Chord Energy Announces Updated Return of Capital Plan, Including Increasing Base Dividend by 114%, Issues an Updated Outlook and Reports Second Quarter 2022 Earnings
HOUSTON, Aug. 3, 2022 /PRNewswire/ -- Chord Energy Corporation (NASDAQ: CHRD) ("Chord", "Chord Energy" or the "Company") today announced its updated return of capital plan, provided an updated outlook for the business and reported financial and operating results for the quarter ending June 30, 2022. The Company completed the merger of equals transaction between Oasis Petroleum Inc. ("Oasis") and Whiting Petroleum Corporation ("Whiting") on July 1, 2022 and began trading under the ticker "CHRD" on July 5, 2022.
"The second quarter was marked by strong operating performance and culminated in the establishment of Chord Energy," said Danny Brown, Chord Energy's President and Chief Executive Officer. "Additionally, we are announcing a new return of capital program which includes an approximate 114% increase to the base dividend and a $300MM share repurchase program. Given our high-quality assets with low breakeven pricing and very strong financial position, Chord Energy is able to return significant amounts of capital to shareholders. The new return of capital program is highly competitive and represents our commitment to operating efficiently, maximizing returns and valuing the return of capital to shareholders."
"Chord Energy is making significant progress on integration and remains excited about its future. I'd like to thank our employees for their hard work and dedication through the closing of the merger and also for driving strong operating and safety performance. With enhanced scale and a low cost of supply, Chord Energy is well positioned to deliver strong value to our shareholders while operating in a sustainable manner and remains a compelling investment opportunity."
Return of Capital Plan
Chord Energy introduced a return of capital plan designed to provide peer-leading, sustainable shareholder returns. The plan calls for returning capital to investors based on free cash flow ("FCF") generated during the quarter and leverage under the following framework (see "Additional Return of Capital Plan Details" below for additional information):
- Below 0.5x leverage: 75%+ of FCF
- Below 1.0x leverage: 50%+ of FCF
- >1.0x leverage: Base dividend
Capital will be returned through base dividends, variable dividends and share repurchases. Chord is increasing its base dividend to $1.25 per share per quarter ($5.00 per share annualized), representing an approximate 114% increase from the prior base dividend of $0.585 per share per quarter. The new base dividend represents an annualized yield of approximately 3.9%. The 2Q22 base dividend will be payable on August 30, 2022 to shareholders of record as of August 16, 2022.
In July 2022, Chord repurchased $125MM of common stock at a weighted average price of $106.25 per share. As of July 31, 2022, the Company had 41,454,152 shares of common stock outstanding. In August, the Board of Directors authorized a new $300MM share repurchase program. Separately, the Company returned $540MM in cash to shareholders in July under the terms of the merger agreement. In November, Chord expects to announce its 3Q22 base dividend and variable dividend. The variable dividend will be calculated using the framework noted above to establish the minimum percentage of FCF to be returned less share repurchases completed during the quarter and the base dividend.
In addition to the share repurchases and dividends, the Company paid a significant portion of the transaction costs related to the merger in July 2022. As of July 31, 2022, Chord had approximately $95.7MM of cash, no outstanding credit facility borrowings, $3.1MM of outstanding letters of credit and $400MM of senior unsecured notes outstanding. The Company has a strong balance sheet and substantial liquidity afforded under its $2.0B credit facility, which has $800MM of elected commitments.
Updated Outlook
The following table presents select operational and financial guidance for 3Q22 and FY22 (pro forma for combined Company results including 1H22).
Metric | 3Q22 | FY22 | ||
Oil Volumes (Mbbl/d) | 94.2 - 97.2 | 95.7 - 97.5 | ||
Total Volumes (Mboe/d)(1) | 162.5 - 167.5 | 166.6 - 169.3 | ||
Oil Premium to WTI ($/Bbl) | $1.00 - $3.00 | $0.00 - $1.20 | ||
Gas and NGL Revenue ($/Boe) | $28.00 - $32.00 | $29.00 - $33.00 | ||
LOE ($/Boe) | $9.35 - $10.15 | $9.00 - $9.80 | ||
Cash GPT ($/Boe) | $2.25 - $3.05 | $2.25 - $3.05 | ||
Cash G&A ($MM)(2) | $22.5 - $25.5 | $89.5 - $93.5 | ||
Production Taxes | 7.7% - 8.1% | 7.4% - 7.8% | ||
E&P & Other CapEx ($MM) | $265 - $295 | $730 - $760 | ||
Cash Interest ($MM) | $9.0 - $10.5 | $36.5 - $39.5 |
___________________ | |
(1) | Legacy Oasis standalone volumes have been adjusted to include current three stream reporting uplift assumption of 18%. Chord will report three stream production beginning in 3Q22. |
(2) | Excludes merger related costs. |
Cash taxes as a percentage of 2H22 Adjusted EBITDA are expected to range between 1% at $80 WTI and 3.6% at $100 WTI, generally trending upward in a linear fashion as oil price increases, and are expected to be paid in 4Q22.
2Q22 Operational and Financial Update
The following table presents select 2Q22 operational and financial data compared to preliminary ranges announced on July 1, 2022.
Metric | OAS Standalone | WLL Standalone | Chord Combined | Preliminary Ranges - | ||||
Oil Volumes (Mbbl/d) | 41.2 | 48.8 | 90.0 | 88.6 - 90.4 | ||||
Total Volumes (Mboe/d)(1) | 75.6 | 83.0 | 158.6 | 156.4 - 158.8 | ||||
Oil Premium to WTI ($/Bbl) | $2.82 | $0.03 | $1.31 | $1.20 - $1.95 | ||||
Gas and NGL Revenue ($/Boe) | $38.20 | $31.83 | $35.02 | $35.50 - $37.00 | ||||
LOE ($/Boe) | $9.84 | $10.26 | $10.06 | $9.85 - $10.10 | ||||
Cash GPT ($/Boe)(2) | $4.74 | $1.05 | $2.81 | $2.30 - $3.30 | ||||
Cash G&A ($MM)(2)(3) | $14.2 | $9.4 | $23.6 | $21.0 - $24.0 | ||||
Production Taxes | 7.4 % | 7.3 % | 7.4 % | 7.1% - 7.4% | ||||
E&P & Other CapEx ($MM)(4) | $46.0 | $126.7 | $172.7 | $165 - $188 | ||||
Cash Interest ($MM)(2) | $7.0 | $2.6 | $9.6 | $8.9 - $10.6 | ||||
Cash taxes paid ($MM) | $— | $1.0 | $1.0 | $0.0 - $2.0 |
___________________ | |
(1) | Legacy Oasis standalone volumes have been adjusted to include current three stream reporting uplift assumption of 18%. Chord will report three stream production beginning in 3Q22. |
(2) | Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under United States generally accepted accounting principles ("GAAP"). |
(3) | 2Q22 reported amounts exclude merger related costs of $5.8MM for legacy Oasis and $3.2MM for legacy Whiting, consistent with the preliminary range. |
(4) | Excludes capitalized interest of $0.9MM. |
The following results for the three months ended June 30, 2022 discussed below represent legacy Oasis and exclude amounts related to legacy Whiting, unless otherwise specified.
Net cash provided by operating activities was $396.4MM and net income from continuing operations was $130.8MM ($6.23/ diluted share). Adjusted EBITDA from continuing operations was $255.9MM, Adjusted Free Cash Flow was $202.9MM and Adjusted Net Income was $153.5MM ($7.30/diluted share). Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Net Income are non-GAAP financial measures. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP.
Legacy Oasis completed and placed on production 7 gross (5.3 net) operated wells in 2Q22. On a combined basis, Chord completed and placed on production 16 gross (12.0 net) operated wells in 2Q22.
Select Operational and Financial Data - Legacy Oasis
The following table presents select operational and financial data of legacy Oasis for the periods presented:
2Q22 | 1Q22 | 2Q21 | |||
Production data: | |||||
Crude oil (Bopd) | 41,174 | 44,975 | 34,668 | ||
Natural gas (Mcfpd) | 137,431 | 147,783 | 117,617 | ||
Total production (Boepd) | 64,079 | 69,606 | 54,271 | ||
Total production(1) (Boepd) | 75,613 | 82,135 | 64,040 | ||
Percent crude oil | 54.5 % | 54.8 % | 54.1 % | ||
Average sales prices: | |||||
Crude oil, without realized derivatives ($ per Bbl) | $ 111.79 | $ 95.34 | $ 65.52 | ||
Differential to NYMEX WTI ($ per Bbl) | 2.82 | 1.22 | 0.61 | ||
Crude oil, with realized derivatives ($ per Bbl) | 78.71 | 75.67 | 47.77 | ||
Crude oil realized derivatives ($MM) | (124.0) | (79.6) | (56.0) | ||
Natural gas, without realized derivatives ($ per Mcf)(2) | 9.57 | 8.09 | 4.53 | ||
Natural gas, with realized derivatives ($ per Mcf)(2) | 8.62 | 7.67 | 4.53 | ||
Natural gas realized derivatives ($MM) | (11.9) | (5.6) | — | ||
Selected financial data ($MM): | |||||
Revenues: | |||||
Crude oil revenues | $ 418.9 | $ 385.9 | $ 206.7 | ||
Natural gas revenues | 119.7 | 107.6 | 48.3 | ||
Purchased oil and gas sales | 250.5 | 159.5 | 108.8 | ||
Other services revenues | 0.3 | — | 0.2 | ||
Total revenues | $ 789.4 | $ 653.0 | $ 364.0 | ||
Net cash provided by operating activities | $ 396.4 | $ 265.6 | $ 160.0 | ||
Non-GAAP financial measures: | |||||
Adjusted EBITDA | $ 255.9 | $ 272.8 | $ 107.7 | ||
Adjusted FCF | 202.9 | 202.6 | 52.9 | ||
Adjusted Net Income | 153.5 | 163.5 | 25.8 | ||
Select operating expenses: | |||||
Lease operating expenses ("LOE") | $ 67.7 | $ 63.1 | $ 50.4 | ||
Gathering, processing and transportation ("GPT") | 31.8 | 32.4 | 32.8 | ||
Purchased oil and gas expenses | 252.1 | 161.6 | 111.0 | ||
Production taxes | 40.1 | 35.9 | 16.2 | ||
Depreciation, depletion and amortization | 42.1 | 44.7 | 29.2 | ||
Total select operating expenses | $ 433.8 | $ 337.7 | $ 239.6 |
___________________ | |
(1) | Oasis standalone total volumes have been adjusted to include current three stream reporting uplift assumption of 18%. Chord will report three stream production beginning in 3Q22. |
(2) | Prices include the value for natural gas and natural gas liquids. |
Capital Expenditures - Legacy Oasis
The following table presents the Company's total capital expenditures ("CapEx") from continuing operations by category for the periods presented:
1Q22 | 2Q22 | FY22 | |||
CapEx ($MM): | |||||
E&P | $ 62.9 | $ 46.0 | $ 108.9 | ||
Other(1) | 0.6 | 0.9 | 1.5 | ||
Total E&P and other CapEx | 63.5 | 46.9 | 110.4 | ||
Acquisitions(2) | — | (4.8) | (4.8) | ||
Total CapEx | $ 63.5 | $ 42.1 | $ 105.6 |
___________________ | |
(1) | Includes capitalized interest of $0.9MM for 2Q22 and $1.5MM for FY22. |
(2) | Executed the final settlement statement with Diamondback Energy, Inc. on June 30, 2022 related to the acquisition of producing oil and gas properties in the Williston Basin in 4Q21. In connection with the execution of the final settlement statement, the Company received $12.0MM related to customary post-close adjustments, including a reduction to the purchase price of $4.8MM. |
Additional Return of Capital Plan Details
FCF Definition
FCF is defined as Adjusted EBITDA (excluding transaction costs) less CapEx, cash interest and cash taxes. FCF is expected to be calculated for the prior quarter to determine the amount of capital to be returned.
Leverage
Leverage is defined as Net Debt (debt less cash) to forecasted next twelve months Adjusted EBITDA run at $65/bbl WTI and $3.00/mmBtu Henry Hub, excluding the impact of hedges.
Share Repurchases
The Company intends to purchase stock under the repurchase program opportunistically with cash on hand, free cash flow from operations and proceeds from potential liquidity events such as the sale of assets. This repurchase program has no time limit and may be suspended from time to time, modified, extended or discontinued by the Board of Directors at any time. Purchases under the repurchase program may be made from time to time in the open market or privately negotiated transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and would be subject to market conditions, applicable legal requirements and other factors. Any stock purchased as part of this program would be put into treasury shares.
Conference Call Information | |
Investors, analysts and other interested parties are invited to listen to the webcast: | |
Date: | Thursday, August 4, 2022 |
Time: | 9:00 a.m. Central Time |
Live Webcast: | |
Sell-side analysts wishing to ask a question may use the following dial-in: | |
Dial-in: | (888) 317-6003 |
Intl. Dial-in: | (412) 317-6061 |
Conference ID: | 1631240 |
Website: | https://www.chordenergy.com |
A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the call and will be | |
Replay dial-in: | (877) 344-7529 |
Intl. replay: | (412) 317-0088 |
Replay access: | 5012487 |
The call will also be available for replay for approximately 30 days at https://www.chordenergy.com. | |
Forward-Looking Statements
Certain statements in this press release concerning the merger between Oasis and Whiting, including any statements regarding Chord's credit facility, the results, effects, benefits and synergies of the merger, future opportunities for Chord, future financial performance and condition, guidance and any other statements regarding Chord's future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts are "forward-looking" statements based on assumptions currently believed to be valid. This press release 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. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Chord expects, believes or anticipates will or may occur in the future are forward-looking statements. The words "anticipate," "ensure," "expect," "if," "intend," "estimate," "probable," "project," "forecasts," "predict," "outlook," "aim," "will," "could," "should," "would," "potential," "may," "might," "anticipate," "likely," "plan," "positioned," "strategy" and similar expressions or other words of similar meaning, and the negatives thereof, are intended to identify forward-looking statements. Specific forward-looking statements include statements regarding Chord's plans and expectations with respect to the return of capital plan, the merger and the anticipated impact of the merger on Chord's results of operations, financial position, growth opportunities and competitive position.
These statements are based on certain assumptions made by Chord based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Chord, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the merger; the ultimate timing, outcome and results of integrating the operations of Chord, the effects of the business combination on Chord, including Chord's future financial condition, results of operations, strategy and plans, the ability of Chord to realize anticipated synergies in the timeframe expected or at all, changes in crude oil and natural gas prices, developments in the global economy, the impact of pandemics such as COVID-19, weather 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 Chord's ability to access them, the proximity to and capacity of transportation facilities, uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting Chord's business, the fact that operating costs and business disruption may be greater than expected following the consummation of the merger and other important factors that could cause actual results to differ materially from those projected as described in Chord's reports filed with the U.S. Securities and Exchange Commission (the "SEC").
Any forward-looking statement speaks only as of the date on which such statement is made and Chord undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. Additional information concerning other risk factors is also contained in the final prospectus and definitive proxy statement filed by the Company on May 24, 2022, Oasis' (now Chord's) and Whiting's most recently filed Annual Reports on Form 10-K (as may be amended), subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other SEC filings.
About Chord Energy
Chord Energy Corporation is an independent exploration and production company with quality and sustainable long-lived assets in the Williston Basin. Chord is uniquely positioned with a best-in-class balance sheet and is focused on rigorous capital discipline and generating free cash flow by operating efficiently, safely and responsibly to develop its unconventional onshore oil-rich resources in the continental United States. For more information, please visit the Company's website at https://www.chordenergy.com.
Condensed Consolidated Balance Sheets (Unaudited) - Legacy Oasis | |||
June 30, 2022 | December 31, 2021 | ||
(In thousands, except share data) | |||
ASSETS | |||
Current assets | |||
Cash and cash equivalents | $ 571,114 | $ 172,114 | |
Accounts receivable, net | 494,949 | 377,202 | |
Inventory | 43,010 | 28,956 | |
Prepaid expenses | 5,160 | 6,016 | |
Other current assets | 884 | 1,836 | |
Current assets held for sale | — | 1,029,318 | |
Total current assets | 1,115,117 | 1,615,442 | |
Property, plant and equipment | |||
Oil and gas properties (successful efforts method) | 1,502,168 | 1,395,837 | |
Other property and equipment | 42,287 | 48,981 | |
Less: accumulated depreciation, depletion and amortization | (207,387) | (124,386) | |
Total property, plant and equipment, net | 1,337,068 | 1,320,432 | |
Derivative instruments | 59,080 | 44,865 | |
Investment in unconsolidated affiliate | 505,335 | — | |
Long-term inventory | 19,188 | 17,510 | |
Operating right-of-use assets | 11,154 | 15,782 | |
Other assets | 15,468 | 12,756 | |
Total assets | $ 3,062,410 | $ 3,026,787 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities | |||
Accounts payable | $ 3,270 | $ 2,136 | |
Revenues and production taxes payable | 341,402 | 270,306 | |
Accrued liabilities | 534,239 | 150,674 | |
Accrued interest payable | 2,715 | 2,150 | |
Derivative instruments | 338,148 | 89,447 | |
Advances from joint interest partners | 2,944 | 1,892 | |
Current operating lease liabilities | 7,419 | 7,893 | |
Other current liabilities | 19,581 | 1,046 | |
Current liabilities held for sale | — | 699,653 | |
Total current liabilities | 1,249,718 | 1,225,197 | |
Long-term debt | 393,354 | 392,524 | |
Deferred income taxes | — | 7 | |
Asset retirement obligations | 60,055 | 57,604 | |
Derivative instruments | 145,302 | 115,282 | |
Operating lease liabilities | 2,879 | 6,724 | |
Other liabilities | 13,006 | 7,876 | |
Total liabilities | 1,864,314 | 1,805,214 | |
Commitments and contingencies | |||
Stockholders' equity | |||
Common stock, $0.01 par value: 60,000,000 shares authorized; 20,533,880 shares | 206 | 200 | |
Treasury stock, at cost: 871,018 shares at June 30, 2022 and at December 31, 2021 | (100,000) | (100,000) | |
Additional paid-in capital | 883,801 | 863,010 | |
Retained earnings | 414,089 | 269,690 | |
Chord share of stockholders' equity | 1,198,096 | 1,032,900 | |
Non-controlling interests | — | 188,673 | |
Total stockholders' equity | 1,198,096 | 1,221,573 | |
Total liabilities and stockholders' equity | $ 3,062,410 | $ 3,026,787 | |
Condensed Consolidated Statements of Operations (Unaudited) - Legacy Oasis (In thousands, except share data) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenues | |||||||
Oil and gas revenues | $ 538,567 | $ 254,995 | $ 1,032,069 | $ 499,985 | |||
Purchased oil and gas sales | 250,489 | 108,822 | 409,956 | 188,967 | |||
Other services revenues | 324 | 195 | 324 | 421 | |||
Total revenues | 789,380 | 364,012 | 1,442,349 | 689,373 | |||
Operating expenses | |||||||
Lease operating expenses | 67,722 | 50,420 | 130,798 | 101,484 | |||
Other services expenses | 12 | 21 | 123 | 21 | |||
Gathering, processing and transportation expenses | 31,813 | 32,787 | 64,210 | 60,892 | |||
Purchased oil and gas expenses | 252,058 | 111,023 | 413,684 | 189,961 | |||
Production taxes | 40,081 | 16,208 | 75,938 | 32,488 | |||
Depreciation, depletion and amortization | 42,136 | 29,231 | 86,809 | 60,001 | |||
Exploration expenses | 278 | 1,250 | 788 | 1,673 | |||
Impairment | — | — | — | 3 | |||
General and administrative expenses | 24,822 | 20,999 | 49,189 | 41,412 | |||
Total operating expenses | 458,922 | 261,939 | 821,539 | 487,935 | |||
Gain on sale of assets | 319 | 222,980 | 1,840 | 223,068 | |||
Operating income | 330,777 | 325,053 | 622,650 | 424,506 | |||
Other income (expense) | |||||||
Net loss on derivative instruments | (98,253) | (267,037) | (466,175) | (448,552) | |||
Net loss from investment in unconsolidated affiliate | (96,253) | — | (36,116) | — | |||
Interest expense, net of capitalized interest | (6,949) | (11,423) | (14,165) | (16,288) | |||
Other income (expense) | 1,298 | (1,141) | 3,050 | (656) | |||
Total other expense, net | (200,157) | (279,601) | (513,406) | (465,496) | |||
Income (loss) from continuing operations before income | 130,620 | 45,452 | 109,244 | (40,990) | |||
Income tax benefit (expense) | 219 | (3,654) | 2,044 | — | |||
Net income (loss) from continuing operations | 130,839 | 41,798 | 111,288 | (40,990) | |||
Income from discontinued operations attributable to Chord, | — | 31,566 | 485,554 | 70,762 | |||
Net income attributable to Chord | $ 130,839 | $ 73,364 | $ 596,842 | $ 29,772 | |||
Earnings (loss) attributable to Chord per share: | |||||||
Basic from continuing operations | $ 6.69 | $ 2.10 | $ 5.73 | $ (2.05) | |||
Basic from discontinued operations | — | 1.59 | 24.99 | 3.55 | |||
Basic total | $ 6.69 | $ 3.69 | $ 30.72 | $ 1.49 | |||
Diluted from continuing operations | $ 6.23 | $ 2.01 | $ 5.30 | $ (2.05) | |||
Diluted from discontinued operations | — | 1.52 | 23.14 | 3.55 | |||
Diluted total | $ 6.23 | $ 3.52 | $ 28.44 | $ 1.49 | |||
Weighted average shares outstanding: | |||||||
Basic | 19,553 | 19,904 | 19,430 | 19,952 | |||
Diluted | 20,990 | 20,822 | 20,983 | 19,952 | |||
Condensed Consolidated Statements of Cash Flows (Unaudited) - Legacy Oasis (In thousands) | |||
Six Months Ended June 30, | |||
2022 | 2021 | ||
Cash flows from operating activities: | |||
Net income including non-controlling interests | $ 599,153 | $ 46,044 | |
Adjustments to reconcile net income including non-controlling interests to net cash | |||
Depreciation, depletion and amortization | 86,809 | 78,958 | |
Gain on sale of assets | (520,740) | (223,068) | |
Impairment | — | 5 | |
Deferred income taxes | (7) | — | |
Net loss on derivative instruments | 466,175 | 448,552 | |
Net loss from investment in unconsolidated affiliate | 36,116 | — | |
Equity-based compensation expenses | 9,663 | 6,900 | |
Deferred financing costs amortization and other | 3,294 | 16,289 | |
Working capital and other changes: | |||
Change in accounts receivable, net | (112,688) | (96,704) | |
Change in inventory | (14,040) | (2,880) | |
Change in prepaid expenses | 1,035 | 3,773 | |
Change in accounts payable, interest payable and accrued liabilities | 96,141 | 80,969 | |
Change in other assets and liabilities, net | 11,080 | (8,475) | |
Net cash provided by operating activities | 661,991 | 350,363 | |
Cash flows from investing activities: | |||
Capital expenditures | (114,325) | (85,217) | |
Acquisition deposit | — | (74,500) | |
Proceeds from divestitures, net of OMP cash | 148,818 | 369,819 | |
Costs related to divestitures | (11,368) | (2,358) | |
Derivative settlements | (201,668) | (78,575) | |
Derivative modifications | — | (82,419) | |
Distributions from investment in unconsolidated affiliate | 26,862 | — | |
Net cash provided by (used in) investing activities | (151,681) | 46,750 | |
Cash flows from financing activities: | |||
Proceeds from revolving credit facilities | 15,000 | 369,500 | |
Principal payments on revolving credit facilities | — | (866,500) | |
Proceeds from issuance of senior unsecured notes | — | 850,000 | |
Deferred financing costs | (9) | (20,332) | |
Proceeds from issuance of OMP common units, net of offering costs | — | 86,657 | |
Common control transaction costs | — | (5,432) | |
Purchases of treasury stock | — | (14,560) | |
Tax withholding on vesting of equity-based awards | (4,789) | — | |
Dividends paid | (139,860) | (15,039) | |
Distributions to non-controlling interests | — | (12,165) | |
Payments on finance lease liabilities | (229) | (726) | |
Proceeds from warrants exercised | 15,908 | 173 | |
Net cash provided by (used in) financing activities | (113,979) | 371,576 | |
Increase in cash and cash equivalents | 396,331 | 768,689 | |
Cash and cash equivalents: | |||
Beginning of period | 174,783 | 20,226 | |
End of period | $ 571,114 | $ 788,915 | |
Supplemental non-cash transactions: | |||
Change in accrued capital expenditures | $ (806) | $ 11,515 | |
Change in asset retirement obligations | (428) | (1,370) | |
Investment in unconsolidated affiliate | 568,312 | — | |
Note receivable from divestiture | — | 2,900 | |
Contingent consideration from Permian Basin Sale | — | 32,860 | |
Dividends payable | 317,530 | 83,543 | |
Non-GAAP Financial Measures
The following are non-GAAP financial measures not prepared in accordance with GAAP that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company believes that the foregoing are useful supplemental measures that provide an indication of the results generated by the Company's principal business activities. However, these measures are not recognized by GAAP and do not have a standardized meaning prescribed by GAAP. Therefore, these measures may not be comparable to similar measures provided by other issuers. From time to time, the Company provides forward-looking forecasts of these measures; however, the Company is unable to provide a quantitative reconciliation of the forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures because management cannot reliably quantify certain of the necessary components of such forward-looking GAAP measures. The reconciling items in future periods could be significant. To see how the Company reconciles its historical presentations of these non-GAAP measures to the most directly comparable GAAP measures, please visit the Investors—Documents & Disclosures—Non-GAAP Reconciliation page on the Company's website at https://ir.chordenergy.com/non-gaap.
Cash GPT
The Company defines Cash GPT as total GPT expenses less non-cash valuation charges on pipeline imbalances. Cash GPT is not a measure of GPT expenses as determined by GAAP. Management believes that the presentation of Cash GPT provides useful additional information to investors and analysts to assess the cash costs incurred to market and transport the Company's commodities from the wellhead to delivery points for sale without regard to the change in value of its pipeline imbalances, which vary monthly based on commodity prices.
The following table presents a reconciliation of the GAAP financial measure of GPT expenses to the non-GAAP financial measure of Cash GPT for legacy Oasis for the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
GPT | $ 31,813 | $ 32,787 | $ 64,210 | $ 60,892 | |||
Pipeline imbalances | 827 | (738) | 1,143 | 1,109 | |||
Cash GPT | $ 32,640 | $ 32,049 | $ 65,353 | $ 62,001 | |||
The following table presents a reconciliation of the GAAP financial measure of GPT expenses to the non-GAAP financial measure of Cash GPT for legacy Whiting for the period presented:
Three Months Ended June 30, | |
2022 | |
(In thousands) | |
GPT | $ 7,921 |
Pipeline imbalances | — |
Cash GPT | $ 7,921 |
Cash G&A
The Company defines Cash G&A as total general and administrative ("G&A") expenses less G&A expenses attributable to discontinued operations, non-cash equity-based compensation expenses, G&A expenses attributable to shared service allocations and other non-cash charges. Cash G&A is not a measure of G&A expenses as determined by GAAP. Management believes that the presentation of Cash G&A provides useful additional information to investors and analysts to assess the Company's operating costs in comparison to peers without regard to the aforementioned charges, which can vary substantially from company to company.
The following table presents a reconciliation of the GAAP financial measure of G&A expenses to the non-GAAP financial measure of Cash G&A for legacy Oasis for the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
General and administrative expenses | $ 24,822 | $ 20,210 | $ 52,503 | $ 40,947 | |||
Less: general and administrative expenses attributable to | — | (789) | 3,314 | (465) | |||
General and administrative expenses attributable to | 24,822 | 20,999 | 49,189 | 41,412 | |||
Equity-based compensation expenses | (4,815) | (4,687) | (9,616) | (6,375) | |||
G&A expenses attributable to shared services | — | (5,291) | (1,624) | (10,030) | |||
Other non-cash adjustments | (35) | (319) | (2,253) | 350 | |||
Cash G&A(1) | $ 19,972 | $ 10,702 | $ 35,696 | $ 25,357 | |||
__________________ | |
(1) | Includes merger related costs of $5.8 million and $9.4 million for the three and six months ended June 30, 2022, respectively. |
The following table presents a reconciliation of the GAAP financial measure of G&A expenses to the non-GAAP financial measure of Cash G&A for legacy Whiting for the period presented:
Three Months Ended June 30, | |
2022 | |
(In thousands) | |
General and administrative expenses | $ 17,716 |
Equity-based compensation expenses | (4,165) |
Other non-cash adjustments | (990) |
Cash G&A(1) | $ 12,561 |
__________________ | |
(1) | Includes merger related costs of $3.2 million. |
Cash Interest
The Company defines Cash Interest as interest expense less interest expense attributable to discontinued operations plus capitalized interest less amortization and write-offs of deferred financing costs. Cash Interest is not a measure of interest expense as determined by GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on the Company's debt to finance its operating activities and the Company's ability to maintain compliance with its debt covenants.
The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for legacy Oasis for the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
Interest expense | $ 6,949 | $ 22,571 | $ 17,850 | $ 31,268 | |||
Less: Interest expense from discontinued operations | — | 11,148 | 3,685 | 14,980 | |||
Interest expense from continuing operations | 6,949 | 11,423 | 14,165 | 16,288 | |||
Capitalized interest | 879 | 543 | 1,480 | 961 | |||
Amortization of deferred financing costs | (864) | (9,601) | (1,719) | (11,967) | |||
Cash Interest | $ 6,964 | $ 2,365 | $ 13,926 | $ 5,282 | |||
The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for legacy Whiting for the period presented:
Three Months Ended June 30, | |
2022 | |
(In thousands) | |
Interest expense | $ 3,524 |
Amortization of deferred financing costs | (895) |
Cash Interest | $ 2,629 |
Net Debt
The Company defines Net Debt as total debt less cash and cash equivalents. Total debt is defined as long-term debt plus unamortized deferred financing costs included in long-term debt and the current portion of long-term debt. Net Debt is not a measure of total debt as determined by GAAP. Management believes that the presentation of Net Debt provides useful additional information to investors and analysts for assessing the Company's financial position and ability to maintain compliance with its debt covenants.
The following table presents reconciliations of the GAAP financial measure of total debt to the non-GAAP financial measure of Net Debt for legacy Oasis for the periods presented:
June 30, 2022 | December 31, 2021 | |||
(In thousands) | ||||
Long-term debt, net | $ 393,354 | $ 392,524 | ||
Unamortized deferred financing costs | 6,646 | 7,476 | ||
Total debt | 400,000 | 400,000 | ||
Cash and cash equivalents | (571,114) | (172,114) | ||
Net Debt | $ — | $ 227,886 | ||
Adjusted EBITDA and Adjusted Free Cash Flow
The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, depletion and amortization ("DD&A"), exploration expenses and other similar non-cash or non-recurring charges. The Company defines Adjusted EBITDA from continuing operations as Adjusted EBITDA less Adjusted EBITDA from discontinued operations, plus cash distributions from Oasis Midstream Partners LP ("OMP"). The Company defines Adjusted Free Cash Flow as Adjusted EBITDA from continuing operations less Cash Interest and E&P and other capital expenditures (excluding capitalized interest and acquisition capital).
Adjusted EBITDA and Adjusted Free Cash Flow are not measures of net income or cash flows from operating activities as determined by GAAP. Management believes that the presentation of Adjusted EBITDA and Adjusted Free Cash Flow provides useful additional information to investors and analysts for assessing the Company's results of operations, financial performance, ability to generate cash from its business operations without regard to its financing methods or capital structure and the Company's ability to maintain compliance with its debt covenants.
The following tables present reconciliations of the GAAP financial measures of net income including non-controlling interests and net cash provided by operating activities to the non-GAAP financial measures of Adjusted EBITDA and Adjusted Free Cash Flow for legacy Oasis for the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
Net income including non-controlling interests | $ 130,839 | $ 81,309 | $ 599,153 | $ 46,044 | |||
Gain on sale of properties | (319) | (222,980) | (520,740) | (223,068) | |||
Net loss on derivative instruments | 98,253 | 267,037 | 466,175 | 448,552 | |||
Realized derivative instruments | (135,840) | (55,979) | (221,104) | (78,575) | |||
Net loss from investment in unconsolidated affiliate | 96,253 | — | 36,116 | — | |||
Distributions from investment in unconsolidated affiliate | 13,746 | — | 26,862 | — | |||
Interest expense, net of capitalized interest | 6,949 | 22,571 | 17,850 | 31,268 | |||
Depreciation, depletion and amortization | 42,136 | 38,968 | 86,809 | 78,958 | |||
Impairment | — | 2 | — | 5 | |||
Exploration expenses | 278 | 1,250 | 788 | 1,673 | |||
Equity-based compensation expenses | 4,815 | 4,702 | 9,663 | 6,900 | |||
Income tax (benefit) expense | (219) | 3,654 | 39,178 | — | |||
Other non-cash adjustments | (988) | 1,720 | 272 | (303) | |||
Adjusted EBITDA | 255,903 | 142,254 | 541,022 | 311,454 | |||
Adjusted EBITDA from discontinued operations | — | (55,120) | (12,296) | (111,468) | |||
Cash distributions from OMP and DevCo Interests | — | 20,608 | — | 33,874 | |||
Adjusted EBITDA from continuing operations | 255,903 | 107,742 | 528,726 | 233,860 | |||
Cash Interest | (6,964) | (2,365) | (13,926) | (5,282) | |||
E&P and other capital expenditures | (46,893) | (53,015) | (110,408) | (82,024) | |||
Capitalized interest | 879 | 543 | 1,480 | 961 | |||
Adjusted Free Cash Flow | $ 202,925 | $ 52,905 | $ 405,872 | $ 147,515 | |||
Net cash provided by operating activities | $ 396,411 | $ 159,950 | $ 661,991 | $ 350,363 | |||
Realized derivative instruments | (135,840) | (55,979) | (221,104) | (78,575) | |||
Distributions from investment in unconsolidated affiliate | 13,746 | — | 26,862 | — | |||
Interest expense, net of capitalized interest | 6,949 | 22,571 | 17,850 | 31,268 | |||
Exploration expenses | 278 | 1,250 | 788 | 1,673 | |||
Deferred financing costs amortization and other | 139 | (13,969) | (3,294) | (16,289) | |||
Current tax expense | (219) | — | 39,184 | — | |||
Changes in working capital | (24,573) | 26,711 | 18,473 | 23,317 | |||
Other non-cash adjustments | (988) | 1,720 | 272 | (303) | |||
Adjusted EBITDA | 255,903 | 142,254 | 541,022 | 311,454 | |||
Adjusted EBITDA from discontinued operations | — | (55,120) | (12,296) | (111,468) | |||
Cash distributions from OMP and DevCo Interests | — | 20,608 | — | 33,874 | |||
Adjusted EBITDA from continuing operations | 255,903 | 107,742 | 528,726 | 233,860 | |||
Cash Interest | (6,964) | (2,365) | (13,926) | (5,282) | |||
E&P and other capital expenditures | (46,893) | (53,015) | (110,408) | (82,024) | |||
Capitalized interest | 879 | 543 | 1,480 | 961 | |||
Adjusted Free Cash Flow | $ 202,925 | $ 52,905 | $ 405,872 | $ 147,515 | |||
Adjusted Net Income Attributable to Chord and Adjusted Diluted Earnings Attributable to Chord Per Share
Adjusted Net Income Attributable to Chord and Adjusted Diluted Earnings Attributable to Chord Per Share are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted Net Income Attributable to Chord as net income after adjusting for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, impairment, and other similar non-cash charges, or non-recurring items, (2) the impact of net income attributable to non-controlling interests, and (3) the non-cash and non-recurring items' impact on taxes based on the Company's effective tax rate applicable to those adjusting items in the same period. Adjusted Net Income Attributable to Chord is not a measure of net income as determined by GAAP. The Company defines Adjusted Diluted Earnings Attributable to Chord Per Share as Adjusted Net Income Attributable to Chord divided by diluted weighted average shares outstanding.
The following table presents reconciliations of the GAAP financial measure of net income attributable to Chord to the non-GAAP financial measure of Adjusted Net Income Attributable to Chord and the GAAP financial measure of diluted earnings attributable to Chord per share to the non-GAAP financial measure of Adjusted Diluted Earnings Attributable to Chord Per Share for legacy Oasis the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands, except per share data) | |||||||
Net income attributable to Chord | $ 130,839 | $ 73,364 | $ 596,842 | $ 29,772 | |||
Gain on sale of properties | (319) | (222,980) | (520,740) | (223,068) | |||
Net loss on derivative instruments | 98,253 | 267,037 | 466,175 | 448,552 | |||
Realized derivative instruments | (135,840) | (55,979) | (221,104) | (78,575) | |||
Net loss from investment in unconsolidated affiliate | 96,253 | — | 36,116 | — | |||
Distributions from investment in unconsolidated | 13,746 | — | 26,862 | — | |||
Impairment | — | 2 | — | 5 | |||
Amortization of deferred financing costs | 864 | 9,883 | 1,888 | 12,981 | |||
Other non-cash adjustments | (988) | 1,720 | 272 | (303) | |||
Tax impact(1) | (18,166) | 85 | 45,851 | (36,826) | |||
Other tax adjustments(2) | (31,157) | (15,567) | (109,466) | (10,728) | |||
Adjusted net income attributable to Chord | 153,485 | 57,565 | 322,696 | 141,810 | |||
Less: Adjusted net income attributable to Chord from | — | 31,776 | 6,142 | 71,803 | |||
Adjusted net income attributable to Chord from | $ 153,485 | $ 25,789 | $ 316,554 | $ 70,007 | |||
Diluted earnings attributable to Chord per share | $ 6.23 | $ 3.52 | $ 28.44 | $ 1.49 | |||
Gain on sale of properties | (0.02) | (10.71) | (24.82) | (10.92) | |||
Net loss on derivative instruments | 4.68 | 12.82 | 22.22 | 21.97 | |||
Realized derivative instruments | (6.47) | (2.69) | (10.54) | (3.85) | |||
Net loss from investment in unconsolidated affiliate | 4.59 | — | 1.72 | — | |||
Distributions from investment in unconsolidated | 0.65 | — | 1.28 | — | |||
Amortization of deferred financing costs | 0.04 | 0.47 | 0.09 | 0.64 | |||
Other non-cash adjustments | (0.05) | 0.10 | 0.01 | (0.01) | |||
Tax impact(1) | (0.87) | — | 2.19 | (1.80) | |||
Other tax adjustments(2) | (1.48) | (0.75) | (5.22) | (0.53) | |||
Impact of diluted shares(3) | — | — | — | (0.04) | |||
Adjusted Diluted Earnings Attributable to Chord Per | 7.30 | 2.76 | 15.37 | 6.95 | |||
Less: Adjusted Diluted Earnings From Discontinued | — | 1.53 | 0.29 | 3.52 | |||
Adjusted Diluted Earnings From Continuing | $ 7.30 | $ 1.23 | $ 15.08 | $ 3.43 | |||
Diluted weighted average shares outstanding(3) | 20,990 | 20,822 | 20,983 | 20,419 | |||
Effective tax rate applicable to adjustment items(1) | 25.2 % | 26.7 % | 21.8 % | 23.1 % | |||
___________________ | |
(1) | The tax impact is computed utilizing the Company's effective tax rate applicable to the adjustments for certain non-cash and non-recurring items. |
(2) | Other tax adjustments relate to the deferred tax asset valuation allowance, which is adjusted to reflect the tax impact of the other adjustments using an assumed effective tax rate that excludes its impact. |
(3) | For the six months ended June 30, 2022, the Company included the dilutive effect of 467,535 potentially dilutive shares in computing Adjusted Diluted Earnings Attributable to Chord Per Share, which were excluded from the GAAP calculation of diluted earnings attributable to Chord per share due to their anti-dilutive effect. |
SOURCE Chord Energy Corp.
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