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

Chord Energy Reports Strong Third Quarter 2023 Financial and Operating Results and Increases Share Repurchase Authorization to $750MM


HOUSTON, Nov. 1, 2023 /PRNewswire/ -- Chord Energy Corporation (NASDAQ: CHRD) ("Chord", "Chord Energy" or the "Company") today reported third quarter 2023 financial and operating results and announced an increase to its share repurchase authorization.

Operational and Financial Highlights:

(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").

(2) Market capitalization as of October 31, 2023.

"Chord's third quarter performance benefited from exceptional execution and continued strong well performance," said Danny Brown, Chord Energy's President and Chief Executive Officer. "The Chord team rose to the challenge and placed 45 wells (56% three-mile) online in the third quarter compared to 37 wells (19% three-mile) in the entire first half of the year. This was an extraordinary achievement and I'm proud of the Chord team for putting the Company in a strong position as we exit the year. During the third quarter, we increased share repurchases 68% sequentially and, subsequent to the third quarter, increased the authorization to $750MM to take advantage of market opportunities. Our low-cost inventory, capital efficient development program and strong balance sheet continue to support sustainable free cash flow generation. This sustainable free cash generation coupled with a peer-leading return of capital program supports a compelling investment opportunity. At Chord, we remain excited about the oil and gas industry, the benefits we bring to the world, and are focused on sustainable value creation through responsible operations."

3Q23 Operational and Financial Update:

The following table presents select 3Q23 operational and financial data compared to guidance released in August 2023:

Metric


3Q23 Actual


3Q23 Guidance

Oil volumes (MBopd)


101.4


95.5 ? 98.5

NGL volumes (MBblpd)


36.0


34.5 ? 35.5

Natural gas volumes (MMcfpd)


231.7


222.0 ? 228.0

Total volumes (MBoepd)


176.0


167.0 ? 172.0

Oil premium to WTI ($/Bbl)


$0.69


$(0.40) ? $1.60

NGL realization (% of WTI)


15 %


10% ? 20%

Residue gas realization (% of Henry Hub)


43 %


40% ? 50%

LOE ($/Boe)


$10.94


$10.20 ? $11.00

Cash GPT ($/Boe)(1)


$3.16


$2.80 ? $3.40

Cash G&A ($MM)(1)


$13.7


$14.6 ? $17.6

Production Taxes (% of oil, NGL and gas sales)


8.6 %


8.6% ? 9.0%

E&P & Other CapEx ($MM)


$254.2


$245 ? $275

Cash Interest ($MM)(1)


$7.6


$7.7 ? $8.7

___________________

(1)

Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP.

During the three months ended September 30, 2023, net cash provided by operating activities was $399.5MM and net income was $209.1MM ($4.77/diluted share). Adjusted EBITDA was $469.1MM, Adjusted Free Cash Flow was $207.4MM and Adjusted Net Income was $220.2MM ($5.04/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.

Chord had 45 gross (32 net) turn-in-line ("TIL") operated wells in 3Q23 (56% three-mile).

Updated Outlook:

For the full-year 2023, Chord expects to generate approximately $1.73B of Adjusted EBITDA and $800MM of Adjusted Free Cash Flow, with a reinvestment rate of approximately 50% ($80/Bbl WTI and $3.00/MMBtu Henry Hub in 4Q23).

Changes to the Company's outlook since August 2023 include:

The following table presents select operational and financial guidance for 4Q23 and FY23:

Metric


4Q23 Guidance
(November 1, 2023)


FY23 Guidance
(November 1, 2023)


FY23 Guidance
(August 2, 2023)

Oil volumes (MBopd)


102.0 ? 105.0


98.7 ? 99.5


97.0 ? 99.0

NGL volumes (MBblpd)


35.5 ? 36.5


35.1 ? 35.3


34.7 ? 35.2

Natural gas volumes (MMcfpd)


224.0 ? 230.0


224.0 ? 226.0


222.0 ? 225.0

Total volumes (MBoepd)


174.8 ? 179.8


171.1 ? 172.5


168.7 ? 171.7

Oil premium (discount) to WTI ($/Bbl)


$(0.85) ? $1.15


$(0.01) ? $0.51


$(0.66) ? $1.34

NGL realization (% of WTI)


13% ? 23%


16% ? 19%


13% ? 23%

Residue gas realization (% of Henry Hub)


50% ? 60%


56% ? 59%


54% ? 64%

LOE ($/Boe)


$10.00 ? $10.80


$10.40 ? $10.60


$9.95 ? $10.75

Cash GPT ($/Boe)(1)


$2.75 ? $3.35


$2.97 ? $3.13


$2.75 ? $3.35

Cash G&A ($MM)(1,2)


$14.9 ? $17.9


$64.5 ? $67.5


$63.0 ? $73.0

Production Taxes (% of oil, NGL and gas sales)


8.4% ? 8.8%


8.3% ? 8.5%


8.2% ? 8.6%

E&P & Other CapEx ($MM)(3)


$147 ? $177


$850 ? $880


$850 ? $880

Cash Interest ($MM)(1)


$7.0 ? $8.0


$29.0 ? $30.0


$29.5 ? $31.5

___________________

(1)

Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP.

(2)

Excludes cash-related costs attributable to the merger.

(3)

FY23 E&P and other CapEx excludes $10.9MM related to divested non-operated assets that will be reimbursed.

 

Select Operational and Financial Data:

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


3Q23


2Q23


3Q22

Production data:






Crude oil (MBopd)

101.4


96.4


96.2

NGLs (MBblpd)

36.0


36.0


38.7

Natural gas (MMcfpd)

231.7


219.3


225.5

Total production (MBoepd)

176.0


169.0


172.5

Percent crude oil

57.6 %


57.0 %


55.8 %

Average sales prices:






Crude oil, without realized derivatives ($/Bbl)

$       83.22


$       73.89


$       93.13

Differential to NYMEX WTI ($/Bbl)

0.69


0.14


1.63

Crude oil, with realized derivatives ($/Bbl)

76.45


68.03


73.34

Crude oil realized derivatives ($MM)

(63.1)


(51.4)


(175.2)

NGL, without realized derivatives ($/Bbl)

12.38


8.70


29.82

NGL, with realized derivatives ($/Bbl)

12.38


8.70


29.71

NGL realized derivatives ($MM)

?


?


(0.4)

Natural gas, without realized derivatives ($/Mcf)

1.11


0.95


6.06

Natural gas, with realized derivatives ($/Mcf)

1.11


0.96


4.39

Natural gas realized derivatives ($MM)

?


0.1


(34.7)

Selected financial data ($MM):






Revenues:






Crude oil revenues

$       776.0


$       647.9


$       824.3

NGL revenues

41.0


28.5


106.2

Natural gas revenues

23.6


19.0


125.7

Total oil, NGL and natural gas revenues

$       840.6


$       695.4


$    1,056.2

Cash flows:






Net cash provided by operating activities:

$       399.5


$       408.2


$       783.6

Non-GAAP financial measures(1):






Adjusted EBITDA

$       469.1


$       369.6


$       564.6

Adjusted Free Cash Flow(2)

207.4


105.3


325.7

Adjusted net income attributable to Chord from continuing operations

220.2


158.4


310.4

Select operating expenses:






Lease operating expenses ("LOE")

$       177.1


$       158.6


$       156.4

Gathering, processing and transportation expenses ("GPT")

52.3


43.4


35.5

Production taxes

72.5


58.5


83.5

Depreciation, depletion and amortization

160.3


137.0


141.0

Total select operating expenses

$       462.2


$       397.5


$       416.4

Earnings per share:






Basic earnings per share

$          5.01


$          5.19


$       21.34

Diluted earnings per share

4.77


4.96


20.45

Adjusted diluted earnings per share (Non-GAAP)(1)

5.04


3.65


7.20

___________________

(1)

Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP.

(2)

2Q23 Adjusted Free Cash Flow was reduced by $10.1MM for E&P and other CapEx related to divested non-operated assets that will be reimbursed.

Capital Expenditures:

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


1Q23


2Q23


3Q23


YTD23

CapEx ($MM):








E&P

$           201.8


$           256.6


$           254.0


$           712.4

Other

0.5


0.4


0.1


1.0

Total E&P and other CapEx(1)

202.3


257.0


254.1


713.4

Capitalized interest

1.4


1.3


0.9


3.6

Acquisitions

?


361.6


?


361.6

Total CapEx

$           203.7


$           619.9


$           255.0


$        1,078.6

___________________

(1)

YTD23 includes $10.9MM of E&P and other CapEx related to divested non-operated assets that will be reimbursed.

Return of Capital:

Chord declared a base-plus-variable cash dividend of $2.50 per share of common stock, including a base dividend of $1.25 per share of common stock and a variable dividend of $1.25 per share of common stock. The dividend will be payable on November 28, 2023 to shareholders of record as of November 14, 2023. Details regarding the calculation of the variable dividend can be found in the Company's most recent investor presentation located on its website at https://ir.chordenergy.com/presentations.

In addition, the Company repurchased 703,862 shares of common stock at a weighted average price of $159.57 per share during the third quarter. Share repurchases totaled $112.3MM, including $52.0MM as third quarter return of capital. During the third quarter, the Company received total cash proceeds from warrant exercises of $73.4MM, and the Company repurchased $60.3MM in the third quarter and the remaining $13.1MM in the fourth quarter to offset shareholder dilution.

Share Repurchase Authorization: 

Chord's Board of Directors has authorized a new $750MM share repurchase program, which replaces the existing $300MM program. As of September 30, 2023, there was $114.8MM of capacity remaining under the previous $300MM program.

Balance Sheet and Liquidity:

On October 31, 2023, the Company completed its semi-annual borrowing base redetermination and entered into the Fourth Amendment to Amended and Restated Credit Agreement. The borrowing base was reaffirmed at $2.5 billion, and the aggregate amount of elected commitments were maintained at $1.0 billion. The next scheduled redetermination is expected to occur in or around April 2024.

The following table presents key balance sheet data and liquidity metrics as of September 30, 2023 (in millions):


September 30, 2023

Revolving credit facility(1)

$                            1,000.0



Revolver borrowings

$                                     ?

Senior notes

400.0

Total debt

$                               400.0



Cash and cash equivalents

$                               265.0

Letters of credit

6.4

Liquidity

$                            1,258.6

___________________

(1)

$2.5B borrowing base and $1.0B of elected commitments.

Conference Call Information 

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

Date:

Thursday, November 2, 2023

Time:

8:00 a.m. Central

Live Webcast:

https://app.webinar.net/LvOWwnJwZlP 

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:

5238861

Website:

www.chordenergy.com

A recording of the conference call will be available beginning at 1:00 p.m. Central on the day of the call and will be available until Thursday, November 9, 2023 by dialing:

Replay dial-in:

877-344-7529

Intl. replay:

412-317-0088

Replay access:

9393038

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

Forward-Looking Statements

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, including any statements regarding the benefits and synergies of the merger, future opportunities for Chord, future financial performance and condition, guidance and statements regarding Chord's expectations, beliefs, plans, objectives, assumptions or future events or performance 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, production levels and reinvestment rates, anticipated financial and operating results and other guidance and the effects, benefits and synergies of the merger.

These statements are based on certain assumptions made by Chord based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Chord, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, the ultimate results of integrating the operations of Chord, the effects of the business combination on Chord, including Chord's future financial condition, results of operations, strategy and plans, the ability of Chord to realize the anticipated benefits or synergies of the merger in the timeframe expected or at all, changes in crude oil, NGL and natural gas prices, war between Russia and Ukraine and the potential for escalation of hostilities between Israel and Hamas and surrounding countries in the Middle East and their effect on commodity prices, inflation rates and the impact of associated monetary policy responses, including increased interest rates, developments in the global economy, the impact of pandemics such as COVID-19, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as Chord's ability to access them, the proximity to and capacity of transportation facilities, the availability of midstream service providers, uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting Chord's business and other important factors that could cause actual results to differ materially from those projected as described in Chord's reports filed with the U.S. Securities and Exchange Commission (the "SEC").

Any forward-looking statement speaks only as of the date on which such statement is made and Chord undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. Additional information concerning other risk factors is also contained in Chord's most recently filed Annual Report on Form 10-K for the year ended December 31, 2022, 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. The Company is uniquely positioned with a best-in-class balance sheet and is focused on rigorous capital discipline and generating free cash flow by operating efficiently, safely and responsibly to develop its unconventional onshore oil-rich resources in the continental United States. For more information, please visit the Company's website at www.chordenergy.com.

Comparability of Financial Statements

The results reported for the three and nine months ended September 30, 2023 reflect the consolidated results of Chord, while the results reported for the nine months ended September 30, 2022 reflect the consolidated results of legacy Oasis for the period from January 1 to June 30, 2022 and the consolidated results of Chord from July 1 to September 30, 2022, unless otherwise noted.

 

Chord Energy Corporation
Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)



September 30, 2023


December 31, 2022





ASSETS




Current assets




Cash and cash equivalents

$                264,966


$                593,151

Accounts receivable, net

1,031,542


781,738

Inventory

64,852


54,411

Prepaid expenses

20,485


17,624

Derivative instruments

26,776


23,735

Other current assets

595


11,853

Current assets held for sale

10,726


?

Total current assets

1,419,942


1,482,512

Property, plant and equipment




Oil and gas properties (successful efforts method)

6,097,747


5,120,121

Other property and equipment

48,605


72,973

Less: accumulated depreciation, depletion and amortization

(890,323)


(481,751)

Total property, plant and equipment, net

5,256,029


4,711,343

Derivative instruments

43,610


37,965

Investment in unconsolidated affiliate

102,571


130,575

Long-term inventory

22,426


22,009

Operating right-of-use assets

24,858


23,875

Deferred tax assets

23,548


200,226

Other assets

19,554


22,576

Total assets

$             6,912,538


$             6,631,081





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable

$                    2,603


$                  29,056

Revenues and production taxes payable

627,202


607,964

Accrued liabilities

571,318


362,454

Accrued interest payable

8,600


3,172

Derivative instruments

114,598


341,541

Advances from joint interest partners

2,526


3,736

Current operating lease liabilities

13,543


9,941

Other current liabilities

42,025


3,469

Current liabilities held for sale

13,332


?

Total current liabilities

1,395,747


1,361,333

Long-term debt

395,475


394,209

Asset retirement obligations

130,015


146,029

Derivative instruments

7,125


2,829

Operating lease liabilities

22,141


13,266

Other liabilities

21,021


33,617

Total liabilities

1,971,524


1,951,283

Commitments and contingencies




Stockholders' equity




Common stock, $0.01 par value: 120,000,000 shares authorized; 44,645,418
shares issued and 41,373,010 shares outstanding at September 30, 2023; and
120,000,000 shares authorized, 43,726,181 shares issued and 41,477,093 shares
outstanding at December 31, 2022

448


438

Treasury stock, at cost: 3,272,408 shares at September 30, 2023 and 2,249,088
shares at December 31, 2022

(410,272)


(251,950)

Additional paid-in capital

3,583,966


3,485,819

Retained earnings

1,766,872


1,445,491

Total stockholders' equity

4,941,014


4,679,798

Total liabilities and stockholders' equity

$             6,912,538


$             6,631,081

 

Chord Energy Corporation
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)



Three Months Ended September 30,


Nine Months Ended September 30,


2023


2022


2023


2022









Revenues








Oil, NGL and gas revenues

$         840,625


$      1,056,146


$      2,302,251


$      2,088,215

Purchased oil and gas sales

282,743


132,697


629,705


542,653

Other services revenues

?


?


?


324

Total revenues

1,123,368


1,188,843


2,931,956


2,631,192

Operating expenses








Lease operating expenses

177,115


156,397


489,077


287,318

Gathering, processing and transportation expenses

52,294


35,549


132,706


99,759

Purchased oil and gas expenses

281,615


132,625


627,433


546,310

Production taxes

72,485


83,535


191,490


159,473

Depreciation, depletion and amortization

160,293


141,047


431,131


227,856

General and administrative expenses

26,117


102,226


100,775


151,415

Exploration and impairment

1,611


910


33,257


1,698

Total operating expenses

771,530


652,289


2,005,869


1,473,829

Gain on sale of assets, net

899


755


3,739


2,595

Operating income

352,737


537,309


929,826


1,159,958

Other income (expense)








Net gain (loss) on derivative instruments

(85,205)


337,409


11,247


(128,766)

Net gain from investment in unconsolidated affiliate

13,512


75,093


21,421


38,977

Interest expense, net of capitalized interest

(7,923)


(8,645)


(22,286)


(22,810)

Other income (expense)

1,651


(864)


9,137


2,186

Total other income (expense), net

(77,965)


402,993


19,519


(110,413)

Income from continuing operations before income taxes

274,772


940,302


949,345


1,049,545

Income tax (expense) benefit

(65,696)


1,307


(227,199)


3,352

Net income from continuing operations

209,076


941,609


722,146


1,052,897

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

?


(59,858)


?


425,696

Net income attributable to Chord

$         209,076


$         881,751


$         722,146


$      1,478,593

Earnings attributable to Chord per share:








Basic from continuing operations

$                5.01


$              22.79


$              17.28


$              39.28

Basic from discontinued operations

?


(1.45)


?


15.88

Basic total

$                5.01


$              21.34


$              17.28


$              55.16

Diluted from continuing operations

$                4.77


$              21.84


$              16.54


$              37.02

Diluted from discontinued operations

?


(1.39)


?


14.97

Diluted total

$                4.77


$              20.45


$              16.54


$              51.99

Weighted average shares outstanding:








Basic

41,563


41,318


41,670


26,806

Diluted

43,662


43,107


43,527


28,438

 

Chord Energy Corporation
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)



Nine Months Ended September 30,


2023


2022





Cash flows from operating activities:




Net income including non-controlling interests

$       722,146


$    1,480,904

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




Depreciation, depletion and amortization

431,131


227,856

Gain on sale of assets

(3,739)


(521,495)

Impairment

28,964


1,073

Deferred income taxes

176,678


66,668

Net (gain) loss on derivative instruments

(11,247)


128,766

Net gain from investment in unconsolidated affiliate

(21,421)


(38,977)

Equity-based compensation expenses

37,260


40,351

Deferred financing costs amortization and other

1,072


1,241

Working capital and other changes:




Change in accounts receivable, net

(258,175)


(13,007)

Change in inventory

(4,945)


2,199

Change in prepaid expenses

430


7,708

Change in accounts payable, interest payable and accrued liabilities

135,880


57,581

Change in other assets and liabilities, net

42,483


4,766

Net cash provided by operating activities

1,276,517


1,445,634

Cash flows from investing activities:




Capital expenditures

(642,584)


(303,140)

Acquisitions, net of cash acquired

(361,609)


(148,363)

Proceeds from divestitures, net of cash divested

46,002


155,728

Costs related to divestitures

?


(11,368)

Derivative settlements

(203,238)


(487,394)

Proceeds from sale of investment in unconsolidated affiliate

40,612


428,231

Distributions from investment in unconsolidated affiliate

8,499


40,607

Net cash used in investing activities

(1,112,318)


(325,699)

Cash flows from financing activities:




Proceeds from revolving credit facilities

135,000


1,035,000

Principal payments on revolving credit facilities

(135,000)


(1,020,000)

Cash paid to settle Whiting debt

?


(2,154)

Deferred financing costs

?


(3,938)

Repurchases of common stock

(157,122)


(124,845)

Tax withholding on vesting of equity-based awards

(13,823)


(36,768)

Dividends paid

(394,652)


(500,106)

Payments on finance lease liabilities

(1,398)


(570)

Proceeds from warrants exercised

74,611


17,520

Net cash used in financing activities

(492,384)


(635,861)

Increase (decrease) in cash and cash equivalents

(328,185)


484,074

Cash and cash equivalents:




Beginning of period

593,151


174,783

End of period

$       264,966


$       658,857

Supplemental non-cash transactions:




Change in accrued capital expenditures

$         77,091


$         41,348

Change in asset retirement obligations

1,057


412

Non-cash consideration exchanged in Merger

?


2,585,211

Investment in unconsolidated affiliate

?


568,312

Dividends payable

36,044


27,256

Non-GAAP Financial Measures

The following are non-GAAP financial measures not prepared in accordance with GAAP that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company believes that the foregoing are useful supplemental measures that provide an indication of the results generated by the Company's principal business activities. However, these measures are not recognized by GAAP and do not have a standardized meaning prescribed by GAAP. Therefore, these measures may not be comparable to similar measures provided by other issuers. From time to time, the Company provides forward-looking forecasts of these measures; however, the Company is unable to provide a quantitative reconciliation of the forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures because management cannot reliably quantify certain of the necessary components of such forward-looking GAAP measures. The reconciling items in future periods could be significant. To see how the Company reconciles its historical presentations of these non-GAAP financial measures to the most directly comparable GAAP measures, please visit the Investors?Documents & Disclosures?Non-GAAP Reconciliation page on the Company's website at https://ir.chordenergy.com/non-gaap.

Cash GPT

The Company defines Cash GPT as total GPT expenses less non-cash valuation charges on pipeline imbalances and non-cash mark-to-market adjustments on transportation contracts accounted for as derivative instruments. Cash GPT is not a measure of GPT expenses as determined by GAAP. Management believes that the presentation of Cash GPT provides useful additional information to investors and analysts to assess the cash costs incurred to market and transport the Company's commodities from the wellhead to delivery points for sale without regard to the change in value of its pipeline imbalances, which vary monthly based on commodity prices, and without regard to the non-cash mark-to-market adjustments on transportation contracts classified as derivative instruments.

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


Three Months Ended September 30,


Nine Months Ended September 30,


2023


2022


2023


2022










(In thousands)

GPT

$          52,294


$          35,549


$        132,706


$          99,759

Pipeline imbalances

234


(4,582)


(7,902)


(3,439)

(Gain) loss on derivative transportation contracts

(1,432)


6,939


16,847


6,939

Cash GPT

$          51,096


$          37,906


$        141,651


$        103,259

Cash G&A

The Company defines Cash G&A as total G&A expenses less G&A expenses directly attributable to the merger of equals with Whiting, 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,


2023


2022


2023


2022










(In thousands)

General and administrative expenses

$          26,117


$         102,226


$         100,775


$        151,415

Merger costs(1)

?


(73,443)


(9,701)


(82,817)

Equity-based compensation expenses

(10,082)


(12,844)


(37,260)


(22,460)

G&A expenses attributable to shared services

?


?


?


(1,624)

Other non-cash adjustments

(2,292)


369


(4,165)


(1,884)

Cash G&A

$          13,743


$           16,308


$           49,649


$          42,630

___________________

(1)

Includes costs directly attributable to the merger of equals with Whiting for the nine months ended September 30, 2023 and the three and nine months ended September 30, 2022.

Cash Interest

The Company defines Cash Interest as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs. Cash Interest is not a measure of interest expense as determined by GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on the Company's debt to finance its operating activities and the Company's ability to maintain compliance with its debt covenants.

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


Three Months Ended September 30,


Nine Months Ended September 30,


2023


2022


2023


2022










(In thousands)

Interest expense

$             7,923


$             8,645


$           22,286


$           22,810

Capitalized interest

857


1,323


3,601


2,803

Amortization of deferred financing costs

(1,224)


(1,097)


(3,633)


(2,816)

Cash Interest

$             7,556


$             8,871


$           22,254


$           22,797

Adjusted EBITDA and Adjusted Free Cash Flow

The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, depletion and amortization ("DD&A"), merger costs, exploration expenses 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. 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 table presents 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,


2023


2022


2023


2022


(In thousands)

Net income including non-controlling interests

$        209,076


$        881,751


$        722,146


$     1,480,904

Interest expense, net of capitalized interest

7,923


8,645


22,286


26,495

Income tax expense

65,696


58,551


227,199


97,728

Depreciation, depletion and amortization

160,293


141,047


431,131


227,856

Merger costs(1)

?


73,443


9,701


82,817

Exploration and impairment expenses

1,611


910


33,257


1,698

Gain on sale of assets

(899)


(755)


(3,739)


(521,495)

Net (gain) loss on derivative instruments

85,205


(337,409)


(11,247)


128,766

Realized loss on derivative instruments

(63,131)


(210,228)


(206,229)


(431,332)

Net gain from investment in unconsolidated affiliate

(13,512)


(75,093)


(21,421)


(38,977)

Distributions from investment in unconsolidated affiliate

2,515


13,746


8,499


40,607

Equity-based compensation expenses

10,082


12,844


37,260


22,507

Other non-cash adjustments

4,246


(2,842)


(1,813)


(2,570)

Adjusted EBITDA

469,105


564,610


1,247,030


1,115,004

Adjusted EBITDA from discontinued operations

?


?


?


(12,296)

Adjusted EBITDA from continuing operations

469,105


564,610


1,247,030


1,102,708

Cash Interest

(7,556)


(8,871)


(22,254)


(22,797)

E&P and other capital expenditures

(254,183)


(230,069)


(713,491)


(338,997)

Adjusted Free Cash Flow

$        207,366


$        325,670


$        511,285


$        740,914









Net cash provided by operating activities

$        399,470


$        783,643


$     1,276,517


$     1,445,634

Changes in working capital

86,704


(77,718)


84,328


(59,245)

Interest expense, net of capitalized interest

7,923


8,645


22,286


26,495

Current income tax (benefit) expense

34,874


(8,125)


50,521


31,059

Merger costs(1)

?


55,600


9,701


64,973

Exploration expenses

1,611


(163)


4,292


625

Realized loss on derivative instruments

(63,131)


(210,228)


(206,229)


(431,332)

Distributions from investment in unconsolidated affiliate

2,515


13,746


8,499


40,607

Deferred financing costs amortization and other

(5,107)


2,052


(1,072)


(1,242)

Other non-cash adjustments

4,246


(2,842)


(1,813)


(2,570)

Adjusted EBITDA

469,105


564,610


1,247,030


1,115,004

Adjusted EBITDA from discontinued operations

?


?


?


(12,296)

Adjusted EBITDA from continuing operations

469,105


564,610


1,247,030


1,102,708

Cash Interest

(7,556)


(8,871)


(22,254)


(22,797)

E&P and other capital expenditures(2)

(254,183)


(230,069)


(713,491)


(338,997)

Adjusted Free Cash Flow

$        207,366


$        325,670


$        511,285


$        740,914

___________________

(1)

Includes costs directly attributable to the merger of equals with Whiting for the nine months ended September 30, 2023 and the three and nine months ended September 30, 2022.

(2)

The nine months ended September 30, 2023 includes $10.9MM of E&P and other CapEx related to divested non-operated assets that will be reimbursed.

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 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 the Company's investment in an unconsolidated affiliate, impairment and other similar non-cash charges, (2) merger costs and (3) the impact of taxes based on the Company's effective tax rate applicable to those adjusting items in the same period. Adjusted Net Income 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,


2023


2022


2023


2022


(In thousands)

Net income attributable to Chord

$     209,076


$     881,751


$     722,146


$ 1,478,593

Net (gain) loss on derivative instruments

85,205


(337,409)


(11,247)


128,766

Realized loss on derivative instruments

(63,131)


(210,228)


(206,229)


(431,332)

Net gain from investment in unconsolidated affiliate

(13,512)


(75,093)


(21,421)


(38,977)

Distributions from investment in unconsolidated affiliate

2,515


13,746


8,499


40,607

Impairment

?


1,073


28,964


1,073

Merger costs(1)

?


73,443


9,701


82,817

Gain on sale of assets

(899)


(755)


(3,739)


(521,495)

Amortization of deferred financing costs

1,224


1,097


3,633


2,986

Other non-cash adjustments

4,246


(2,842)


(1,813)


(2,570)

Tax impact(2)

(3,742)


131,708


46,270


180,502

Other tax adjustments(3)

?


(166,041)


?


(275,358)

Adjusted net income attributable to Chord

220,982


310,450


574,764


645,612

Adjusted net income attributable to Chord from
discontinued operations

?


?


?


(6,142)

Distributed and undistributed earnings allocated to
participating securities

(817)


(43)


(1,674)


(24)

Adjusted net income from continuing operations
attributable to common stockholders

$     220,165


$     310,407


$     573,090


$     639,446









Diluted earnings attributable to Chord per share

4.79


$         20.45


16.59


$         51.99

Net (gain) loss on derivative instruments

1.95


(7.83)


(0.26)


4.53

Realized loss on derivative instruments

(1.45)


(4.88)


(4.74)


(15.17)

Net gain from investment in unconsolidated affiliate

(0.31)


(1.74)


(0.49)


(1.37)

Distributions from investment in unconsolidated affiliate

0.06


0.32


0.20


1.43

Impairment

?


0.02


0.67


0.04

Merger costs(1)

?


1.70


0.22


2.91

Gain on sale of assets

(0.02)


(0.02)


(0.09)


(18.34)

Amortization of deferred financing costs

0.03


0.03


0.08


0.11

Other non-cash adjustments

0.10


(0.06)


(0.04)


(0.09)

Tax impact(2)

(0.09)


3.06


1.06


6.35

Other tax adjustments(3)

?


(3.85)


?


(9.68)

Adjusted Diluted Earnings Attributable to Chord Per
Share

5.06


7.20


13.20


22.71

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

?


?


?


(0.22)

Less: Distributed and undistributed earnings allocated to
participating securities

(0.02)


?


(0.04)


?

Adjusted Diluted Earnings From Continuing Operations
Attributable to Chord Per Share

$           5.04


$           7.20


$         13.16


$         22.49









Diluted weighted average shares outstanding

43,662


43,107


43,527


28,438









Effective tax rate applicable to adjustment items(2)

23.9 %


24.5 %


23.9 %


24.5 %

_____________________

(1)

Includes costs directly attributable to the merger of equals with Whiting for the nine months ended September 30, 2023 and the three and nine months ended September 30, 2022.

(2)

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

(3)

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

 

SOURCE Chord Energy Corp.


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