CHRD Chord Energy Corporation

HOUSTON, Aug. 7, 2024 /PRNewswire/ -- Chord Energy Corporation (NASDAQ: CHRD) ("Chord", "Chord Energy" or the "Company") today reported financial and operating results for the second quarter 2024. The results for the three and six months ended June 30, 2024 include the results of Enerplus Corporation ("Enerplus") for the period subsequent to May 31, 2024, unless otherwise noted.

2Q24 Operational and Financial Highlights:

• Oil volumes of 118.1 MBopd were at the high-end of guidance reflecting strong well performance and lower downtime;
• Total volumes of 207.2 MBoepd were above the high-end of guidance;
• E&P and other CapEx was $314.3MM ($298.2MM, excluding $16.1MM of capital incurred related to divested non-operated assets that will be reimbursed and was not in guidance), below the low-end of guidance reflecting program timing;
• Lease Operating Expense ("LOE") was $9.37 per Boe. LOE performance was favorable to expectations and benefited from lower maintenance associated with improved downtime;
• Net cash provided by operating activities was $460.9MM and net income was $213.4MM;
• Adjusted EBITDA⁽¹⁾ was $567.9MM and Adjusted Free Cash Flow⁽¹⁾ was $216.1MM;
• Enerplus combination closed May 31, 2024, creating a premier Williston Basin operator; and
• ESG and sustainability initiatives progressing with a focus on continually improving safety and emissions.

2Q24 Shareholder Return Highlights:

• Return of capital set at $197MM⁽²⁾, or 75% of Adjusted Free Cash Flow on a pro forma basis of $262.8MM^(1,2);
• Share repurchases totaled $61.7MM (weighted average price of $169.01 per share), of which $21.1MM was repurchased with cash proceeds from warrants exercised during 1H24; and
• Declared a base-plus-variable cash dividend of $2.52 per share of common stock. See "Return of Capital" below for additional information.

"Chord's strong second quarter performance benefited from both solid well performance and lower levels of downtime," said Danny Brown, Chord Energy's President and Chief Executive Officer. "Production levels and cost control drove free cash flow above expectations. In addition, the combination with Enerplus closed during the quarter, creating a premier Williston Basin operator with enhanced scale, significant low-cost inventory, financial strength, and peer-leading shareholder returns. I'm grateful for the dedication and hard work of both the Chord and Enerplus teams, as we have made substantial progress on the integration and continue to see over $200MM of annual synergies, which is well above original expectations."

Mr. Brown continued, "Chord's outlook is compelling as the combination with Enerplus significantly accelerates our rate of change as it relates to improving economic returns and value creation. Chord has been a leader in wider spacing and extending lateral length, which has improved both the predictability and economic returns of its inventory. By maintaining capital discipline and an attractive reinvestment rate, the Company has improved the capital efficiency of its program, reduced its corporate decline rate, and been a leader in returning cash to shareholders while operating in a safe and sustainable manner."

2Q24 Operational and Financial Update:

The following table presents select 2Q24 operational and financial data compared to guidance released on May 31, 2024:

On a pro forma basis Chord had 58 gross (42.9 net) operated turn-in-line ("TIL") wells in 2Q24.

During the three months ended June 30, 2024, net cash provided by operating activities was $460.9MM and net income was $213.4MM ($4.25/diluted share). Adjusted EBITDA was $567.9MM, Adjusted Free Cash Flow was $216.1MM and Adjusted Net Income was $234.9MM ($4.69/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.

Enerplus Integration Update:

On May 31, 2024, Chord and Enerplus completed their previously announced combination, establishing Chord as a premier operator in the Williston Basin with enhanced size and scale. Chord has a proven track record of successfully integrating assets in the Williston Basin and anticipates implementation of best practices and operating efficiencies from the combination with Enerplus to further enhance Chord's positive rate of change. Chord continues to make substantial progress integrating the Enerplus assets and remains on pace to achieve its target of over $200MM in annual synergies, which was increased in May from the original target of up to $150MM.

Updated Outlook:

Chord is updating its FY24 guidance to reflect the completion of the combination with Enerplus and remains on target with its 2024 plan. Chord expects to generate approximately $2.9B of Adjusted EBITDA and $1.2B of Adjusted Free Cash Flow on a pro forma basis in FY24, with a reinvestment rate of approximately 55% (actual prices for 1H24 and $80/Bbl WTI and $2.50/MMBtu Henry Hub for 2H24).

Certain reclassifications have been made to the historical presentation of Enerplus' financial statements to conform to Chord's accounting policies and presentation. Enerplus expensed certain items through LOE that Chord will deduct through gas and NGL revenues or charge through capital. Additionally, Enerplus capitalized certain G&A charges that Chord will expense. The net impact of these changes relative to Enerplus' standalone reporting is lower LOE, lower gas and NGL revenues and slightly higher capital. The impact of these changes is expected to be neutral to Adjusted Free Cash Flow before factoring in synergies. For more information, please reference Chord's August 7, 2024 presentation at https://ir.chordenergy.com/presentations.

• Full year volume projections updated to account for strong 1H24 performance and the latest development schedule. 2H24 oil volumes are unchanged from the May outlook. Pro forma FY24 midpoint oil volumes increased 0.5 MBopd;
• FY24 capital expenditures are unchanged from the May outlook (other than the impact of aligning Enerplus' accounting policies to Chord), while 2H24 capital reflects program timing and some spending deferred from 2Q24;
• LOE reflects the benefits of effective cost control and lower downtime;
• Overall combined cost structure favorable to expectations of each company entering the year; and
• Adjusting oil differentials, gas realizations, and Cash GPT to reflect current market prices, the alignment of Enerplus' accounting policies to Chord's accounting policies and the incorporation of Enerplus' cost structure.

The following table presents select operational and financial guidance for 3Q24 and FY24:

Cash taxes in 2H24 are expected to be 6% – 12% of Adjusted EBITDA at WTI prices of $70/Bbl – $90/Bbl, below the range of 8% – 14% referenced in May. Full-year cash taxes are trending slightly below original expectations.

Select Operational and Financial Data:

The following table presents select operational and financial data for the periods presented:

For the three months ended June 30, 2024, Marcellus natural gas volumes were 117.4 MMcfpd, and the realized natural gas price was $1.56/Mcf. 

Capital Expenditures:

The following table presents the Company's total capital expenditures ("CapEx") by category for the periods presented:

Return of Capital:

Chord declared a base-plus-variable cash dividend of $2.52 per share of common stock, including a base dividend of $1.25 per share of common stock and a variable dividend of $1.27 per share of common stock. The dividends will be payable on September 5, 2024 to shareholders of record as of August 21, 2024. 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.

During 2Q24, the Company repurchased 365,310 shares of common stock at a weighted average price of $169.01 per share totaling $61.7MM, of which $21.1MM was repurchased with cash proceeds from warrants exercised during 1H24. In addition, the Company repurchased $11.3MM of shares associated with tax withholding on vested equity awards during 2Q24.

Balance Sheet and Liquidity:

The following table presents key balance sheet data and liquidity metrics as of June 30, 2024 (in millions):

NI 51-101 Exemption:

The Canadian securities regulatory authorities have issued a decision document (the "Decision") granting Chord exemptive relief from the requirements contained in Canada's National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). As a result of the Decision, and provided that certain conditions set out in the Decision are met on an on-going basis, Chord will not be required to comply with the Canadian requirements of NI 51-101 and the Canadian Oil and Gas Evaluation Handbook and, accordingly, will not be required to file Form 51-101F1 Statement of Reserves Data and Other Oil and Gas Information or related forms and disclosure as part of its annual filings. In lieu of such filings, the Decision permits Chord to provide disclosure in respect of its oil and gas activities in the form permitted by, and in accordance with, the legal requirements imposed by the U.S. Securities and Exchange Commission ("SEC"), the Securities Act of 1933, the Securities and Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the rules of the NASDAQ. The Decision also provides that Chord is required to file all such oil and gas disclosures with the Canadian securities regulatory authorities on www.sedar.com as soon as practicable after such disclosure is filed with the SEC.

Contact:

Chord Energy Corporation
Bob Bakanauskas, Managing Director, Investor Relations
(281) 404-9600
ir@chordenergy.com

Conference Call Information

Investors, analysts and other interested parties are invited to listen to the webcast:

To join the conference call by phone without operator assistance (including sell-side analysts wishing to ask a question), you may register and enter your phone number at https://emportal.ink/3zNnvXS to receive an instant automated call back and be immediately placed into the call.

You may also use the following dial-in information to join the conference call by phone with operator assistance:

A recording of the conference call will be available beginning at 1:00 p.m. Central on the day of the call and will be available until Thursday, August 15, 2024 by dialing:

The call will also be available for replay for approximately 30 days at https://www.chordenergy.com 

Forward-Looking Statements and Cautionary Statements

Certain statements in this press release, other than statements of historical facts, 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 Enerplus combination, future opportunities for Chord, future financial performance and condition, guidance and statements regarding Chord's expectations, beliefs, plans, financial condition, objectives, assumptions or future events or performance are forward-looking statements based on assumptions currently believed to be valid. Forward-looking statements are all statements other than statements of historical facts. The words "anticipate," "believe," "ensure," "expect," "if," "intend," "estimate," "probable," "project," "forecasts," "predict," "outlook," "aim," "will," "could," "should," "would," "potential," "may," "might," "anticipate," "likely," "plan," "positioned," "strategy" and similar expressions or other words of similar meaning, and the negatives thereof, are intended to identify forward-looking statements. Specific forward-looking statements include statements regarding Chord's plans and expectations with respect to the return of capital plan, production levels and reinvestment rates, anticipated financial and operating results and other guidance and the effects, benefits and synergies of the Enerplus combination. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.

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 Chord, the effects of the Enerplus 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 Enerplus combination in the timeframe expected or at all, changes in crude oil, NGL and natural gas prices, war between Russia and Ukraine as well as was between Israel and Hamas and the potential for escalation of hostilities across the surrounding countries in the Middle East and their effect on commodity prices, changes in general economic and geopolitical conditions, including as a result of the 2024 U.S. presidential election, 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 Report on Form 10-K for the year ended December 31, 2023, 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 primarily 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.

Comparability of Financial Statements

The results reported for the three and six months ended June 30, 2024 reflect the consolidated results of Chord, including combined operations with Enerplus beginning on May 31, 2024, while the results reported for the three and six months ended June 30, 2023 reflect the consolidated results of Chord, excluding the impact from the business combination with Enerplus and the 2023 acquisition of acreage in the Williston Basin, unless otherwise noted.

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:

Cash G&A

The Company defines Cash G&A as total G&A expenses less G&A expenses directly attributable to certain merger and acquisition activity, non-cash equity-based compensation expenses 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:

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:

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, impairment expenses and other similar non-cash or non-recurring charges. The Company defines Adjusted Free Cash Flow as Adjusted EBITDA 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 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:

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Adjusted Net Income and Adjusted Diluted Earnings 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 as net income after adjusting for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, 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 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 Per Share is calculated as (i) Adjusted Net Income (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 to the non-GAAP financial measure of Adjusted Net Income and the GAAP financial measure of diluted earnings per share to the non-GAAP financial measure of Adjusted Diluted Earnings Per Share for the periods presented:

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SOURCE Chord Energy