Chord Energy (CHRD) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited financial statements for Q2 2025 reflect a significant net loss driven by a $539.3 million goodwill impairment, decreasing total assets to $12.55 billion Condensed Consolidated Balance Sheets Total assets decreased to $12.55 billion as of June 30, 2025, primarily due to the complete write-off of $530.6 million in goodwill Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $12,546,596 | $13,032,007 | ($485,411) | | Cash and cash equivalents | $40,487 | $36,950 | $3,537 | | Total property, plant and equipment, net | $10,810,484 | $10,686,169 | $124,315 | | Goodwill | $— | $530,616 | ($530,616) | | Total Liabilities | $4,450,372 | $4,329,745 | $120,627 | | Long-term debt | $918,901 | $842,600 | $76,301 | | Total Stockholders' Equity | $8,096,224 | $8,702,262 | ($606,038) | - Goodwill was reduced to zero as of June 30, 2025, from $530.6 million at the end of 2024, due to a non-cash impairment charge[23][43] Condensed Consolidated Statements of Operations The company reported a Q2 2025 net loss of $389.9 million, primarily driven by a $541.9 million impairment charge, despite $1.18 billion in total revenues Key Operating Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,180,560 | $1,260,680 | $2,395,606 | $2,345,940 | | Operating Income (Loss) | ($403,215) | $289,021 | ($65,222) | $561,960 | | Impairment and Exploration | $541,940 | $1,485 | $543,923 | $7,639 | | Net Income (Loss) | ($389,905) | $213,361 | ($170,068) | $412,715 | | Diluted EPS | ($6.77) | $4.25 | ($2.93) | $8.87 | - A significant non-cash impairment charge of $539.3 million related to goodwill was recognized in the three and six months ended June 30, 2025, leading to a substantial net loss[27][43] Condensed Consolidated Statements of Cash Flows Net cash from operations increased to $1.08 billion for the first half of 2025, with significant cash used in investing and financing activities Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,076,703 | $867,574 | | Net cash used in investing activities | ($677,782) | ($1,150,576) | | Net cash provided by (used in) financing activities | ($395,384) | $162,393 | | Increase (decrease) in cash | $3,537 | ($120,609) | - Major uses of cash in financing activities for the first six months of 2025 included $274.0 million for common stock repurchases and $168.8 million for dividend payments[33] Notes to Condensed Consolidated Financial Statements Key notes detail the Enerplus acquisition, a $539.3 million goodwill impairment, debt refinancing, and significant shareholder returns - The acquisition of Enerplus Corporation was completed on May 31, 2024, and accounted for under the acquisition method, with the purchase price allocation finalized as of June 30, 2025[40][41] - A goodwill impairment test on June 30, 2025, triggered by a decrease in the company's stock price and commodity prices, resulted in a non-cash impairment charge of $539.3 million, reducing goodwill to zero[43][60] - In March 2025, the company issued $750.0 million of 6.750% senior unsecured notes due 2033 and used the proceeds to redeem its $400.0 million of 6.375% senior notes due 2026[91][94] - During the first six months of 2025, the company repurchased 2.6 million shares for $271.5 million and declared total dividends of $2.60 per share[114][117] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the Q2 2025 net loss to a $539.3 million goodwill impairment, despite increased production and strong $1.83 billion liquidity Overview and Recent Developments Chord Energy experienced a $539.3 million goodwill impairment in Q2 2025 due to volatile commodity prices, while maintaining capital discipline - The company's revenue and profitability are substantially dependent on fluctuating crude oil, NGL, and natural gas prices, which are beyond its control[133] - Due to market volatility and a decrease in crude oil prices during Q2 2025, the company assessed goodwill for impairment and recognized a non-cash charge of $539.3 million[134] Results of Operations Q2 2025 revenues decreased due to lower commodity prices, despite higher production, with operating expenses dominated by a $539.3 million goodwill impairment Production and Realized Prices (Q2 2025 vs Q1 2025) | Metric | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Avg. Daily Production (Boepd) | 281,858 | 270,855 | +4.1% | | Avg. Crude Oil Sales Price (/Bbl) | $61.62 | $69.11 | -10.8% | | Avg. NGL Sales Price (/Bbl) | $5.80 | $14.18 | -59.1% | | Avg. Natural Gas Sales Price (/Mcf) | $1.10 | $2.30 | -52.2% | - The decrease in Q2 2025 revenue compared to Q1 2025 was primarily driven by lower realized commodity prices, which offset the increase in production volumes[143][145][146] - General and administrative expenses decreased in Q2 2025 compared to Q1 2025, mainly due to lower employee compensation and a reduction in merger-related costs from the Enerplus Arrangement[157] - Compared to the first six months of 2024, DD&A expense for the same period in 2025 increased by $330.0 million, primarily due to a higher depletion rate and increased production volumes following the Enerplus acquisition[169] Liquidity and Capital Resources Chord Energy maintained $1.83 billion in liquidity as of June 30, 2025, with cash used for capital expenditures, share repurchases, and debt refinancing - The company maintained a strong liquidity position with $1,830.6 million available as of June 30, 2025[178] - In August 2025, the Board of Directors authorized a new $1.0 billion share repurchase program, replacing the previous $750.0 million program[199][119] Six Months 2025 Cash Flow Summary (in thousands) | Category | Amount | | :--- | :--- | | Net cash provided by operating activities | $1,076,703 | | Net cash used in investing activities | ($677,782) | | Net cash used in financing activities | ($395,384) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages commodity price, interest rate, and counterparty risks using derivatives and fixed-rate debt, with a 10% crude oil price change impacting derivative fair value by $55 million - The company uses derivative instruments to partially reduce the risk of volatile commodity prices for crude oil, NGLs, and natural gas[205] - A 10% increase in crude oil prices would reduce the fair value of the company's unrealized derivative asset position by approximately $54.5 million, while a 10% decrease would increase it by $56.4 million[206] - Interest rate risk exists on the $180.0 million of borrowings under the variable-rate Credit Facility as of June 30, 2025, while $750.0 million of senior notes carry a fixed interest rate[208] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, while integrating Enerplus's internal controls post-acquisition - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter, June 30, 2025[213] - Following the acquisition of Enerplus on May 31, 2024, the company is in the process of incorporating Enerplus's controls and procedures into its own system of internal control over financial reporting[214] PART II — OTHER INFORMATION Item 1. Legal Proceedings The company refers to Note 16 for material legal proceedings, with no new significant updates in this section - For discussion of material legal proceedings, the company refers to Note 16 in the financial statements[217] Item 1A. Risk Factors No material changes to risk factors were reported from the 2024 Annual Report on Form 10-K - There have been no material changes in risk factors from those described in the 2024 Annual Report[219] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Chord Energy repurchased 605,621 shares for $55.0 million in Q2 2025 under its program, with no unregistered equity sales Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | April 2025 | 573,025 | $90.68 | 494,344 | | May 2025 | 116,455 | $89.91 | 111,277 | | June 2025 | — | — | — | | Total | 689,480 | $90.55 | 605,621 | - In August 2025, the Board authorized a new $1.0 billion share repurchase program, which replaces the previous $750 million program[221]