Chord Energy Corporation Reports Financial and Operating Results for Fourth Quarter and Full-Year 2022, Declares Base and Variable Dividends and Issues 2023 Outlook
HOUSTON, Feb. 22, 2023 /PRNewswire/ -- Chord Energy Corporation (NASDAQ: CHRD) ("Chord", "Chord Energy" or the "Company") today announced financial and operating results for the quarter and year ending December 31, 2022. The Company completed the merger of equals transaction between Oasis Petroleum Inc. ("Oasis") and Whiting Petroleum Corporation ("Whiting") on July 1, 2022. The results for the fourth quarter of 2022 presented within this release represent the consolidated results for Chord. The results for the year ended December 31, 2022 include the results of legacy Oasis for the period from January 1, 2022 through June 30, 2022 and the consolidated results of Chord for the period from July 1, 2022 through December 31, 2022, unless noted otherwise.
4Q22 Operational and Financial Highlights:
- Severe winter weather impacted production and deferred development activity, resulting in oil volumes and capital below guidance;
- Produced 171.3 MBoepd in 4Q22, with oil volumes of 95.8 MBopd;
- E&P and other CapEx was $164.1MM in 4Q22;
- Net cash provided by operating activities was $478.4MM and net income was $377.6MM in 4Q22;
- Adjusted EBITDA(1) was $475.6MM and Adjusted Free Cash Flow(1) was $304.4MM in 4Q22;
- Cash of $593.2MM exceeded debt of $400.0MM at December 31, 2022; and
- Estimated net proved reserves were 655.6 MMBoe and PV-10 was $14.5 billion at December 31, 2022.
Shareholder Return Highlights:
- Total return of capital for 4Q22 set at 75% of Adjusted Free Cash Flow;
- Declared a base-plus-variable cash dividend of $4.80 per share of common stock. The dividend will be payable on March 21, 2023 to shareholders of record as of March 7, 2023; and
- Pro forma return of capital to shareholders was over $1.2B in FY22 (including 4Q22 dividend declarations to be paid in 1Q23) including over $1B of base, variable and special dividends plus cash merger consideration supplemented by $152MM of common stock repurchases.
2023 Outlook:
- Investing capital of $825MM – $865MM with ~80% allocated to drilling and completions;
- Holding oil volumes flat to slightly growing year-over-year pro forma for merger; and
- Projecting Adjusted Free Cash Flow(1) over $825MM at $75/Bbl WTI and $3.50/MMBtu Henry Hub at the midpoint of guidance.
ESG Highlights:
- Continued commitment to transparent reporting of Chord's environmental, social and governance ("ESG") performance; and
- We remain focused on reducing GHG and methane emissions, enhancing best practices and training to minimize the likelihood of safety incidents among employees and contractors.
(1) 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"). |
"In 2022, our teams combined two strong Williston Basin assets to form Chord Energy, a premier E&P company committed to producing the energy needed to fuel society in a responsible manner," said Danny Brown, Chord Energy's President and Chief Executive Officer. "We closed the merger mid-year, creating an industry leader in the Williston Basin and simultaneously debuted a peer-leading return of capital program, which allows us to return a significant amount of capital to shareholders while maintaining a strong balance sheet and organizational flexibility. Pro forma return of capital to shareholders was over $1.2B in 2022 through a mix of base and variable dividend payouts, supplemented by opportunistic share repurchases."
Danny Brown continued, "Going forward, we're committed to further enhancing the business through the capture of merger synergies, strong operating practices, and disciplined capital allocation which we believe positions us for strong shareholder returns in the future. Chord Energy has an attractive combination of strong assets, operational capability, financial discipline, a commitment to responsible operations and represents a compelling investment opportunity."
4Q22 Operational and Financial Update
The following table presents select operational and financial data for 4Q22 compared to 4Q22 guidance released in November 2022:
Metric | 4Q22 Actual | 4Q22 Guidance | ||
Oil volumes (MBopd) | 95.8 | 97.5 – 100.5 | ||
NGL volumes (MBblpd) | 37.7 | 36.5 – 37.5 | ||
Natural gas volumes (MMcfpd) | 226.9 | 217.0 – 223.0 | ||
Total volumes (MBoepd) | 171.3 | 170.0 – 175.0 | ||
Oil premium to WTI ($/Bbl) | $0.99 | $0.50 – $2.50 | ||
NGL realization (% of WTI) | 27 % | 25% – 35% | ||
Residue gas realization (% of Henry Hub) | 57 % | 65% – 75% | ||
LOE ($/Boe) | $9.87 | $9.20 – $10.00 | ||
Cash GPT ($/Boe)(1) | $2.61 | $2.05 – $2.65 | ||
Cash G&A ($MM)(1,2) | $22.4 | $14.8 – $17.8 | ||
Production Taxes (% of oil, NGL and natural gas sales) | 8.0 % | 7.8% – 8.2% | ||
E&P & Other CapEx ($MM) | $164.1 | $170 – $200 | ||
Cash Interest ($MM)(1) | $7.2 | $8.5 – $9.5 | ||
Cash taxes ($MM)(1,3) | $— | $10.0 – $20.0 |
(1) | Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP. | ||||||
(2) | Excludes $13.4MM of cash-related costs attributable to the merger. | ||||||
(3) | In 4Q22, the Company made a cash tax payment of $10MM reflecting taxes associated with the September 2022 monetization of 16MM CEQP units. No cash taxes were paid in 4Q22 associated with normal operations. | ||||||
2023 Outlook
Chord constructed its 2023 plan to focus on capital efficiency and maximizing cash flow generation with a low reinvestment rate, and is running estimates at the midpoint of guidance using $75/Bbl WTI and $3.50MMBtu Henry Hub. Chord expects to generate approximately $1.75B of Adjusted EBITDA and over $825MM of Adjusted Free Cash Flow in 2023, including the impact of derivatives but excluding dividends. The 2023 reinvestment rate is expected to be approximately 50% (inclusive of the capital which shifted into 2023 due to weather delays in 4Q22). Highlights of the 2023 plan include:
- 2023 E&P and other CapEx is expected to total approximately $825MM – $865MM, including approximately $20MM of CapEx which carried over from 4Q22;
- Approximately 80% of E&P and other CapEx is expected to be invested in drilling and completions. Approximately 50% of wells turned-in-line ("TIL") in 2023 are expected to be 3-mile laterals;
- Chord plans to TIL 90 to 94 gross operated wells in 2023 with an average working interest of approximately 73%. Completions activity is concentrated in 2Q23 and 3Q23 with over two-thirds of TILs expected during these quarters. 1Q23 is expected to have approximately 11-15 back-end-weighted TILs;
- 1Q23 total volumes are impacted by January downtime and deferred activity related to severe winter weather. Volumes are expected to increase sequentially each quarter with 4Q23 volumes the highest of the year; and
- Continued focus on ESG and sustainability with Chord planning to enhance its ESG program and transparency in 2023, including publishing a sustainability report. Chord's sustainability letter to stakeholders can be found on the Company's website at www.chordenergy.com/sustainability.
The following table presents select operational and financial guidance for 1Q23 and FY23:
Metric | 1Q23 Guidance | FY23 Guidance | ||
Oil volumes (MBopd) | 91.5 – 94.5 | 94.5 – 98.5 | ||
NGL volumes (MBblpd) | 34.5 – 35.5 | 35.5 – 36.5 | ||
Natural gas volumes (MMcfpd) | 212.0 – 218.0 | 215.0 – 221.0 | ||
Total volumes (MBoepd) | 161.3 – 166.3 | 165.5 – 172.0 | ||
Oil premium (discount) to WTI ($/Bbl) | $(1.00) – $1.00 | $(0.50) – $1.50 | ||
NGL realization (% of WTI) | 25% – 35% | 25% – 35% | ||
Residue gas realization (% of Henry Hub) | 50% – 60% | 40% – 50% | ||
LOE ($/Boe) | $9.85 – $10.65 | $9.80 – $10.60 | ||
Cash GPT ($/Boe)(1) | $2.45 – $3.05 | $2.45 – $3.05 | ||
Cash G&A ($MM)(1,2) | $16.5 – $19.5 | $63 – $73 | ||
Production Taxes (% of oil, NGL and natural gas sales) | 7.7% – 8.1% | 7.7% – 8.1% | ||
E&P & Other CapEx ($MM)(3) | $175 – $205 | $825 – $865 | ||
Cash Interest ($MM)(1) | $7.0 – $8.0 | $28.0 – $32.0 |
The Company expects to pay no cash taxes in 1Q23. Cash taxes for 2Q23 – 4Q23 are expected to approximate 2% – 8% of Adjusted EBITDA per quarter at WTI prices between $70/bbl – $90/bbl.
(1) | Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP. | ||||||
(2) | Excludes cash-related costs attributable to the merger. | ||||||
(3) | Excludes capitalized interest of approximately $4MM. | ||||||
Net Proved Reserves
During 2022, the Company added 349.8 million barrels of oil equivalent ("MMBoe") of net proved reserves as a result of the merger with Whiting and 51.5 MMBoe of net proved reserves as a result of successful drilling in the Williston Basin. Chord's estimated net proved reserves at December 31, 2022 were 655.6 MMBoe and consisted of 381.3 million barrels ("MMBbl") of crude oil, 138.5 MMBbl of NGLs and 814.9 billion cubic feet ("Bcf") of natural gas. The Company's estimated net proved reserves and PV-10 do not include probable or possible reserves and were determined using the preceding 12 month unweighted arithmetic average of the first-day-of-the-month index prices for crude oil and natural gas, which were held constant throughout the life of the properties. The unweighted arithmetic average first-day-of-the-month prices for the prior 12 months were $93.67 per Bbl for crude oil and $6.36 per MMBtu for natural gas for the year ended December 31, 2022. These prices were adjusted for quality, energy content, transportation fees and market differentials. The information in the following table does not give any effect to or reflect our commodity derivatives. Future operating costs, production taxes, plugging and abandonment costs and capital costs were based on current costs as of each year end. Our estimated net proved reserves and related PV-10 at December 31, 2022 are based on reports independently prepared by Netherland, Sewell & Associates, Inc., our independent reserve engineers.
The table below summarizes the Company's estimated net proved reserves and related PV-10 at December 31, 2022:
Crude Oil (MMBbl) | NGLs (MMBbl) | Natural Gas (Bcf) | Net Estimated | PV-10(1) (in millions) | ||||||
Proved Developed | 272.5 | 115.2 | 689.7 | 502.7 | $ 11,460.3 | |||||
Undeveloped | 108.8 | 23.3 | 125.2 | 152.9 | 2,991.9 | |||||
Total Proved(2) | 381.3 | 138.5 | 814.9 | 655.6 | $ 14,452.2 |
(1) | PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effect of income taxes on discounted future net cash flows. We believe PV-10 is a useful measure for investors when evaluating the relative monetary significance of our oil and gas properties and as a basis for comparison of the relative size and value of our proved reserves to our peers without regard to income taxes, which can vary between individual companies for various and unique factors. The PV-10 does not purport to present the fair value of our proved oil, NGL and natural gas reserves. | ||||||
Hedging Activity
The Company has not added any additional hedges since its last update. Chord has certain natural gas basis swaps which expire over 1H23 and are in a liability position of approximately $7MM as of December 31, 2022.
Select Operational and Financial Data
The following table presents select operational and financial data from continuing operations, unless otherwise noted, for the periods presented. Full-year 2022 results include six months of legacy Oasis results from January 1, 2022 through June 30, 2022 plus six months of consolidated Chord results from July 1, 2022 through December 31, 2022.
3Q22 | 4Q22 | FY22 | |||
Production data: | |||||
Crude oil (MBopd) | 96.2 | 95.8 | 69.7 | ||
NGLs (MBblpd)(1) | 38.7 | 37.7 | 19.3 | ||
Natural gas (MMcfpd)(1) | 225.5 | 226.9 | 184.7 | ||
Total production (MBoepd)(1) | 172.5 | 171.3 | 119.8 | ||
Percent crude oil | 55.8 % | 55.9 % | 58.2 % | ||
Average sales prices: | |||||
Crude oil, without realized derivatives ($/Bbl) | $ 93.13 | $ 83.74 | $ 92.98 | ||
Differential to NYMEX WTI ($/Bbl) | 1.63 | 0.99 | 1.52 | ||
Crude oil, with realized derivatives ($/Bbl) | 73.34 | 70.45 | 73.50 | ||
Crude oil realized derivatives ($MM) | (175.2) | (117.2) | (495.9) | ||
NGL, without realized derivatives ($/Bbl)(1) | 29.82 | 22.54 | 26.23 | ||
NGL, with realized derivatives ($/Bbl)(1) | 29.71 | 24.10 | 26.94 | ||
NGL realized derivatives ($MM) | (0.4) | 5.4 | 5.0 | ||
Natural gas, without realized derivatives ($/Mcf)(1) | 6.06 | 3.45 | 6.30 | ||
Natural gas, with realized derivatives ($/Mcf)(1) | 4.39 | 2.59 | 5.26 | ||
Natural gas realized derivatives ($MM) | (34.7) | (18.0) | (70.2) | ||
Selected financial data ($MM): | |||||
Revenues: | |||||
Crude oil revenues | $ 824.3 | $ 738.0 | $ 2,367.0 | ||
NGL revenues(1) | 106.2 | 78.1 | 184.3 | ||
Natural gas revenues(1) | 125.7 | 72.0 | 425.0 | ||
Total oil, NGL and natural gas revenues | $ 1,056.2 | $ 888.1 | $ 2,976.3 | ||
Net cash provided by operating activities | $ 783.6 | $ 478.4 | $ 1,924.0 | ||
Non-GAAP financial measures: | |||||
Adjusted EBITDA | $ 564.6 | $ 475.6 | $ 1,579.9 | ||
Adjusted FCF | 325.7 | 304.4 | 1,046.8 | ||
Adjusted Net Income | 310.4 | 230.5 | 871.5 | ||
Select operating expenses: | |||||
Lease operating expenses ("LOE") | $ 156.4 | $ 155.6 | $ 443.4 | ||
Gathering, processing and transportation ("GP&T") | 35.5 | 41.9 | 141.6 | ||
Production taxes | 83.5 | 70.7 | 229.6 | ||
Depreciation, depletion and amortization | 141.0 | 141.8 | 369.7 | ||
Total select operating expenses | $ 416.4 | $ 410.0 | $ 1,184.3 | ||
Earnings per share: | |||||
Basic earnings per share | $ 22.79 | $ 9.08 | $ 46.90 | ||
Diluted earnings per share | 21.84 | 8.64 | 44.35 | ||
Adjusted diluted earnings per share (Non-GAAP) | 7.20 | 5.28 | 27.03 |
(1) | Beginning in 3Q22, the Company reported crude oil, NGLs and natural gas on a three-stream basis. Prior to 3Q22, the Company reported crude oil and natural gas (including NGLs) on a two-stream basis. This change impacts comparability between periods. | ||||||
Capital Expenditures
The following table presents the Company's total capital expenditures ("CapEx") by category for the periods presented:
1Q22 | 2Q22 | 3Q22 | 4Q22 | FY22(4) | |||||
CapEx ($MM): | |||||||||
E&P | $ 62.9 | $ 46.0 | $ 224.8 | $ 162.2 | $ 495.9 | ||||
Other(1) | 0.6 | 0.9 | 6.6 | 3.7 | 11.8 | ||||
Total E&P and other CapEx | 63.5 | 46.9 | 231.4 | 165.9 | 507.7 | ||||
Acquisitions(2,3) | — | (4.8) | 2.4 | 0.1 | (2.3) | ||||
Total CapEx | $ 63.5 | $ 42.1 | $ 233.8 | $ 166.0 | $ 505.4 |
(1) | Includes capitalized interest of $0.6MM for 1Q22, $0.9MM for 2Q22, $1.3MM for 3Q22 and $1.8MM for 4Q22. | ||||||
(2) | 2Q22 includes customary post-close adjustments to the purchase price of the Company's acquisition of oil and gas properties in the Williston Basin from Diamondback Energy Inc. | ||||||
(3) | Acquisitions excludes amounts related to the merger of equals with Whiting. | ||||||
(4) | FY22 E&P and other CapEx (Chord combined) was $720.7MM. | ||||||
Dividend Declaration
Chord declared a base-plus-variable cash dividend of $4.80 per share of common stock. The dividend will be payable on March 21, 2023 to shareholders of record as of March 7, 2023. The base-plus-variable dividend was declared in connection with Chord's return of capital plan. The total $4.80 per share dividend reflects a quarterly base dividend of $1.25 per share of common stock and quarterly variable dividend of $3.55 per share of common stock. Additional details regarding the calculation of the variable dividend can be found in the Company's most recent investor presentation located on its website at https://ir.chordenergy.com/presentations.
Balance Sheet and Liquidity
The following table presents key balance sheet statistics and liquidity metrics from continuing operations as of December 31, 2022 (in millions):
December 31, 2022 | |
Revolving credit facility(1) | $ 1,000.0 |
Revolver borrowings | $ — |
Senior notes | 400.0 |
Total debt | $ 400.0 |
Cash and cash equivalents | $ 593.2 |
Letters of credit | 6.4 |
Liquidity | $ 1,586.8 |
(1) | $2.75B borrowing base and $1.0B of elected commitments. | ||
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the webcast:
Date: | Thursday, February 23, 2023 |
Time: | 10:00 a.m. Central Time |
Live Webcast: | https://app.webinar.net/6Gpr03Mlqn8 |
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: | 9607643 |
A recording of the conference call will be available beginning at 1:00 p.m. Central Time on the day of the call and will be available until Thursday, March 2, 2023 by dialing:
Replay dial-in: | (877) 344-7529 |
Intl. replay: | (412) 317-0088 |
Replay access: | 6916568 |
The call will also be available for replay for approximately 30 days at https://www.chordenergy.com
Forward-Looking Statements
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, including any statements regarding the benefits and synergies of the merger, future opportunities for Chord, future financial performance and condition, guidance and statements regarding Chord's expectatations, beliefs, plans, objectives, assumptions or future events or performance 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," "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, production levels and reinvestment rates, anticipated financial and operating results and other guidance and the effects, benefits and synergies of the merger, including 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, the ultimate results of integrating the operations of Oasis and Whiting, 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 the anticipated benefits or synergies of the merger in the timeframe expected or at all, litigation relating to the merger, changes in crude oil, NGL and natural gas prices, war and political instability in Ukraine and the effect on commodity prices due to the ongoing conflict in Ukraine, inflation rates and the impact of associated monetary policy responses, including increased interest rates, 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, the availability of midstream service providers, uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting Chord's business 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.
Chord Energy Corporation | |||
December 31, | |||
2022 | 2021 | ||
ASSETS | |||
Current assets | |||
Cash and cash equivalents | $ 593,151 | $ 172,114 | |
Accounts receivable, net | 781,738 | 377,202 | |
Inventory | 54,411 | 28,956 | |
Prepaid expenses | 17,624 | 6,016 | |
Derivative instruments | 23,735 | — | |
Other current assets | 11,853 | 1,836 | |
Current assets held for sale | — | 1,029,318 | |
Total current assets | 1,482,512 | 1,615,442 | |
Property, plant and equipment | |||
Oil and gas properties (successful efforts method) | 5,120,121 | 1,395,837 | |
Other property and equipment | 72,973 | 48,981 | |
Less: accumulated depreciation, depletion and amortization | (481,751) | (124,386) | |
Total property, plant and equipment, net | 4,711,343 | 1,320,432 | |
Derivative instruments | 37,965 | 44,865 | |
Investment in unconsolidated affiliate | 130,575 | — | |
Long-term inventory | 22,009 | 17,510 | |
Operating right-of-use assets | 23,875 | 15,782 | |
Deferred tax assets | 200,226 | — | |
Other assets | 22,576 | 12,756 | |
Total assets | $ 6,631,081 | $ 3,026,787 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities | |||
Accounts payable | $ 29,056 | $ 2,136 | |
Revenues and production taxes payable | 607,964 | 270,306 | |
Accrued liabilities | 362,454 | 150,674 | |
Accrued interest payable | 3,172 | 2,150 | |
Derivative instruments | 341,541 | 89,447 | |
Advances from joint interest partners | 3,736 | 1,892 | |
Current operating lease liabilities | 9,941 | 7,893 | |
Other current liabilities | 3,469 | 1,046 | |
Current liabilities held for sale | — | 699,653 | |
Total current liabilities | 1,361,333 | 1,225,197 | |
Long-term debt | 394,209 | 392,524 | |
Deferred tax liabilities | — | 7 | |
Asset retirement obligations | 146,029 | 57,604 | |
Derivative instruments | 2,829 | 115,282 | |
Operating lease liabilities | 13,266 | 6,724 | |
Other liabilities | 33,617 | 7,876 | |
Total liabilities | 1,951,283 | 1,805,214 | |
Commitments and contingencies | |||
Stockholders' equity | |||
Common stock, $0.01 par value: 120,000,000 shares authorized; 43,726,181 shares issued and 41,477,093 shares outstanding at December 31, 2022; 60,000,000 shares authorized, 20,147,199 shares issued and 19,276,181 shares outstanding at December 31, 2021 | 438 | 200 | |
Treasury stock, at cost: 2,249,088 and 871,018 shares at December 31, 2022 and December 31, 2021, respectively | (251,950) | (100,000) | |
Additional paid-in capital | 3,485,819 | 863,010 | |
Retained earnings | 1,445,491 | 269,690 | |
Chord share of stockholders' equity | 4,679,798 | 1,032,900 | |
Non-controlling interests | — | 188,673 | |
Total stockholders' equity | 4,679,798 | 1,221,573 | |
Total liabilities and stockholders' equity | $ 6,631,081 | $ 3,026,787 | |
Chord Energy Corporation | |||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenues | |||||||
Oil, NGL and gas revenues | $ 888,081 | $ 418,799 | $ 2,976,296 | $ 1,200,256 | |||
Purchased oil and gas sales | 127,522 | 102,633 | 670,174 | 378,983 | |||
Other services revenues | — | 145 | 324 | 687 | |||
Total revenues | 1,015,603 | 521,577 | 3,646,794 | 1,579,926 | |||
Operating expenses | |||||||
Lease operating expenses | 155,567 | 57,560 | 443,373 | 203,933 | |||
Gathering, processing and transportation expenses | 41,885 | 31,694 | 141,644 | 122,614 | |||
Purchased oil and gas expenses | 125,625 | 104,183 | 671,935 | 379,972 | |||
Production taxes | 70,708 | 25,902 | 229,571 | 76,835 | |||
Depreciation, depletion and amortization | 141,803 | 42,459 | 369,659 | 126,436 | |||
Exploration and impairment | 506 | 823 | 2,204 | 2,763 | |||
General and administrative expenses | 58,084 | 19,188 | 209,299 | 80,688 | |||
Other services expenses | 64 | — | 187 | 47 | |||
Total operating expenses | 594,242 | 281,809 | 2,067,872 | 993,288 | |||
Gain (loss) on sale of assets | 2,272 | (5,667) | 4,867 | 222,806 | |||
Operating income | 423,633 | 234,101 | 1,583,789 | 809,444 | |||
Other income (expense) | |||||||
Net loss on derivative instruments | (79,361) | (39,298) | (208,128) | (589,641) | |||
Net gain (loss) from investment in unconsolidated affiliate | (4,612) | — | 34,366 | — | |||
Interest expense, net of capitalized interest | (6,539) | (7,361) | (29,349) | (30,806) | |||
Gain on debt extinguishment | — | — | — | ||||
Reorganization items, net | — | — | — | ||||
Other income (expense) | 915 | (215) | 2,901 | (1,010) | |||
Total other expense, net | (89,597) | (46,874) | (200,210) | (621,457) | |||
Income from continuing operations | 334,036 | 187,227 | 1,383,579 | 187,987 | |||
Income tax benefit | 43,532 | 973 | 46,884 | 973 | |||
Net income from continuing operations | 377,568 | 188,200 | 1,430,463 | 188,960 | |||
Income from discontinued operations attributable to Chord, net of income tax | — | 29,682 | 425,696 | 130,642 | |||
Net income attributable to Chord | $ 377,568 | $ 217,882 | $ 1,856,159 | $ 319,602 | |||
Earnings attributable to Chord per share: | |||||||
Basic from continuing operations | $ 9.08 | $ 9.67 | $ 46.90 | $ 9.55 | |||
Basic from discontinued operations | — | 1.53 | 13.96 | 6.60 | |||
Basic total | $ 9.08 | $ 11.20 | $ 60.86 | $ 16.15 | |||
Diluted from continuing operations | $ 8.64 | $ 8.96 | $ 44.35 | $ 9.15 | |||
Diluted from discontinued operations | — | 1.41 | 13.20 | 6.33 | |||
Diluted total | $ 8.64 | $ 10.37 | $ 57.55 | $ 15.48 | |||
Weighted average shares outstanding: | |||||||
Basic | 41,553 | 19,457 | 30,497 | 19,792 | |||
Diluted | 43,677 | 21,007 | 32,251 | 20,648 | |||
Chord Energy Corporation | |||
Year Ended December 31, | |||
2022 | 2021 | ||
Cash flows from operating activities: | |||
Net income including non-controlling interests | $ 1,858,470 | $ 355,298 | |
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities: | |||
Depreciation, depletion and amortization | 369,659 | 158,304 | |
Gain on sale of assets | (523,767) | (222,806) | |
Impairment | (344) | 5 | |
Deferred income taxes | 28,341 | (977) | |
Net gain from investment in unconsolidated affiliate | (34,366) | — | |
Net gain on derivative instruments | 208,128 | 589,641 | |
Equity-based compensation expenses | 61,269 | 15,476 | |
Deferred financing costs amortization and other | 3,194 | 12,992 | |
Working capital and other changes: | |||
Change in accounts receivable, net | 84,041 | (184,605) | |
Change in inventory | 8,756 | 2,168 | |
Change in prepaid expenses | 3,423 | 5,605 | |
Change in accounts payable, interest payable and accrued liabilities | (131,687) | 184,517 | |
Change in other assets and liabilities, net | (11,091) | (1,482) | |
Net cash provided by operating activities | 1,924,026 | 914,136 | |
Cash flows from investing activities: | |||
Capital expenditures | (531,327) | (212,820) | |
Acquisitions, net of cash acquired | (148,144) | (590,097) | |
Proceeds from divestitures, net of cash divested | 169,198 | 376,081 | |
Costs related to divestitures | (11,368) | (2,926) | |
Derivative settlements | (633,025) | (270,118) | |
Derivative modifications | — | (220,889) | |
Proceeds from sale of investment in unconsolidated affiliate | 428,231 | — | |
Distributions from investment in unconsolidated affiliate | 43,873 | — | |
Net cash used in investing activities | (682,562) | (920,769) | |
Cash flows from financing activities: | |||
Proceeds from revolving credit facilities | 1,035,000 | 399,500 | |
Principal payments on revolving credit facilities | (1,020,000) | (906,500) | |
Proceeds from issuance of senior unsecured notes | — | 850,000 | |
Cash paid to settle Whiting debt | (2,154) | — | |
Deferred financing costs | (5,997) | (22,251) | |
Proceeds from issuance of OMP common units, net of offering costs | — | 86,467 | |
Common control transaction costs | — | (5,675) | |
Purchases of treasury stock | (151,950) | (100,000) | |
Tax withholding on vesting of equity-based awards | (41,752) | — | |
Dividends paid | (654,728) | (111,905) | |
Distributions to non-controlling interests | — | (28,720) | |
Payments on finance lease liabilities | (1,299) | (1,161) | |
Proceeds from warrants exercised | 19,784 | 1,435 | |
Net cash provided by (used in) financing activities | (823,096) | 161,190 | |
Increase in cash, cash equivalents and restricted cash | 418,368 | 154,557 | |
Cash, cash equivalents and restricted cash: | |||
Beginning of period | 174,783 | 20,226 | |
End of period | $ 593,151 | $ 174,783 | |
Supplemental cash flow information: | |||
Cash paid for interest, net of capitalized interest | $ 24,266 | $ 41,603 | |
Cash paid for income taxes | 10,000 | 20,000 | |
Supplemental non-cash transactions: | |||
Change in accrued capital expenditures | $ (21,668) | $ 8,304 | |
Change in asset retirement obligations | 852 | 14,724 | |
Non-cash consideration exchanged in Merger | 2,585,211 | — | |
Investment in unconsolidated affiliate | 568,312 | — | |
Note receivable from divestiture | — | 2,900 | |
Contingent consideration from Permian Basin Sale | — | 32,860 | |
Dividends payable | 30,630 | 4,946 | |
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 financial 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 gathering, processing and transportation ("GPT") expenses less non-cash valuation charges on pipeline imbalances and non-cash mark-to-market adjustments on transportation contracts accounted for as derivative instruments. 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, and without regard to the non-cash mark-to-market adjustments on transportation contracts classified as derivative instruments.
The following table presents a reconciliation of the GAAP financial measure of GPT expenses to the non-GAAP financial measure of Cash GPT for the periods presented:
Three Months Ended December 31, | Year Ended December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
GPT | $ 41,885 | $ 31,694 | $ 141,644 | $ 122,614 | |||
Pipeline imbalances | (1,133) | 15 | (4,570) | 1,670 | |||
Mark-to-market adjustments on derivative transportation contracts | 393 | — | 7,331 | — | |||
Cash GPT | $ 41,145 | $ 31,709 | $ 144,405 | $ 124,284 | |||
Cash G&A
The Company defines Cash G&A as total G&A expenses less G&A expenses from 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 the periods presented:
Three Months Ended December 31, | Year Ended December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
General and administrative expenses | $ 58,084 | $ 19,188 | $ 209,299 | $ 80,688 | |||
Merger costs(1) | (13,360) | — | (97,739) | — | |||
Equity-based compensation expenses | (20,918) | (4,145) | (43,378) | (14,664) | |||
G&A expenses attributable to shared services | — | (5,026) | (1,624) | (19,442) | |||
Other non-cash adjustments | (1,446) | 305 | (3,330) | (371) | |||
Cash G&A | $ 22,360 | $ 10,322 | $ 63,228 | $ 46,211 | |||
(1) | Includes costs directly attributable to the merger of equals with Whiting, including $13.4 million and $79.9 million of cash-related costs for severance, advisory, legal and other fees for the three months and year ended December 31, 2022, respectively, as well as $17.8 million for the year ended December 31, 2022 related to the non-cash acceleration of equity-based compensation expenses for certain officers terminated immediately upon completion of the merger. | ||||||
Cash Interest
The Company defines Cash Interest as interest expense 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 the periods presented:
Three Months Ended December 31, | Year Ended December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
Interest expense | $ 6,539 | $ 7,361 | $ 29,349 | $ 30,806 | |||
Capitalized interest | 1,844 | 537 | 4,647 | 2,077 | |||
Amortization of deferred financing costs | (1,191) | (934) | (4,008) | (13,727) | |||
Cash Interest | $ 7,192 | $ 6,964 | $ 29,988 | $ 19,156 | |||
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"), merger costs, exploration expenses and impairment 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 table presents 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 the periods presented:
Three Months Ended December 31, | Year Ended December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
Net income including non-controlling interests | $ 377,568 | $ 225,923 | $ 1,858,470 | $ 355,298 | |||
Interest expense, net of capitalized interest | 6,539 | 18,331 | 33,034 | 67,751 | |||
Income tax expense (benefit) | (43,532) | (956) | 54,196 | (956) | |||
Depreciation, depletion and amortization | 141,803 | 45,723 | 369,659 | 158,304 | |||
Merger costs(1) | 13,360 | — | 97,739 | — | |||
Exploration and impairment expenses | 506 | 823 | 2,204 | 2,765 | |||
(Gain) loss on sale of assets | (2,272) | 5,667 | (523,767) | (222,806) | |||
Net loss on derivative instruments | 79,361 | 39,298 | 208,128 | 589,641 | |||
Realized loss on derivative instruments | (129,772) | (110,100) | (561,105) | (270,118) | |||
Net (gain) loss from investment in unconsolidated affiliate | 4,612 | — | (34,366) | — | |||
Distributions from investment in unconsolidated affiliate | 3,266 | — | 43,873 | — | |||
Equity-based compensation expenses | 20,918 | 4,288 | 43,426 | 15,476 | |||
Other non-cash adjustments | 3,273 | (42) | 703 | 123 | |||
Adjusted EBITDA | 475,630 | 228,955 | 1,592,194 | 695,478 | |||
Adjusted EBITDA from discontinued operations | — | (47,092) | (12,296) | (216,540) | |||
Cash distributions from OMP and DevCo Interests | — | 18,954 | — | 71,781 | |||
Adjusted EBITDA from continuing operations | 475,630 | 200,817 | 1,579,898 | 550,719 | |||
Cash Interest | (7,192) | (6,964) | (29,988) | (19,156) | |||
E&P and other capital expenditures | (164,074) | (45,354) | (503,071) | (168,389) | |||
Adjusted Free Cash Flow | $ 304,364 | $ 148,499 | $ 1,046,839 | $ 363,174 | |||
Net cash provided by operating activities | $ 478,391 | $ 269,390 | $ 1,924,026 | $ 914,136 | |||
Changes in working capital | 105,805 | 44,714 | 46,560 | (6,204) | |||
Interest expense, net of capitalized interest | 6,539 | 18,331 | 33,034 | 67,751 | |||
Current income tax expense (benefit) | (5,205) | 21 | 25,855 | 21 | |||
Merger costs(1) | 13,360 | — | 79,894 | — | |||
Exploration expenses | 1,923 | 823 | 2,548 | 2,760 | |||
Realized loss on derivative instruments | (129,772) | (110,100) | (561,105) | (270,118) | |||
Distributions from investment in unconsolidated affiliate | 3,266 | — | 43,873 | — | |||
Deferred financing costs amortization and other | (1,950) | 5,818 | (3,194) | (12,991) | |||
Other non-cash adjustments | 3,273 | (42) | 703 | 123 | |||
Adjusted EBITDA | 475,630 | 228,955 | 1,592,194 | 695,478 | |||
Adjusted EBITDA from discontinued operations | — | (47,092) | (12,296) | (216,540) | |||
Cash distributions from OMP and DevCo Interests | — | 18,954 | — | 71,781 | |||
Adjusted EBITDA from continuing operations | 475,630 | 200,817 | 1,579,898 | 550,719 | |||
Cash Interest | (7,192) | (6,964) | (29,988) | (19,156) | |||
E&P and other capital expenditures | (164,074) | (45,354) | (503,071) | (168,389) | |||
Adjusted Free Cash Flow | $ 304,364 | $ 148,499 | $ 1,046,839 | $ 363,174 | |||
(1) | Includes costs directly attributable to the merger of equals with Whiting, including $13.4 million and $79.9 million of cash-related costs for severance, advisory, legal and other fees for the three months and year ended December 31, 2022, respectively, as well as $17.8 million for the year ended December 31, 2022 related to the non-cash acceleration of equity-based compensation expenses for certain officers terminated immediately upon completion of the merger. | ||||||
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 attributable to Chord after adjusting for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, non-cash changes in the fair value of our investment in an unconsolidated affiliate, impairment and other similar non-cash charges, (2) merger costs and (3) the impact of 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 calculates earnings per share under the two-class method in accordance with GAAP. The two-class method is an earnings allocation formula that computes earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Adjusted Diluted Earnings Attributable to Chord Per Share is calculated as (i) Adjusted Net Income Attributable to Chord (ii) less distributed and undistributed earnings allocated to participating securities (iii) divided by the weighted average number of diluted shares outstanding for the periods presented.
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 the periods presented:
Three Months Ended December 31, | Year Ended December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
Net income attributable to Chord | $ 377,568 | $ 217,882 | $ 1,856,159 | $ 319,602 | |||
Net loss on derivative instruments | 79,361 | 39,298 | 208,128 | 589,641 | |||
Realized loss on derivative instruments | (129,772) | (110,100) | (561,105) | (270,118) | |||
Net (gain) loss from investment in unconsolidated affiliate | 4,612 | — | (34,366) | — | |||
Distributions from investment in unconsolidated affiliate | 3,266 | — | 43,873 | — | |||
Impairment | (1,417) | — | (344) | 5 | |||
Merger costs(1) | 13,360 | — | 97,739 | — | |||
(Gain) loss on sale of assets | (2,272) | 5,667 | (523,767) | (222,806) | |||
Amortization of deferred financing costs | 1,191 | 1,240 | 4,177 | 15,339 | |||
Other non-cash adjustments | 3,273 | (42) | 703 | 122 | |||
Tax impact(2) | 6,901 | 14,369 | 187,403 | (24,565) | |||
Other tax adjustments(3) | (125,465) | (48,985) | (400,823) | (78,569) | |||
Adjusted net income attributable to Chord | 230,606 | 119,329 | 877,777 | 328,651 | |||
Adjusted net income attributable to Chord from discontinued operations | — | (29,987) | (6,142) | (132,235) | |||
Distributed and undistributed earnings allocated to participating securities | (74) | — | (96) | — | |||
Adjusted net income attributable to Chord from continuing operations | $ 230,532 | $ 89,342 | $ 871,539 | $ 196,416 | |||
Diluted earnings attributable to Chord per share | $ 8.64 | $ 10.37 | $ 57.55 | $ 15.48 | |||
Net loss on derivative instruments | 1.82 | 1.87 | 6.45 | 28.56 | |||
Realized derivative instruments | (2.97) | (5.24) | (17.40) | (13.08) | |||
Net (gain) loss from investment in unconsolidated affiliate | 0.11 | — | (1.07) | — | |||
Distributions from investment in unconsolidated affiliate | 0.07 | — | 1.36 | — | |||
Impairment | (0.03) | — | (0.01) | — | |||
Merger costs(1) | 0.31 | — | 3.03 | — | |||
(Gain) loss on sale of assets | (0.05) | 0.27 | (16.24) | (10.79) | |||
Amortization of deferred financing costs | 0.03 | 0.06 | 0.13 | 0.74 | |||
Other non-cash adjustments | 0.06 | — | 0.04 | 0.01 | |||
Tax impact(2) | 0.16 | 0.68 | 5.81 | (1.19) | |||
Other tax adjustments(3) | (2.87) | (2.33) | (12.43) | (3.81) | |||
Adjusted Diluted Earnings Attributable to Chord Per Share | 5.28 | 5.68 | 27.22 | 15.92 | |||
Less: Adjusted Diluted Earnings From Discontinued Operations Attributable to Chord Per Share | — | (1.43) | (0.19) | (6.40) | |||
Less: Distributed and undistributed earnings allocated to participating securities | — | — | — | — | |||
Adjusted Diluted Earnings From Continuing Operations Attributable to Chord Per Share | $ 5.28 | $ 4.25 | $ 27.03 | $ 9.52 | |||
Diluted weighted average shares outstanding | 43,677 | 21,007 | 32,251 | 20,648 | |||
Effective tax rate applicable to adjustment items(2) | 24.3 % | 22.5 % | 24.4 % | 21.9 % | |||
(1) | Includes costs directly attributable to the merger of equals with Whiting, including $13.4 million and $79.9 million of cash-related costs for severance, advisory, legal and other fees for the three months and year ended December 31, 2022, respectively, as well as $17.8 million for the year ended December 31, 2022 related to the non-cash acceleration of equity-based compensation costs for certain officers terminated immediately upon completion of the merger. | ||||||
(2) | The tax impact is computed utilizing the Company's effective tax rate applicable to the adjustments for certain non-cash and non-recurring items. | ||||||
(3) | Other tax adjustments relate to the change in 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. | ||||||
SOURCE Chord Energy Corp.
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