Chord Energy Corporation Reports Financial and Operating Results for First Quarter 2023, Declares Base and Variable Dividends and Issues Second Quarter Outlook

About this update from Chord Energy Corporation

HOUSTON , May 3, 2023 /PRNewswire/ -- Chord Energy Corporation (NASDAQ: CHRD) ("Chord", " Chord Energy " or the "Company") today reported first quarter 2023 financial and operating results. On July 1, 2022 , the Company completed the merger of equals transaction between Oasis Petroleum Inc. ("Oasis") and Whiting Petroleum Corporation ("Whiting"). The results reported for the three months ended March 31, 2023 reflect the consolidated results of Chord, while the results reported for the three months ended March 31, 2022 reflect legacy Oasis, unless otherwise noted. 1Q23 Operational and Financial Highlights: 1Q23 oil volumes of 95.1 MBopd were above the high-end of guidance due to strong well performance and accelerated activity; Total 1Q23 volumes of 164.7 MBoepd were above midpoint of guidance, with NGL volumes negatively impacted by ethane rejection; 1Q23 revenues totaled $766 .2MM. Combined natural gas and NGL revenues totaled $115 .3MM, which exceeded the $108 .0MM of revenue implied by midpoint volume and differential guidance using actual 1Q23 benchmark pricing; E&P and other CapEx was $202 .3MM in 1Q23, towards the high-end of our guidance range primarily due to accelerated activity; Net cash provided by operating activities was $468 .8MM and net income was $297 .0MM in 1Q23; Adjusted EBITDA(1) was $408 .3MM and Adjusted Free Cash Flow(1) was $198 .6MM in 1Q23; Cash of $592 .3MM exceeded debt of $400 .0MM at March 31, 2023 ; Announced the sale of certain non- Williston Basin , non-core properties for proceeds of approximately $35MM with all transactions closing or expected to close during 2Q23. Recent total volumes included in divested assets were approximately 1.1 MBoepd with oil volumes of approximately 0.9 MBopd; Total return of capital for 1Q23 set at 75% of Adjusted Free Cash Flow, including share repurchases of $15MM during 1Q23 at a weighted average price of $135.55 per share; Declared a base-plus-variable cash dividend of $3.22 per share of common stock. The dividend will be payable on May 30, 2023 to shareholders of record as of May 16, 2023 ; In March, Chord Energy was added to the S&P MidCap 400 index. Additionally, Chord's S&P issuer bond rating increased to BB-; and Continued focused on ESG and Sustainability with active programs to reduce emissions and enhance disclosure. Sustainability report expected mid-year. (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"). "Chord's first quarter performance demonstrated the power of our premier Williston Basin position and strong operational execution which was enhanced through the 2022 merger," said Danny Brown , Chord Energy's President and Chief Executive Officer. "We saw better than expected well performance coupled with a modest acceleration of activity, which led to oil production above estimates and stronger than expected free cash flow. I'd like to offer my thanks to the entire Chord team for their resilience overcoming very difficult January conditions and putting the Company on excellent footing for the remainder of the year. Additionally, Chord was able to sell certain non-Williston, non-core assets and increased 2023 volume guidance when accounting for these divestitures. Shareholder returns remain robust, supported by deep, low-cost inventory and excellent capital efficiency. We remain excited about the oil and gas industry and the value we bring to the world. We are focused on sustainable value creation through disciplined capital allocation, responsible operations, and maintaining a strong balance sheet." 1Q23 Operational and Financial Update: The following table presents select 1Q23 operational and financial data compared to guidance released in February 2023 : Metric 1Q23 Actual 1Q23 Guidance ( February 22, 2023 ) Oil volumes (MBopd) 95.1 91.5 – 94.5 NGL volumes (MBblpd) 32.7 34.5 – 35.5 Natural gas volumes (MMcfpd) 221.4 212.0 – 218.0 Total volumes (MBoepd) 164.7 161.3 – 166.3 Oil premium to WTI ($/Bbl) $— $(1.00) – $1.00 NGL realization (% of WTI) 28 % 25% – 35% Residue gas realization (% of Henry Hub ) 79 % 50% – 60% LOE ($/Boe) $10.35 $9 .85 – $10.65 Cash GPT ($/Boe)(1) $2.84 $2.45 – $3.05 Cash G&A ($MM)(1,2) $18.2 $16.5 – $19.5 Production Taxes (% of oil, NGL and gas sales) 7.9 % 7.7% – 8.1% E&P & Other CapEx ($MM)(3) $202.3 $175 – $205 Cash Interest ($MM)(1) $7.4 $7.0 – $8.0 (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 cash-related costs attributable to the merger of $2 .8MM incurred in 1Q23. (3) Excludes capitalized interest of $1 .4MM incurred in 1Q23. During the three months ended March 31, 2023 , net cash provided by operating activities was $468 .8MM and net income was $297 .0MM ( $6.87 /diluted share). Adjusted EBITDA was $408 .3MM, Adjusted Free Cash Flow was $198 .6MM and Adjusted Net Income was $194 .4MM ( $4.49 /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. Updated Outlook: Chord is updating its outlook to reflect its latest projections including the impact of the non-core divestitures which removed 400 Bopd – 500 Bopd from 2Q23 and approximately 600 Bopd from FY23. Assuming pricing of $75 /Bbl WTI and $2.75 /MMBtu Henry Hub for the remainder of 2023, 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%. Highlights of the updated 2023 plan include: Updating volume projections to account for strong well performance, a modest acceleration of activity in 1Q23, higher levels of ethane rejection and the production impact from the non-core divestitures for FY23. Excluding the non-core divestitures, FY23 oil volumes would increase by 0.6 MBopd compared to February guidance; Increasing residue gas realizations to account for higher levels of ethane in the residue gas stream. NGL realizations adjusted to reflect current market prices versus WTI; LOE per BOE reflect the impact of the non-core divestitures and lower NGL volumes due to moving ethane into residue gas stream, but otherwise unchanged compared to February guidance; Production tax as a percent of revenue is increasing due to lower Henry Hub price assumption of $2.75 /MMBtu; and 2023 E&P and other CapEx unchanged at approximately $825MM – $865MM. The following table presents select operational and financial guidance for 2Q23 and FY23: Metric 2Q23 Guidance ( May 3, 2023 ) FY23 Guidance( May 3, 2023 ) Original FY23 Guidance ( February 22, 2023 ) Oil volumes (MBopd) 93.5 – 96.5 95.0 – 98.0 94.5 – 98.5 NGL volumes (MBblpd) 33.5 – 34.5 33.0 – 34.0 35.5 – 36.5 Natural gas volumes (MMcfpd) 217.0 – 223.0 216.0 – 220.5 215.0 – 221.0 Total volumes (MBoepd) 163.2 – 168.2 164.0 – 168.5 165.5 – 172.0 Oil premium (discount) to WTI ($/Bbl) $(0.60) – $1.40 $(0.50) – $1.50 $(0.50) – $1.50 NGL realization (% of WTI) 23% – 33% 23% – 33% 25% – 35% Residue gas realization (% of Henry Hub ) 55% – 65% 56% – 66% 40% – 50% LOE ($/Boe) $10 .00 – $10.80 $9.75 – $10.60 $9 .80 – $10.60 Cash GPT ($/Boe)(1) $2.50 – $3.10 $2.50 – $3.10 $2.45 – $3.05 Cash G&A ($MM)(1,2) $15.1 – $18.1 $63.0 – $73.0 $63.0 – $73.0 Production Taxes (% of oil, NGL and gas sales) 8.0% – 8.4% 7.9% – 8.3% 7.7% – 8.1% E&P & Other CapEx ($MM)(3) $235 – $265 $825 – $865 $825 – $865 Cash Interest ($MM)(1) $7.0 – $8.0 $28.0 – $32.0 $28.0 – $32.0 (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 cash-related costs attributable to the merger. (3) Excludes capitalized interest of approximately $1 .3MM and $4 .9MM for 2Q23 and FY23, respectively. Chord expects to pay no cash taxes in 2Q23, and expects to pay 3% – 10% of Adjusted EBITDA in 2H23 with oil prices ranging from $70 /Bbl – $90 /Bbl. Hedging Activity: Chord recently added 4.0 MBopd of crude oil collars in 2H23 with weighted average ceiling of $88.51 /Bbl and weighted average floor of $65.00 /Bbl. Additionally, Chord added 1.8 MBopd of crude oil collars in 2024 with weighted average ceiling of $80.13 /Bbl and weighted average floor of $65.00 /Bbl. The following table summarizes these hedge transactions. A complete summary of the Company's current hedge positions can be found in the Company's most recent investor presentation located on its website at https://ir.chordenergy.com/presentations . Volumes (Bbl) Weighted Average Prices Commodity Settlement Period Derivative Instrument Total Daily Floor Ceiling Crude oil Q3 2023 - Q4 2023 Two-way collar 736,000 4,000 $ 65.00 $ 88.51 Crude oil Q1 2024 - Q2 2024 Two-way collar 364,000 2,000 65.00 80.15 Crude oil Q3 2024 - Q4 2024 Two-way collar 276,000 1,500 65.00 80.10 Select Operational and Financial Data: The following table presents select operational and financial data from continuing operations for the periods presented. 1Q23 1Q22 Production data: Crude oil (MBopd) 95.1 45.0 NGLs (MBblpd)(1) 32.7 — Natural gas (MMcfpd)(1) 221.4 147.8 Total production (MBoepd)(1) 164.7 69.6 Percent crude oil 57.7 % 64.6 % Average sales prices: Crude oil, without realized derivatives ($/Bbl) $ 76.04 $ 95.34 Differential to NYMEX WTI ($/Bbl) — 1.22 Crude oil, with realized derivatives ($/Bbl) 65.79 79.27 Crude oil realized derivatives ($MM) (87.7) (65.0) NGL, without realized derivatives ($/Bbl)(1) 21.13 — NGL, with realized derivatives ($/Bbl)(1) 22.10 — NGL realized derivatives ($MM) 2.9 — Natural gas, without realized derivatives ($/Mcf)(1) 2.66 8.09 Natural gas, with realized derivatives ($/Mcf)(1) 2.31 7.67 Natural gas realized derivatives ($MM) (7.0) (5.6) Selected financial data ($MM): Revenues: Crude oil revenues $ 650.9 $ 385.9 NGL revenues(1) 62.2 — Natural gas revenues(1) 53.1 107.6 Total oil, NGL and natural gas revenues $ 766.2 $ 493.5 Cash flows: Net cash provided by operating activities: $ 468.8 $ 265.6 Non-GAAP financial measures(2): Adjusted EBITDA $ 408.3 $ 287.4 Adjusted FCF 198.6 217.5 Adjusted net income attributable to Chord from continuing operations 194.4 174.5 Select operating expenses: Lease operating expenses ("LOE") $ 153.4 $ 63.2 Gathering, processing and transportation expenses ("GPT") 37.0 32.4 Production taxes 60.5 35.9 Depreciation, depletion and amortization 133.8 44.7 Total select operating expenses $ 384.7 $ 176.2 Earnings per share: Basic earnings (loss) per share $ 7.13 $ (1.01) Diluted earnings (loss) per share 6.87 (1.01) Adjusted diluted earnings per share (Non-GAAP)(2) 4.49 8.32 (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. (2) Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP. The Company turned in line (TIL'd) 15 gross (11 net) operated wells in 1Q23. Capital Expenditures: The following table presents the Company's total capital expenditures ("CapEx") by category for the period presented: 1Q23 CapEx ($MM): E&P $ 201.8 Other 0.5 Total E&P and other CapEx 202.3 Capitalized interest 1.4 Total CapEx $ 203.7 Dividend Declaration: Chord declared a base-plus-variable cash dividend of $3.22 per share of common stock. The dividend will be payable on May 30, 2023 to shareholders of record as of May 16, 2023 . The base-plus-variable dividend was declared in connection with Chord's return of capital plan. The total $3.22 per share dividend reflects a quarterly base dividend of $1.25 per share of common stock and quarterly variable dividend of $1.97 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 data and liquidity metrics as of March 31, 2023 (in millions): March 31, 2023 Revolving credit facility(1) $ 1,000.0 Revolver borrowings $ — Senior notes 400.0 Total debt $ 400.0 Cash and cash equivalents $ 592.3 Letters of credit 6.1 Liquidity $ 1,586.2 (1) $2.5B borrowing base and $1.0B of elected commitments as of May 2, 2023 . Conference Call Information Investors, analysts and other interested parties are invited to listen to the webcast: Date: Thursday, May 4, 2023 Time: 10:00 a.m. Central Time Live Webcast: https://app.webinar.net/16nXqV1G8Wm 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: 7946962 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, May 11, 2023 by dialing: Replay dial-in: (877) 344-7529 Intl. replay: (412) 317-0088 Replay access: 8634496 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 expectations, 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 Chord's most recently filed Annual Reports on Form 10-K, for the year ended December 31, 2022 , 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 . The Company 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 www.chordenergy.com . Chord Energy Corporation Consolidated Balance Sheets (Unaudited) (In thousands, except share data) March 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 592,300 $ 593,151 Accounts receivable, net 790,989 781,738 Inventory 60,887 54,411 Prepaid expenses 29,180 17,624 Derivative instruments 24,728 23,735 Other current assets 32 11,853 Total current assets 1,498,116 1,482,512 Property, plant and equipment Oil and gas properties (successful efforts method) 5,320,711 5,120,121 Other property and equipment 69,011 72,973 Less: accumulated depreciation, depletion and amortization (611,716) (481,751) Total property, plant and equipment, net 4,778,006 4,711,343 Derivative instruments 38,231 37,965 Investment in unconsolidated affiliate 112,997 130,575 Long-term inventory 20,669 22,009 Operating right-of-use assets 22,501 23,875 Deferred tax assets 126,304 200,226 Other assets 18,579 22,576 Total assets $ 6,615,403 $ 6,631,081 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 7,909 $ 29,056 Revenues and production taxes payable 568,387 607,964 Accrued liabilities 481,764 362,454 Accrued interest payable 9,597 3,172 Derivative instruments 175,622 341,541 Advances from joint interest partners 3,087 3,736 Current operating lease liabilities 11,589 9,941 Other current liabilities 10,132 3,469 Total current liabilities 1,268,087 1,361,333 Long-term debt 394,626 394,209 Asset retirement obligations 148,137 146,029 Derivative instruments 260 2,829 Operating lease liabilities 22,267 13,266 Other liabilities 23,286 33,617 Total liabilities 1,856,663 1,951,283 Commitments and contingencies Stockholders' equity Common stock, $0.01 par value: 120,000,000 shares authorized; 43,897,964 shares issued and 41,538,209 shares outstanding at March 31, 2023 ; and 120,000,000 shares authorized, 43,726,181 shares issued and 41,477,093 shares outstanding at December 31, 2022 439 438 Treasury stock, at cost: 2,359,755 shares at March 31, 2023 and 2,249,088 shares at December 31, 2022 (266,953) (251,950) Additional paid-in capital 3,487,648 3,485,819 Retained earnings 1,537,606 1,445,491 Total stockholders' equity 4,758,740 4,679,798 Total liabilities and stockholders' equity $ 6,615,403 $ 6,631,081 Chord Energy Corporation Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) Three Months Ended March 31 , 2023 2022 Revenues Oil, NGL and gas revenues $ 766,200 $ 493,502 Purchased oil and gas sales 130,317 159,467 Total revenues 896,517 652,969 Operating expenses Lease operating expenses 153,408 63,187 Gathering, processing and transportation expenses 37,015 32,398 Purchased oil and gas expenses 129,593 161,627 Production taxes 60,517 35,858 Depreciation, depletion and amortization 133,791 44,673 General and administrative expenses 32,484 24,367 Exploration and impairment 24,864 510 Total operating expenses 571,672 362,620 Gain on sale of assets, net 1,227 1,521 Operating income 326,072 291,870 Other income (expense) Net gain (loss) on derivative instruments 66,934 (367,922) Net gain (loss) from investment in unconsolidated affiliate (2,216) 60,137 Interest expense, net of capitalized interest (7,135) (7,216) Other income 5,193 1,754 Total other income (expense), net 62,776 (313,247) Income (loss) from continuing operations before income taxes 388,848 (21,377) Income tax (expense) benefit (91,849) 1,826 Net income (loss) from continuing operations 296,999 (19,551) Income from discontinued operations attributable to Chord, net of income tax — 485,554 Net income attributable to Chord $ 296,999 $ 466,003 Earnings (loss) attributable to Chord per share: Basic from continuing operations $ 7.13 $ (1.01) Basic from discontinued operations — 25.15 Basic total $ 7.13 $ 24.14 Diluted from continuing operations $ 6.87 $ (1.01) Diluted from discontinued operations — 25.15 Diluted total $ 6.87 $ 24.14 Weighted average shares outstanding: Basic 41,568 19,306 Diluted 43,149 19,306 Chord Energy Corporation Consolidated Statements of Cash Flows (Unaudited) (In thousands) Three Months Ended March 31 , 2023 2022 Cash flows from operating activities: Net income including non-controlling interests $ 296,999 $ 468,314 Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities: Depreciation, depletion and amortization 133,791 44,673 Gain on sale of assets (1,227) (520,421) Impairment 23,304 — Deferred income taxes 73,923 (7) Net (gain) loss on derivative instruments (66,934) 367,922 Net (gain) loss from investment in unconsolidated affiliate 2,216 (60,137) Equity-based compensation expenses 11,854 4,848 Deferred financing costs amortization and other (3,791) 3,433 Working capital and other changes: Change in accounts receivable, net (14,657) (111,813) Change in inventory (12,753) 667 Change in prepaid expenses 1,211 (369) Change in accounts payable, interest payable and accrued liabilities 8,176 52,122 Change in other assets and liabilities, net 16,699 16,348 Net cash provided by operating activities 468,811 265,580 Cash flows from investing activities: Capital expenditures (172,328) (48,831) Proceeds from divestitures, net of cash divested 7,034 147,056 Costs related to divestitures — (11,368) Derivative settlements (91,656) (70,670) Proceeds from sale of investment in unconsolidated affiliate 12,347 — Distributions from investment in unconsolidated affiliate 3,015 13,116 Net cash provided by (used in) investing activities (241,588) 29,303 Cash flows from financing activities: Proceeds from revolving credit facilities — 15,000 Deferred financing costs — (9) Repurchases of common stock (15,003) — Tax withholding on vesting of equity-based awards (10,300) (4,132) Dividends paid (202,473) (70,579) Payments on finance lease liabilities (388) (229) Proceeds from warrants exercised 90 457 Net cash used in financing activities (228,074) (59,492) Increase (decrease) in cash and cash equivalents (851) 235,391 Cash and cash equivalents: Beginning of period 593,151 174,783 End of period $ 592,300 $ 410,174 Supplemental non-cash transactions: Change in accrued capital expenditures $ 46,097 $ 17,504 Change in asset retirement obligations 234 (428) Investment in unconsolidated affiliate — 568,312 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 total 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 March 31 , 2023 2022 (In thousands) GPT $ 37,015 $ 32,398 Pipeline imbalances (6,005) 316 Mark-to-market adjustments on derivative transportation contracts 11,157 — Cash GPT $ 42,167 $ 32,714 Cash G&A The Company defines Cash G&A as total G&A expenses less G&A expenses directly attributable to the merger of equals with Whiting, 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 March 31 , 2023 2022 (In thousands) General and administrative expenses $ 32,484 $ 24,367 Merger costs(1) (2,793) — Equity-based compensation expenses (11,854) (4,800) G&A expenses attributable to shared services — (1,624) Other non-cash adjustments 411 (2,218) Cash G&A $ 18,248 $ 15,725 (1) Includes costs directly attributable to the merger of equals with Whiting for the three months ended March 31, 2023 . 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 March 31 , 2023 2022 (In thousands) Interest expense $ 7,135 $ 7,216 Capitalized interest 1,421 600 Amortization of deferred financing costs (1,198) (855) Cash Interest $ 7,358 $ 6,961 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. 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 March 31 , 2023 2022 (In thousands) Net income including non-controlling interests $ 296,999 $ 468,314 Interest expense, net of capitalized interest 7,135 10,901 Income tax expense 91,849 39,396 Depreciation, depletion and amortization 133,791 44,673 Merger costs(1) 2,793 — Exploration and impairment expenses 24,864 510 Gain on sale of assets (1,227) (520,421) Net (gain) loss on derivative instruments (66,934) 367,922 Realized loss on derivative instruments (91,858) (70,670) Net (gain) loss from investment in unconsolidated affiliate 2,216 (60,137) Distributions from investment in unconsolidated affiliate 3,015 13,116 Equity-based compensation expenses 11,854 4,848 Other non-cash adjustments (6,213) 1,260 Adjusted EBITDA 408,284 299,712 Adjusted EBITDA from discontinued operations — (12,296) Adjusted EBITDA from continuing operations 408,284 287,416 Cash Interest (7,358) (6,961) E&P and other capital expenditures (202,296) (62,915) Adjusted Free Cash Flow $ 198,630 $ 217,540 Net cash provided by operating activities $ 468,811 $ 265,580 Changes in working capital 1,324 43,045 Interest expense, net of capitalized interest 7,135 10,901 Current income tax expense 17,927 39,403 Merger costs(1) 2,793 — Exploration expenses 1,559 510 Realized loss on derivative instruments (91,858) (70,670) Distributions from investment in unconsolidated affiliate 3,015 13,116 Deferred financing costs amortization and other 3,791 (3,433) Other non-cash adjustments (6,213) 1,260 Adjusted EBITDA 408,284 299,712 Adjusted EBITDA from discontinued operations — (12,296) Adjusted EBITDA from continuing operations 408,284 287,416 Cash Interest (7,358) (6,961) E&P and other capital expenditures (202,296) (62,915) Adjusted Free Cash Flow $ 198,630 $ 217,540 (1) Includes cash-related costs directly attributable to the merger of equals with Whiting that were incurred during the three months ended March 31, 2023 . 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 the Company's 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 March 31 , 2023 2022 (In thousands) Net income attributable to Chord $ 296,999 $ 466,003 Net (gain) loss on derivative instruments (66,934) 367,922 Realized loss on derivative instruments (91,858) (70,670) Net (gain) loss from investment in unconsolidated affiliate 2,216 (60,137) Distributions from investment in unconsolidated affiliate 3,015 13,116 Impairment 23,304 — Merger costs(1) 2,793 — Gain on sale of assets (1,227) (520,421) Amortization of deferred financing costs 1,198 1,024 Other non-cash adjustments (6,213) 1,260 Tax impact(2) 31,583 60,710 Other tax adjustments(3) — (78,159) Adjusted net income attributable to Chord 194,876 180,648 Adjusted net income attributable to Chord from discontinued operations — (6,142) Distributed and undistributed earnings allocated to participating securities (467) — Adjusted net income attributable to Chord from continuing operations $ 194,409 $ 174,506 Diluted earnings attributable to Chord per share $ 6.87 $ 24.14 Net (gain) loss on derivative instruments (1.55) 17.54 Realized loss on derivative instruments (2.13) (3.37) Net (gain) loss from investment in unconsolidated affiliate 0.05 (2.87) Distributions from investment in unconsolidated affiliate 0.07 0.63 Impairment 0.54 — Merger costs(1) 0.06 — Gain on sale of assets (0.03) (24.81) Amortization of deferred financing costs 0.03 0.05 Other non-cash adjustments (0.14) 0.06 Tax impact(2) 0.73 2.89 Other tax adjustments(3) — (3.73) Impact of diluted shares — (1.92) Adjusted Diluted Earnings Attributable to Chord Per Share 4.50 8.61 Less: Adjusted Diluted Earnings From Discontinued Operations Attributable to Chord Per Share — (0.29) Less: Distributed and undistributed earnings allocated to participating securities (0.01) — Adjusted Diluted Earnings From Continuing Operations Attributable to Chord Per Share $ 4.49 $ 8.32 Diluted weighted average shares outstanding 43,149 20,974 Effective tax rate applicable to adjustment items(2) 23.6 % 22.7 % (1) Includes cash-related costs directly attributable to the merger of equals with Whiting that were incurred during the three months ended March 31, 2023 . (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 was adjusted to reflect the tax impact of the other adjustments using an assumed effective tax rate that excludes its impact. View original content to download multimedia: https://www.prnewswire.com/news-releases/chord-energy-corporation-reports-financial-and-operating-results-for-first-quarter-2023-declares-base-and-variable-dividends-and-issues-second-quarter-outlook-301815213.html SOURCE Chord Energy Corp.

View stock analysis, news, and events for Chord Energy Corporation