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Chord Energy Corporation First Quarter 2023 Results

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   |    Monday,May 08,2023

Chord Energy Corporation announced first quarter 2023 results.

Highlights

• 1Q23 oil volumes of 95.1 MBopd were above the high-end of guidance due to strong well performance and accelerated activity;
• Total 1Q23 volumes of 164.7 MBoepd were above midpoint of guidance, with NGL volumes negatively impacted by ethane rejection;
• 1Q23 revenues totaled $766.2MM. Combined natural gas and NGL revenues totaled $115.3MM, which exceeded the $108.0MM of revenue implied by midpoint volume and differential guidance using actual 1Q23 benchmark pricing;
• E&P and other CapEx was $202.3MM in 1Q23, towards the high-end of our guidance range primarily due to accelerated activity;
• Net cash provided by operating activities was $468.8MM and net income was $297.0MM in 1Q23;
• Adjusted EBITDA⁽¹⁾ was $408.3MM and Adjusted Free Cash Flow⁽¹⁾ was $198.6MM in 1Q23;
• Cash of $592.3MM exceeded debt of $400.0MM at March 31, 2023;
• Announced the sale of certain non-Williston Basin, non-core properties for proceeds of approximately $35MM with all transactions closing or expected to close during 2Q23. Recent total volumes included in divested assets were approximately 1.1 MBoepd with oil volumes of approximately 0.9 MBopd;
• Total return of capital for 1Q23 set at 75% of Adjusted Free Cash Flow, including share repurchases of $15MM during 1Q23 at a weighted average price of $135.55 per share;
• Declared a base-plus-variable cash dividend of $3.22 per share of common stock. The dividend will be payable on May 30, 2023 to shareholders of record as of May 16, 2023;
• In March, Chord Energy was added to the S&P MidCap 400 index. Additionally, Chord's S&P issuer bond rating increased to BB-; and
• Continued focused on ESG and Sustainability with active programs to reduce emissions and enhance disclosure. Sustainability report expected mid-year.

Chord Energy Corp. reported first quarter 2023 financial and operating results. On July 1, 2022, the Company completed the merger of equals transaction between Oasis Petroleum Inc. ("Oasis") and Whiting Petroleum Corporation ("Whiting"). The results reported for the three months ended March 31, 2023 reflect the consolidated results of Chord, while the results reported for the three months ended March 31, 2022 reflect legacy Oasis, unless otherwise noted.

Danny Brown, Chord Energy's President and Chief Executive Officer, said: "Chord's first quarter performance demonstrated the power of our premier Williston Basin position and strong operational execution which was enhanced through the 2022 merger."

"We saw better than expected well performance coupled with a modest acceleration of activity, which led to oil production above estimates and stronger than expected free cash flow. I'd like to offer my thanks to the entire Chord team for their resilience overcoming very difficult January conditions and putting the Company on excellent footing for the remainder of the year. Additionally, Chord was able to sell certain non-Williston, non-core assets and increased 2023 volume guidance when accounting for these divestitures. Shareholder returns remain robust, supported by deep, low-cost inventory and excellent capital efficiency. We remain excited about the oil and gas industry and the value we bring to the world. We are focused on sustainable value creation through disciplined capital allocation, responsible operations, and maintaining a strong balance sheet."

1Q23 Operational and Financial Update:

The following table presents select 1Q23 operational and financial data compared to guidance released in February 2023:

During the three months ended March 31, 2023, net cash provided by operating activities was $468.8MM and net income was $297.0MM ($6.87/diluted share). Adjusted EBITDA was $408.3MM, Adjusted Free Cash Flow was $198.6MM and Adjusted Net Income was $194.4MM ($4.49/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.

Updated Outlook:

Chord is updating its outlook to reflect its latest projections including the impact of the non-core divestitures which removed 400 Bopd - 500 Bopd from 2Q23 and approximately 600 Bopd from FY23. Assuming pricing of $75/Bbl WTI and $2.75/MMBtu Henry Hub for the remainder of 2023, Chord expects to generate approximately $1.75B of Adjusted EBITDA and over $825MM of Adjusted Free Cash Flow in 2023, including the impact of derivatives but excluding dividends. The 2023 reinvestment rate is expected to be approximately 50%. Highlights of the updated 2023 plan include:

• Updating volume projections to account for strong well performance, a modest acceleration of activity in 1Q23, higher levels of ethane rejection and the production impact from the non-core divestitures for FY23. Excluding the non-core divestitures, FY23 oil volumes would increase by 0.6 MBopd compared to February guidance;
• Increasing residue gas realizations to account for higher levels of ethane in the residue gas stream. NGL realizations adjusted to reflect current market prices versus WTI;
• LOE per BOE reflect the impact of the non-core divestitures and lower NGL volumes due to moving ethane into residue gas stream, but otherwise unchanged compared to February guidance;
• Production tax as a percent of revenue is increasing due to lower Henry Hub price assumption of $2.75/MMBtu; and
• 2023 E&P and other CapEx unchanged at approximately $825MM - $865MM.

The following table presents select operational and financial guidance for 2Q23 and FY23:

Chord expects to pay no cash taxes in 2Q23, and expects to pay 3% - 10% of Adjusted EBITDA in 2H23 with oil prices ranging from $70/Bbl - $90/Bbl.

Hedging Activity

Chord recently added 4.0 MBopd of crude oil collars in 2H23 with weighted average ceiling of $88.51/Bbl and weighted average floor of $65.00/Bbl. Additionally, Chord added 1.8 MBopd of crude oil collars in 2024 with weighted average ceiling of $80.13/Bbl and weighted average floor of $65.00/Bbl. The following table summarizes these hedge transactions. A complete summary of the Company's current hedge positions can be found in the Company's most recent investor presentation located on its website at https://ir.chordenergy.com/presentations.

Capital Expenditures

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

Dividend Declaration

Chord declared a base-plus-variable cash dividend of $3.22 per share of common stock. The dividend will be payable on May 30, 2023 to shareholders of record as of May 16, 2023. The base-plus-variable dividend was declared in connection with Chord's return of capital plan. The total $3.22 per share dividend reflects a quarterly base dividend of $1.25 per share of common stock and quarterly variable dividend of $1.97 per share of common stock. Additional 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.

Balance Sheet and Liquidity

The following table presents key balance sheet data and liquidity metrics as of March 31, 2023 (in millions):