Chord Energy Corporation Reports Third Quarter 2022 Earnings, Declares Base and Variable Dividends, Issues Fourth Quarter Outlook
Chord Energy Corporation (NASDAQ: CHRD) reported strong financial results for 3Q22, including a production of 172.5 MBoe/d and net income of $941.6MM. The company declared a cash dividend of $3.67 per share and returned 85% of adjusted free cash flow to shareholders. CapEx for the quarter was $230.1MM, lower than expected. Chord successfully monetized 16MM units of Crestwood Equity Partners for $428.2MM and has a robust cash position of $658.9MM against $400.0MM in debt. The outlook for 4Q22 anticipates oil volumes between 97.5 MBbl/d and 100.5 MBbl/d.
- Net income of $941.6MM ($21.84/diluted share).
- Adjusted EBITDA was $564.6MM, demonstrating operational efficiency.
- Declared a base-plus-variable cash dividend of $3.67 per share.
- Returned 85% of adjusted free cash flow amounting to approximately $277MM.
- Monetized Crestwood units for $428.2MM, enhancing financial flexibility.
- CapEx of $230.1MM was below guidance due to delays.
- 4Q22 oil volume guidance reflects shifts in production schedule.
HOUSTON, Nov. 2, 2022 /PRNewswire/ -- Chord Energy Corporation (NASDAQ: CHRD) ("Chord", "Chord Energy" or the "Company") today reported financial and operating results for the quarter ending September 30, 2022, declared base and variable dividends and provided an updated outlook for the business. The Company completed the merger of equals transaction between Oasis Petroleum Inc. ("Oasis") and Whiting Petroleum Corporation ("Whiting") on July 1, 2022. The results for the third quarter of 2022 discussed within this release represent the consolidated results for Chord. The results for the nine months ended September 30, 2022 include the consolidated results for Chord for the third quarter of 2022 plus the results of legacy Oasis for the period prior to completion of the merger of equals on July 1, 2022, unless otherwise noted.
3Q22 Operational and Financial Highlights:
- Produced 172.5 MBoe/d in 3Q22, above the high-end of guidance released in August 2022. Oil volumes of 96.2 MBo/d exceeded the mid-point of the guidance;
- E&P and other CapEx was
$230 .1MM in 3Q22, below the low-end of August 2022 guidance largely due to timing. Full year 2022 CapEx guidance is unchanged; - Combined LOE and GPT costs were below the mid-point of August 2022 guidance;
- Net cash provided by operating activities was
$783 .6MM and net income from continuing operations was$941 .6MM; - Adjusted EBITDA(1) was
$564 .6MM and Adjusted Free Cash Flow(1) was$325 .7MM; - Total return of capital for 3Q22 set at
85% of Adjusted Free Cash Flow; - Declared a base-plus-variable cash dividend of
$3.67 per share of common stock. The dividend will be payable on November 29, 2022 to shareholders of record as of November 15, 2022; - Repurchased approximately
$125M M, or approximately 1.2MM shares during 3Q22 at a weighted average price per share of$106.25 ; - Cash of
$658 .9MM exceeded debt of$400 .0MM, as of September 30, 2022; - Monetized 16MM units of Crestwood Equity Partners LP (NASDAQ: CEQP) ("Crestwood") for net proceeds (pre-tax) of
$428 .2MM. As of September 30, 2022, Chord owned approximately 5MM Crestwood units (less than5% of Crestwood's units outstanding); - Received
$13 .7MM distributions from Crestwood in 3Q22 (included in Adjusted EBITDA); - Progressed integration activities associated with the merger. Chord continues to expect approximately
$100M M or more of combined capital, operating and G&A synergies; - Published sustainability letter to stakeholders outlining Chord's commitment to transparent reporting of its environmental, social and governance ("ESG") performance. Highlights include reduced greenhouse gas ("GHG") and methane intensity, and improved freshwater intensity. We remain focused on reducing GHG and methane emissions, and enhancing best practices and training to minimize the likelihood of safety incidents among employees and contractors. The letter and ESG metrics for 2019, 2020, and 2021 can be found at https://www.chordenergy.com/sustainability/.
(1) Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under United States Generally Accepted Accounting Principles ("GAAP").
"Chord Energy had strong operating performance in the third quarter which supported significant free cash flow and our peer-leading return of capital framework," said Danny Brown, Chord Energy's President and Chief Executive Officer. "This performance combined with Chord's pristine balance sheet allows us to return to shareholders approximately
The following table presents select 3Q22 operational and financial data compared to 3Q22 guidance released in August 2022.
Metric | 3Q22 Actual | 3Q22 Guidance | ||
Oil Volumes (Mbbl/d) | 96.2 | 94.2 - 97.2 | ||
Total Volumes (Mboe/d) | 172.5 | 162.5 - 167.5 | ||
Oil Premium to WTI ($/Bbl) | ||||
Gas and NGL Revenue ($/Boe) | ||||
LOE ($/Boe) | ||||
Cash GPT ($/Boe)(1) | ||||
Cash G&A ($MM)(1,2) | ||||
Production Taxes (% of oil, NGL and gas sales) | 7.9 % | |||
E&P & Other CapEx ($MM)(3) | ||||
Cash Interest ($MM)(1) |
___________________
(1) | Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly |
(2) | Excludes |
(3) | Excludes capitalized interest of |
During the three months ended September 30, 2022, net cash provided by operating activities was
On September 12, 2022, the Company sold 16,000,000 common units in Crestwood for pre-tax net proceeds of
Chord is providing a 4Q22 outlook which reflects the Company's most recent forecasts. 3Q22 volumes were above the mid-point of guidance largely reflecting strong well performance; however, over the course of the quarter, Chord experienced delays in completing certain wells due to mechanical issues which shifted some CapEx from 3Q22 to 4Q22. FY22 CapEx estimate of
The following table presents select operational and financial guidance for 4Q22.
Metric | 4Q22 | |
Oil Volumes (Mbbl/d) | 97.5 – 100.5 | |
Gas Volumes (MMcf/d) | 217.0 – 223.0 | |
NGL Volumes (Mbbl/d) | 36.5 – 37.5 | |
Total Volumes (Mboe/d) | 170.0 – 175.0 | |
Oil Premium to WTI ($/Bbl) | ||
Gas Realization (% of NYMEX) | ||
NGL Realization (% of WTI) | ||
LOE ($/Boe) | ||
Cash GPT ($/Boe) | ||
Cash G&A ($MM)(1) | ||
Production Taxes (% of oil, NGL and gas sales) | ||
E&P & Other CapEx ($MM) | ||
Cash Interest ($MM) |
___________________
(1) | Excludes merger-related costs. |
4Q22 cash taxes are expected to approximate
The following table presents select operational and financial data from continuing operations, unless otherwise noted, for the periods presented. Effective July 1, 2022, the Company reported crude oil, NGLs and natural gas on a three-stream basis. Periods prior to July 1, 2022 were reported on a two-stream basis. This change impacts the comparability between periods.
3Q22 | 2Q22 | 3Q21(1) | |||
Production data: | |||||
Crude oil (Bbl/d) | 96,201 | 41,174 | 31,896 | ||
Natural gas (Mcf/d)(2) | 225,524 | 137,431 | 119,448 | ||
NGLs (Bbl/d)(2) | 38,693 | — | — | ||
Total production (Boe/d)(2) | 172,481 | 64,079 | 51,804 | ||
Percent crude oil | 55.8 % | 64.3 % | 61.6 % | ||
Average sales prices: | |||||
Crude oil, without realized derivatives ($ per Bbl) | $ 93.13 | $ 111.79 | $ 70.12 | ||
Differential to NYMEX WTI ($ per Bbl) | 1.63 | 2.82 | 0.43 | ||
Crude oil, with realized derivatives ($ per Bbl) | 73.34 | 78.71 | 43.81 | ||
Crude oil realized derivatives ($MM) | (175.2) | (124.0) | (77.2) | ||
Natural gas, without realized derivatives ($ per Mcf)(2) | 6.06 | 9.57 | 6.91 | ||
Natural gas, with realized derivatives ($ per Mcf)(2) | 4.39 | 8.62 | 6.52 | ||
Natural gas realized derivatives ($MM) | (34.7) | (11.9) | (4.3) | ||
NGL, without realized derivatives ($ per Bbl)(2) | 29.82 | — | — | ||
NGL, with realized derivatives ($ per Bbl)(2) | 29.71 | — | — | ||
NGL realized derivatives ($MM) | (0.4) | — | — | ||
Selected financial data ($MM): | |||||
Revenues: | |||||
Crude oil revenues | $ 824.3 | $ 418.9 | $ 205.7 | ||
Natural gas revenues(2) | 125.7 | 119.7 | 75.7 | ||
NGL revenues(2) | 106.2 | — | — | ||
Purchased oil and gas sales | 132.7 | 250.5 | 87.4 | ||
Other services revenues | — | 0.3 | 0.1 | ||
Total revenues | $ 1,188.9 | $ 789.4 | $ 368.9 | ||
Net cash provided by operating activities(1) | $ 783.6 | $ 396.4 | $ 294.4 | ||
Non-GAAP financial measures: | |||||
Adjusted EBITDA | $ 564.6 | $ 261.7 | $ 116.4 | ||
Adjusted FCF | 325.7 | 208.7 | 67.5 | ||
Adjusted Net Income | 310.4 | 157.8 | 35.3 | ||
Select operating expenses: | |||||
Lease operating expenses ("LOE") | $ 156.4 | $ 67.7 | $ 44.9 | ||
Gathering, processing and transportation ("GPT") | 35.5 | 31.8 | 30.0 | ||
Purchased oil and gas expenses | 132.6 | 252.1 | 85.8 | ||
Production taxes | 83.5 | 40.1 | 18.4 | ||
Depreciation, depletion and amortization | 141.0 | 42.1 | 24.0 | ||
Total select operating expenses | $ 549.0 | $ 433.8 | $ 203.1 |
___________________
(1) | The OMP Merger was completed on February 1, 2022 and qualified for reporting as a discontinued operation. |
(2) | Beginning in 3Q22, the Company reported crude oil, NGLs and natural gas on a three-stream basis. Prior to 3Q22, the |
The following table presents the Company's total capital expenditures ("CapEx") from continuing operations by category for the periods presented:
1Q22 | 2Q22 | 3Q22 | YTD22 | ||||
CapEx ($MM): | |||||||
E&P | $ 62.9 | $ 46.0 | $ 224.8 | $ 333.7 | |||
Other(1) | 0.6 | 0.9 | 6.6 | 8.1 | |||
Total E&P and other CapEx | 63.5 | 46.9 | 231.4 | 341.8 | |||
Acquisitions(2,3) | — | (4.8) | 2.4 | (2.4) | |||
Total CapEx | $ 63.5 | $ 42.1 | $ 233.8 | $ 339.4 |
___________________
(1) | Includes capitalized interest of |
(2) | 2Q22 includes customary post-close adjustments to the purchase price of the Company's acquisition of oil and gas |
(3) | 3Q22 excludes amounts related to the merger of equals with Whiting. |
Chord declared a base-plus-variable cash dividend of
On October 31, 2022, Chord entered into its Second Amendment to Amended and Restated Credit Agreement, resulting in the borrowing base increasing from
Conference Call Information | |
Investors, analysts and other interested parties are invited to listen to the webcast: | |
Date: | Thursday, November 3, 2022 |
Time: | 10:00 a.m. Central Time |
Live Webcast: | https://app.webinar.net/zDjVxQAxY2m |
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: | 6295781 |
A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the | |
Replay dial-in: | (877) 344-7529 |
Intl. replay: | 412) 317-0088 |
Replay access: | 6819360 |
The call will also be available for replay for approximately 30 days at https://www.chordenergy.com | |
Certain statements in this press release concerning the merger between Oasis and Whiting, including any statements regarding Chord's credit facility, the results, effects, benefits and synergies of the merger, future opportunities for Chord, future financial performance and condition, guidance and any other statements regarding Chord's future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts are "forward-looking" statements based on assumptions currently believed to be valid. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Chord expects, believes or anticipates will or may occur in the future are forward-looking statements. The words "anticipate," "ensure," "expect," "if," "intend," "estimate," "probable," "project," "forecasts," "predict," "outlook," "aim," "will," "could," "should," "would," "potential," "may," "might," "likely," "plan," "positioned," "strategy" and similar expressions or other words of similar meaning, and the negatives thereof, are intended to identify forward-looking statements. Specific forward-looking statements include statements regarding Chord's plans and expectations with respect to the return of capital plan, the merger and the anticipated impact of the merger on Chord's results of operations, financial position, growth opportunities and competitive position.
These statements are based on certain assumptions made by Chord based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Chord, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the merger, the ultimate timing, outcome and results of integrating the operations of 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 anticipated synergies in the timeframe expected or at all, 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, developments in the global economy, the impact of pandemics such as COVID-19, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as Chord's ability to access them, the proximity to and capacity of transportation facilities, uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting Chord's business, the fact that operating costs and business disruption may be greater than expected following the consummation of the merger and other important factors that could cause actual results to differ materially from those projected as described in Chord's reports filed with the U.S. Securities and Exchange Commission (the "SEC").
Any forward-looking statement speaks only as of the date on which such statement is made and Chord undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. Additional information concerning other risk factors is also contained in the final prospectus and definitive proxy statement filed by the Company on May 24, 2022, Oasis' (now Chord's) and Whiting's most recently filed Annual Reports on Form 10-K (as may be amended), subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other SEC filings.
Chord Energy Corporation is an independent exploration and production company with quality and sustainable long-lived assets in the Williston Basin. Chord is uniquely positioned with a best-in-class balance sheet and is focused on rigorous capital discipline and generating free cash flow by operating efficiently, safely and responsibly to develop its unconventional onshore oil-rich resources in the continental United States. For more information, please visit the Company's website at https://www.chordenergy.com.
Condensed Consolidated Balance Sheets (Unaudited) | |||
September 30, 2022 | December 31, 2021 | ||
(In thousands, except share data) | |||
ASSETS | |||
Current assets | |||
Cash and cash equivalents | $ 658,857 | $ 172,114 | |
Accounts receivable, net | 717,149 | 377,202 | |
Inventory | 60,956 | 28,956 | |
Prepaid expenses | 13,339 | 6,016 | |
Derivative instruments | 3,061 | — | |
Other current assets | 582 | 1,836 | |
Current assets held for sale | — | 1,029,318 | |
Total current assets | 1,453,944 | 1,615,442 | |
Property, plant and equipment | |||
Oil and gas properties (successful efforts method) | 4,926,278 | 1,395,837 | |
Other property and equipment | 75,434 | 48,981 | |
Less: accumulated depreciation, depletion and amortization | (345,648) | (124,386) | |
Total property, plant and equipment, net | 4,656,064 | 1,320,432 | |
Derivative instruments | 52,110 | 44,865 | |
Investment in unconsolidated affiliate | 138,452 | — | |
Long-term inventory | 22,009 | 17,510 | |
Operating right-of-use assets | 26,954 | 15,782 | |
Deferred tax assets | 183,495 | — | |
Other assets | 22,107 | 12,756 | |
Total assets | $ 6,555,135 | $ 3,026,787 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities | |||
Accounts payable | $ 32,709 | $ 2,136 | |
Revenues and production taxes payable | 575,372 | 270,306 | |
Accrued liabilities | 476,636 | 150,674 | |
Accrued interest payable | 9,759 | 2,150 | |
Derivative instruments | 366,605 | 89,447 | |
Advances from joint interest partners | 3,609 | 1,892 | |
Current operating lease liabilities | 11,870 | 7,893 | |
Other current liabilities | 12,205 | 1,046 | |
Current liabilities held for sale | — | 699,653 | |
Total current liabilities | 1,488,765 | 1,225,197 | |
Long-term debt | 393,782 | 392,524 | |
Deferred tax liabilities | — | 7 | |
Asset retirement obligations | 119,757 | 57,604 | |
Derivative instruments | 37,898 | 115,282 | |
Operating lease liabilities | 14,380 | 6,724 | |
Other liabilities | 29,740 | 7,876 | |
Total liabilities | 2,084,322 | 1,805,214 | |
Commitments and contingencies | |||
Stockholders' equity | |||
Common stock, | 438 | 200 | |
Treasury stock, at cost: 2,045,774 shares at September 30, 2022 and 871,018 at | (224,845) | (100,000) | |
Additional paid-in capital | 3,469,622 | 863,010 | |
Retained earnings | 1,225,598 | 269,690 | |
Chord share of stockholders' equity | 4,470,813 | 1,032,900 | |
Non-controlling interests | — | 188,673 | |
Total stockholders' equity | 4,470,813 | 1,221,573 | |
Total liabilities and stockholders' equity | $ 6,555,135 | $ 3,026,787 | |
Condensed Consolidated Statements of Operations (Unaudited) | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands, except per share data) | |||||||
Revenues | |||||||
Oil, NGL and gas revenues | $ 1,056,146 | $ 281,474 | $ 2,088,215 | $ 781,459 | |||
Purchased oil and gas sales | 132,697 | 87,382 | 542,653 | 276,349 | |||
Other services revenues | — | 121 | 324 | 542 | |||
Total revenues | 1,188,843 | 368,977 | 2,631,192 | 1,058,350 | |||
Operating expenses | |||||||
Lease operating expenses | 156,397 | 44,889 | 287,195 | 146,373 | |||
Other services expenses | — | 26 | 123 | 47 | |||
Gathering, processing and transportation expenses | 35,549 | 30,028 | 99,759 | 90,920 | |||
Purchased oil and gas expenses | 132,625 | 85,828 | 546,310 | 275,789 | |||
Production taxes | 83,535 | 18,445 | 159,473 | 50,933 | |||
Depreciation, depletion and amortization | 141,047 | 23,975 | 227,856 | 83,976 | |||
Exploration and impairment | 910 | 263 | 1,698 | 1,941 | |||
General and administrative expenses | 102,226 | 20,088 | 151,415 | 61,500 | |||
Total operating expenses | 652,289 | 223,542 | 1,473,829 | 711,479 | |||
Gain on sale of assets | 755 | 5,405 | 2,595 | 228,473 | |||
Operating income | 537,309 | 150,840 | 1,159,958 | 575,344 | |||
Other income (expense) | |||||||
Net gain (loss) on derivative instruments | 337,409 | (101,790) | (128,766) | (550,342) | |||
Net gain from investment in unconsolidated affiliate | 75,093 | — | 38,977 | — | |||
Interest expense, net of capitalized interest | (8,645) | (7,156) | (22,810) | (23,444) | |||
Other income (expense) | (864) | (139) | 2,186 | (793) | |||
Total other income (expense), net | 402,993 | (109,085) | (110,413) | (574,579) | |||
Income from continuing operations before income taxes | 940,302 | 41,755 | 1,049,545 | 765 | |||
Income tax benefit | 1,307 | — | 3,352 | — | |||
Net income from continuing operations | 941,609 | 41,755 | 1,052,897 | 765 | |||
Income (loss) from discontinued operations attributable to | (59,858) | 30,195 | 425,696 | 100,957 | |||
Net income attributable to Chord | $ 881,751 | $ 71,950 | $ 1,478,593 | $ 101,722 | |||
Basic earnings attributable to Chord per share: | |||||||
Basic from continuing operations | $ 22.79 | $ 2.11 | $ 39.28 | $ 0.04 | |||
Basic from discontinued operations | (1.45) | 1.52 | 15.88 | 5.07 | |||
Basic total | $ 21.34 | $ 3.63 | $ 55.16 | $ 5.11 | |||
Diluted earnings attributable to Chord per share: | |||||||
Diluted from continuing operations | $ 21.84 | $ 2.01 | $ 37.02 | $ 0.04 | |||
Diluted from discontinued operations | (1.39) | 1.45 | 14.97 | 4.92 | |||
Diluted total | $ 20.45 | $ 3.46 | $ 51.99 | $ 4.96 | |||
Weighted average shares outstanding: | |||||||
Basic | 41,318 | 19,812 | 26,806 | 19,905 | |||
Diluted | 43,107 | 20,786 | 28,438 | 20,508 | |||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||
Nine Months Ended September 30, | |||
2022 | 2021 | ||
(In thousands) | |||
Cash flows from operating activities: | |||
Net income including non-controlling interests | $ 1,480,904 | $ 129,376 | |
Adjustments to reconcile net income including non-controlling interests to net cash | |||
Depreciation, depletion and amortization | 227,856 | 112,581 | |
Gain on sale of assets | (521,495) | (228,473) | |
Impairment | 1,073 | 5 | |
Deferred income taxes | 66,668 | — | |
Net loss on derivative instruments | 128,766 | 550,342 | |
Net gain from investment in unconsolidated affiliate | (38,977) | — | |
Equity-based compensation expenses | 40,351 | 11,187 | |
Deferred financing costs amortization and other | 1,241 | 18,811 | |
Working capital and other changes: | |||
Change in accounts receivable, net | (13,007) | (65,324) | |
Change in inventory | 2,199 | 2,408 | |
Change in prepaid expenses | 7,708 | 4,509 | |
Change in accounts payable, interest payable and accrued liabilities | 57,581 | 118,942 | |
Change in other assets and liabilities, net | 4,766 | (9,618) | |
Net cash provided by operating activities | 1,445,634 | 644,746 | |
Cash flows from investing activities: | |||
Capital expenditures | (303,140) | (143,201) | |
Acquisitions, net of cash acquired | (148,363) | (74,500) | |
Proceeds from divestitures, net of cash divested | 155,728 | 373,892 | |
Costs related to divestitures | (11,368) | (2,785) | |
Derivative settlements | (487,394) | (242,437) | |
Proceeds from sale of investment in unconsolidated affiliate | 428,231 | — | |
Distributions from investment in unconsolidated affiliate | 40,607 | — | |
Net cash used in investing activities | (325,699) | (89,031) | |
Cash flows from financing activities: | |||
Proceeds from revolving credit facilities | 1,035,000 | 384,500 | |
Principal payments on revolving credit facilities | (1,020,000) | (884,500) | |
Proceeds from issuance of senior unsecured notes | — | 850,000 | |
Cash paid to settle Whiting debt | (2,154) | — | |
Deferred financing costs | (3,938) | (20,480) | |
Proceeds from issuance of OMP common units, net of offering costs | — | 86,592 | |
Common control transaction costs | — | (5,453) | |
Purchases of treasury stock | (124,845) | (14,560) | |
Tax withholding on vesting of equity-based awards | (36,768) | — | |
Dividends paid | (500,106) | (102,123) | |
Distributions to non-controlling interests | — | (20,443) | |
Payments on finance lease liabilities | (570) | (1,107) | |
Proceeds from warrants exercised | 17,520 | 241 | |
Net cash provided by (used in) financing activities | (635,861) | 272,667 | |
Increase in cash and cash equivalents | 484,074 | 828,382 | |
Cash and cash equivalents: | |||
Beginning of period | 174,783 | 20,226 | |
End of period | $ 658,857 | $ 848,608 | |
Supplemental non-cash transactions: | |||
Change in accrued capital expenditures | $ 41,348 | $ 13,014 | |
Change in asset retirement obligations | 412 | (389) | |
Non-cash consideration exchanged in Whiting merger | 2,585,211 | — | |
Investment in unconsolidated affiliate | 568,312 | — | |
Note receivable from divestiture | — | 2,900 | |
Contingent consideration from Permian Basin Sale | — | 32,860 | |
Dividends payable | 27,256 | — | |
The following are non-GAAP financial measures not prepared in accordance with GAAP that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company believes that the foregoing are useful supplemental measures that provide an indication of the results generated by the Company's principal business activities. However, these measures are not recognized by GAAP and do not have a standardized meaning prescribed by GAAP. Therefore, these measures may not be comparable to similar measures provided by other issuers. From time to time, the Company provides forward-looking forecasts of these measures; however, the Company is unable to provide a quantitative reconciliation of the forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures because management cannot reliably quantify certain of the necessary components of such forward-looking GAAP measures. The reconciling items in future periods could be significant. To see how the Company reconciles its historical presentations of these non-GAAP measures to the most directly comparable GAAP measures, please visit the Investors—Documents & Disclosures—Non-GAAP Reconciliation page on the Company's website at https://ir.chordenergy.com/non-gaap.
The Company defines Cash GPT as gathering, processing and transportation ("GPT") expenses less non-cash valuation charges on pipeline imbalances and non-cash mark-to-market adjustments on transportation contracts classified 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 September 30, | Nine Months Ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
GPT | $ 35,549 | $ 30,028 | $ 99,759 | $ 90,920 | |||
Pipeline imbalances | (4,582) | 547 | (3,439) | 1,656 | |||
Mark-to-market adjustments on derivative transportation | 6,939 | — | 6,939 | — | |||
Cash GPT | $ 37,906 | $ 30,575 | $ 103,259 | $ 92,576 | |||
The Company defines Cash G&A as total general and administrative ("G&A") expenses less merger costs, 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 September 30, | Nine Months Ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
General and administrative expenses | $ 102,226 | $ 20,088 | $ 151,415 | $ 61,500 | |||
Merger costs(1) | (73,443) | — | (82,817) | — | |||
Equity-based compensation expenses | (12,844) | (4,144) | (22,460) | (10,519) | |||
G&A expenses attributable to shared services | — | (4,387) | (1,624) | (14,416) | |||
Other non-cash adjustments | 369 | (1,025) | (1,884) | (675) | |||
Cash G&A | $ 16,308 | $ 10,532 | $ 42,630 | $ 35,890 | |||
___________________
(1) | Includes costs directly attributable to the merger of equals with Whiting, including |
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 September 30, | Nine Months Ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
Interest expense | $ 8,645 | $ 7,156 | $ 22,810 | $ 23,444 | |||
Capitalized interest | 1,323 | 578 | 2,803 | 1,539 | |||
Amortization of deferred financing costs | (1,097) | (825) | (2,816) | (12,791) | |||
Cash Interest | $ 8,871 | $ 6,909 | $ 22,797 | $ 12,192 | |||
The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, depletion and amortization ("DD&A"), merger costs, exploration expenses and impairment expenses and other similar non-cash or non-recurring charges. The Company defines Adjusted EBITDA from continuing operations as Adjusted EBITDA less Adjusted EBITDA from discontinued operations, plus cash distributions from Oasis Midstream Partners LP ("OMP"). The Company defines Adjusted Free Cash Flow as Adjusted EBITDA from continuing operations less Cash Interest and E&P and other capital expenditures (excluding capitalized interest and acquisition capital).
Adjusted EBITDA and Adjusted Free Cash Flow are not measures of net income or cash flows from operating activities as determined by GAAP. Management believes that the presentation of Adjusted EBITDA and Adjusted Free Cash Flow provides useful additional information to investors and analysts for assessing the Company's results of operations, financial performance, ability to generate cash from its business operations without regard to its financing methods or capital structure and the Company's ability to maintain compliance with its debt covenants.
The following tables present reconciliations of the GAAP financial measures of net income including non-controlling interests and net cash provided by operating activities to the non-GAAP financial measures of Adjusted EBITDA and Adjusted Free Cash Flow for the periods presented:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands) | |||||||
Net income including non-controlling interests | $ 881,751 | $ 83,332 | $ 1,480,904 | $ 129,376 | |||
Interest expense, net of capitalized interest | 8,645 | 18,153 | 26,495 | 49,421 | |||
Income tax (benefit) expense | 58,551 | — | 97,728 | — | |||
Depreciation, depletion and amortization | 141,047 | 33,623 | 227,856 | 112,581 | |||
Merger costs(1) | 73,443 | — | 82,817 | — | |||
Exploration and impairment | 910 | 263 | 1,698 | 1,941 | |||
Gain on sale of assets | (755) | (5,405) | (521,495) | (228,473) | |||
Net (gain) loss on derivative instruments | (337,409) | 101,790 | 128,766 | 550,342 | |||
Realized derivative instruments | (210,228) | (81,443) | (431,332) | (160,018) | |||
Net gain from investment in unconsolidated affiliate | (75,093) | — | (38,977) | — | |||
Distributions from investment in unconsolidated affiliate | 13,746 | — | 40,607 | — | |||
Equity-based compensation expenses | 12,844 | 4,287 | 22,507 | 11,187 | |||
Other non-cash adjustments | (2,842) | 816 | (2,570) | 164 | |||
Adjusted EBITDA | 564,610 | 155,416 | 1,115,004 | 466,521 | |||
Adjusted EBITDA from discontinued operations | — | (57,980) | (12,296) | (169,448) | |||
Cash distributions from OMP and DevCo Interests | — | 18,954 | — | 52,828 | |||
Adjusted EBITDA from continuing operations | 564,610 | 116,390 | 1,102,708 | 349,901 | |||
Cash Interest | (8,871) | (6,909) | (22,797) | (12,192) | |||
E&P and other capital expenditures | (230,069) | (41,973) | (338,997) | (123,035) | |||
Adjusted Free Cash Flow | $ 325,670 | $ 67,508 | $ 740,914 | $ 214,674 | |||
Net cash provided by operating activities | $ 783,643 | $ 294,383 | $ 1,445,634 | $ 644,746 | |||
Interest expense, net of capitalized interest | 8,645 | 18,153 | 26,495 | 49,421 | |||
Current tax expense | (8,125) | — | 31,059 | — | |||
Merger costs(1) | 55,600 | — | 64,973 | — | |||
Exploration expenses | (163) | 263 | 625 | 1,936 | |||
Realized derivative instruments | (210,228) | (81,443) | (431,332) | (160,018) | |||
Distributions from investment in unconsolidated affiliate | 13,746 | — | 40,607 | — | |||
Deferred financing costs amortization and other | 2,052 | (2,523) | (1,242) | (18,811) | |||
Changes in working capital | (77,718) | (74,233) | (59,245) | (50,917) | |||
Other non-cash adjustments | (2,842) | 816 | (2,570) | 164 | |||
Adjusted EBITDA | 564,610 | 155,416 | 1,115,004 | 466,521 | |||
Adjusted EBITDA from discontinued operations | — | (57,980) | (12,296) | (169,448) | |||
Cash distributions from OMP and DevCo Interests | — | 18,954 | — | 52,828 | |||
Adjusted EBITDA from continuing operations | 564,610 | 116,390 | 1,102,708 | 349,901 | |||
Cash Interest | (8,871) | (6,909) | (22,797) | (12,192) | |||
E&P and other capital expenditures | (230,069) | (41,973) | (338,997) | (123,035) | |||
Adjusted Free Cash Flow | $ 325,670 | $ 67,508 | $ 740,914 | $ 214,674 | |||
___________________
(1) | Includes costs directly attributable to the merger of equals with Whiting, including |
Adjusted Net Income Attributable to Chord and Adjusted Diluted Earnings Attributable to Chord Per Share are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted Net Income Attributable to Chord as net income attributable to Chord after adjusting for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, non-cash changes in the fair value of our investment in an unconsolidated affiliate, impairment and other similar non-cash charges, (2) merger costs and (3) the impact of taxes based on the Company's effective tax rate applicable to those adjusting items in the same period. Adjusted Net Income Attributable to Chord is not a measure of net income as determined by GAAP.
The Company calculates earnings per share under the two-class method in accordance with GAAP. The two-class method is an earnings allocation formula that computes earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Adjusted Diluted Earnings Attributable to Chord Per Share is calculated as (i) Adjusted Net Income Attributable to Chord (ii) less distributed and undistributed earnings allocated to participating securities (iii) divided by the weighted average number of diluted shares outstanding for the periods presented.
The following table presents reconciliations of the GAAP financial measure of net income attributable to Chord to the non-GAAP financial measure of Adjusted Net Income Attributable to Chord and the GAAP financial measure of diluted earnings attributable to Chord per share to the non-GAAP financial measure of Adjusted Diluted Earnings Attributable to Chord Per Share for the periods presented:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(In thousands, except per share data) | |||||||
Net income attributable to Chord | $ 881,751 | $ 71,950 | $ 1,478,593 | $ 101,722 | |||
Net (gain) loss on derivative instruments | (337,409) | 101,790 | 128,766 | 550,342 | |||
Realized derivative instruments | (210,228) | (81,443) | (431,332) | (160,018) | |||
Net gain from investment in unconsolidated affiliate | (75,093) | — | (38,977) | — | |||
Distributions from investment in unconsolidated | 13,746 | — | 40,607 | — | |||
Impairment | 1,073 | — | 1,073 | 5 | |||
Merger costs(1) | 73,443 | — | 82,817 | — | |||
Gain on sale of assets | (755) | (5,405) | (521,495) | (228,473) | |||
Amortization of deferred financing costs | 1,097 | 1,072 | 2,986 | 14,100 | |||
Other non-cash adjustments | (2,842) | 816 | (2,570) | 164 | |||
Tax impact(2) | 131,708 | (4,177) | 180,502 | (39,767) | |||
Other tax adjustments(3) | (166,041) | (18,857) | (275,358) | (29,585) | |||
Adjusted net income attributable to Chord | 310,450 | 65,746 | 645,612 | 208,490 | |||
Adjusted net income attributable to Chord from | — | (30,445) | (6,142) | (102,248) | |||
Distributed and undistributed earnings allocated to | (43) | — | (24) | — | |||
Adjusted net income attributable to Chord from | $ 310,407 | $ 35,301 | $ 639,446 | $ 106,242 | |||
Diluted earnings attributable to Chord per share | $ 20.45 | $ 3.46 | $ 51.99 | $ 4.96 | |||
Gain on sale of assets | (0.02) | (0.26) | (18.34) | (11.14) | |||
Net (gain) loss on derivative instruments | (7.83) | 4.90 | 4.53 | 26.84 | |||
Realized derivative instruments | (4.88) | (3.92) | (15.17) | (7.80) | |||
Net loss from investment in unconsolidated affiliate | (1.74) | — | (1.37) | — | |||
Distributions from investment in unconsolidated | 0.32 | — | 1.43 | — | |||
Merger costs(1) | 1.70 | — | 2.91 | — | |||
Impairment | 0.02 | — | 0.04 | — | |||
Amortization of deferred financing costs | 0.03 | 0.05 | 0.11 | 0.69 | |||
Other non-cash adjustments | (0.06) | 0.04 | (0.09) | — | |||
Tax impact(2) | 3.06 | (0.20) | 6.35 | (1.94) | |||
Other tax adjustments(3) | (3.85) | (0.91) | (9.68) | (1.44) | |||
Adjusted Diluted Earnings Attributable to Chord Per | 7.20 | 3.16 | 22.71 | 10.17 | |||
Adjusted Diluted Earnings From Discontinued | — | (1.46) | (0.22) | (4.99) | |||
Distributed and undistributed earnings allocated to | — | — | — | — | |||
Adjusted Diluted Earnings From Continuing | $ 7.20 | $ 1.70 | $ 22.49 | $ 5.18 | |||
Diluted weighted average shares outstanding | 43,107 | 20,786 | 28,438 | 20,508 | |||
Effective tax rate applicable to adjustment items(2) | 24.5 % | 24.8 % | 24.5 % | 22.6 % | |||
___________________
(1) | Includes costs directly attributable to the merger of equals with Whiting, including |
(2) | The tax impact is computed utilizing the Company's effective tax rate applicable to the adjustments for certain non-cash |
(3) | Other tax adjustments relate to the change in the deferred tax asset valuation allowance, which is adjusted to reflect the |
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SOURCE Chord Energy Corp.
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