Chord Energy Corp

6. Derivative Instruments

Commodity derivative contracts. The Company utilizes derivative financial instruments to manage risks related to changes in commodity prices. The Company’s crude oil contracts settle monthly based on the average NYMEX WTI, and its natural gas contracts settle monthly based on the average NYMEX Henry Hub natural gas index price.

The Company utilizes derivative financial instruments including fixed-price swaps and two-way and three-way collars to manage risks related to changes in commodity prices. The Company’s fixed-price swaps are designed to establish a fixed price for the volumes under contract. Two-way collars are designed to establish a minimum price (floor) and a maximum price (ceiling) for the volumes under contract. Three-way collars are designed to establish a minimum price (floor), unless the market price falls below the sold put (sub-floor), at which point the minimum price would be the index price plus the difference between the purchased put and the sold put strike price. The sold call establishes a maximum price (ceiling) for the volumes under contract. The Company may, from time to time, restructure existing derivative contracts or enter into new transactions to effectively modify the terms of current contracts in order to improve the pricing parameters in existing contracts.

At March 31, 2025, the Company had the following outstanding commodity derivative contracts:

Transportation derivative contract. The Company had a contract that provided for the transportation of crude oil through a buy/sell structure from North Dakota to Cushing, Oklahoma. The contract had required the purchase and sale of fixed volumes of crude oil through July 2024 as specified in the agreement. The Company determined that this contract qualified as a derivative and did not elect the “normal purchase normal sale” exclusion. As of June 30, 2024, the term of this contract expired. The Company recorded the changes in fair value of this contract within GPT expenses on the Company’s Condensed Consolidated Statements of Operations. Settlements on this contract are reflected as operating activities on the Company’s Condensed Consolidated Statements of Cash Flows and represent cash payments to the counterparty for transportation of crude oil or the net settlement of contract liabilities if the transportation was not utilized, as applicable.

Contingent consideration. The Company bifurcated the Contingent Consideration from the host contract and accounted for it separately at fair value. The Contingent Consideration is marked-to-market each reporting period, with changes in fair value recorded in the other income (expense) section of the Company’s Condensed Consolidated Statements of Operations as a net gain or loss on derivative instruments. The estimated fair value of the Contingent Consideration was classified as a current derivative asset of $23.5 million and $22.8 million on the Condensed Consolidated Balance Sheet at March 31, 2025 and December 31, 2024, respectively. See Note 5—Fair Value Measurements for additional information.

The following table summarizes the location and amounts of gains and losses from the Company’s derivative instruments recorded in the Company’s Condensed Consolidated Statements of Operations for the periods presented:

(1)The change in the fair value of the transportation derivative contract was recorded in GPT expenses as a loss for the three months ended March 31, 2024.

(2)The change in the fair value of the Contingent Consideration was recorded in net loss on derivative instruments as a gain for the three months ended March 31, 2025 and 2024.

In accordance with the FASB’s authoritative guidance on disclosures about offsetting assets and liabilities, the Company is required to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting agreement. The Company’s derivative instruments are presented as assets and liabilities on a net basis by counterparty, as all counterparty contracts provide for net settlement. No margin or collateral balances are deposited with counterparties, and as such, gross amounts are offset to determine the net amounts presented in the Company’s Condensed Consolidated Balance Sheets.

The following table summarizes the location and fair value of all outstanding derivative instruments recorded in the Company’s Condensed Consolidated Balance Sheets: