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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission file number: 1-34776
Chord Energy Logo_H_RGB.jpg
Chord Energy Corporation
(Exact name of registrant as specified in its charter)
 
Delaware 80-0554627
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1001 Fannin Street, Suite 1500
 
Houston, Texas
77002
(Address of principal executive offices) (Zip Code)
(281) 404-9500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockCHRDThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐ No 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes  ý   No  ¨
Number of shares of the registrant’s common stock outstanding at October 26, 2023: 41,278,429 shares.



Table of Contents
TABLE OF CONTENTS
 Page
Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022


Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. — Financial Statements (Unaudited)
Chord Energy Corporation
Condensed Consolidated Balance Sheets (Unaudited)
September 30, 2023December 31, 2022
 (In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents$264,966 $593,151 
Accounts receivable, net1,031,542 781,738 
Inventory64,852 54,411 
Prepaid expenses20,485 17,624 
Derivative instruments26,776 23,735 
Other current assets595 11,853 
Current assets held for sale10,726  
Total current assets1,419,942 1,482,512 
Property, plant and equipment
Oil and gas properties (successful efforts method)6,097,747 5,120,121 
Other property and equipment48,605 72,973 
Less: accumulated depreciation, depletion and amortization(890,323)(481,751)
Total property, plant and equipment, net5,256,029 4,711,343 
Derivative instruments43,610 37,965 
Investment in unconsolidated affiliate102,571 130,575 
Long-term inventory22,426 22,009 
Operating right-of-use assets24,858 23,875 
Deferred tax assets23,548 200,226 
Other assets19,554 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 payable627,202 607,964 
Accrued liabilities571,318 362,454 
Accrued interest payable8,600 3,172 
Derivative instruments114,598 341,541 
Advances from joint interest partners2,526 3,736 
Current operating lease liabilities13,543 9,941 
Other current liabilities42,025 3,469 
Current liabilities held for sale13,332  
Total current liabilities1,395,747 1,361,333 
Long-term debt395,475 394,209 
Asset retirement obligations130,015 146,029 
Derivative instruments7,125 2,829 
Operating lease liabilities22,141 13,266 
Other liabilities21,021 33,617 
Total liabilities1,971,524 1,951,283 
1

Table of Contents
September 30, 2023December 31, 2022
 (In thousands, except share data)
Commitments and contingencies (Note 19)
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 capital3,583,966 3,485,819 
Retained earnings1,766,872 1,445,491 
Total stockholders’ equity4,941,014 4,679,798 
Total liabilities and stockholders’ equity$6,912,538 $6,631,081 
The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Table of Contents
Chord Energy Corporation
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In thousands, except per share data)
Revenues
Oil, NGL and gas revenues$840,625 $1,056,146 $2,302,251 $2,088,215 
Purchased oil and gas sales282,743 132,697 629,705 542,653 
Other services revenues   324 
Total revenues1,123,368 1,188,843 2,931,956 2,631,192 
Operating expenses
Lease operating expenses177,115 156,397 489,077 287,318 
Gathering, processing and transportation expenses52,294 35,549 132,706 99,759 
Purchased oil and gas expenses281,615 132,625 627,433 546,310 
Production taxes72,485 83,535 191,490 159,473 
Depreciation, depletion and amortization160,293 141,047 431,131 227,856 
General and administrative expenses26,117 102,226 100,775 151,415 
Exploration and impairment1,611 910 33,257 1,698 
Total operating expenses771,530 652,289 2,005,869 1,473,829 
Gain on sale of assets, net899 755 3,739 2,595 
Operating income352,737 537,309 929,826 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 affiliate13,512 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 taxes274,772 940,302 949,345 1,049,545 
Income tax (expense) benefit(65,696)1,307 (227,199)3,352 
Net income from continuing operations209,076 941,609 722,146 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 
Basic 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 (Note 18)
$5.01 $21.34 $17.28 $55.16 
Diluted earnings attributable to Chord per share:
Diluted from continuing operations$4.77 $21.84 $16.54 $37.02 
Diluted from discontinued operations (1.39) 14.97 
Diluted total (Note 18)
$4.77 $20.45 $16.54 $51.99 
Weighted average shares outstanding:
Basic (Note 18)
41,563 41,318 41,670 26,806 
Diluted (Note 18)
43,662 43,107 43,527 28,438 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Chord Energy Corporation
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
 Common StockTreasury StockAdditional
Paid-in Capital
Retained EarningsTotal
Stockholders’
Equity
SharesAmountSharesAmount
(In thousands)
Balance as of December 31, 202241,477 $438 2,249 $(251,950)$3,485,819 $1,445,491 $4,679,798 
Equity-based compensation and vestings210 2 — — 11,852 — 11,854 
Tax withholdings on settlement of equity-based awards(77)(1)— — (10,299)— (10,300)
Dividends
— — — — — (204,884)(204,884)
Share repurchases(111)— 111 (15,003)— — (15,003)
Warrants exercised39 — — — 276 — 276 
Net income— — — — — 296,999 296,999 
Balance as of March 31, 202341,538 439 2,360 (266,953)3,487,648 1,537,606 4,758,740 
Equity-based compensation and vestings64 2 — — 15,325 — 15,327 
Tax withholdings on settlement of equity-based awards(22)— — — (3,331)— (3,331)
Dividends— — — — — (137,507)(137,507)
Share repurchases(209)— 209 (30,815)— — (30,815)
Warrants exercised19 — — — 1,085 — 1,085 
Net income— — — — — 216,071 216,071 
Balance as of June 30, 202341,390 441 2,569 (297,768)3,500,727 1,616,170 4,819,570 
Equity-based compensation and vestings12 — — — 10,081 — 10,081 
Tax withholdings on settlement of equity-based awards(1)— — — (192)— (192)
Dividends— — — — — (58,374)(58,374)
Share repurchases(703)— 703 (112,504)— — (112,504)
Warrants exercised675 7 — — 73,350 — 73,357 
Net income— — — — — 209,076 209,076 
Balance as of September 30, 202341,373 $448 3,272 $(410,272)$3,583,966 $1,766,872 $4,941,014 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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Attributable to Chord
 Common StockTreasury StockAdditional
Paid-in Capital
Retained EarningsNon-controlling InterestsTotal
Stockholders’
Equity
SharesAmountSharesAmount
(In thousands)
Balance as of December 31, 202119,276 $200 871 $(100,000)$863,010 $269,690 $188,673 $1,221,573 
Equity-based compensation94 — — — 4,800 — 48 4,848 
Tax withholdings on settlement of equity-based awards(31)— 31 (4,132)— — — (4,132)
Modification of equity-based awards— — — — (226)— — (226)
Dividends— — — — — (73,074)— (73,074)
Warrants exercised233 3 — — 15,689 — — 15,692 
OMP Merger— — — — — — (191,032)(191,032)
Net income— — — — — 466,003 2,311 468,314 
Balance as of March 31, 202219,572 203 902 (104,132)883,273 662,619  1,441,963 
Equity-based compensation11 — — — 4,815 — — 4,815 
Tax withholdings on settlement of equity-based awards(4)— 4 (657)— — — (657)
Dividends— — — — — (71,961)— (71,961)
Special dividend— — — — — (307,408)— (307,408)
Transfer of equity plan shares from treasury — — (35)4,789 (4,789)— —  
Warrants exercised84 3 — — 502 — — 505 
Net income— — — — — 130,839 — 130,839 
Balance as of June 30, 202219,663 206 871 (100,000)883,801 414,089  1,198,096 
Shares issued in Merger22,672 227 — — 2,477,809 — — 2,478,036 
Replacement equity awards issued in Merger— — — — 27,402 — — 27,402 
Replacement warrants issued in Merger— — — — 79,774 — — 79,774 
Equity-based compensation626 4 — — 30,684 — — 30,688 
Tax withholdings on settlement of equity-based awards(286)— — — (31,979)— — (31,979)
Dividends— — — — — (70,242)— (70,242)
Share repurchases(1,175)— 1,175 (124,845)— — — (124,845)
Warrants exercised55 1 — — 2,131 — — 2,132 
Net income— — — — — 881,751 — 881,751 
Balance as of September 30, 202241,555 $438 2,046 $(224,845)$3,469,622 $1,225,598 $ $4,470,813 
The accompanying notes are an integral part of these condensed consolidated financial statements.











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Chord Energy Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30,
 20232022
 (In thousands)
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 amortization431,131 227,856 
Gain on sale of assets(3,739)(521,495)
Impairment28,964 1,073 
Deferred income taxes176,678 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 expenses37,260 40,351 
Deferred financing costs amortization and other1,072 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 expenses430 7,708 
Change in accounts payable, interest payable and accrued liabilities135,880 57,581 
Change in other assets and liabilities, net42,483 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 divested46,002 155,728 
Costs related to divestitures (11,368)
Derivative settlements(203,238)(487,394)
Proceeds from sale of investment in unconsolidated affiliate40,612 428,231 
Distributions from investment in unconsolidated affiliate8,499 40,607 
Net cash used in investing activities
(1,112,318)(325,699)
Cash flows from financing activities:
Proceeds from revolving credit facilities135,000 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 exercised74,611 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 period593,151 174,783 
End of period$264,966 $658,857 
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Nine Months Ended September 30,
 20232022
 (In thousands)
Supplemental non-cash transactions:
Change in accrued capital expenditures$77,091 $41,348 
Change in asset retirement obligations1,057 412 
Non-cash consideration exchanged in Merger 2,585,211 
Investment in unconsolidated affiliate 568,312 
Dividends payable36,044 27,256 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Chord Energy Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Organization and Operations of the Company
Chord Energy Corporation (together with its consolidated subsidiaries, the “Company” or “Chord”) is an independent exploration and production company with quality and sustainable long-lived assets in the Williston Basin. The Company, formerly known as Oasis Petroleum Inc. (“Oasis”), was established upon the completion of the merger of equals (the “Merger”) with Whiting Petroleum Corporation (“Whiting”) on July 1, 2022. Whiting was an independent oil and gas company engaged in the development, production and acquisition of crude oil, natural gas liquids (“NGL”) and natural gas primarily in the Rocky Mountains region of the United States.
The Merger was accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). Accordingly, unless otherwise specifically noted herein, the periods prior to July 1, 2022 report the financial results of legacy Oasis, while the periods as of and subsequent to July 1, 2022 report the financial results of Chord, which include the operating results of Whiting and the associated impacts from the Merger.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the Condensed Consolidated Balance Sheet at December 31, 2022 is derived from audited financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of the Company’s financial position, have been included. Management has made certain estimates and assumptions that affect reported amounts in the unaudited condensed consolidated financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results.
These interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Annual Report”).
Risks and Uncertainties
As a producer of crude oil, NGLs and natural gas, the Company’s revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for crude oil, NGLs and natural gas, which are dependent upon numerous factors beyond its control such as economic, political and regulatory developments and competition from other energy sources. The energy markets have historically been very volatile, and there can be no assurance that the prices for crude oil, NGLs or natural gas will not be subject to wide fluctuations in the future. A substantial or extended decline in prices for crude oil and, to a lesser extent, NGLs and natural gas, could have a material adverse effect on the Company’s financial position, results of operations, cash flows, the quantities of crude oil, NGL and natural gas reserves that may be economically produced and the Company’s access to capital.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies and estimates from those disclosed in the 2022 Annual Report.
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3. Revenue Recognition
Revenues from contracts with customers were as follows for the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In thousands)
Crude oil revenues$775,969 $824,265 $2,074,746 $1,629,033 
Purchased crude oil sales269,619 82,902 584,109 415,838 
NGL and natural gas revenues64,656 231,881 227,505 459,182 
Purchased NGL and natural gas sales13,124 49,795 45,596 126,815 
Other services revenues   324 
Total revenues$1,123,368 $1,188,843 $2,931,956 $2,631,192 

The Company records revenue when the performance obligations under the terms of its customer contracts are satisfied. For sales of commodities, the Company records revenue in the month the production or purchased product is delivered to the purchaser. However, settlement statements and payments are typically not received for 20 to 90 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production that was delivered to the purchaser and the price that will be received for the sale of the product. The Company uses knowledge of its properties, its properties’ historical performance, spot market prices and other factors as the basis for these estimates. The Company records the differences between estimates and the actual amounts received for product sales once payment is received from the purchaser. In certain cases, the Company is required to estimate these volumes during a reporting period and record any differences between the estimated volumes and actual volumes in the following reporting period. Differences between estimated and actual revenues have historically not been significant. For the three and nine months ended September 30, 2023 and 2022, revenue recognized related to performance obligations satisfied in prior reporting periods was not material.
4. Inventory
The following table sets forth the Company’s inventory:
September 30, 2023December 31, 2022
 (In thousands)
Inventory
Equipment and materials$27,415 $21,097 
Crude oil inventory37,437 33,314 
Total inventory64,852 54,411 
Long-term inventory
Linefill in third-party pipelines22,426 22,009 
Total long-term inventory22,426 22,009 
Total$87,278 $76,420 
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5. Additional Balance Sheet Information
The following table sets forth certain balance sheet amounts comprised of the following:
September 30, 2023December 31, 2022
 (In thousands)
Accounts receivable, net
Trade and other accounts$850,062 $661,121 
Joint interest accounts191,654 127,772 
Total accounts receivable1,041,716 788,893 
Less: allowance for credit losses(10,174)(7,155)
Total accounts receivable, net$1,031,542 $781,738 
Accrued liabilities
Accrued oil and gas marketing$215,132 $127,240 
Accrued capital costs153,838 76,747 
Accrued lease operating expenses124,594 73,714 
Accrued general and administrative expenses33,170 42,259 
Current portion of asset retirement obligations2,285 19,376 
Accrued dividends19,294 5,873 
Other accrued liabilities23,005 17,245 
Total accrued liabilities$571,318 $362,454 
6. Fair Value Measurements
The Company’s financial instruments, including certain cash and cash equivalents, accounts receivable, accounts payable and other payables, are carried at cost, which approximates their respective fair market values due to their short-term maturities. The Company recognizes its non-financial assets and liabilities, such as asset retirement obligations (“ARO”) and properties acquired in a business combination or upon impairment, at fair value on a non-recurring basis.
Financial Assets and Liabilities
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
The following tables set forth by level, within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:
Fair value at September 30, 2023
Level 1Level 2Level 3Total
(In thousands)
Assets:
Commodity derivative contracts (see Note 7)
$ $75 $2,241 $2,316 
Contingent consideration (see Note 7)
 68,070  68,070 
Investment in unconsolidated affiliate (see Note 12)
102,571   102,571 
Total assets$102,571 $68,145 $2,241 $172,957 
Liabilities:
Commodity derivative contracts (see Note 7)
$ $121,635 $88 $121,723 
Total liabilities$ $121,635 $88 $121,723 

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 Fair value at December 31, 2022
 Level 1Level 2Level 3Total
 (In thousands)
Assets:
Commodity derivative contracts (see Note 7)
$ $780 $ $780 
Contingent consideration (see Note 7)
 60,920  60,920 
Investment in unconsolidated affiliate (see Note 12)
130,575   130,575 
Total assets$130,575 $61,700 $ $192,275 
Liabilities:
Commodity derivative contracts (see Note 7)
$ $329,676 $14,694 $344,370 
Total liabilities$ $329,676 $14,694 $344,370 
Commodity derivative contracts. The Company enters into commodity derivative contracts to manage risks related to changes in crude oil, NGL and natural gas prices. The Company’s swaps, collars and basis swaps are valued by a third-party preparer based on an income approach. The significant inputs used are commodity prices, discount rate and the contract terms of the derivative instruments. These assumptions are observable in the marketplace throughout the full term of the contract, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace and are therefore designated as Level 2 within the fair value hierarchy. The Company recorded a credit risk adjustment to increase the fair value of its net derivative liability for these contracts by $0.1 million at September 30, 2023 and to reduce the fair value of its net derivative liability for these contracts by $3.5 million at December 31, 2022. See Note 7—Derivative Instruments for additional information.
Transportation derivative contracts. The Company is a party to certain buy/sell transportation contracts that are derivative contracts for which the Company has not elected the “normal purchase normal sale” exclusion under FASB ASC 815, Derivatives and Hedging. These transportation derivative contracts are valued by a third-party preparer based on an income approach. The significant inputs used are quoted forward prices for commodities, market differentials for crude oil and either the Company’s or the counterparty’s nonperformance risk, as appropriate. The assumptions used in the valuation of these contracts include certain market differential metrics that are unobservable during the term of the contracts. Such unobservable inputs are significant to the contract valuation methodology, and the contracts’ fair values are therefore designated as Level 3 within the fair value hierarchy. See Note 7—Derivative Instruments for additional information.
Contingent consideration. In June 2021, the Company completed the divestiture of oil and gas properties in the Texas region of the Permian Basin. In connection with the divestiture, the Company is entitled to receive up to three earn-out payments of $25.0 million per year for each of 2023, 2024 and 2025 if the average daily settlement price of New York Mercantile Exchange (“NYMEX”) West Texas Intermediate crude oil price index (“NYMEX WTI”) exceeds $60 per barrel for such year (the “Permian Basin Sale Contingent Consideration”). If NYMEX WTI for calendar year 2023 or 2024 is less than $45 per barrel, then each calendar year thereafter the buyer’s obligation to make any remaining earn-out payments is terminated. The fair value of the Permian Basin Sale Contingent Consideration is determined by a third-party preparer using a Monte Carlo simulation model and Ornstein-Uhlenbeck pricing process. The significant inputs used are NYMEX WTI forward price curve, volatility, mean reversion rate and counterparty credit risk adjustment. The Company determined these were Level 2 fair value inputs that are substantially observable in active markets or can be derived from observable data. As of the date of this report, the Company expects to receive approximately $25.0 million in the first quarter of 2024 related to the 2023 contingent payment. See Note 7—Derivative Instruments for additional information.
Investment in unconsolidated affiliate. In connection with the OMP Merger (defined in Note 10—Divestitures and Assets Held for Sale), the Company owns common units in Crestwood Equity Partners LP (“Crestwood”) which are accounted for using the fair value option under FASB ASC 825-10, Financial Instruments. The fair value of the Company’s investment in Crestwood was determined using Level 1 inputs based upon the quoted market price of Crestwood’s publicly traded common units at September 30, 2023 and December 31, 2022. See Note 12—Investment in Unconsolidated Affiliate for additional information.
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Non-Financial Assets and Liabilities
The fair value of the Company’s non-financial assets and liabilities measured on a non-recurring basis are determined using valuation techniques that include Level 3 inputs.
Asset retirement obligations. The initial measurement of ARO at fair value is recorded in the period in which the liability is incurred. Fair value is determined by calculating the present value of estimated future cash flows related to the liability. Estimating the future ARO requires management to make estimates and judgments regarding the timing and existence of a liability, as well as what constitutes adequate restoration when considering current regulatory requirements. Inherent in the fair value calculation are numerous assumptions and judgments, including the ultimate costs, inflation factors, credit-adjusted discount rates, timing of settlement and changes in the legal, environmental and regulatory environments.
2023 Williston Basin Acquisition. On June 30, 2023, the Company completed the 2023 Williston Basin Acquisition (defined in Note 9—Acquisitions). The assets acquired and liabilities assumed were recorded at fair value as of June 30, 2023. The fair value of the oil and gas properties acquired was calculated using an income approach based on the net discounted future cash flows from the oil and gas properties. The inputs utilized in the valuation of the oil and gas properties acquired included mostly unobservable inputs which fall within Level 3 of the fair value hierarchy. Such inputs included estimates of future oil and gas production from the properties’ reserve reports, commodity prices based on forward strip price curves (adjusted for basis differentials), operating and development costs, expected future development plans for the properties and the utilization of a discount rate based on a market-based weighted-average cost of capital. The Company also recorded the ARO assumed from the 2023 Williston Basin Acquisition at fair value. The inputs utilized in valuing the ARO were mostly Level 3 unobservable inputs, including estimated economic lives of oil and natural gas wells as of June 30, 2023, anticipated future plugging and abandonment costs and an appropriate credit-adjusted risk-free rate to discount such costs. See Note 9—Acquisitions for additional information.
7. Derivative Instruments
Commodity derivative contracts. The Company utilizes derivative financial instruments to manage risks related to changes in commodity prices. The Company’s crude oil contracts settle monthly based on the average NYMEX WTI and its natural gas contracts settle monthly based on the average NYMEX Henry Hub natural gas index price.
The Company utilizes fixed-price swaps and two-way and three-way collars to manage risks related to changes in commodity prices. The Company’s fixed-price swaps are designed to establish a fixed price for the volumes under contract. Two-way collars are designed to establish a minimum price (floor) and a maximum price (ceiling) for the volumes under contract. Three-way collars are designed to establish a minimum price (floor), unless the market price falls below the sold put (sub-floor), at which point the minimum price would be the index price plus the difference between the purchased put and the sold put strike price. The sold call establishes a maximum price (ceiling) for the volumes under contract. The Company may, from time to time, restructure existing derivative contracts or enter into new transactions to effectively modify the terms of current contracts in order to improve the pricing parameters in existing contracts.
At September 30, 2023, the Company had the following outstanding commodity derivative contracts:
CommoditySettlement
Period
Derivative
Instrument
VolumesWeighted Average Prices
Fixed-Price SwapsSub-FloorFloorCeiling
  
Crude oil2023Two-way collars2,162,000 Bbls$56.06 $76.65 
Crude oil2023Fixed-price swaps1,288,000 Bbls$50.00 
Crude oil2024Two-way collars3,928,000 Bbls$64.18 $85.40 
Crude oil2024Three-way collars736,000 Bbls$55.00 $71.25 $92.14 
Crude oil2025Two-way collars1,181,000 Bbls$60.00 $79.05 
Crude oil2025Three-way collars181,000 Bbls$55.00 $70.00 $91.55 
Natural gas2025Fixed-price swaps651,600 MMBtu$3.93 
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Transportation derivative contracts. The Company is a party to two contracts that provide for the transportation of crude oil through a buy/sell structure from North Dakota to either Cushing, Oklahoma or Guernsey, Wyoming. The contracts require the purchase and sale of fixed volumes of crude oil through July 2024 as specified in the agreements. The Company determined that these contracts qualified as derivatives and did not elect the “normal purchase normal sale” exclusion. As of September 30, 2023, the estimated fair value of these contracts was a $2.2 million asset, which was classified as a current derivative asset on the Company’s Condensed Consolidated Balance Sheet. As of December 31, 2022, the estimated fair value of these contracts was a $14.7 million liability, of which $11.9 million was classified as a current derivative liability and $2.8 million was classified as a non-current derivative liability on the Company’s Condensed Consolidated Balance Sheet. The Company records the changes in fair value of these contracts to gathering, processing and transportation (“GPT”) expenses on the Company’s Condensed Consolidated Statement of Operations. Settlements on these contracts are reflected as operating activities on the Company’s Consolidated Statements of Cash Flows and represent cash payments to the counterparties for transportation of crude oil or the net settlement of contract liabilities if the transportation was not utilized, as applicable. See Note 6—Fair Value Measurements for additional information.
Contingent consideration. The Company bifurcated the Permian Basin Sale Contingent Consideration from the host contract and accounted for it separately at fair value. The Permian Basin Sale Contingent Consideration is marked-to-market each reporting period, with changes in fair value recorded in the other income (expense) section of the Company’s Condensed Consolidated Statements of Operations as a net gain or loss on derivative instruments. As of September 30, 2023, the estimated fair value of the Permian Basin Sale Contingent Consideration was $68.1 million, of which $24.5 million was classified as a current derivative asset and $43.6 million was classified as a non-current derivative asset on the Condensed Consolidated Balance Sheet. As of December 31, 2022, the estimated fair value of the Permian Basin Sale Contingent Consideration was $60.9 million, of which $23.0 million was classified as a current derivative asset and $38.0 million was classified as a non-current derivative asset on the Condensed Consolidated Balance Sheet. See Note 6—Fair Value Measurements for additional information.
The following table summarizes the location and amounts of gains and losses from the Company’s derivative instruments recorded in the Company’s Condensed Consolidated Statements of Operations for the periods presented:

Three Months Ended September 30,Nine Months Ended September 30,
Derivative InstrumentStatements of Operations Location2023202220232022
 (In thousands)
Commodity derivativesNet gain (loss) on derivative instruments$(91,483)$344,379 $4,097 $(136,066)
Commodity derivatives (buy/sell transportation contracts)(1)
Gathering, processing and transportation expenses(1,432)6,939 16,847 6,939 
Contingent considerationNet gain (loss) on derivative instruments6,278 (6,970)7,150 7,300 
__________________ 
(1)    The change in the fair value of the transportation derivative contracts was recorded in GPT expenses as a loss for the three months ended September 30, 2023 and as a gain for the nine months ended September 30, 2023.
In accordance with the FASB’s authoritative guidance on disclosures about offsetting assets and liabilities, the Company is required to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting agreement. The Company’s derivative instruments are presented as assets and liabilities on a net basis by counterparty, as all counterparty contracts provide for net settlement. No margin or collateral balances are deposited with counterparties, and as such, gross amounts are offset to determine the net amounts presented in the Company’s Condensed Consolidated Balance Sheets.
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The following table summarizes the location and fair value of all outstanding derivative instruments recorded in the Company’s Condensed Consolidated Balance Sheets:
September 30, 2023
Derivative InstrumentBalance Sheet LocationGross AmountGross Amount OffsetNet Amount
(In thousands)
Derivatives assets:
Commodity derivativesDerivative instruments — current assets$9,502 $(9,463)$39 
Contingent considerationDerivative instruments — current assets24,496  24,496 
Commodity derivatives (buy/sell transportation contracts)Derivative instruments — current assets2,241  2,241 
Commodity derivativesDerivative instruments — non-current assets11,410 (11,374)36 
Contingent considerationDerivative instruments — non-current assets43,574  43,574 
Total derivatives assets$91,223 $(20,837)$70,386 
Derivatives liabilities:
Commodity derivativesDerivative instruments — current liabilities$123,973 $(9,463)$114,510 
Commodity derivatives (buy/sell transportation contracts)Derivative instruments — current liabilities88  88 
Commodity derivativesDerivative instruments — non-current liabilities18,499 (11,374)7,125 
Total derivatives liabilities$142,560 $(20,837)$121,723 
December 31, 2022
Derivative InstrumentBalance Sheet LocationGross AmountGross Amount OffsetNet Amount
(In thousands)
Derivatives assets:
Commodity derivativesDerivative instruments — current assets$10,194 $(9,414)$780 
Contingent considerationDerivative instruments — current assets22,955  22,955 
Contingent considerationDerivative instruments — non-current assets37,965  37,965 
Total derivatives assets$71,114 $(9,414)$61,700 
Derivatives liabilities:
Commodity derivativesDerivative instruments — current liabilities$339,090 $(9,414)$329,676 
Commodity derivatives (buy/sell transportation contracts)Derivative instruments — current liabilities11,865  11,865 
Commodity derivatives (buy/sell transportation contracts)Derivative instruments — non-current liabilities2,829  2,829 
Total derivatives liabilities$353,784 $(9,414)$344,370 
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8. Property, Plant and Equipment
The following table sets forth the Company’s property, plant and equipment:
September 30, 2023December 31, 2022
 (In thousands)
Proved oil and gas properties
$5,890,781 $5,089,185 
Less: Accumulated depletion(871,997)(461,175)
Proved oil and gas properties, net5,018,784 4,628,010 
Unproved oil and gas properties206,966 30,936 
Other property and equipment
48,605 72,973 
Less: Accumulated depreciation(18,326)(20,576)
Other property and equipment, net30,279 52,397 
Total property, plant and equipment, net$5,256,029 $4,711,343 
9. Acquisitions
2023 Acquisition
On May 22, 2023, the Company announced that a wholly-owned subsidiary of the Company had entered into a definitive agreement to acquire approximately 62,000 net acres in the Williston Basin from XTO Energy Inc. and affiliates, subsidiaries of Exxon Mobil Corporation (collectively “XTO”), for total cash consideration of $375.0 million, subject to customary purchase price adjustments (the “2023 Williston Basin Acquisition”). The effective date of the 2023 Williston Basin Acquisition was April 1, 2023.
On June 30, 2023, the Company completed the 2023 Williston Basin Acquisition for total cash consideration of $361.6 million, including a deposit of $37.5 million paid to XTO upon execution of the purchase and sale agreement and $324.1 million paid to XTO at closing (including customary purchase price adjustments). The Company funded the 2023 Williston Basin Acquisition with cash on hand. The 2023 Williston Basin Acquisition was accounted for as a business combination and was recorded under the acquisition method of accounting in accordance with ASC 805. The post-acquisition operating results and pro forma revenue and earnings for the 2023 Williston Basin Acquisition were not material to the Company’s condensed consolidated financial statements and have therefore not been presented.
Preliminary purchase price allocation. The Company recorded the assets acquired and liabilities assumed in the 2023 Williston Basin Acquisition at their estimated fair value on June 30, 2023 of $361.6 million. The allocation of the fair value to the identifiable assets acquired and liabilities assumed resulted in no goodwill or bargain purchase gain being recognized. Determining the fair value of the assets and liabilities of the 2023 Williston Basin Acquisition requires judgement and certain assumptions to be made. See Note 6—Fair Value Measurements for additional information.
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The tables below present the total consideration transferred and its allocation to the identifiable assets acquired and liabilities assumed as of the acquisition date on June 30, 2023. As provided under ASC 805, the purchase price allocation may be subject to change for up to one year after June 30, 2023, which may result in a different allocation than what is presented in the tables below.
Purchase Price Consideration
(In thousands)
Cash consideration transferred$361,609 
Preliminary Purchase Price Allocation
(In thousands)
Assets acquired:
Oil and gas properties$367,672 
Inventory1,844 
Total assets acquired$369,516 
Liabilities assumed:
Asset retirement obligations$6,771 
Revenue and production taxes payable1,136 
Total liabilities assumed$7,907 
Net assets acquired$361,609 
2022 Acquisition
On July 1, 2022, the Company completed the Merger with Whiting and issued 22,671,871 shares of common stock and paid $245.4 million of cash to Whiting stockholders. The Merger was accounted for under the acquisition method of accounting in accordance with ASC 805.
Purchase price allocation. Under the acquisition method of accounting, the assets and liabilities of Whiting were recorded at their respective fair values as of the acquisition date on July 1, 2022. The allocation of the fair value to the identifiable assets acquired and liabilities assumed resulted in no goodwill or bargain purchase gain being recognized. As provided under ASC 805, the purchase price allocation may be subject to change for up to one year after July 1, 2022. There were no measurement period adjustments recorded to the purchase price allocation during the nine months ended September 30, 2023.
Unaudited pro forma financial information. The results of Whiting’s operations have been included in the Company’s consolidated financial statements since July 1, 2022. The following supplemental unaudited pro forma financial information for the nine months ended September 30, 2022 has been prepared as if the Merger had occurred on January 1, 2022. The information presented below reflects pro forma adjustments based on available information and certain assumptions that the Company believes are factual and supportable. The pro forma financial information includes certain non-recurring pro forma adjustments that were directly attributable to the Merger, including transaction costs incurred by the Company and Whiting. The unaudited pro forma financial information does not purport to be indicative of results of operations that would have occurred had the Merger occurred on the basis assumed above, nor is such information indicative of the Company’s expected future results. The pro forma results of operations did not include any future cost savings or other synergies that may result from the Merger or any estimated costs that have not yet been incurred by the Company to integrate the Whiting assets.
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Nine Months Ended September 30, 2022
(In thousands)
Revenues$3,739,261 
Net income attributable to Chord1,701,478 
Net income attributable to Chord per share:
Basic$40.53 
Diluted38.92 
10. Divestitures and Assets Held for Sale
2023 Divestitures and Assets Held for Sale
Non-core properties. During the second and third quarters of 2023, the Company entered into separate agreements with multiple buyers to sell a majority of its non-core properties located outside of the Williston Basin for total estimated net cash proceeds (including purchase price adjustments) of $38.7 million (the “Non-core Asset Sales”). As of September 30, 2023, the Company completed certain of these divestitures and received total net cash proceeds (including purchase price adjustments) of $33.1 million, subject to customary post-closing adjustments. During the three and nine months ended September 30, 2023, the Company recorded a pre-tax net loss on sale of $0.8 million and $1.7 million, respectively, for the divestiture of these non-core properties.
Assets held for sale. The remainder of the Non-core Asset Sales are expected to close in the fourth quarter of 2023 for estimated net cash proceeds (including purchase price adjustments) of $5.6 million. As of September 30, 2023, the Company classified the assets and liabilities associated with these properties as held for sale on its Condensed Consolidated Balance Sheet.
The following table presents balance sheet data related to the assets held for sale:
September 30, 2023
(In thousands)
Assets:
Oil and gas properties$16,634 
Less: accumulated depreciation, depletion and amortization(6,244)
Total property, plant and equipment, net10,390 
Inventory336 
Total current assets held for sale$