Chord Energy Corp

As of September 30, 2024, we had $1.1 billion of liquidity available, including $52.1 million in cash and cash equivalents and $999.3 million of aggregate unused borrowing capacity available under our Credit Facility (defined below). Our primary sources of liquidity were from cash on hand, cash flows from operations and available borrowing capacity under our Credit Facility. Our primary liquidity requirements were capital expenditures for the development of oil and gas properties, dividend payments, debt repayments, share repurchases, cash consideration and transaction costs associated with the Arrangement, and working capital requirements.

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. The U.S. Federal Reserve recently decreased interest rates, however the potential for such rates to decrease further or to remain elevated for an extended period of time has created additional economic uncertainty. Although we are unable to predict future interest rates, this disruption 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.

Enerplus Arrangement. In connection with the consummation of the Arrangement on May 31, 2024, we paid $375.8 million, or $1.84 per Enerplus common share, to Enerplus shareholders. In addition, we paid $395.0 million tosettle Enerplus’ revolving bank credit facility balance and $102.4 million to settle all outstanding Enerplus equity-based compensation awards.

Also in connection with the Arrangement, we incurred certain costs for advisory, legal and other third-party fees which were recorded to G&A expenses on the Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2024, we incurred merger-related costs of $17.5 million and $80.3 million, respectively, primarily related to legal and advisory services and severance costs.

Our cash flows depend on many factors, including the price of crude oil, NGLs and natural gas and the success of our development and exploration activities as well as future acquisitions. We actively manage our exposure to commodity price fluctuations by executing derivative transactions to mitigate the impact of changes in crude oil, NGL and natural gas prices on our production, which mitigates our exposure to crude oil, NGL and natural gas price declines; however, these transactions may also limit our cash flow in periods of rising crude oil, NGL and natural gas prices.

Commodity derivative contracts. As of September 30, 2024, our commodity derivative contracts cover 2,668 MBbls of our crude oil production for 2024, 7,111 MBbls of our crude oil production and 5,681,600 MMBtu of our natural gas production for 2025 and 2,540 MBbls of our crude oil production and 2,262,500 MMBtu of our natural gas production for 2026. See “Item 3. Quantitative and Qualitative Disclosures about Market Risk” for additional information.

In October 2024, we entered into new commodity derivative contracts to manage risks related to changes in crude oil prices. The following table summarizes these commodity derivative contracts:

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. 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 from third parties to satisfy our minimum volume commitments. For the three and nine months ended September 30, 2023, we did not incur any deficiency payments related to these contracts. See “Item 1. Financial Statements (Unaudited)—Note 17—Commitments and Contingencies” for additional information on our volume delivery commitments.

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. On a quarterly basis, we pay a commitment fee on the average amount of borrowing base capacity not utilized during the quarter and fees calculated on the average amount of letter of credit balances outstanding during the quarter.

Revolving credit facility. We have a senior secured revolving credit facility (the “Credit Facility”) with a borrowing base of $3.0 billion and elected commitments of $1.5 billion that is due July 1, 2027. As of September 30, 2024, we had $470.0 million borrowings outstanding and $30.7 million of outstanding letters of credit, resulting in an unused borrowing capacity of $999.3 million. Additionally, we are permitted to incur term loans in addition to the revolving loans provided under the Credit Facility. We were in compliance with the financial covenants under the Credit Facility as of September 30, 2024. See “Item 1. Financial Statements (Unaudited)—Note 11—Long-Term Debt” for additional information.

Senior unsecured notes. As of September 30, 2024, we had $400.0 million of 6.375% senior unsecured notes outstanding (the “Senior Notes”) that mature on June 1, 2026. 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 11—Long-Term Debt” for additional information.

Enerplus senior unsecured notes. In connection with the Arrangement on May 31, 2024, we assumed $63.0 million of 3.79% senior unsecured notes from Enerplus (the “Enerplus Senior Notes”). On July 2, 2024, we repaid all of the remaining outstanding Enerplus Senior Notes and $0.8 million of accrued interest on such notes.

Cash Flows

Our cash flows for the nine months ended September 30, 2024 and 2023 are presented below:

Cash flows provided by operating activities

Our net cash flows from operating activities are primarily impacted by commodity prices, production volumes and operating costs. Net cash provided by operating activities was $1,530.8 million for the nine months ended September 30, 2024. The increase in net cash provided by operating activities of $254.3 million as compared to the nine months ended September 30, 2023 was primarily due to an increase in oil revenues, offset by increases in LOE, merger-related costs, GPT costs and production taxes, as well as changes in our working capital. See “Results of Operations” above for additional information.

Working Capital. Our working capital is primarily impacted by the factors discussed above, coupled with the timing of cash receipts and disbursements. During the nine months ended September 30, 2024 and 2023, changes in working capital (as reflected in the Condensed Consolidated Statements of Cash Flows) increased net cash flows from operating activities by $23.3 million and decreased net cash flows from operating activities by $84.3 million, respectively. Changes in working capital associated with our capital expenditure activities and settlement of outstanding commodity derivative instruments impact our cash flows from investing activities.

The 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 $999.3 million asof September 30, 2024, and excludes current hedge assets, which were $55.7 million as of September 30, 2024. For purposes of the Current Ratio, the Credit Facility’s definition of total current liabilities excludes current hedge liabilities, which were immaterial as of September 30, 2024.

Cash flows used in investing activities

For the nine months ended September 30, 2024, net cash used in investing activities of$1,494.1 million was primarily attributable tocapital expenditures incurred to develop our oil and gas propertiesof$877.4 million and net cash paid for the Arrangement of $652.7 million. The net cash used in the Arrangement included $395.0 million paid to settle Enerplus’ revolving bank credit facility balance, $375.8 million paid to Enerplus shareholders and $102.4 million paid to settle Enerplus’ equity awards, partially offset by cash acquired in the Arrangement of $239.9 million. Net cash used in investing activities during the nine months ended September 30, 2024 also included the receipt of the 2023 contingent consideration earn-out payment of $25.0 millionand proceeds from divestituresof $21.8 million. Net cash used in investing activities for the nine months ended September 30, 2023 of $1,112.3 million was primarily attributable to$642.6 million of capital expenditures,$361.6 million paid for the 2023 acquisition of acreage in the Williston Basin and $203.2 million associated with the settlement of derivative contract, partially offset by $46.0 million of proceeds from divestitures and $40.6 million of proceeds from the sale of Energy Transfer units.

Cash flows used in financing activities

For the nine months ended September 30, 2024, net cash used in financing activities of$302.6 million was primarily attributable to dividends paid to shareholders of$437.7 million, payments to repurchase our common stock of $239.8 million, repayments on our Enerplus Senior Notes of $63.0 million and payments for income tax withholdings on vested equity-based compensation awards of $58.0 million. These uses of cash were partially offset by borrowings under the Credit Facility of $2.3 billion, partially offset by repayments of $1.8 billion, resulting in net borrowings under the Credit Facility of $0.5 billion, primarily made in connection with the Arrangement, and proceeds from the exercise of outstanding warrants of $30.5 million. Net cash used in financing activities for the nine months ended September 30, 2023 of$492.4 million was primarily attributable todividends paid to shareholders of $394.7 million, payments torepurchase our common stockof$157.1 million and payments for income tax withholdings on vested equity-based compensation awards of $13.8 million, partially offset by proceeds from the exercise of outstanding warrants of $74.6 million.

Capital Expenditures

Expenditures for the acquisition and development of oil and gas properties are the primary use of our capital resources. Our capital expenditures are summarized in the following table:

(1)Other capital expenditures include items such as infrastructure capital, administrative capital and capitalized interest. Capitalized interest totaled $1.8 million and $3.7 million for the three and nine months ended September 30, 2024, respectively.

(2)Total capital expenditures for the nine months ended September 30, 2024 include approximately $20.0 million related to certain non-operated divested assets that are expected to be reimbursed.

(3)Excludes amounts attributable to the Arrangement, including cash consideration of $375.8 million.

(4)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.

(5)For the three and nine months ended September 30, 2024, capital expenditures related to the Marcellus Shale were $5.2 million and $7.3 million, respectively.

Dividends

On November 6, 2024, we declared a base-plus-variable cash dividend of $1.44 per share of common stock. The dividend will be payable on December 12, 2024 to shareholders of record as of November 27, 2024. See “Item 1. Financial Statements (Unaudited)—Note 15—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 2023 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, 2024, we repurchased 1,509,996 shares of common stock at a weighted average price of $157.47 per common share for a total cost of $237.8 million, excluding accrued excise tax of $1.2 million, under our $750 million share repurchase program. In October 2024, our Board of Directors authorized a new share repurchase program of $750 million, which replaces the existing $750 million share repurchase program. As of September 30, 2024, there was $445.2 million of capacity remaining under the previous $750 million share repurchase program.

During the nine months ended September 30, 2023, we repurchased 1,023,320 shares of common stock under our previous share repurchase program, which was replaced by our current $750 million share repurchase program.