.9 million on settled commodity derivative contracts. During the three months ended March 31, 2024, we recorded a $27.6 million net loss on derivative instruments, 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.

Investment in unconsolidated affiliate. We recorded a $5.9 million gain related to our investment in Energy Transfer LP (“Energy Transfer”) for the three months ended June 30, 2024 due to an unrealized gain of $3.6 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 period. During the three months ended March 31, 2024, we recorded a $16.3 million gain related to our investment in Energy Transfer 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 period.

Income tax expense. Our income tax expense was recorded at 26.8% and 22.4% of pre-tax income for the three months ended June 30, 2024 and March 31, 2024, respectively. Our effective tax rate for the three months ended June 30, 2024 was higher than the effective tax rate for the three months ended March 31, 2024 primarily due to Canadian losses for which no benefit is recognized, coupled with the impacts of equity-based compensation windfalls.

Six months ended June 30, 2024 as compared to six months ended June 30, 2023

Lease operating expenses. LOE increased $23.9 million to $335.9 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Our expanded operations after the Arrangement contributed $22.9 million of additional LOE period over period. Excluding the impacts of the Arrangement, LOE was relatively consistent period over period. LOE per Boe decreased $0.50 per Boe period over period to $9.83 per Boe for the six months ended June 30, 2024 primarily due to higher production volumes.

Gathering, processing and transportation expenses. GPT expenses increased $36.7 million to $117.1 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Our expanded operations after the Arrangement contributed $10.7 million of additional GPT period over period. Excluding the impacts of the Arrangement, GPT increased $26.0 million primarily due to an increased loss attributable to the change in fair value of certain derivative transportation contracts period over period of $24.2 million. GPT expenses per Boe increased $0.77 per Boe period over period to $3.43 per Boe for the six months ended June 30, 2024 due to the increases described above.

Purchased oil and gas expenses. Purchased oil and gas expenses increased $346.3 million to $692.1 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily due to an increase in the volume of crude oil purchased and subsequently sold period over period.

Production taxes. Production taxes increased $24.4 million to $143.4 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Our expanded operations after the Arrangement contributed $11.0 million of additional production taxes period over period. Excluding the impacts of the Arrangement, production taxes increased $13.4 million primarily due to an increase in crude oil revenues period over period. The production tax rate as a percentage of crude oil, NGL and natural gas sales increased to 8.7% for the six months ended June 30, 2024 as compared to 8.1% for the six months ended June 30, 2023. This rate increase period over period was primarily due to a decrease in natural gas revenue as a result of lower realized prices.

Depreciation, depletion and amortization. DD&A expense increased $126.0 million to $396.8 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Our expanded operations after the Arrangement contributed $40.4 million of additional DD&A period over period. Excluding the impacts of the Arrangement, DD&A expense increased $77.6 million primarily due to an increased depletion rate period over period driven by the addition of oil and gas properties acquired in the Arrangement and the 2023 acquisition of acreage in the Williston Basin coupled with a decrease in reserves as a result of lower commodity prices. DD&A expense increased an additional $8.0 million due to higher production volumes. The depletion rate increased $2.61 per Boe period over period to $11.29 per Boe for the six months ended June 30, 2024.

General and administrative expenses. G&A expenses increased $33.1 million to $107.8 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Our expanded operations after the Arrangement contributed $66.9 million of additional G&A expense period over period, including merger-related costs of $62.8 million and other G&A expenses of $4.1 million. Excluding the impacts of the Arrangement, G&A expenses decreased $33.8 million primarily due to a decrease in stock-based compensation costs of $17.0 million due to the vesting of certain equity-based compensation awards in the first half of 2024 as well as higher credits related to billable overhead of $12.7 million.

Exploration and impairment. Exploration and impairment expenses decreased $24.0 million to $7.6 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. During the six months ended June 30, 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, coupled with $3.7 million of exploration expenses. During the six months ended June 30, 2023, exploration and impairment expenses totaled $31.6 million, which was primarily due to impairment expenses of $29.0 million, including $17.5 million associated with the write-down of the right-of-use asset for our Denver office lease acquired in 2022, $5.8 million associated with a lower of cost or net realizable value write down of oil-in-tank inventory and $5.6 million to adjust the carrying value of non-core properties held for sale to their estimated fair value less costs to sell.

Gain on sale of assets, net. During the six months ended June 30, 2024 and 2023, we recorded a net gain on sale of assets of $16.8 million and $2.8 million, respectively, primarily related to the divestitures of certain non-operated properties within each period.

Derivative instruments. We recorded a $23.0 million net loss on derivative instruments for the six months ended June 30, 2024, which was comprised of a net loss of $27.0 million associated with our contracts to manage commodity price risk, partially offset by an unrealized gain of $4.0 million associated with a contract that includes contingent consideration. The net loss of $27.0 million on commodity derivative contracts included an unrealized loss of $21.7 million related to the change in fair value of our commodity derivative contracts and a realized loss of $5.3 million on settled commodity derivative contracts. During the six months ended June 30, 2023, we recorded a $96.5 million net gain on derivative instruments, which was primarily due to a net gain of $95.6 million associated with our contracts to manage commodity price risk. This net gain of $95.6 million on commodity derivative contracts included an unrealized gain of $238.7 million related to the change in fair value of our commodity derivative contracts, partially offset by a realized loss of $143.1 million on settled commodity derivative contracts.

Investment in unconsolidated affiliate. We recorded a $22.2 million gain related to our investment in Energy Transfer for the six months ended June 30, 2024, which included an unrealized gain of $17.6 million as a result of an increase in the fair value of the investment during the period, coupled with a gain of $4.6 million for cash distributions received from Energy Transfer during the period. During the six months ended June 30, 2023, we recorded a gain of $7.9 million related to our investment in Energy Transfer, which included a gain of $6.0 million for cash distributions received from Energy Transfer during the period, coupled with an unrealized gain of $1.1 million as a result of an increase in the fair value of the investment during the period.

Income tax expense. Our effective tax rate for the six months ended June 30, 2024 was recorded at 24.7% of pre-tax income which was materially unchanged compared to 23.9% of pre-tax income for the six months ended June 30, 2023.