Le Lézard
Classified in: Oil industry, Business, Covid-19 virus
Subjects: ERN, ERP

Chord Energy Announces Updated Return of Capital Plan, Including Increasing Base Dividend by 114%, Issues an Updated Outlook and Reports Second Quarter 2022 Earnings


HOUSTON, Aug. 3, 2022 /PRNewswire/ -- Chord Energy Corporation (NASDAQ: CHRD) ("Chord", "Chord Energy" or the "Company") today announced its updated return of capital plan, provided an updated outlook for the business and reported financial and operating results for the quarter ending June 30, 2022. The Company completed the merger of equals transaction between Oasis Petroleum Inc. ("Oasis") and Whiting Petroleum Corporation ("Whiting") on July 1, 2022 and began trading under the ticker "CHRD" on July 5, 2022.

"The second quarter was marked by strong operating performance and culminated in the establishment of Chord Energy," said Danny Brown, Chord Energy's President and Chief Executive Officer. "Additionally, we are announcing a new return of capital program which includes an approximate 114% increase to the base dividend and a $300MM share repurchase program. Given our high-quality assets with low breakeven pricing and very strong financial position, Chord Energy is able to return significant amounts of capital to shareholders. The new return of capital program is highly competitive and represents our commitment to operating efficiently, maximizing returns and valuing the return of capital to shareholders."

"Chord Energy is making significant progress on integration and remains excited about its future. I'd like to thank our employees for their hard work and dedication through the closing of the merger and also for driving strong operating and safety performance. With enhanced scale and a low cost of supply, Chord Energy is well positioned to deliver strong value to our shareholders while operating in a sustainable manner and remains a compelling investment opportunity."

Return of Capital Plan

Chord Energy introduced a return of capital plan designed to provide peer-leading, sustainable shareholder returns. The plan calls for returning capital to investors based on free cash flow ("FCF") generated during the quarter and leverage under the following framework (see "Additional Return of Capital Plan Details" below for additional information):

Capital will be returned through base dividends, variable dividends and share repurchases. Chord is increasing its base dividend to $1.25 per share per quarter ($5.00 per share annualized), representing an approximate 114% increase from the prior base dividend of $0.585 per share per quarter. The new base dividend represents an annualized yield of approximately 3.9%. The 2Q22 base dividend will be payable on August 30, 2022 to shareholders of record as of August 16, 2022.

In July 2022, Chord repurchased $125MM of common stock at a weighted average price of $106.25 per share. As of July 31, 2022, the Company had 41,454,152 shares of common stock outstanding. In August, the Board of Directors authorized a new $300MM share repurchase program. Separately, the Company returned $540MM in cash to shareholders in July under the terms of the merger agreement. In November, Chord expects to announce its 3Q22 base dividend and variable dividend. The variable dividend will be calculated using the framework noted above to establish the minimum percentage of FCF to be returned less share repurchases completed during the quarter and the base dividend.

In addition to the share repurchases and dividends, the Company paid a significant portion of the transaction costs related to the merger in July 2022. As of July 31, 2022, Chord had approximately $95.7MM of cash, no outstanding credit facility borrowings, $3.1MM of outstanding letters of credit and $400MM of senior unsecured notes outstanding. The Company has a strong balance sheet and substantial liquidity afforded under its $2.0B credit facility, which has $800MM of elected commitments.

Updated Outlook

The following table presents select operational and financial guidance for 3Q22 and FY22 (pro forma for combined Company results including 1H22). 

Metric


3Q22


FY22

Oil Volumes (Mbbl/d)


94.2 - 97.2


95.7 - 97.5

Total Volumes (Mboe/d)(1)


162.5 - 167.5


166.6 - 169.3

Oil Premium to WTI ($/Bbl)


$1.00 - $3.00


$0.00 - $1.20

Gas and NGL Revenue ($/Boe)


$28.00 - $32.00


$29.00 - $33.00

LOE ($/Boe)


$9.35 - $10.15


$9.00 - $9.80

Cash GPT ($/Boe)


$2.25 - $3.05


$2.25 - $3.05

Cash G&A ($MM)(2)


$22.5 - $25.5


$89.5 - $93.5

Production Taxes


7.7% - 8.1%


7.4% - 7.8%

E&P & Other CapEx ($MM)


$265 - $295


$730 - $760

Cash Interest ($MM)


$9.0 - $10.5


$36.5 - $39.5

___________________

(1)

Legacy Oasis standalone volumes have been adjusted to include current three stream reporting uplift assumption of 18%. Chord will report three stream production beginning in 3Q22.

(2)

Excludes merger related costs.

Cash taxes as a percentage of 2H22 Adjusted EBITDA are expected to range between 1% at $80 WTI and 3.6% at $100 WTI, generally trending upward in a linear fashion as oil price increases, and are expected to be paid in 4Q22. 

2Q22 Operational and Financial Update

The following table presents select 2Q22 operational and financial data compared to preliminary ranges announced on July 1, 2022. 

Metric


OAS Standalone


WLL Standalone


Chord Combined


Preliminary Ranges -
Chord Combined (7/1
Release)

Oil Volumes (Mbbl/d)


41.2


48.8


90.0


88.6 - 90.4

Total Volumes (Mboe/d)(1)


75.6


83.0


158.6


156.4 - 158.8

Oil Premium to WTI ($/Bbl)


$2.82


$0.03


$1.31


$1.20 - $1.95

Gas and NGL Revenue ($/Boe)


$38.20


$31.83


$35.02


$35.50 - $37.00

LOE ($/Boe)


$9.84


$10.26


$10.06


$9.85 - $10.10

Cash GPT ($/Boe)(2)


$4.74


$1.05


$2.81


$2.30 - $3.30

Cash G&A ($MM)(2)(3)


$14.2


$9.4


$23.6


$21.0 - $24.0

Production Taxes


7.4 %


7.3 %


7.4 %


7.1% - 7.4%

E&P & Other CapEx ($MM)(4)


$46.0


$126.7


$172.7


$165 - $188

Cash Interest ($MM)(2)


$7.0


$2.6


$9.6


$8.9 - $10.6

Cash taxes paid ($MM)


$?


$1.0


$1.0


$0.0 - $2.0

___________________

(1)

Legacy Oasis standalone volumes have been adjusted to include current three stream reporting uplift assumption of 18%. Chord will report three stream production beginning in 3Q22.

(2)

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").

(3)

2Q22 reported amounts exclude merger related costs of $5.8MM for legacy Oasis and $3.2MM for legacy Whiting, consistent with the preliminary range.

(4)

Excludes capitalized interest of $0.9MM.

The following results for the three months ended June 30, 2022 discussed below represent legacy Oasis and exclude amounts related to legacy Whiting, unless otherwise specified.

Net cash provided by operating activities was $396.4MM and net income from continuing operations was $130.8MM ($6.23/ diluted share). Adjusted EBITDA from continuing operations was $255.9MM, Adjusted Free Cash Flow was $202.9MM and Adjusted Net Income was $153.5MM ($7.30/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.

Legacy Oasis completed and placed on production 7 gross (5.3 net) operated wells in 2Q22. On a combined basis, Chord completed and placed on production 16 gross (12.0 net) operated wells in 2Q22.

Select Operational and Financial Data - Legacy Oasis

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


2Q22


1Q22


2Q21

Production data:






Crude oil (Bopd)

41,174


44,975


34,668

Natural gas (Mcfpd)

137,431


147,783


117,617

Total production (Boepd)

64,079


69,606


54,271

Total production(1) (Boepd)

75,613


82,135


64,040

Percent crude oil

54.5 %


54.8 %


54.1 %

Average sales prices:






Crude oil, without realized derivatives ($ per Bbl)

$     111.79


$       95.34


$       65.52

Differential to NYMEX WTI ($ per Bbl)

2.82


1.22


0.61

Crude oil, with realized derivatives ($ per Bbl)

78.71


75.67


47.77

Crude oil realized derivatives ($MM)

(124.0)


(79.6)


(56.0)

Natural gas, without realized derivatives ($ per Mcf)(2)

9.57


8.09


4.53

Natural gas, with realized derivatives ($ per Mcf)(2)

8.62


7.67


4.53

Natural gas realized derivatives ($MM)

(11.9)


(5.6)


?

Selected financial data ($MM):






Revenues:






Crude oil revenues

$       418.9


$       385.9


$       206.7

Natural gas revenues

119.7


107.6


48.3

Purchased oil and gas sales

250.5


159.5


108.8

Other services revenues

0.3


?


0.2

Total revenues

$       789.4


$       653.0


$       364.0

Net cash provided by operating activities

$       396.4


$       265.6


$       160.0

Non-GAAP financial measures:






Adjusted EBITDA

$       255.9


$       272.8


$       107.7

Adjusted FCF

202.9


202.6


52.9

Adjusted Net Income

153.5


163.5


25.8

Select operating expenses:






Lease operating expenses ("LOE")

$          67.7


$          63.1


$          50.4

Gathering, processing and transportation ("GPT")

31.8


32.4


32.8

Purchased oil and gas expenses

252.1


161.6


111.0

Production taxes

40.1


35.9


16.2

Depreciation, depletion and amortization

42.1


44.7


29.2

Total select operating expenses

$       433.8


$       337.7


$       239.6

___________________

(1)

Oasis standalone total volumes have been adjusted to include current three stream reporting uplift assumption of 18%. Chord will report three stream production beginning in 3Q22.

(2)

Prices include the value for natural gas and natural gas liquids.

Capital Expenditures - Legacy Oasis

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


1Q22


2Q22


FY22

CapEx ($MM):






E&P

$                       62.9


$                       46.0


$                    108.9

Other(1)

0.6


0.9


1.5

Total E&P and other CapEx

63.5


46.9


110.4

Acquisitions(2)

?


(4.8)


(4.8)

Total CapEx

$                       63.5


$                       42.1


$                    105.6

___________________

(1)

Includes capitalized interest of $0.9MM for 2Q22 and $1.5MM for FY22.

(2)

Executed the final settlement statement with Diamondback Energy, Inc. on June 30, 2022 related to the acquisition of producing oil and gas properties in the Williston Basin in 4Q21. In connection with the execution of the final settlement statement, the Company received $12.0MM related to customary post-close adjustments, including a reduction to the purchase price of $4.8MM.

Additional Return of Capital Plan Details

FCF Definition

FCF is defined as Adjusted EBITDA (excluding transaction costs) less CapEx, cash interest and cash taxes. FCF is expected to be calculated for the prior quarter to determine the amount of capital to be returned.

Leverage

Leverage is defined as Net Debt (debt less cash) to forecasted next twelve months Adjusted EBITDA run at $65/bbl WTI and $3.00/mmBtu Henry Hub, excluding the impact of hedges. 

Share Repurchases

The Company intends to purchase stock under the repurchase program opportunistically with cash on hand, free cash flow from operations and proceeds from potential liquidity events such as the sale of assets. This repurchase program has no time limit and may be suspended from time to time, modified, extended or discontinued by the Board of Directors at any time. Purchases under the repurchase program may be made from time to time in the open market or privately negotiated transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and would be subject to market conditions, applicable legal requirements and other factors. Any stock purchased as part of this program would be put into treasury shares.

Conference Call Information


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

Date: 

Thursday, August 4, 2022

Time:

9:00 a.m. Central Time

Live Webcast: 

https://app.webinar.net/2BJdjxO9ZmD



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:

1631240

Website:

https://www.chordenergy.com



A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the call and will be
available until Thursday, August 11, 2022 by dialing:

Replay dial-in:

(877) 344-7529

Intl. replay:

(412) 317-0088

Replay access:

5012487



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

Forward-Looking Statements

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," "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, 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 Chord, 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 and natural gas prices, 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.

About Chord Energy

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) - Legacy Oasis



June 30, 2022


December 31, 2021






(In thousands, except share data)

ASSETS




Current assets




Cash and cash equivalents

$                571,114


$                172,114

Accounts receivable, net

494,949


377,202

Inventory

43,010


28,956

Prepaid expenses

5,160


6,016

Other current assets

884


1,836

Current assets held for sale

?


1,029,318

Total current assets

1,115,117


1,615,442

Property, plant and equipment




Oil and gas properties (successful efforts method)

1,502,168


1,395,837

Other property and equipment

42,287


48,981

Less: accumulated depreciation, depletion and amortization

(207,387)


(124,386)

Total property, plant and equipment, net

1,337,068


1,320,432

Derivative instruments

59,080


44,865

Investment in unconsolidated affiliate

505,335


?

Long-term inventory

19,188


17,510

Operating right-of-use assets

11,154


15,782

Other assets

15,468


12,756

Total assets

$             3,062,410


$             3,026,787





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable

$                    3,270


$                    2,136

Revenues and production taxes payable

341,402


270,306

Accrued liabilities

534,239


150,674

Accrued interest payable

2,715


2,150

Derivative instruments

338,148


89,447

Advances from joint interest partners

2,944


1,892

Current operating lease liabilities

7,419


7,893

Other current liabilities

19,581


1,046

Current liabilities held for sale

?


699,653

Total current liabilities

1,249,718


1,225,197

Long-term debt

393,354


392,524

Deferred income taxes

?


7

Asset retirement obligations

60,055


57,604

Derivative instruments

145,302


115,282

Operating lease liabilities

2,879


6,724

Other liabilities

13,006


7,876

Total liabilities

1,864,314


1,805,214

Commitments and contingencies




Stockholders' equity




Common stock, $0.01 par value: 60,000,000 shares authorized; 20,533,880 shares
issued and 19,662,862 shares outstanding at June 30, 2022 and 20,147,199 shares
issued and 19,276,181 shares outstanding at December 31, 2021

206


200

Treasury stock, at cost: 871,018 shares at June 30, 2022 and at December 31, 2021

(100,000)


(100,000)

Additional paid-in capital

883,801


863,010

Retained earnings

414,089


269,690

Chord share of stockholders' equity

1,198,096


1,032,900

Non-controlling interests

?


188,673

Total stockholders' equity

1,198,096


1,221,573

Total liabilities and stockholders' equity

$             3,062,410


$             3,026,787

 

Condensed Consolidated Statements of Operations (Unaudited) - Legacy Oasis

(In thousands, except share data)



Three Months Ended June 30,


Six Months Ended June 30,


2022


2021


2022


2021









Revenues








Oil and gas revenues

$         538,567


$         254,995


$      1,032,069


$         499,985

Purchased oil and gas sales

250,489


108,822


409,956


188,967

Other services revenues

324


195


324


421

Total revenues

789,380


364,012


1,442,349


689,373

Operating expenses








Lease operating expenses

67,722


50,420


130,798


101,484

Other services expenses

12


21


123


21

Gathering, processing and transportation expenses

31,813


32,787


64,210


60,892

Purchased oil and gas expenses

252,058


111,023


413,684


189,961

Production taxes

40,081


16,208


75,938


32,488

Depreciation, depletion and amortization

42,136


29,231


86,809


60,001

Exploration expenses

278


1,250


788


1,673

Impairment

?


?


?


3

General and administrative expenses

24,822


20,999


49,189


41,412

Total operating expenses

458,922


261,939


821,539


487,935

Gain on sale of assets

319


222,980


1,840


223,068

Operating income

330,777


325,053


622,650


424,506

Other income (expense)








Net loss on derivative instruments

(98,253)


(267,037)


(466,175)


(448,552)

Net loss from investment in unconsolidated affiliate

(96,253)


?


(36,116)


?

Interest expense, net of capitalized interest

(6,949)


(11,423)


(14,165)


(16,288)

Other income (expense)

1,298


(1,141)


3,050


(656)

Total other expense, net

(200,157)


(279,601)


(513,406)


(465,496)

Income (loss) from continuing operations before income
taxes

130,620


45,452


109,244


(40,990)

Income tax benefit (expense)

219


(3,654)


2,044


?

Net income (loss) from continuing operations

130,839


41,798


111,288


(40,990)

Income from discontinued operations attributable to Chord,
net of income tax

?


31,566


485,554


70,762

Net income attributable to Chord

$         130,839


$           73,364


$         596,842


$           29,772

Earnings (loss) attributable to Chord per share:








Basic from continuing operations

$                6.69


$                2.10


$                5.73


$              (2.05)

Basic from discontinued operations

?


1.59


24.99


3.55

Basic total

$                6.69


$                3.69


$             30.72


$                1.49

Diluted from continuing operations

$                6.23


$                2.01


$                5.30


$              (2.05)

Diluted from discontinued operations

?


1.52


23.14


3.55

Diluted total

$                6.23


$                3.52


$             28.44


$                1.49

Weighted average shares outstanding:








Basic

19,553


19,904


19,430


19,952

Diluted

20,990


20,822


20,983


19,952

 

Condensed Consolidated Statements of Cash Flows (Unaudited) - Legacy Oasis

(In thousands)



Six Months Ended June 30,


2022


2021





Cash flows from operating activities:




Net income including non-controlling interests

$        599,153


$          46,044

Adjustments to reconcile net income including non-controlling interests to net cash
provided by operating activities:




Depreciation, depletion and amortization

86,809


78,958

Gain on sale of assets

(520,740)


(223,068)

Impairment

?


5

Deferred income taxes

(7)


?

Net loss on derivative instruments

466,175


448,552

Net loss from investment in unconsolidated affiliate

36,116


?

Equity-based compensation expenses

9,663


6,900

Deferred financing costs amortization and other

3,294


16,289

Working capital and other changes:




Change in accounts receivable, net

(112,688)


(96,704)

Change in inventory

(14,040)


(2,880)

Change in prepaid expenses

1,035


3,773

Change in accounts payable, interest payable and accrued liabilities

96,141


80,969

Change in other assets and liabilities, net

11,080


(8,475)

Net cash provided by operating activities

661,991


350,363

Cash flows from investing activities:




Capital expenditures

(114,325)


(85,217)

Acquisition deposit

?


(74,500)

Proceeds from divestitures, net of OMP cash

148,818


369,819

Costs related to divestitures

(11,368)


(2,358)

Derivative settlements

(201,668)


(78,575)

Derivative modifications

?


(82,419)

Distributions from investment in unconsolidated affiliate

26,862


?

Net cash provided by (used in) investing activities

(151,681)


46,750

Cash flows from financing activities:




Proceeds from revolving credit facilities

15,000


369,500

Principal payments on revolving credit facilities

?


(866,500)

Proceeds from issuance of senior unsecured notes

?


850,000

Deferred financing costs

(9)


(20,332)

Proceeds from issuance of OMP common units, net of offering costs

?


86,657

Common control transaction costs

?


(5,432)

Purchases of treasury stock

?


(14,560)

Tax withholding on vesting of equity-based awards

(4,789)


?

Dividends paid

(139,860)


(15,039)

Distributions to non-controlling interests

?


(12,165)

Payments on finance lease liabilities

(229)


(726)

Proceeds from warrants exercised

15,908


173

Net cash provided by (used in) financing activities

(113,979)


371,576

Increase in cash and cash equivalents

396,331


768,689

Cash and cash equivalents:




Beginning of period

174,783


20,226

End of period

$        571,114


$        788,915

Supplemental non-cash transactions:




Change in accrued capital expenditures

$               (806)


$          11,515

Change in asset retirement obligations

(428)


(1,370)

Investment in unconsolidated affiliate

568,312


?

Note receivable from divestiture

?


2,900

Contingent consideration from Permian Basin Sale

?


32,860

Dividends payable

317,530


83,543

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 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. 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.

The following table presents a reconciliation of the GAAP financial measure of GPT expenses to the non-GAAP financial measure of Cash GPT for legacy Oasis for the periods presented:


Three Months Ended June 30,


Six Months Ended June 30,


2022


2021


2022


2021










(In thousands)

GPT

$         31,813


$         32,787


$         64,210


$       60,892

Pipeline imbalances

827


(738)


1,143


1,109

Cash GPT

$         32,640


$         32,049


$         65,353


$       62,001

The following table presents a reconciliation of the GAAP financial measure of GPT expenses to the non-GAAP financial measure of Cash GPT for legacy Whiting for the period presented:


Three Months Ended June 30,


2022




(In thousands)

GPT

$                                 7,921

Pipeline imbalances

?

Cash GPT

$                                 7,921

Cash G&A

The Company defines Cash G&A as total general and administrative ("G&A") expenses less G&A expenses attributable to discontinued operations, 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 legacy Oasis for the periods presented:


Three Months Ended June 30,


Six Months Ended June 30,


2022


2021


2022


2021










(In thousands)

General and administrative expenses

$         24,822


$         20,210


$         52,503


$        40,947

Less: general and administrative expenses attributable to
discontinued operations

?


(789)


3,314


(465)

General and administrative expenses attributable to
continuing operations(1)

24,822


20,999


49,189


41,412

Equity-based compensation expenses

(4,815)


(4,687)


(9,616)


(6,375)

G&A expenses attributable to shared services

?


(5,291)


(1,624)


(10,030)

Other non-cash adjustments

(35)


(319)


(2,253)


350

Cash G&A(1)

$         19,972


$         10,702


$         35,696


$        25,357

__________________

(1)

Includes merger related costs of $5.8 million and $9.4 million for the three and six months ended June 30, 2022, respectively.

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 legacy Whiting for the period presented:


Three Months Ended June 30,


2022




(In thousands)

General and administrative expenses

$                               17,716

Equity-based compensation expenses

(4,165)

Other non-cash adjustments

(990)

Cash G&A(1)

$                               12,561

__________________

(1)

Includes merger related costs of $3.2 million.

Cash Interest

The Company defines Cash Interest as interest expense less interest expense attributable to discontinued operations 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 legacy Oasis for the periods presented:


Three Months Ended June 30,


Six Months Ended June 30,


2022


2021


2022


2021










(In thousands)

Interest expense

$           6,949


$         22,571


$         17,850


$         31,268

Less: Interest expense from discontinued operations

?


11,148


3,685


14,980

Interest expense from continuing operations

6,949


11,423


14,165


16,288

Capitalized interest

879


543


1,480


961

Amortization of deferred financing costs

(864)


(9,601)


(1,719)


(11,967)

Cash Interest

$           6,964


$           2,365


$         13,926


$           5,282

The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for legacy Whiting for the period presented:


Three Months Ended June 30,


2022




(In thousands)

Interest expense

$                                 3,524

Amortization of deferred financing costs

(895)

Cash Interest

$                                 2,629

Net Debt

The Company defines Net Debt as total debt less cash and cash equivalents. Total debt is defined as long-term debt plus unamortized deferred financing costs included in long-term debt and the current portion of long-term debt. Net Debt is not a measure of total debt as determined by GAAP. Management believes that the presentation of Net Debt provides useful additional information to investors and analysts for assessing the Company's financial position and ability to maintain compliance with its debt covenants.

The following table presents reconciliations of the GAAP financial measure of total debt to the non-GAAP financial measure of Net Debt for legacy Oasis for the periods presented:



June 30, 2022


December 31, 2021



(In thousands)

Long-term debt, net


$                          393,354


$                          392,524

Unamortized deferred financing costs


6,646


7,476

Total debt


400,000


400,000

Cash and cash equivalents


(571,114)


(172,114)

Net Debt


$                                    ?


$                          227,886

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"), exploration 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 legacy Oasis for the periods presented:


Three Months Ended June 30,


Six Months Ended June 30,


2022


2021


2022


2021










(In thousands)

Net income including non-controlling interests

$       130,839


$         81,309


$       599,153


$          46,044

Gain on sale of properties

(319)


(222,980)


(520,740)


(223,068)

Net loss on derivative instruments

98,253


267,037


466,175


448,552

Realized derivative instruments

(135,840)


(55,979)


(221,104)


(78,575)

Net loss from investment in unconsolidated affiliate

96,253


?


36,116


?

Distributions from investment in unconsolidated affiliate

13,746


?


26,862


?

Interest expense, net of capitalized interest

6,949


22,571


17,850


31,268

Depreciation, depletion and amortization

42,136


38,968


86,809


78,958

Impairment

?


2


?


5

Exploration expenses

278


1,250


788


1,673

Equity-based compensation expenses

4,815


4,702


9,663


6,900

Income tax (benefit) expense

(219)


3,654


39,178


?

Other non-cash adjustments

(988)


1,720


272


(303)

Adjusted EBITDA

255,903


142,254


541,022


311,454

Adjusted EBITDA from discontinued operations

?


(55,120)


(12,296)


(111,468)

Cash distributions from OMP and DevCo Interests

?


20,608


?


33,874

Adjusted EBITDA from continuing operations

255,903


107,742


528,726


233,860

Cash Interest

(6,964)


(2,365)


(13,926)


(5,282)

E&P and other capital expenditures

(46,893)


(53,015)


(110,408)


(82,024)

Capitalized interest

879


543


1,480


961

Adjusted Free Cash Flow

$       202,925


$         52,905


$       405,872


$        147,515









Net cash provided by operating activities

$       396,411


$       159,950


$       661,991


$        350,363

Realized derivative instruments

(135,840)


(55,979)


(221,104)


(78,575)

Distributions from investment in unconsolidated affiliate

13,746


?


26,862


?

Interest expense, net of capitalized interest

6,949


22,571


17,850


31,268

Exploration expenses

278


1,250


788


1,673

Deferred financing costs amortization and other

139


(13,969)


(3,294)


(16,289)

Current tax expense

(219)


?


39,184


?

Changes in working capital

(24,573)


26,711


18,473


23,317

Other non-cash adjustments

(988)


1,720


272


(303)

Adjusted EBITDA

255,903


142,254


541,022


311,454

Adjusted EBITDA from discontinued operations

?


(55,120)


(12,296)


(111,468)

Cash distributions from OMP and DevCo Interests

?


20,608


?


33,874

Adjusted EBITDA from continuing operations

255,903


107,742


528,726


233,860

Cash Interest

(6,964)


(2,365)


(13,926)


(5,282)

E&P and other capital expenditures

(46,893)


(53,015)


(110,408)


(82,024)

Capitalized interest

879


543


1,480


961

Adjusted Free Cash Flow

$       202,925


$         52,905


$       405,872


$        147,515

Adjusted Net Income Attributable to Chord and Adjusted Diluted Earnings Attributable to Chord Per Share

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 after adjusting for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, impairment, and other similar non-cash charges, or non-recurring items, (2) the impact of net income attributable to non-controlling interests, and (3) the non-cash and non-recurring items' impact on 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 defines Adjusted Diluted Earnings Attributable to Chord Per Share as Adjusted Net Income Attributable to Chord divided by diluted weighted average shares outstanding.

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 legacy Oasis the periods presented:


Three Months Ended June 30,


Six Months Ended June 30,


2022


2021


2022


2021










(In thousands, except per share data)

Net income attributable to Chord

$           130,839


$             73,364


$       596,842


$          29,772

Gain on sale of properties

(319)


(222,980)


(520,740)


(223,068)

Net loss on derivative instruments

98,253


267,037


466,175


448,552

Realized derivative instruments

(135,840)


(55,979)


(221,104)


(78,575)

Net loss from investment in unconsolidated affiliate

96,253


?


36,116


?

Distributions from investment in unconsolidated
affiliate

13,746


?


26,862


?

Impairment

?


2


?


5

Amortization of deferred financing costs

864


9,883


1,888


12,981

Other non-cash adjustments

(988)


1,720


272


(303)

Tax impact(1)

(18,166)


85


45,851


(36,826)

Other tax adjustments(2)

(31,157)


(15,567)


(109,466)


(10,728)

Adjusted net income attributable to Chord

153,485


57,565


322,696


141,810

Less: Adjusted net income attributable to Chord from
discontinued operations

?


31,776


6,142


71,803

Adjusted net income attributable to Chord from
continuing operations

$           153,485


$             25,789


$       316,554


$          70,007









Diluted earnings attributable to Chord per share

$                 6.23


$                 3.52


$           28.44


$               1.49

Gain on sale of properties

(0.02)


(10.71)


(24.82)


(10.92)

Net loss on derivative instruments

4.68


12.82


22.22


21.97

Realized derivative instruments

(6.47)


(2.69)


(10.54)


(3.85)

Net loss from investment in unconsolidated affiliate

4.59


?


1.72


?

Distributions from investment in unconsolidated
affiliate

0.65


?


1.28


?

Amortization of deferred financing costs

0.04


0.47


0.09


0.64

Other non-cash adjustments

(0.05)


0.10


0.01


(0.01)

Tax impact(1)

(0.87)


?


2.19


(1.80)

Other tax adjustments(2)

(1.48)


(0.75)


(5.22)


(0.53)

Impact of diluted shares(3)

?


?


?


(0.04)

Adjusted Diluted Earnings Attributable to Chord Per
Share

7.30


2.76


15.37


6.95

Less: Adjusted Diluted Earnings From Discontinued
Operations Attributable to Chord Per Share

?


1.53


0.29


3.52

Adjusted Diluted Earnings From Continuing
Operations Attributable to Chord Per Share

$                 7.30


$                 1.23


$           15.08


$               3.43









Diluted weighted average shares outstanding(3)

20,990


20,822


20,983


20,419









Effective tax rate applicable to adjustment items(1)

25.2 %


26.7 %


21.8 %


23.1 %

___________________

(1)

The tax impact is computed utilizing the Company's effective tax rate applicable to the adjustments for certain non-cash and non-recurring items.

(2)

Other tax adjustments relate to the deferred tax asset valuation allowance, which is adjusted to reflect the tax impact of the other adjustments using an assumed effective tax rate that excludes its impact.

(3)

For the six months ended June 30, 2022, the Company included the dilutive effect of 467,535 potentially dilutive shares in computing Adjusted Diluted Earnings Attributable to Chord Per Share, which were excluded from the GAAP calculation of diluted earnings attributable to Chord per share due to their anti-dilutive effect.

 

SOURCE Chord Energy Corp.


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