Chord Energy : Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

About this update from Chord Energy Corporation

- Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Annual Report"), as well as the unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding, but not limited to, our strategic tactics, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words "could," "believe," "anticipate," "intend," "estimate," "expect," "may," "continue," "predict," "potential," "project," "plans" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. In particular, the factors discussed below and detailed under "Part II, Item 1A. Risk Factors" in this Quarterly Report on Form 10-Q could affect our actual results and cause our actual results to differ materially from expectations, estimates, or assumptions expressed in, forecasted in, or implied in such forward-looking statements. These forward-looking statements are based on management's current belief, based on currently available information, as to the outcome and timing of future events. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. Without limiting the generality of the foregoing, certain statements incorporated by reference or included in this Quarterly Report on Form 10-Q constitute forward-looking statements. We believe these factors and risks relate to forward-looking statements including, but not limited to, the following: • crude oil, NGL and natural gas realized prices; • uncertainty regarding the future actions of foreign oil producers and the related impacts such actions have on the balance between the supply of and demand for crude oil, NGL and natural gas; • the actions taken by OPEC+ with respect to oil production levels and announcements of potential changes in such levels, including the ability of the OPEC+ countries to agree on and comply with production levels; • changes in trade policies and regulations, including increases or change in duties, current and potentially new tariffs or quotas; and other similar measures, as well as the potential impact of retaliatory tariffs and other actions; • war between Russia and Ukraine, military conflicts in the Red Sea Region, Iran, and the wider Middle East and their effect on commodity prices; • changes or uncertainty in general economic and geopolitical conditions; • inflation rates and the impact of associated monetary policy responses, including fluctuating interest rates; • logistical challenges and supply chain disruptions, including as a result of conflicts; • our business strategy, including the continued implementation of our 4-mile well program; • the geographic concentration of our operations; • estimated future net reserves and present value thereof; • timing and amount of future production of crude oil, NGL and natural gas; • drilling and completion of wells; • estimated inventory of wells remaining to be drilled and completed; • costs of exploiting and developing our properties and conducting other operations; • availability of drilling, completion and production equipment and materials; • availability of qualified personnel; • infrastructure for produced and flowback water gathering and disposal; • gathering, transportation and marketing of crude oil, NGL and natural gas in the Williston Basin and other regions in the United States; • the possible shutdown of the Dakota Access Pipeline; • our ability to realize the anticipated benefits from acquisitions; • property acquisitions and divestitures; • integration and benefits of property acquisitions or the effects of such acquisitions on our cash position and levels of indebtedness; • the amount, nature and timing of capital expenditures; • availability and terms of capital; • our financial strategic tactics, budget, projections, execution of business plan and operating results; • cash flows and liquidity; • our ability to pursue goals regarding capital management activities such as share repurchases, paying dividends on our common stock or additional means to return capital to shareholders; • our ability to utilize net operating loss carryforwards or other tax attributes in future periods; • our ability to comply with the covenants under our Credit Facility and other indebtedness; • operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; • interruptions in service and fluctuations in tariff provisions of third-party connecting pipelines; • potential disruptions arising from cybersecurity threats, terrorist attacks and any consequential or other hostilities; • compliance with, and changes in, environmental, safety and other laws and regulations; • execution of our sustainability initiatives; • effectiveness of risk management activities; • competition in the oil and gas industry; • counterparty credit risk; • incurring environmental liabilities; • developments in the global economy and resulting demand and supply for crude oil, NGL and natural gas; • governmental regulation, including, but not limited to, that of the Federal Energy Regulatory Commission ("FERC"), and the taxation of the oil and gas industry; • developments in crude oil-producing and natural gas-producing countries; • integration of emerging technologies, including artificial intelligence and machine learning technologies for improving operational efficiency; • consumer demand and preferences for, and governmental policies encouraging, fossil fuel alternatives; • the effects of accounting pronouncements issued periodically during the periods covered by forward-looking statements; • uncertainty regarding future operating results; • our ability to successfully forecast future operating results and manage activity levels with ongoing macroeconomic uncertainty; • the impact of disruptions in the financial markets, including bank failures and the volatile interest rate environment; • plans, objectives, expectations and intentions contained in this Quarterly Report on Form 10-Q that are not historical; and • certain factors discussed elsewhere in this Quarterly Report on Form 10-Q, in our 2025 Annual Report and in our other filings with the SEC. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. You should not place undue reliance on these forward-looking statements. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. Overview Chord Energy Corporation, a Delaware corporation (together with its consolidated subsidiaries, the "Company," "Chord," "we," "us," or "our"), is an independent exploration and production ("E&P") company engaged in the acquisition, exploration, development and production of crude oil, NGL and natural gas primarily in the Williston Basin with limited non-operated interests in the Marcellus Shale. Our mission is to responsibly produce hydrocarbons while exercising capital discipline, operating efficiently, improving continuously and providing a fun and rewarding environment for our employees. We are ideally positioned to generate strong free cash flow and enhance return of capital, while being responsible stewards of the communities and environment where we operate. Market Conditions and Commodity Prices Our revenue, profitability and ability to return cash to shareholders depend substantially on factors beyond our control, such as economic, political and regulatory developments as well as competition from other sources of energy. Energy markets experienced significant volatility during the first quarter of 2026, driven primarily by geopolitical tensions and the resulting disruptions to global oil supply. Following the escalation of conflict in the Middle East in late February, the NYMEX WTI spot price increased more than 50% by the end of the first quarter. Continued geopolitical tensions, uncertainty around OPEC+ production policy and the potential economic outcomes of tariff and trade policy decisions of the U.S. or other governments create difficulty in predicting future impacts to commodity prices, which could affect our financial position, results of operations, cash flows, capital and operating costs, and the quantities of crude oil, NGL and natural gas reserves that may be economically produced. In an effort to improve price realizations from the sale of our crude oil, NGL and natural gas, we manage our commodities marketing activities in-house, which enables us to market and sell our crude oil, NGL and natural gas to a broader array of potential purchasers. We enter into crude oil, NGL and natural gas sales contracts with purchasers who have access to transportation capacity, utilize derivative financial instruments to manage our commodity price risk and enter into physical delivery contracts to manage our price differentials. Due to the availability of other markets and pipeline connections, we do not believe that the loss of any single customer would have a material adverse effect on our results of operations or cash flows. Additionally, we sell a significant amount of our crude oil production through gathering systems connected to multiple pipeline and rail facilities. These gathering systems, which originate at the wellhead, reduce the need to transport barrels by truck from the wellhead, helping remove trucks from local highways and reduce greenhouse gas emissions. As of March 31, 2026, substantially all of our gross operated crude oil and natural gas production were connected to gathering systems. Our market optionality on these crude oil gathering systems allows us to shift volumes between pipeline and, to a lesser extent, rail markets in order to optimize price realizations. Expansions of both pipeline and rail facilities in the Williston Basin has reduced prior constraints on crude oil takeaway capacity and improved our price differentials received at the lease. In an effort to reduce inflationary pressures that emerged in the broader economy, central banks have in the past raised interest rates. Although U.S. inflation rates have shown signs of moderating, higher interest rates generally reduce economic activity levels, which have and could in the future again result in lower commodity prices due to reduced demand for crude oil, NGL and natural gas. To the extent we and our relevant markets experience high inflation, we may see cost increases in our operations, including increases in equipment and labor costs, and as a result our revenues, estimates of future reserves, borrowing base calculations and impairment assessments could be negatively impacted. Results of Operations Operational and Financial Highlights • Production volumes averaged 275,615 Boepd (57% oil), including average daily crude oil volumes of 158,027 Bopd in the first quarter of 2026. • Capital expenditures (excluding capitalized interest) were $344.9 million in the first quarter of 2026. • Lease operating expenses ("LOE") were $9.87 per Boe in the first quarter of 2026. • Net cash provided by operating activities was $507.5 million and net income was $108.6 million for the first quarter of 2026. Shareholder Return Highlights • Paid $1.30 per share base cash dividend on March 27, 2026. • Repurchased $70.7 million of common stock (excluding accrued excise taxes) in the first quarter of 2026. • Declared a base cash dividend of $1.30 per share of common stock. The dividend will be payable on June 5, 2026 to shareholders of record as of May 20, 2026. Net Income We had net income of $108.6 million for the three months ended March 31, 2026, which decreased 51% as compared to $219.8 million for the three months ended March 31, 2025, primarily due to an unrealized loss on our commodity derivative contracts driven by an upward shift in the crude oil futures curve. Additional impacts on net income from increases and decreases in certain revenues and expenses are further explained below. Revenues Our crude oil, NGL and natural gas revenues are derived from the sale of crude oil, NGL and natural gas production. These revenues do not include the effects of derivative instruments and may vary significantly from period to period as a result of changes in volumes of production sold and/or changes in commodity prices. Our purchased oil and gas sales are derived from the sale of crude oil and natural gas purchased through our marketing activities primarily to optimize transportation costs, for blending to meet pipeline specifications or to cover production shortfalls. Revenues and expenses from crude oil and natural gas sales and purchases are generally recorded on a gross basis, as we act as a principal in these transactions by assuming control of the purchased crude oil or natural gas before it is transferred to the counterparty. In certain cases, we enter into sales and purchases with the same counterparty in contemplation of one another, and these transactions are recorded on a net basis. The following table summarizes our revenues, production and average realized prices for the periods presented: Three Months Ended March 31, 2026 Three Months Ended December 31, 2025 Three Months Ended March 31, 2025 Revenues (in thousands) Crude oil revenues $ 996,296 $ 801,016 $ 956,138 NGL revenues 38,222 23,541 61,345 Natural gas revenues 116,071 52,046 85,942 Purchased oil and gas sales 515,046 292,836 111,622 Total revenues $ 1,665,635 $ 1,169,439 $ 1,215,047 Production data Crude oil (MBbls) 14,222 14,078 13,835 NGL (MBbls) 4,413 4,825 4,325 Natural gas (MMcf) (1) 37,023 37,187 37,303 Oil equivalents (MBoe) 24,805 25,101 24,377 Average daily production (Boepd) 275,615 272,840 270,855 Average daily crude oil production (Bopd) 158,027 153,026 153,720 Average sales prices Crude oil (per Bbl) Average sales price $ 70.05 $ 56.90 $ 69.11 Effect of derivative settlements (2) (0.48) 1.72 (0.03) Average realized price after the effect of derivative settlements (2) $ 69.57 $ 58.62 $ 69.08 NGL (per Bbl) Average sales price $ 8.66 $ 4.88 $ 14.18 Effect of derivative settlements (2) - - - Average realized price after the effect of derivative settlements (2) $ 8.66 $ 4.88 $ 14.18 Natural gas (per Mcf) Average sales price (1) $ 3.14 $ 1.40 $ 2.30 Effect of derivative settlements (2) (0.32) 0.16 0.01 Average realized price after the effect of derivative settlements (1)(2) $ 2.82 $ 1.56 $ 2.31 ____________________ (1) For the three months ended March 31, 2026, December 31, 2025 and March 31, 2025, natural gas production volume from the Marcellus Shale was 11,745 MMcf, 10,950 MMcf and MMcf 11,563, respectively. The related realized natural gas price prior to the effect of derivative settlements was $6.40 per Mcf, $3.19 per Mcf and $4.71 per Mcf for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025, respectively. (2) The effect of derivative settlements includes the gains or losses on commodity derivatives for contracts ending in the periods presented. Our commodity derivatives do not qualify for or were not designated as hedging instruments for accounting purposes. Three months ended March 31, 2026 as compared to three months ended December 31, 2025 Crude oil revenues . Our crude oil revenues increased $195.3 million to $996.3 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. The increase was primarily due to higher crude oil realized prices quarter over quarter resulting in a $185.2 million increase, coupled with an increase of $10.1 million due to higher crude oil production volumes sold quarter over quarter. Average crude oil sales prices, without derivative settlements, increased by $13.15 per barrel quarter over quarter to an average of $70.05 per barrel for the three months ended March 31, 2026 primarily due to an increase in NYMEX WTI. NGL revenues. Our NGL revenues increased $14.7 million to $38.2 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. The increase was primarily due to higher realized NGL prices quarter over quarter resulting in a $18.3 million increase, partially offset by a decrease of $3.6 million due to lower NGL production volumes sold quarter over quarter. Average NGL sales prices, without derivative settlements, increased by $3.78 per barrel quarter over quarter to an average of $8.66 per barrel for the three months ended March 31, 2026 primarily due to increases in the corresponding NGL product index prices for butane and pentane. Natural gas revenues. Our natural gas revenues increased $64.0 million to $116.1 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. The increase was primarily due to higher natural gas realized prices quarter over quarter resulting in a $64.5 million increase, partially offset by a decrease of $0.5 million due to lower natural gas production volumes sold quarter over quarter. Average natural gas sales prices, without derivative settlements, increased by $1.74 per Mcf quarter over quarter to $3.14 per Mcf for the three months ended March 31, 2026 primarily due to the seasonality of colder weather resulting in higher index prices quarter over quarter. Purchased oil and gas sales . Purchased oil and gas sales increased $222.2 million to $515.0 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. This increase was primarily due to an increase in the volume of crude oil purchased and subsequently sold quarter over quarter, coupled with increased crude oil prices over the same period. Three months ended March 31, 2026 as compared to three months ended March 31, 2025 Crude oil revenues. Our crude oil revenues increased $40.2 million to $996.3 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily due to higher crude oil production volumes sold period over period resulting in a $27.1 million increase, coupled with an increase of $13.1 million due to higher crude oil realized prices period over period. Average crude oil sales prices, without derivative settlements, increased by $0.94 per barrel period over period to an average of $70.05 per barrel for the three months ended March 31, 2026 primarily due to an increase in NYMEX WTI. NGL revenues. Our NGL revenues decreased $23.1 million to $38.2 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease was primarily due to lower realized NGL prices period over period resulting in a $23.9 million decrease, partially offset by an increase of $0.8 million due to higher NGL production volumes sold period over period. Average NGL sales prices, without derivative settlements, decreased by $5.52 per barrel period over period to an average of $8.66 per barrel for the three months ended March 31, 2026 primarily due to decreases in the corresponding NGL product index prices. Natural gas revenues. Our natural ga s revenu es increased $30.1 million to $116.1 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily due to higher natural gas realized prices period over period resulting in a $31.0 million increase, partially offset by a decrease of $0.9 million due to lower natural gas production volumes sold period over period. Average natural gas sales prices, without derivative settlements, increased by $0.84 per Mcf period over period to $3.14 per Mcf for the three months ended March 31, 2026 primarily due to increases in the corresponding natural gas index prices period over period. Purchased oil and gas sales. Purchased oil and gas sales increased $403.4 million to $515.0 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This increase was prim arily due to an increase i n the volume of crude oil purchased and subsequently sold period over peri od . Expenses and other income (expense) The following table summarizes our operating expenses and other income (expense) for the periods presented: Three Months Ended March 31, 2026 Three Months Ended December 31, 2025 Three Months Ended March 31, 2025 (In thousands, except per Boe of production data) Operating expenses Lease operating expenses $ 244,909 $ 243,966 $ 233,074 Gathering, processing and transportation expenses 67,018 70,451 73,314 Purchased oil and gas expenses 509,832 291,068 111,368 Production taxes 86,711 68,764 74,642 Depreciation, depletion and amortization 384,215 368,446 349,809 General and administrative expenses 37,508 33,516 38,377 Exploration and impairment 2,563 5,454 1,983 Total operating expenses 1,332,756 1,081,665 882,567 Gain on sale of assets, net 343 4,083 5,516 Operating income 333,222 91,857 337,996 Other income (expense) Net gain (loss) on derivative instruments (241,471) 44,944 (20,281) Net gain (loss) from investment in equity securities 22,829 (2,450) (4,900) Interest expense, net of capitalized interest (26,596) (26,826) (15,818) Loss on debt extinguishment - - (3,494) Other income (expense), net 6,329 8,350 (501) Total other income (expense), net (238,909) 24,018 (44,994) Income before income taxes 94,313 115,875 293,002 Income tax benefit (expense) 14,295 (31,459) (73,165) Net income $ 108,608 $ 84,416 $ 219,837 Costs and expenses (per Boe of production) Lease operating expenses $ 9.87 $ 9.72 $ 9.56 Gathering, processing and transportation expenses 2.70 2.81 3.01 Production taxes 3.50 2.74 3.06 Three months ended March 31, 2026 as compared to three months ended December 31, 2025 Lease operating expenses. LOE increased $0.9 million to $244.9 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. The increase was primarily due to higher workover activity and costs of $7.2 million and an increase in operating costs from our non-operated assets of $1.2 million, partially offset by lower fixed costs of $4.8 million and lower water costs of $3.5 million quarter over quarter. The same factors contributed to an increase in LOE per BOE, which increased $0.15 per Boe quarter over quarter to $9.87 per Boe for the three months ended March 31, 2026. Gathering, processing and transportation expenses . GPT expenses decreased $3.4 million to $67.0 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. The decrease was primarily due to a decrease in NGL and natural gas production volumes of $3.0 million quarter over quarter. GPT expenses decreased $0.11 per Boe quarter over quarter to $2.70 per Boe for the three months ended March 31, 2026 primarily due to lower NGL and natural gas production volumes. Purchased oil and gas expenses . Purchased oil and gas expenses increased $218.8 million to $509.8 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. The increase was primarily due to an increase in the volume of crude oil purchased quarter over quarter at increased crude oil prices over the same period. Production taxes. Production taxes increased $17.9 million to $86.7 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025 primarily due to higher crude oil revenues quarter over quarter. The production tax rate as a percentage of crude oil, NGL and natural gas revenues of 7.5% for the three months ended March 31, 2026 decreased from 7.8% for the three months ended December 31, 2025 primarily due to natural gas comprising a larger percentage of total sales relative to the prior quarter due to higher natural gas realized prices, while total natural gas production volumes, which drive production taxes on natural gas, remained relatively flat. Depreciation, depletion and amortization. DD&A expense increased $15.8 million to $384.2 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. The increase was primarily driven by $24.0 million related to a higher depletion rate quarter over quarter, offset by a decrease in plugging and abandonment expenses of $5.8 million. The depletion rate increased $1.03 per Boe quarter over quarter to $15.20 per Boe for the three months ended March 31, 2026 primarily due to a decrease in proved developed reserves quarter over quarter. General and administrative expenses. G&A expenses increased $4.0 million to $37.5 million for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025. The increase was primarily attributable to an increase in equity-based compensation costs of $4.8 million due to the impact of our stock price on the fair value of our liability-based awards coupled with new award grants during the current quarter and an increase of $3.6 million due to higher current expected credit losses. These increases were partially offset by a decrease of $4.4 million primarily attributable to various cost savings related to other G&A expenses quarter over quarter. Derivative instruments. We recorded a $241.5 million net loss on derivative instruments for the three months ended March 31, 2026, which included an unrealized loss of $223.0 million related to the change in fair value of our commodity derivative contracts primarily driven by an upward shift in the futures curve for forecasted commodity prices, coupled with a realized loss on settled commodity derivative contracts of $18.5 million. During the three months ended December 31, 2025, we recorded a $44.9 million net gain on derivative instruments, which was comprised of a net gain of $19.9 million associated with our commodity derivative contracts, coupled with a gain of $25.0 million associated with a contract that included contingent consideration. The net gain of $19.9 million on commodity derivative contracts included a realized gain of $30.2 million on settled commodity derivative contracts, partially offset by an unrealized loss of $10.3 million related to the change in fair value of our commodity derivative contracts. Investment in equity securities . We recor de d a $22.8 million net gain related to our investment in Energy Transfer LP ("Energy Transfer") for the three months ended March 31, 2026, which included an unrealiz ed gain o f $20.4 million as a result of an increase in the fair value of the investment during the quarter, coupled with a gain of $2.4 million for a cash distribution from Energy Transfer during the quarter. Du ring the three months ended December 31, 2025, we recorded a $2.5 million net loss related to our investment in Energy Transfer, which included an unrealized loss of $4.9 million as a result of a decrease in the fair value of the investment during the quarter, partially offset by a gain of $2.4 million for a cash distribution from Energy Transfer during the quarter. Income tax benefit (expense). Our effective tax rate was recorded at (15.2)% of pre-tax income for the three months ended March 31, 2026 and 27.1% of pre-tax income for the three months ended December 31, 2025. The effective tax rate for the three months ended March 31, 2026 was lower than the statutory federal rate of 21% primarily as a result of the identification of an error in the tax provision for the three and six months ended June 30, 2025 pertaining to the impact of goodwill impairment on our deferred taxes on unremitted earnings. As a result, we recognized an additional income tax benefit of $41.8 million during the three months ended March 31, 2026, with a corresponding decrease to deferred tax liabilities. The effective tax rate for the three months ended December 31, 2025 was higher than the statutory federal rate of 21% primarily as a result of state income tax and return to provision adjustments resulting from filing our tax returns during the quarter. Three months ended March 31, 2026 as compared to three months ended March 31, 2025 Lease operating expenses. LOE increased $11.8 million to $244.9 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily due to increased activity and operating costs from our non-operated assets of $14.6 million, higher workover costs of $4.6 million and higher variable costs of $1.9 million, partially offset by decreased fixed costs of $9.4 million period over period. The same factors contributed to an increase in LOE per Boe, which increased $0.31 per Boe period over period to $9.87 per Boe for the three months ended March 31, 2026. Gathering, processing and transportation expenses . GPT expenses decreased $6.3 million to $67.0 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease was primarily due to lower NGL and natural gas gathering and processing fees of $7.6 million and lower crude oil transportation fees of $1.9 million, partially offset by an increase in crude oil and NGL production volumes of $3.5 million period over period. GPT expenses decreased $0.31 per Boe period over period to $2.70 per Boe for the three months ended March 31, 2026 primarily due to lower gathering, processing and transportation fees. Purchased oil and gas expenses. Purchased oil and gas expenses increased $398.5 million to $509.8 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 primarily due to an increase in the volume of crude oil purchased period over period. Production taxes. Production taxes increased $12.1 million to $86.7 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily due to higher crude oil revenues period over period, partially offset by a $10.9 million decrease in non-recurring refunds period over period related to certain North Dakota wells receiving an extraction tax exemption. The production tax rate as a percentage of crude oil, NGL and natural gas revenues increased from 6.8% for the three months ended March 31, 2025 to 7.5% for the three months ended March 31, 2026 primarily due to increased crude oil revenues and fewer wells qualifying for the extraction tax exemption relative to the prior period. Depreciation, depletion and amortization. DD&A expense increased $34.4 million to $384.2 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily due to $24.3 million of additional depletion expense due to a higher depletion rate period over period, coupled with $9.3 million of additional DD&A expense related to an overall increase in production volumes. The depletion rate increased $1.11 per Boe period over period to $15.20 per Boe for the three months ended March 31, 2026 primarily due to a decrease in proved developed reserves period over period. General and administrative expenses. G&A expenses decreased $0.9 million to $37.5 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease was primarily attributable to a decrease in merger-related costs of $5.1 million, lower employee compensation expenses of $2.5 million and a decrease of $1.7 million primarily attributable to various cost savings related to other G&A expenses, partially offset by an increase of $4.5 million due to higher current expected credit losses and an increase in equity-based compensation costs of $4.0 million period over period. Derivative instruments. During the three months ended March 31, 2026, we recorded a $241.5 million net loss on derivative instruments, which included an unrealized loss of $223.0 million related to the change in fair value of our commodity derivative contracts primarily driven by an upward shift in the futures curve for forecasted commodity prices, coupled with a realized loss of $18.5 million on settled commodity derivative contracts. During the three months ended March 31, 2025, we recorded a $20.3 million net loss on derivative instruments, which was comprised of a net loss of $21.0 million associated with our commodity derivative contracts and an unrealized gain of $0.7 million associated with a contract that included contingent consideration. The net loss of $21.0 million on commodity derivative contracts included an unrealized loss of $20.7 million related to the change in fair value of our commodity derivative contracts primarily driven by an upward shift i n the crude oil and natural gas futures curves, coupled with a realized loss of $0.3 million on settled commodity derivative contracts. Investment in equity securities . We recorded a $22.8 million net gain related to our investment in Energy Transfer for the three months ended March 31, 2026, which included an unrealized gain of $20.4 million as a result of an increase in the fair value of the investment during the period, coupled with a gain of $2.4 million for a cash distribution from Energy Transfer during the period. During the three months ended March 31, 2025, we recorded a net loss of $4.9 million related to our investment in Energy Transfer, which included an unrealized loss of $7.3 million as a result of a decrease in the fair value of the investment during the period, partially offset by a gain of $2.4 million for a cash distribution from Energy Transfer during the period. Interest expense, net of capitalized interest. Interest expense increased $10.8 million to $26.6 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase is primarily due to additional interest expense period over period on our senior unsecured notes of $23.5 million as a result of the issuance of the 2033 Senior Notes (defined below) and the 2030 Senior Notes (defined below) during 2025. This increase was partially offset by a $7.7 million decrease resulting from the repayment of the 2026 Senior Notes (defined below) during March 2025 and a $5.0 million decrease in interest expense on the Credit Facility (defined below) period over period. For the three months ended March 31, 2026, the weighted average borrowings outstanding under the Credit Facility were $0.2 million, and the weighted average interest rate incurred on the outstanding borrowings was 7.5%. During the three months ended March 31, 2025, the weighted average borrowings outstanding under the Credit Facility were $383.4 million, and the weighted average interest rate incurred on the outstanding borrowings was 6.4%. Loss on debt extinguishment. On March 13, 2025, we paid an aggregate of $409.1 million to purchase and satisfy and discharge $400.0 million of 6.375% senior unsecured notes outstanding due June 1, 2026 (the "2026 Senior Notes"), resulting in a loss on debt extinguishment of $3.5 million for the three months ended March 31, 2025. The loss primarily included the write-off of unamortized debt issuance costs of $2.1 million and a premium paid to redeem a portion of the 2026 Senior Notes of $1.1 million. Income tax benefit (expense). Our effective tax rate was recorded at (15.2)% and 25.0% of pre-tax income for the three months ended March 31, 2026 and 2025, respectively. Our effective tax rate for the three months ended March 31, 2026 was lower than the statutory federal rate of 21% primarily as a result of the identification of an error in the tax provision for the three and six months ended June 30, 2025 pertaining to the impact of goodwill impairment on our deferred taxes on unremitted earnings. As a result, we recognized an additional income tax benefit of $41.8 million during the three months ended March 31, 2026, with a corresponding decrease to deferred tax liabilities. The effective tax rate for the three months ended March 31, 2025 was higher than the statutory federal rate of 21% primarily as a result of the impact of state income taxes and deferred taxes on unremitted earnings. Liquidity and Capital Resources As of March 31, 2026, we had $2,193.2 million of liquidity available, including $1,967.4 million of aggregate unused borrowing capacity available under the Credit Facility (defined below) and $225.8 million in cash and cash equivalents. During the three months ended March 31, 2026, our primary sources of liquidity were from cash flows from operations, available borrowing capacity under the Credit Facility, and cash on hand. During the same period, our primary liquidity requirements were capital expenditures for the development of oil and gas properties, dividend payments, share repurchases, and working capital requirements. Our cash flows depend on many factors, including the price of crude oil, NGL and natural gas and the success of our development and exploration activities as well as future acquisitions. Our material cash requirements from known obligations include repayment of outstanding borrowings and interest payment obligations related to our long-term debt, obligations to plug, abandon and remediate our oil and gas properties at the end of their productive lives, payment of income taxes, obligations associated with outstanding commodity derivative contracts that settle in a loss position and obligations associated with our leases. In addition, we have announced a return of capital plan pursuant to which we intend to return capital to stockholders through dividend payouts, supplemented by opportunistic share repurchases. On a quarterly basis, we pay a commitment fee on the average amount of borrowing base capacity not utilized during the quarter and fees calculated on the average amount of letter of credit balances outstanding during the quarter. Capital availability is affected by prevailing conditions in our industry, the global economy, the global banking and financial markets, stakeholder scrutiny of sustainability matters and other factors, many of which are beyond our control. The U.S. Federal Reserve has stabilized interest rates, however the potential for such rates to decrease or increase creates additional economic uncertainty. Although we are unable to predict future interest rates, this disruption to the broader economy and financial markets may reduce our ability to access capital or result in such capital being available on less favorable terms, which could in the future negatively affect our liquidity. We believe, however, we have adequate liquidity to fund our capital expenditures and meet our contractual obligations during the next 12 months and the foreseeable future. Commodity derivative contracts . We actively manage our exposure to commodity price fluctuations by executing derivative transactions to mitigate the impact of changes in crude oil, NGL and natural gas prices on our production, which mitigates our exposure to crude oil, NGL and natural gas price declines; however, these transactions may also limit our cash flow in periods of rising crude oil, NGL and natural gas prices. See Note 6-Derivative Instruments and "Item 3. Quantitative and Qualitative Disclosures about Market Risk" for additional information. Commitments. We also have contracts which include provisions for the delivery, transport or purchase of a minimum volume of crude oil, NGL, natural gas and water within specified time frames, the majority of which are five years or less. Under the terms of these contracts, if we fail to deliver, transport or purchase the committed volumes we will be required to pay a deficiency payment for the volumes not tendered over the duration of the contract. The estimable future commitments under these agreements were $587.3 million as of March 31, 2026. We believe that for the substantial majority of these agreements our future production will be adequate to meet our delivery commitments or that we will be able to purchase sufficient volumes of crude oil, NGL and natural gas from third parties to satisfy our minimum volume commitments. See "Item 1. Financial Statements (Unaudited)-Note 16-Commitments and Contingencies" and "Item 8. Financial Statements and Supplementary Data-Note 20-Commitments and Contingencies" in our 2025 Annual Report for additional information on our volume delivery commitments. Long-term debt Our long-term debt consists of a senior secured revolving line of credit that is generally used to support our working capital requirements, $750.0 million of 6.000% senior unsecured notes and $750.0 million of 6.750% senior unsecured notes. Senior secured revolving line of credit. As of March 31, 2026, we had a senior secured revolving credit facility (the "Credit Facility") with a borrowing base of $2.75 billion and an aggregate amount of elected commitments of $2.0 billion that is due November 3, 2029. We had no net borrowings outstanding and $32.6 million of outstanding letters of credit, resulting in an unused borrowing base capacity of $1,967.4 million as of March 31, 2026. Additionally, we are permitted to incur term loans in addition to the revolving loans provided under the Credit Facility. The semi-annual redetermination of our borrowing base was completed in May 2026, which reaffirmed the borrowing base and the aggregate elected commitment at $2.75 billion and $2.0 billion, respectively. The next redetermination is scheduled for October 2026. For the three months ended March 31, 2026, the weighted average interest rate incurred on borrowings under the Credit Facility was 7.50% compared to 6.42% for the three months ended March 31, 2025. We were in compliance with the financial covenants in the Credit Facility at March 31, 2026. See "Item 1. Financial Statements (Unaudited)-Note 10-Long-Term Debt" for additional information. Senior unsecured notes. As of March 31, 2026, we had $750.0 million of 6.000% senior unsecured notes (the "2030 Senior Notes") that mature on October 1, 2030 and $750.0 million of 6.750% senior unsecured notes (the "2033 Senior Notes") that mature on March 15, 2033. Interest on the 2030 Senior Notes is payable semi-annually on April 1 and October 1 of each year, and interest on the 2033 Senior Notes is payable semi-annually on March 15 and September 15 of each year. See "Item 1. Financial Statements (Unaudited)-Note 10-Long-Term Debt" for additional information. Cash Flows Our cash flows for the three months ended March 31, 2026 and 2025 are presented below: Three Months Ended March 31, 2026 2025 (In thousands) Net cash provided by operating activities $ 507,467 $ 656,893 Net cash used in investing activities (324,405) (292,270) Net cash used in financing activities (146,791) (365,819) Increase (decrease) in cash and cash equivalents $ 36,271 $ (1,196) Cash flows provided by operating activities Our net cash flows provided by operating activities are primarily impacted by commodity prices, production volumes and operating costs. Net cash provided by operating activities was $507.5 million for the three months ended March 31, 2026. The decrease in net cash provided by operating activities of $149.4 million as compared to the three months ended March 31, 2025 was primarily due to a decrease in our working capital, decrease in NGL revenues primarily due to lower NGL realized prices, increase in production taxes primarily driven by increased crude oil sales and increase in LOE, partially offset by increases in crude oil and natural gas revenues. See "Results of Operations" above for additional information. Working Capital. Our working capital is primarily impacted by the factors discussed above, coupled with the timing of cash receipts and disbursements. Changes in working capital (as reflected in the Condensed Consolidated Statements of Cash Flows) decreased net cash flows from operating activities by $165.7 million during the three months ended March 31, 2026 and increased net cash flows from operating activities by $37.2 million during the three months ended March 31, 2025. Changes in working capital associated with our capital expenditure activities and settlements of outstanding commodity derivative instruments impact our cash flows from investing activities. The Credit Facility includes a requirement that we maintain a Current Ratio (as defined in the Credit Facility) of no less than 1.0 to 1.0 as of the last day of any fiscal quarter. For purposes of the Current Ratio, the Credit Facility's definition of total current assets includes unused com mitments under the Credit Facility, which were $1,967.4 million at March 31, 2026, and excludes current hedge assets, which were $1.2 million at March 31, 2026. For purposes of the Current Ratio, the Credit Facility's definition of total current liabilities excludes current hedge liabilities, of which there were $154.4 million at March 31, 2026 . Cash flows used in investing activities For the three months ended March 31, 2026, net cash used in inv e sting activities of $324.4 million was primarily attributable to capital expenditures incurred to develop our oil and gas properties of $351.3 million and acquisitions and leasehold costs of $5.0 million, partially offset by the receipt of the 2025 contingent consideration earn-out payment of $25.0 million. For the three months ended March 31, 2025 , net cash used in inv e sting activities of $292.3 million was primarily attributable to capital expenditures incurred to develop our oil and gas properties of $308.9 million and $17.9 million paid primarily for acreage in the Williston Basin, partially offset by the receipt of the 2024 contingent consideration earn-out payment of $25.0 million. Cash flows used in fi nancing activities For the three months ended March 31, 2026, the net cash used in finan cing activities of $146.8 million was primarily attributable to dividends paid to shareholders of $74.2 million, payments to repurchase our common stock of $67.7 million, and payments for income tax withholdings on vested equity-based compensation awards of $4.3 million. For the three months ended March 31, 2025 , net cash used in finan cing activities of $365.8 million was primarily attributable to repayments of the 2026 Senior Notes totaling $401.4 million, repayments under the Credit Facility of $1,445.0 million, partially offset by borrowings of $1,060.0 million, resulting in net repayments under the Credit Facility of $385.0 million, payments to repurchase our common stock of $215.2 million, dividends paid to shareholders of $86.5 million, payments for income tax withholdings on vested equity-based compensation awards of $14.4 million and payment of debt issuance costs of $13.0 million made primarily in connection with the issuance of the 2033 Senior Notes. These uses of cash were partially offset by proceeds from the issuance of the 2033 Senior Notes of $750.0 million. Capital Expenditures Our capital expenditures are summarized in the following table for the period presented: Three Months Ended March 31, 2026 (In thousands) E&P (1) $ 330,571 Midstream 14,203 Other (2) 113 Capitalized interest 933 Total capital expenditures (3) $ 345,820 __________________ (1) E&P capital expenditures include approximately $3.0 million of non-operated capital expenditures related to certain non-operated divested assets that were reimbursable for the three months ended March 31, 2026. (2) Other capital expenditures include items such as corporate and administrative capital. (3) Total capital expenditures reflected in the table above differ from the amounts for capital expenditures shown in the statements of cash flows in our condensed consolidated financial statements because amounts reflected in the table above include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statements of cash flows are presented on a cash basis. Acquisitions Acquisitions and leasehold costs were $5.0 million for the three months ended March 31, 2026. Dividends On May 5, 2026, we declared a base cash dividend of $1.30 per share of common stock. The dividend will be payable on June 5, 2026 to shareholders of record as of May 20, 2026. See "Item 1. Financial Statements (Unaudited)-Note 14-Stockholders' Equity" for additional information. See "Part I. Item 1.-Business-Business Strategy" in our 2025 Annual Report for additional information regarding our strategy on future dividend payments. Future dividend payments will depend on the Company's earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that the Board of Directors deems relevant. Share Repurchase Program During the three months ended March 31, 2026, we repurchased 559,064 shares of common stock at a weighted average price of $126.53 per common share for a total cost of $70.7 million under our $1.0 billion share repurchase program authorized by our Board of Directors in August 2025. As of March 31, 2026, there was $881.4 million of capacity remaining under this share repurchase program. During the three months ended March 31, 2025, we repurchased 1,994,496 shares of common stock under a previous share repurchase program at a weighted average price of $108.54 per common share for a total cost of $216.5 million. Fair Value of Financial Instruments See "Item 1. Financial Statements (Unaudited)-Note 5-Fair Value Measurements" for additional information on our derivative instruments and their related fair value measurements. See also "Item 3. Quantitative and Qualitative Disclosures about Market Risk" below. Critical Accounting Policies and Estimates There have been no material changes in our critical accounting policies and estimates from those disclosed in our 2025 Annual Report.

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