Chord Energy Corp

Results of Operations

Comparability of Financial Statements

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

Operational and Financial Highlights

•Production volumes averaged 280,815 Boepd (57% oil), including crude oil volumes of 158,793 Bopd in the third quarter of 2024.

•E&P and other capital expenditures (excluding capitalized interest) were $329.2 million in the third quarter of 2024.

•Lease operating expenses (“LOE”) were $9.56 per Boe in the third quarter of 2024.

•Net cash provided by operating activities was $663.2 million and net income was $225.3 million in the third quarter of 2024.

Shareholder Return Highlights

•Paid $2.52 per share base-plus-variable cash dividend on August 21, 2024.

•Repurchased $146.0 million of common stock in the third quarter of 2024 with $445.2 million remaining under our $750 million share repurchase program.

•In October 2024, the Board of Directors authorized a new $750.0 million share repurchase program.

•Declared a base-plus-variable cash dividend of $1.44 per share of common stock. The dividend will be payable on December 12, 2024 to shareholders of record as of November 27, 2024.

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 revenues for the three and nine months ended September 30, 2024 increased due to the Arrangement, which expanded our operations primarily in the Williston Basin. Our purchased oil and gas sales are derived from the sale of crude oil, NGLs 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, NGL 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:

(1)For the three and nine months ended September 30, 2024, natural gas production volume from the Marcellus Shale was 10,508 MMcf and 14,272 MMcf, respectively. The realized natural gas price related to this production, prior to the effect of derivative settlements, was $1.32 per Mcf and $1.41 per Mcf, for the three and nine months ended September 30, 2024, 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 September 30, 2024 as compared to three months ended June 30, 2024

Crude oil revenues. Our crude oil revenues increased $225.8 million to $1,073.9 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. Our crude oil revenues increased$283.6 million due to higher total crude oil production volumes sold, primarily due to a full quarter of results from the Arrangement. The increase was partially offset by a decrease of $57.8 million due to lower crude oil realized prices quarter over quarter. Average crude oil sales prices, without derivative settlements, decreased by $5.38 per barrel quarter over quarter to an average of $73.51 per barrel for thethree months ended September 30, 2024 primarily due to a decrease in NYMEX WTI.

NGL revenues. Our NGL revenues decreased $6.7 million to $30.0 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. The decrease was primarily due to lower NGL realized prices quarter over quarter resulting in a $13.5 million decrease, partially offset by an increase of$6.8 million due to higher NGL production volumes sold quarter over quarter due to a full quarter of results from the Arrangement. Average NGL sales prices, without derivative settlements, decreased by $3.68 per barrel quarter over quarter to an average of $6.31 per barrel for the three months ended September 30, 2024 primarily due to a decrease in the corresponding NGL product benchmark prices.

Natural gas revenues. Our natural gas revenues decreased $0.8 million to $17.0 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. The decrease was primarily due to lower natural gas realized prices quarter over quarter of$6.2 million, offset by an increase in total natural gas production volumes sold of$5.4 million, primarily due to a full quarter of results from the Arrangement. Average natural gas sales prices, without derivative settlements, decreased by $0.23 per Mcf quarter over quarter to $0.44 per Mcf for the three months ended September 30, 2024 primarily due to widening differentials.

Purchased oil and gas sales. Purchased oil and gas sales decreased $28.6 million to $329.5 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. This decrease was primarily due to lower crude oil prices and a decrease in the volume of crude oil purchased and subsequently sold quarter over quarter.

Nine months ended September 30, 2024 as compared to nine months ended September 30, 2023

Crude oil revenues. Our crude oil revenues increased $526.1 million to $2,600.9 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Our crude oil revenues increased$584.1 million due to higher total crude oil production volumes sold, primarily due to our expanded operations after the Arrangement. The increase was partially offset by a decrease of $57.8 million due to lower crude oil realized prices period over period. Average crude oil sales prices, without derivative settlements, decreased by $2.17 per barrel period over period to an average of $75.67 per barrel for the nine months ended September 30, 2024 primarily due to widening in-basin differentials period over period.

NGL revenues. Our NGL revenues decreased $17.8 million to $114.1 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The decrease was primarily due to lower NGL realized prices period over period resulting in a $37.8 million decrease, partially offset by an increase of $20.0 million due to higher NGL production volumes sold period over period. Average NGL sales prices, without derivative settlements, decreased by $3.96 per barrel period over period to an average of $9.86 per barrel for the nine months ended September 30, 2024 primarily due to wider differentials on incremental volumes from the Arrangement period over period.

Natural gas revenues. Our natural gas revenues decreased $38.8 million to $56.9 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The decrease was primarily due to lower natural gas realized prices period over period of$54.5 million, offset by an increase in total natural gas production volumes sold of$15.6 million, primarily due to our expanded operations after the Arrangement. Average natural gas sales prices, without derivative sett lements, decreased by $0.89 per Mcf period over period to $0.67 per Mcf for the nine months ended September 30, 2024 primarily due to the impact of incurring a fixed fee for the majority of our natural gas marketing contracts beginning in the second quarter of 2023.

Purchased oil and gas sales. Purchased oil and gas sales increased $394.9 million to $1,024.6 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. This increase was primarily due to an increase in the volume of crude oil purchased and subsequently sold, partially offset by lower crude oil and gas prices period over period.

Expenses and other income (expense)

The following table summarizes our operating expenses and other income (expense) for the periods presented:

Three months ended September 30, 2024 as compared to three months ended June 30, 2024

Lease operating expenses. LOE increased $70.4 million to $247.1 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024 primarily due to increased costs resulting from the Arrangement of $59.7 million and increased fixed costs quarter over quarter of $10.8 million. LOE per Boe increased $0.19 per Boe quarter over quarter to $9.56 per Boe for the three months ended September 30, 2024 primarily due to higher fixed costs.

Gathering, processing and transportation expenses. GPT expenses increased $14.2 million to $77.4 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024 primarily due to increased costs resulting from the Arrangement of $24.4 million, partially offset by lower transportation expenses due to a fixed-cost oil transportation contract that terminated during the second quarter of 2024. GPT expenses per Boe decreased $0.36 per Boe to $2.99 per Boe for the three months ended September 30, 2024 primarily due to the termination of the fixed-cost oil transportation contract during the second quarter of 2024.

Purchased oil and gas expenses. Purchased oil and gas expenses decreased $26.7 million to $329.6 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024 primarily due to lower crude oil prices and a decrease in the volume of crude oil purchased and subsequently sold quarter over quarter.

Production taxes. Production taxes increased $21.5 million to $101.0 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. The increase was primarily due to a $26.0 million increase in production taxes attributable to our expanded operations after the Arrangement, partially offset by the impact of lower oil prices quarter over quarter. The production tax rate as a percentage of crude oil, NGL and natural gas sales of 9.0% for the three months ended September 30, 2024 was in line with the production tax rate of 8.8% for the three months ended June 30, 2024.

Depreciation, depletion and amortization. DD&A expense increased $132.3 million to $360.2 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. The increase was primarily due to an $86.1 million increase in DD&A expenses attributable to our expanded operations after the Arrangement, an increase of $40.1 million due to a higher depletion rate quarter over quarter and an increase of $5.6 million due to higher production volumes quarter over quarter. The depletion rate increased $1.82 per Boe quarter over quarter to $13.65 per Boe for the three months ended September 30, 2024 primarily due to the higher costs attributable to the oil and gas properties acquired in the Arrangement.

General and administrative expenses. G&A expenses decreased $30.0 million to $52.1 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. The decrease was primarily attributable to a decrease in merger-related costs of $37.2 million, partially offset by an increase in compensation and other costs associated with a larger organization after the Arrangement of $7.2 million.

Exploration and impairment. Exploration and impairment expenses increased $5.8 million to $7.3 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. The increase is primarily due to a $3.5 million lower of cost or net realizable value write-down of oil-in-tank inventory and a $2.5 million write-down of our Denver office lease acquired in connection with the Arrangement.

Gain (loss) on sale of assets, net. During the three months ended September 30, 2024 and June 30, 2024, we recorded a net loss on sale of assets of $3.0 million and a net gain on sale of assets of $15.5 million, respectively, primarily related to the divestitures of certain non-operated properties within each quarter.

Derivative instruments. We recorded a $52.7 million net gain on derivative instruments for the three months ended September 30, 2024, which was comprised ofa net gain of$54.1 million associated with our commodity derivative contracts, offset by an unrealized loss of $1.4 million associated with a contract that includes contingent consideration. The net gain of$54.1 million on commodity derivative contracts includedan unrealized gain of $53.2 million related to the change in fair value of our commodity derivative contr acts primarily driven by a downward shift in the futures curve for forecasted commodity prices and a realized gain of $1.0 millionon settled commodity derivative contracts. During the three months ended June 30, 2024, we recorded a $4.6 million net gain on derivative instruments, which was comprised of a net gain of $4.0 million associated with our commodity derivative contracts and an unrealized gain of $0.6 million associated with a contract that includes contingent consideration. The net gain of $4.0 million on commodity derivative contracts included an unrealized gain of $7.9 million related to the change in fair value of our commodity derivative contracts primarily driven by a downward shift in the futures curve for forecasted commodity prices, partially offset by a realized loss of $3.9 million on settled commodity derivative contracts.

Investment in unconsolidated affiliate. We recorded a $1.1 million gain related to our investment in Energy Transfer LP (“Energy Transfer”) for the three months ended September 30, 2024 due to a gain of $2.3 million for a cash distribution received from Energy Transfer, offset by an unrealized loss of $1.2 million as a result of adecrease in the fair value of the investment during the quarter. During the three months ended June 30, 2024, we recorded a $5.9 million gain related to our investment in Energy Transfer due to an unrealized gain of $3.6 million as a result of an increase in the fair value of the investment during the quarter, coupled with a gain of $2.3 million for a cash distribution received from Energy Transfer during the quarter.

Interest expense, net of capitalized interest. Interest expense increased$6.9 million to$19.1 million for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024. The increase was primarily due to higher borrowings on our revolving Credit Facility during the quarter. For the three months ended September 30, 2024, the weighted average borrowings outstanding under the Credit Facility were $567.6 million, and the weighted average interest rate incurred on the outstanding borrowings was 7.51%. For the three months ended June 30, 2024, the weighted average borrowings outstanding under the Credit Facility were $230.0 million, and the weighted average interest rate incurred on the outstanding borrowings was 7.53%. Interest capitalized during the three months ended September 30, 2024 and June 30, 2024 was $1.8 million and $1.2 million, respectively.

Nine months ended September 30, 2024 as compared to nine months ended September 30, 2023

Lease operating expenses. LOE increased $93.8 million to $582.9 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The increase was primarily driven by our expanded operations after the Arrangement contributing $105.5 million of additional LOE period over period, increased variable costs of $16.0 million, and increased fixed costs of $5.9 million. These costs were partially offset by a decrease in workover activity of $33.6 million period over period. LOE per Boe decreased $0.83 per Boe period over period to $9.71 per Boe for the nine months ended September 30, 2024 primarily due to higher production volumes and lower workover costs.

Gathering, processing and transportation expenses. GPT expenses increased $61.8 million to $194.5 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The increase was primarily due to our expanded operations after the Arrangement contributing $45.8 million of additional GPT and lower fair value gains of $22.7 million attributable to the completion of certain derivative transportation contracts during the nine months ended September 30, 2024. These increases resulted in an increase in GPT expenses of $0.38 per Boe period over period to $3.24 per Boe for the nine months ended September 30, 2024.

Purchased oil and gas expenses. Purchased oil and gas expenses increased $394.3 million to $1,021.7 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to an increase in the volume of crude oil purchased and subsequently sold, partially offset by lower crude oil and gas prices period over period.

Production taxes. Production taxes increased $52.9 million to $244.4 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The increase was primarily due to an overall increase in oil production volumes period over period and included a $48.2 million increase in production taxes attributable to our expanded operations after the Arrangement. The production tax rate as a percentage of crude oil, NGL and natural gas sales increased to 8.8% for the nine months ended September 30, 2024 as compared to 8.3% for the nine months ended September 30, 2023. This rate increase period over period was primarily due to decreased natural gas and NGL revenues as a result of lower realized prices.

Depreciation, depletion and amortization. DD&A expense increased $325.9 million to $757.0 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The increase was primarily due to our expanded operations after the Arrangement contributing $167.0 million of additional DD&A expense period over period, an increase of $151.2 million due to a higher depletion rate period over period and an increase of $9.1 million due to higher production volumes period over period. The depletion rate increased $3.28 per Boe period over period to $12.30 per Boe for the nine months ended September 30, 2024 primarily due to the higher costs attributable to the oil and gas properties acquired in the Arrangement.

General and administrative expenses. G&A expenses increased $59.1 million to $159.9 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to increased merger-related costs of $70.6 million and an increase in costs associated with a larger organization after the Arrangement of $15.8 million. These increases were partially offset by a decrease in stock-based compensation costs of $21.2 million due to the vesting of certain equity-based compensation awards period over period.

Exploration and impairment. Exploration and impairment expenses decreased $18.3 million to $14.9 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. During the nine months ended September 30, 2024, we recorded an impairment expense of $9.8 million, which primarily included a $7.4 million lower of cost or net realizable value write-down of oil-in-tank inventory and a $2.5 million impairment expense related to the Denver office lease and related fixed assets acquired in connection with the Arrangement. During the nine months ended September 30, 2023, exploration and impairment expenses totaled $33.3 million, which was primarily due to impairment expenses of $29.0 million, including $17.5 million associated with the write-down of our Denver office lease acquired in 2022, $5.8 million associated with a lower of cost or net realizable value write-down of oil-in-tank inventory and $5.6 million to adjust the carrying value of certain non-core properties held for sale to their estimated fair value less costs to sell.

Gain (loss) on sale of assets, net. During the nine months ended September 30, 2024 and 2023, we recorded a net gain on sale of assets of $13.8 million and $3.7 million, respectively, primarily related to the divestitures of certain non-operated properties within each period.

Derivative instruments. During the nine months ended September 30, 2024, we reco rded a $29.8 million net gain on derivative instruments, which was comprised of a net gain of$27.1 million associated with our commodity derivative contracts andan unrealized gain of$2.6 million associated with a contract that includes contingent consideration. The net gain of$27.1 million on commodity derivative contracts included an unrealized gain of $31.5 millionr elated to the change in fair value of our commodity derivative contracts primarily driven by a downward shift in the futures curve for forecasted commodity pricesand a realized loss of $4.3 million on settled commodity derivative contracts. During the nine months ended September 30, 2023, we recorded an $11.2 million net gain on derivative instruments, which was primarily comprised of a net gain of $7.2 million associated with a contract that includes contingent consideration and a net gain of $4.1 million associated with commodity derivative contracts. The net gain of $4.1 million on commodity derivative contracts included an unrealized gain of $210.3 million related to the change in fair value of our commodity derivative contracts primarily driven by a downward shift in the futures curve for forecasted commodity prices, partially offset by a realized loss of $206.2 million on settled commodity derivative contracts.

Investment in unconsolidated affiliate. We recorded a $23.2 million gain related to our investment in Energy Transfer for the nine months ended September 30, 2024, which included an unrealized gain of $16.3 million as a result of an increase in the fair value of the investment during the period, coupled with a gain of $6.9 million for cash distributions received from Energy Transfer during the period. During the nine months ended September 30, 2023, we recorded a gain of $21.4 million related to our investment in Energy Transfer, which primarily included an unrealized gain of $10.8 million as a result of an increase in the fair value of the investment during the period, coupled with a gain of $8.5 million for cash distributions received from Energy Transfer during the period.

Interest expense, net of capitalized interest. Interest expense increased $16.7 million to $38.9 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The increase is primarily due to higher borrowings outstanding on our revolving Credit Facility during the period. For the nine months ended September 30, 2024, the weighted average borrowings outstanding under the Credit Facility were $267.0 million, and the weighted average interest rate incurred on the outstanding borrowings was 7.51%. For the nine months ended September 30, 2023, the weighted average borrowings outstanding under the Credit Facility were $3.3 million, and the weighted average interest rate incurred on the outstanding borrowings was 7.09%. Interest capitalized during the nine months ended September 30, 2024 and September 30, 2023 was $3.7 million and $3.6 million, respectively.

Income tax expense. Our effective tax rate was recorded at 25.2% and 23.9% of pre-tax income for the nine months ended September 30, 2024 and September 30, 2023, respectively. Our effective tax rate was higher period over period due to Canadian losses for which no benefit is recognized and deferred taxes on unremitted earnings.