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What changed in Chord Energy Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Chord Energy Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+472 added−484 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-28)

Top changes in Chord Energy Corp's 2023 10-K

472 paragraphs added · 484 removed · 350 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

136 edited+38 added−34 removed283 unchanged
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations.” Successor Predecessor Year Ended December 31, Period from November 20, 2020 through December 31, 2020 Period from January 1, 2020 through November 19, 2020 2022 2021 Net production volumes: Crude oil (MBbls) 25,457 13,489 1,593 14,226 NGLs (MBbls) (1) 7,026 — — — Natural gas (MMcf) (1) 67,428 46,157 5,008 42,199 Oil equivalents (MBoe) 43,722 21,182 2,428 21,258 Average daily production (Boepd) 119,785 58,032 57,809 65,612 Average sales prices: Crude oil, without derivative settlements (per Bbl) $ 92.98 $ 67.49 $ 43.36 $ 36.75 Crude oil, with derivative settlements (2) (per Bbl) 73.50 48.55 43.36 48.13 NGL, without derivative settlements (1) (per Bbl) 26.23 — — — NGL, with derivative settlements (1)(2) (per Bbl) 26.94 — — — Natural gas, without derivative settlements (1) (per Mcf) 6.30 6.28 3.41 1.86 Natural gas, with derivative settlements (1)(2) (per Mcf) 5.26 5.96 3.40 1.86 Average costs (per Boe): Lease operating expenses 10.14 9.63 9.27 7.55 Gathering, processing and transportation expenses 3.24 5.79 5.44 5.55 Production taxes 5.25 3.63 2.45 2.14 __________________ (1) For periods prior to July 1, 2022, we reported crude oil and natural gas on a two-stream basis, and NGLs were combined with the natural gas stream when presenting our production data and average sales prices.
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations.” Year Ended December 31, 2023 2022 2021 Net production volumes: Crude oil (MBbls) 36,427 25,457 13,489 NGLs (MBbls) (1) 13,047 7,026 — Natural gas (MMcf) (1) 82,953 67,428 46,157 Oil equivalents (MBoe) 63,300 43,722 21,182 Average daily production (Boepd) 173,425 119,785 58,032 Average sales prices: Crude oil, without derivative settlements (per Bbl) $ 77.85 $ 92.98 $ 67.49 Crude oil, with derivative settlements (2) (per Bbl) 70.92 73.50 48.55 NGL, without derivative settlements (1) (per Bbl) 13.62 26.23 — NGL, with derivative settlements (1)(2) (per Bbl) 13.84 26.94 — Natural gas, without derivative settlements (1) (per Mcf) 1.43 6.30 6.28 Natural gas, with derivative settlements (1)(2) (per Mcf) 1.35 5.26 5.96 Average costs (per Boe): Lease operating expenses 10.41 10.14 9.63 Gathering, processing and transportation expenses 2.85 3.24 5.79 Production taxes 4.11 5.25 3.63 __________________ (1) For periods prior to July 1, 2022, we reported crude oil and natural gas on a two-stream basis, and NGLs were combined with the natural gas stream when presenting our production data and average sales prices.
The magnitude and concentration of our acreage within the Williston Basin allows us to capture economies of scale, including the ability to drill multiple wells from a single drilling pad into multiple formations, the ability to drill longer lateral lengths for developmental wells, the ability to utilize centralized production and crude oil, natural gas and water fluid handling facilities and infrastructure, and reduce the time and cost of rig mobilization.
The magnitude and concentration of our acreage within the Williston Basin allows us to capture economies of scale, including the ability to drill longer lateral lengths for developmental wells, the ability to drill multiple wells from a single drilling pad into multiple formations, the ability to utilize centralized production and crude oil, natural gas and water fluid handling facilities and infrastructure, and reduce the time and cost of rig mobilization.
We strive to provide safe, reliable and affordable energy in a responsible manner against the backdrop of an evolving energy landscape.
We strive to provide reliable, safe and affordable energy in a responsible manner against the backdrop of an evolving energy landscape.
Risk Factors—Risks related to the oil and gas industry and our business—We may incur losses as a result of title defects in the properties in which we invest.” Seasonality Winter weather conditions and lease stipulations can limit or temporarily halt our drilling, completion and producing activities and other oil and gas operations.
Risk Factors—Risks related to the oil and gas industry and our business—Risks related to the oil and gas industry and our business—We may incur losses as a result of title defects in the properties in which we invest.” Seasonality Winter weather conditions and lease stipulations can limit or temporarily halt our drilling, completion and producing activities and other oil and gas operations.
Additionally, during February and March 2022, shippers filed timely petitions for review of the January 2022 Order with the D.C. Circuit and the 5th Circuit. The petitions for review filed with the D.C. Circuit were transferred to the 5th Circuit. On May 6, 2022, the FERC issued an order on rehearing in which it denied the Request for Rehearing.
Additionally, during February and March 2022, shippers filed timely petitions for review of the January 2022 Order with the D.C. Circuit and the 5th Circuit. The petitions for review filed with the D.C. Circuit were transferred to the 5th Circuit. On May 6, 2022, FERC issued an order on rehearing in which it denied the Request for Rehearing.
Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted rules and regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and gas system sources, and impose new standards reducing methane emissions from oil and gas operations through limitations on venting and flaring and the implementation of enhanced emission leak detection and repair requirements.
Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted rules and regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and gas system sources, and impose standards for reducing methane emissions from oil and gas operations through limitations on venting and flaring and the implementation of enhanced emission leak detection and repair requirements.
Our estimated net proved reserves and PV-10 at December 31, 2021 and 2020 were based on reports independently prepared by DeGolyer and MacNaughton, by the use of appropriate geologic, petroleum engineering and evaluation principles and techniques that are in accordance with practices generally recognized by the petroleum industry as presented in the Estimated and Auditing Standards and definitions and current guidelines established by the SEC.
Our estimated net proved reserves and PV-10 at December 31, 2021 were based on reports independently prepared by DeGolyer and MacNaughton, by the use of appropriate geologic, petroleum engineering and evaluation principles and techniques that are in accordance with practices generally recognized by the petroleum industry as presented in the Estimated and Auditing Standards and definitions and current guidelines established by the SEC.
In October 2019, PHMSA published a final rule imposing numerous requirements on onshore gas transmission pipelines relating to maximum allowable operating pressure (“MAOP”) reconfirmation and exceedance reporting, the integrity assessment of additional pipeline mileage found in MCAs and non-HCA Class 3 and Class 4 areas by 2033, and the consideration of seismicity as a risk factor in integrity management.
In October 2019, PHMSA published a final rule imposing numerous requirements on onshore gas transmission pipelines relating to maximum allowable operating pressure reconfirmation and exceedance reporting, the integrity assessment of additional pipeline mileage found in MCAs and non-HCA Class 3 and Class 4 areas by 2033, and the consideration of seismicity as a risk factor in integrity management.
To sustain and promote a diverse, equitable and inclusive workforce, we maintain a robust compliance program supported by annual certification by all employees to our Code of Business Conduct and Ethics Policy, as well as training programs on equal employment opportunity. Offices Our principal corporate office is located in Houston, Texas at 1001 Fannin Street.
To sustain and promote a diverse, equitable and inclusive workforce, we maintain a robust compliance program supported by an annual certification by all employees to our Code of Business Conduct and Ethics Policy, as well as training programs on equal employment opportunity. Offices Our principal corporate office is located in Houston, Texas at 1001 Fannin Street.
From a safety standpoint, our corporate, field and environmental, health and safety teams are enhancing best practices and training to minimize the likelihood of safety incidents among employees and contractors. We owe it to our employees, our service providers and stakeholders to do all we can to create an environment where everyone on a Chord location is safe.
From a safety standpoint, our corporate, field and environmental, health and safety teams are enhancing best practices and training to minimize the likelihood and severity of safety incidents among employees and contractors. We owe it to our employees, our service providers and stakeholders to do all we can to create an environment where everyone on a Chord location is safe.
Our oil and gas properties are subject to customary royalty and other interests, liens to secure borrowings under the Credit Facility, liens for current taxes and other burdens, which we believe do not materially interfere with the use or affect our carrying value of the properties. Please see “Item 1A.
Our oil and gas properties are subject to customary royalty and other interests, liens to secure borrowings under our revolving credit facility, and liens for current taxes and other burdens, which we believe do not materially interfere with the use of or affect our carrying value of the properties. Please see “Item 1A.
Accordingly, the results of operations presented herein report the results of legacy Oasis prior to the closing of the Merger on July 1, 2022 and the results of Chord (including legacy Whiting) from July 1, 2022 through December 31, 2022. For additional information on price calculations, please see information set forth in “Part II, Item 7.
Accordingly, the results of operations presented herein report the results of legacy Oasis prior to the closing of the Merger on July 1, 2022 and the results of Chord (including legacy Whiting) from July 1, 2022 through December 31, 2023. For additional information on price calculations, please see information set forth in “Part II, Item 7.
Compensation and benefits The goal of our total rewards program is to provide a transparent, thoughtful framework for decisions on employee compensation and benefits. Our total rewards program considers goals in addition to financial benefits and aims to increase employee focus on key performance goals, improve overall happiness and well-being and deepen commitment to our collective success.
Compensation and benefits The goal of our total rewards program is to provide a transparent, thoughtful framework for decisions on employee compensation and benefits. Our total rewards program considers goals in addition to financial benefits and aims to increase employee focus on key performance goals, improve overall well-being and deepen commitment to our collective success.
More recently, in August 2022, PHMSA issued a final rule that established more stringent standards for management of change, integrity management, corrosion control, and inspection criteria to help identify and mitigate potential failures and worst-case scenarios.
In August 2022, PHMSA issued a final rule that established more stringent standards for management of change, integrity management, corrosion control, and inspection criteria to help identify and mitigate potential failures and worst-case scenarios.
Our estimated net proved reserves and related PV-10 at December 31, 2021 and 2020 were based on reports independently prepared by DeGolyer and MacNaughton, our previous independent reserve engineers.
Our estimated net proved reserves and related PV-10 at December 31, 2021 were based on reports independently prepared by DeGolyer and MacNaughton, our previous independent reserve engineers.
Occupational Safety and Health Administration hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state regulations require that information be maintained concerning hazardous materials used or produced in our operations and that this information be provided to employees, state and local government authorities and citizens.
Occupational Safety and Health Administration hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state regulations require that information be maintained concerning hazardous materials used or produced in our operations. Certain of this information must be provided to employees, state and local government authorities, or citizens.
In September 2020, the NDIC revised the gas capture policy to allow several additional exceptions for companies that flare natural gas under certain circumstances, such as gas plant outages or delays in securing a right-of-way for pipeline construction. As of December 31, 2022, we were capturing substantially all of our natural gas production in North Dakota.
In September 2020, the NDIC revised the gas capture policy to allow several additional exceptions for companies that flare natural gas under certain circumstances, such as gas plant outages or delays in securing a right-of-way for pipeline construction. As of December 31, 2023, we were capturing substantially all of our natural gas production in North Dakota.
The Audit and Reserves Committee of our Board of Directors reviews our cybersecurity guidelines and policies and receives updates on cybersecurity matters at least annually.
The Audit and Reserves Committee of our Board of Directors reviews our cybersecurity guidelines and policies and receives updates on cybersecurity matters at least semi-annually.
While we were satisfying the applicable gas capture percentage goals as of December 31, 2022, there is no assurance that we will remain in compliance in the future or that such future satisfaction of such goals will not have a material adverse effect on our business and results of operations.
While we were satisfying the applicable gas capture percentage goals as of December 31, 2023, there is no assurance that we will remain in compliance in the future or that such future satisfaction of such goals will not have a material adverse effect on our business and results of operations.
Our internal controls over the reserves estimation process include verification of input data into our reserves evaluation software as well as management review, such as, but not limited to the following: • Comparison of historical expenses from the lease operating statements and workover authorizations for expenditure to the operating costs input in our reserves database; • Review of working interests and net revenue interests in our reserves database against our well ownership system; • Review of historical realized prices and differentials from index prices as compared to the differentials used in our reserves database; • Review of updated capital costs prepared by our operations team; • Review of internal reserve estimates by well and by area by our internal reservoir engineers; • Discussion of material reserve variances among our internal reservoir engineers; • Review of the reserves report by members of our senior management team, including our President & Chief Executive Officer; Executive Vice President & Chief Operating Officer; Executive Vice President & Chief 11 Table of Content s Financial Officer; Senior Vice President, Planning & Investor Relations and Managing Director, Corporate Planning & Reserves; and • Review of our reserves estimation process and the reserves report by our Audit and Reserves Committee and NSAI on an annual basis.
Our internal controls over the reserves estimation process include verification of input data into our reserves evaluation software as well as management review, such as, but not limited to the following: • Comparison of historical expenses from the lease operating statements and workover authorizations for expenditure to the operating costs input in our reserves database; • Review of working interests and net revenue interests in our reserves database against our well ownership system; • Review of historical realized prices and differentials from index prices as compared to the differentials used in our reserves database; 15 Table of Contents • Review of updated capital costs prepared by our operations team; • Review of internal reserve estimates by well and by area by our internal reservoir engineers; • Discussion of material reserve variances among our internal reservoir engineers; • Review of the reserves report by members of our senior management team, including our President & Chief Executive Officer; Executive Vice President & Chief Operating Officer; Executive Vice President & Chief Financial Officer; Senior Vice President, Planning & Investor Relations and Managing Director, Corporate Planning & Reserves; and • Review of our reserves estimation process and the reserves report by our Audit and Reserves Committee and NSAI on an annual basis.
For example, the IRA, which appropriates significant federal funding for renewable energy initiatives and, for the first time ever, imposes a fee on GHG emissions from certain facilities, was signed into law in August 2022. The excess methane emissions fee provision of the IRA takes effect in 2024.
For example, the IRA, which appropriates significant federal funding for renewable energy initiatives and, for the first time ever, imposes a fee on methane emissions from certain facilities, was signed into law in August 2022. The methane emissions fee provision of the IRA takes effect in 2024.
Our current and previous independent reserve engineers evaluated 100% of the reserves and discounted values at December 31, 2022, 2021 and 2020 in accordance with the rules and regulations of the SEC applicable to companies involved in crude oil, NGL and natural gas producing activities.
Our current and previous independent reserve engineers evaluated 100% of the reserves and discounted values at December 31, 2023, 2022 and 2021 in accordance with the rules and regulations of the SEC applicable to companies involved in crude oil, NGL and natural gas producing activities.
These include regulation of the size of drilling and spacing units or proration units, the number of wells that may be drilled in an area, the siting of processing plants, disposal wells and gathering or transportation lines, and the unitization or pooling of crude oil and natural gas wells, as well as regulations that generally discourage the venting or flaring of natural gas and impose certain requirements regarding the ratability or fair apportionment of production from fields and individual wells.
These include regulation of the size of drilling and spacing units or proration units, the number of wells that may be drilled in an area, the siting of processing plants, disposal wells and gathering or transportation lines, and the unitization or pooling of crude oil and natural gas wells, as well as regulations that generally discourage the 19 Table of Contents venting or flaring of natural gas and impose certain requirements regarding the ratability or fair apportionment of production from fields and individual wells.
If the EPA were to adopt more stringent NAAQS for ground-level ozone as a result of its reconsideration of the December 2020 decision, state implementation of the revised standard or any other new legal requirements could, among other things, require installation of new emission controls on some of our equipment, result in longer permitting timelines, significantly increase our capital expenditures and operating costs and reduce demand for the crude oil and natural gas that we produce, which one or more developments could adversely impact our E&P business.
If the EPA were to adopt more stringent NAAQS for ground-level ozone as a result of its new review and ongoing reconsideration of the December 2020 decision, state implementation of the revised standard or any other new legal requirements could, among other things, require installation of new emission controls on some of our equipment, result in longer permitting timelines, significantly increase our capital expenditures and operating costs and reduce demand for the crude oil and natural gas that we produce, which one or more developments could adversely impact our business.
Risk Factors—Our operations are subject to a series of risks arising out of the threat of climate change, energy conservation measures or initiatives that stimulate demand for alternative forms of energy that could result in increased operating costs, restrictions on drilling and reduced demand for the crude oil and natural gas that we produce.” 15 Table of Content s Title to Properties As is customary in the oil and gas industry, we initially conduct a preliminary review of the title to our properties on which we do not have proved reserves.
Risk Factors—Our operations are subject to a series of risks arising out of the threat of climate change, energy conservation measures or initiatives that stimulate demand for alternative forms of energy that could result in increased operating costs, restrictions on drilling and reduced demand for the crude oil and natural gas that we produce.” Title to Properties As is customary in the oil and gas industry, we initially conduct a preliminary review of the title to our properties on which we do not have proved reserves.
We do this by ensuring employees at Chord are fairly compensated and feel valued, which enables us to attract, motivate and retain high level talent while delivering strong performance to achieve our business strategy.
We do this by ensuring employees at Chord are competitively compensated and feel valued, which enables us to attract, motivate and retain high level talent while delivering strong performance to achieve our business strategy.
Our Managing Director, Corporate Planning & Reserves has more than 12 years of broad reservoir engineering experience in the oil and gas industry, focused across conventional and unconventional evaluation and development projects, including corporate reserves estimations.
Our Managing Director, Corporate Planning & Reserves has more than 13 years of broad reservoir engineering experience in the oil and gas industry, focused across conventional and unconventional evaluation and development projects, including corporate reserves estimations.
The Senior Vice President at DeGolyer and MacNaughton that was primarily responsible for overseeing the preparation of the reserve estimates is a Registered Professional Engineer in the State of Texas, is a member of the Society of Petroleum Engineers and has over 10 years of experience in crude oil and natural gas reservoir studies and reserve evaluations.
The Senior Vice President at DeGolyer and MacNaughton that was primarily responsible for overseeing the preparation of the reserve estimates is a Registered Professional Engineer in the State of Texas, is a member of 14 Table of Contents the Society of Petroleum Engineers and has over 10 years of experience in crude oil and natural gas reservoir studies and reserve evaluations.
If endangered or threatened species are located in areas of the underlying properties where we want to conduct seismic surveys, development activities or abandonment operations, such work could be prohibited or delayed by seasonal or permanent restrictions or require the performance of extensive studies or implementation of costly mitigation practices.
If endangered or threatened species are located in areas of the underlying properties where we want to conduct seismic surveys, development activities or abandonment operations, such work could be prohibited or delayed by seasonal or permanent restrictions or require the performance of extensive studies or implementation of costly mitigation practices. Moreover, the U.S.
For more information about our ESG and corporate responsibility efforts, please see the “Sustainability” page of our website and the Proxy Statement that we will file for our 2023 Annual Meeting of Stockholders.
For more information about our ESG and corporate responsibility efforts, please see the “Sustainability” page of our website and the Proxy Statement that we will file for our 2024 Annual Meeting of Stockholders.
As of July 1, 2022, NGLs were reported separately from the natural gas stream on a three-stream basis. This prospective change impacts the comparability of the periods presented. (2) Our commodity derivatives do not qualify for or were not designated as hedging instruments for accounting purposes.
As of July 1, 2022, NGLs were reported separately from the natural gas stream on a three-stream basis. This prospective change impacts the comparability of the periods presented. 16 Table of Contents (2) Our commodity derivatives do not qualify for or were not designated as hedging instruments for accounting purposes.
As of November 1, 2020, the enforceable gas capture percentage goal is 91%. The NDIC requires operators to develop and implement Gas Capture Plans to maintain consistency with the agency’s gas capture percentage goals, but it maintains the flexibility to exclude certain gas volumes from consideration in calculating compliance with the state’s gas capture percentage goals.
As of November 1, 2020, the enforceable gas capture percentage goal is 91%. The NDIC requires operators to develop and implement Gas Capture Plans to maintain 26 Table of Contents consistency with the agency’s gas capture percentage goals, but it maintains the flexibility to exclude certain gas volumes from consideration in calculating compliance with the state’s gas capture percentage goals.
The effect of these regulations is to limit the amount of crude oil and natural gas that we can produce from our wells and to limit the number of wells or the locations at which we can drill, although we can apply for exceptions to such regulations or to have reductions in well spacing.
The effect of these regulations is to limit the amount of crude oil and natural gas that we can produce from our wells and to limit the number of wells or the locations at which we can drill, although we can apply for 22 Table of Contents exceptions to such regulations or to have reductions in well spacing.
Pipeline and Hazardous Materials Safety Administration (“PHMSA”) that Bakken crude oil tends to be more volatile and flammable than certain other crude oils, and thus poses an increased risk for a significant accident. Since 2011, all new railroad tank cars built to transport crude oil or other petroleum type fluids, including ethanol, have been built to more stringent safety standards.
Pipeline and Hazardous Materials Safety Administration (“PHMSA”) that Bakken crude oil tends to be more volatile and flammable than certain other crude oils, and thus poses an increased risk for a significant accident. 20 Table of Contents Since 2011, all new railroad tank cars built to transport crude oil or other petroleum type fluids, including ethanol, have been built to more stringent safety standards.
As of December 31, 2022, substantially all of our gross operated crude oil and natural gas production were connected to gathering systems. In addition, from time to time we may enter into third-party purchase and sales transactions to, among other things, improve price realizations, optimize transportation costs, blend to meet pipeline specifications or to cover production shortfalls.
As of December 31, 2023, substantially all of our gross operated crude oil and natural gas production was connected to gathering systems. In addition, from time to time we may enter into third-party purchase and sales transactions to, among other things, improve price realizations, optimize transportation costs, blend to meet pipeline specifications or to cover production shortfalls.
We expect to return a certain percentage of adjusted free cash flow (“Adjusted FCF”) each quarter, with the targeted percentage based on free cash flow generated during the previous quarter and leverage under the following framework: • Below 0.5x leverage: 75%+ of Adjusted FCF • Below 1.0x leverage: 50%+ of Adjusted FCF • >1.0x leverage: Base dividend+ ($5.00 per share annualized) 6 Table of Content s The variable dividend will be calculated using the framework noted above to establish the minimum percentage of free cash flow to be returned less share repurchases completed during the quarter and the base dividend. • Financial strength.
We expect to return a certain percentage of adjusted free cash flow (“Adjusted FCF”) each quarter, with the targeted percentage based on free cash flow generated during the previous quarter and projected leverage under the following framework: • Below 0.5x leverage: 75%+ of Adjusted FCF • Below 1.0x leverage: 50%+ of Adjusted FCF • >1.0x leverage: Base dividend+ ($5.00 per share annualized) The variable dividend will be calculated using the framework noted above to establish the minimum percentage of free cash flow to be returned less share repurchases completed during the quarter and the base dividend. • Financial strength.
These requirements have increased or will increase the well costs incurred by us and similarly situated crude oil and natural gas E&P operators, and we expect to continue to incur these increased costs as well as any added costs arising from new NDIC legal requirements laws and regulations applicable to the drilling and production of crude oil and natural gas that may be issued in the future. 20 Table of Content s Furthermore, the NDIC regulates natural gas flaring and over the past decade has issued orders limiting flaring emissions.
These requirements have increased or will increase the well costs incurred by us and similarly situated crude oil and natural gas E&P operators, and we expect to continue to incur these increased costs as well as any added costs arising from new NDIC legal requirements laws and regulations applicable to the drilling and production of crude oil and natural gas that may be issued in the future. 23 Table of Contents Furthermore, the NDIC regulates natural gas flaring and over the past decade has issued orders limiting flaring emissions.
Furthermore, competitive conditions may be substantially affected by various forms of energy legislation or regulation enacted by state, local and U.S. government bodies and their associated agencies, especially with regard to environmental protection and climate-related policies.
Furthermore, competitive conditions may be 18 Table of Contents substantially affected by various forms of energy legislation or regulation enacted by state, local and U.S. government bodies and their associated agencies, especially with regard to environmental protection and climate-related policies.
See “Item 8. Financial Statements and Supplementary Data—Note 26.—Supplemental Oil and Gas Reserve Information — Unaudited” for additional information about our estimated net proved reserves.
See “Item 8. Financial Statements and Supplementary Data—Note 24.—Supplemental Oil and Gas Reserve Information — Unaudited” for additional information about our estimated net proved reserves.
The core elements of our compensation program include base pay, short-term incentives and long-term incentive opportunity for employees at all levels of the Company.
The core elements of our compensation program include base pay, short-term incentives and long-term incentive opportunities for employees at all levels of the Company.
We believe our management and technical team is one of our principal competitive strengths relative to our industry peers due to our team’s proven record of accomplishment in identification, acquisition and execution of large, repeatable development drilling programs.
We believe our management and technical team is one of our principal competitive strengths relative to our industry peers due to our team’s proven record of accomplishment in identification, acquisition and execution of large, 12 Table of Contents repeatable development drilling programs.
Although FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry. 18 Table of Content s In 2000, FERC issued Order No. 637 and subsequent orders, which imposed a number of additional reforms designed to enhance competition in natural gas markets.
Although FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry. In 2000, FERC issued Order No. 637 and subsequent orders, which imposed a number of additional reforms designed to enhance competition in natural gas markets.
Other actions adversely affecting the oil and gas industry that may be pursued by the Biden Administration include limiting hydraulic fracturing by banning new oil and gas permitting on federal lands and waters, potentially eliminating certain tax deductions and relief available to the oil and gas industry, and imposing restrictions on pipeline infrastructure and LNG export facilities.
Other actions adversely affecting the oil and gas industry that may be pursued by the Biden Administration include limiting hydraulic fracturing by banning new oil and gas permitting on federal lands and waters, potentially eliminating certain tax deductions and relief available to the oil and gas industry and imposing restrictions on pipeline infrastructure and liquid natural gas (“LNG”) export facilities.
The substantial majority of our operated wells are connected to gas gathering systems, which reduces our flared volumes of natural gas. 23 Table of Content s The NDIC has issued orders and pursued other regulatory initiatives to implement legally enforceable “gas capture percentage goals” targeting the capture of natural gas produced in the state, commencing in 2014.
The substantial majority of our operated wells are connected to gas gathering systems, which reduces our flared volumes of natural gas. The NDIC has issued orders and pursued other regulatory initiatives to implement legally enforceable “gas capture percentage goals” targeting the capture of natural gas produced in the state, commencing in 2014.
We cannot predict when or whether any such proposals may be finalized and become effective. 16 Table of Content s Regulation of transportation and sales of crude oil Sales of crude oil and NGLs are not currently regulated and are made at negotiated prices. Nevertheless, Congress could reenact price controls in the future.
We cannot predict when or whether any such proposals may be finalized and become effective. Regulation of transportation and sales of crude oil Sales of crude oil and NGLs are not currently regulated and are made at negotiated prices. Nevertheless, Congress could reenact price controls in the future.
The following table provides a reconciliation of Standardized Measure to PV-10: At December 31, 2022 2021 2020 (In millions) Standardized Measure of discounted future net cash flows $ 11,494.5 $ 2,696.9 $ 948.9 Add: present value of future income taxes discounted at 10% 2,957.7 418.5 166.1 PV-10 $ 14,452.2 $ 3,115.4 $ 1,115.0 Independent petroleum engineers Our estimated net proved reserves and PV-10 at December 31, 2022 are based on reports independently prepared by NSAI, our independent reserve engineers, by the use of appropriate geologic, petroleum engineering and evaluation principles and techniques that are in accordance with practices generally recognized by the petroleum industry as presented in the publication of the Society of Petroleum Engineers entitled Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information (Revised June 2019) (the “Estimating and Auditing Standards”) and definitions and current guidelines established by the SEC.
The following table provides a reconciliation of Standardized Measure to PV-10: At December 31, 2023 2022 2021 (In millions) Standardized Measure of discounted future net cash flows $ 6,990.6 $ 11,494.5 $ 2,696.9 Add: present value of future income taxes discounted at 10% 1,537.9 2,957.7 418.5 PV-10 $ 8,528.5 $ 14,452.2 $ 3,115.4 Independent petroleum engineers Our estimated net proved reserves and PV-10 at December 31, 2023 and 2022 are based on reports independently prepared by NSAI, our independent reserve engineers, by the use of appropriate geologic, petroleum engineering and evaluation principles and techniques that are in accordance with practices generally recognized by the petroleum industry as presented in the publication of the Society of Petroleum Engineers entitled Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information (Revised June 2019) (the “Estimating and Auditing Standards”) and definitions and current guidelines established by the SEC.
Deregulation of wellhead natural gas sales began with the enactment of the NGPA and culminated in adoption of the Natural Gas Wellhead Decontrol Act, which removed all price controls affecting wellhead sales of natural gas effective January 1, 1993.
Deregulation of 21 Table of Contents wellhead natural gas sales began with the enactment of the NGPA and culminated in adoption of the Natural Gas Wellhead Decontrol Act, which removed all price controls affecting wellhead sales of natural gas effective January 1, 1993.
We generate materials in the course of our operations that may be regulated as hazardous substances. 22 Table of Content s We are also subject to the requirements of the Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes. RCRA imposes strict requirements on the generation, storage, treatment, transportation, disposal and cleanup of hazardous and nonhazardous wastes.
We generate materials in the course of our operations that may be regulated as hazardous substances. 25 Table of Contents We are also subject to the requirements of the Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes. RCRA imposes strict requirements on the generation, storage, treatment, transportation, disposal and cleanup of hazardous and nonhazardous wastes.
Should the Company be targeted by any such litigation, we may incur liability, which, to the extent that societal pressures or political or other factors are involved, could be imposed without regard to causation or contribution to the asserted damage, or to other mitigating factors.
Should the Company be targeted by any such litigation, we may incur liability, which, to the extent that societal 28 Table of Contents pressures or political or other factors are involved, could be imposed without regard to causation or contribution to the asserted damage, or to other mitigating factors.
EPAct 2005 provides FERC with the power to assess civil penalties of up to $1,496,035 per day, adjusted annually for inflation, for violations of the NGA and increases FERC’s civil penalty authority under the NGPA from $5,000 per violation per day to $1,496,035 per violation per day, adjusted annually for inflation.
EPAct 2005 provides FERC with the power to assess civil penalties of up to $1,544,521 per day, adjusted annually for inflation, for violations of the NGA and increases FERC’s civil penalty authority under the NGPA from $5,000 per violation per day to $1,544,521 per violation per day, adjusted annually for inflation.
Accordingly, our reported production volumes and reserve estimates as of and subsequent to July 1, 2022 are reported on a three-stream basis, while periods prior to July 1, 2022 were reported on a two-stream basis with NGLs combined with the natural gas stream.
Accordingly, our reported production volumes and reserve estimates as of and subsequent to July 1, 2022 are reported on a three-stream basis, while periods prior to July 1, 2022 were reported on a two-stream basis with NGLs combined with the natural gas stream. This change impacts comparability with prior periods.
These reports or any future studies could spur initiatives to further regulate hydraulic fracturing and ultimately make it more difficult or costly for the Company to perform fracturing activities.
These reports or any future studies could spur initiatives to further regulate hydraulic fracturing and ultimately make it more difficult or costly for us to perform fracturing activities.
We expect that our business strategy will continue to provide sizable cash flow generation which will enable us to return capital to our stockholders and continue to pursue acquisitions that add to our inventory, while maintaining a strong balance sheet. In August 2022, we introduced a return of capital program designed to provide peer-leading, sustainable stockholder returns.
We expect that our business strategy will continue to provide sizable cash flow generation which will enable us to return capital to our stockholders and continue to pursue acquisitions that add to our inventory, while maintaining a strong balance sheet. We have a return of capital program designed to provide peer-leading, sustainable stockholder returns.
The effect of derivative settlements includes the gains or losses on commodity derivatives for contracts ending within the periods presented. 12 Table of Content s Acreage The following table sets forth certain information regarding the developed and undeveloped acreage in which we own a working interest as of December 31, 2022.
The effect of derivative settlements includes the gains or losses on commodity derivatives for contracts ending within the periods presented. Acreage The following table sets forth certain information regarding the developed and undeveloped acreage in which we own a working interest as of December 31, 2023.
References to the Company’s website in this Form 10-K are provided as a convenience and do not constitute, and should not be deemed, an incorporation by reference of the information contained on, or available through, the website, and such information should not be considered part of this Form 10-K. 32 Table of Content s
References to the Company’s website in this Form 10-K are provided as a convenience and do not constitute, and should not be deemed, an incorporation by reference of the information contained on, or available through, the website, and such information should not be considered part of this Form 10-K. 34 Table of Contents
A violation of this rule may result in civil penalties of up to $1,426,319 per day per violation, adjusted annually for inflation, in addition to any applicable penalty under the Federal Trade Commission Act.
A violation of this rule may result in civil penalties of up to $1,544,521 per day per violation, adjusted annually for inflation, in addition to any applicable penalty under the Federal Trade Commission Act.
Additionally, under certain circumstances, the BLM may require operations on federal leases to be suspended or terminated. 28 Table of Content s Oil, NGL, and natural gas operations on federal lands are subject to increasing regulatory attention. The Biden Administration has explored various means to curtail oil and natural gas activities on federal lands.
Additionally, under certain circumstances, the BLM may require operations on federal leases to be suspended or terminated. Oil, NGL, and natural gas operations on federal lands are subject to increasing regulatory attention. The Biden Administration has explored various means to curtail oil and natural gas activities on federal lands.
The key tenets of our ESG philosophy are to always put safety first, minimize our environmental impact, reduce our emissions intensity, promote a diverse and inclusive culture, align executive compensation with long-term value creation and stockholder interests, and support programs that benefit the communities in which we operate.
The key tenets of our ESG philosophy are to always put safety first, minimize our environmental impact, reduce our emissions intensity, promote an 11 Table of Contents inclusive culture, align executive compensation with long-term value creation and stockholder interests, and support programs that benefit the communities in which we operate.
(3) PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable financial measure under GAAP, because it does not include the effect of income taxes on discounted future net cash flows.
(3) PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable financial measure under GAAP, because it does not include the effect of income taxes on discounted future net cash flows. See “Reconciliation of Standardized Measure to PV-10” below.
The firm is a Texas Registered Engineering Firm. 10 Table of Content s Technology used to establish proved reserves In accordance with rules and regulations of the SEC applicable to companies involved in crude oil and natural gas producing activities, proved reserves are those quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations.
Technology used to establish proved reserves In accordance with rules and regulations of the SEC applicable to companies involved in crude oil and natural gas producing activities, proved reserves are those quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations.
Moreover, the FWS may make determinations on the listing of species as endangered or threatened under the ESA and litigation with respect to the listing or non-listing of certain species as endangered or threatened may result in more fulsome protections for non-protected or lesser-protected species pursuant to specific timelines.
Fish and Wildlife Service may make determinations on the listing of species as endangered or threatened under the ESA and litigation with respect to the listing or non-listing of certain species as endangered or threatened may result in more fulsome protections for non-protected or lesser-protected species pursuant to specific timelines.
While it presently appears unlikely that comprehensive climate change legislation will be passed by Congress in the near future, energy legislation and other regulatory initiatives are expected to be proposed that may be relevant to GHG emissions issues.
While it presently appears unlikely that comprehensive climate change legislation will be passed by Congress in the near future, energy legislation and other regulatory initiatives have been and continue to be proposed that are relevant to GHG emissions issues.
Similarly, our Environmental Social and Governance Committee provides oversight, guidance and perspective to management and the Board of Directors regarding the Company’s policies, programs and initiatives related to the promotion of diversity. As of February 22, 2023, approximately 25% of our employees are either women or members of a minority group.
Similarly, our Environmental Social and Governance Committee provides oversight, guidance and perspective to management and the Board of Directors regarding the Company’s policies, programs and initiatives related to the promotion of diversity. As of February 16, 2024, approximately 45% of our employees are either women or members of a minority group.
We 7 Table of Content s also are proficient in capturing the natural gas that we produce, and, as of December 31, 2022, we were capturing substantially all of our natural gas production in North Dakota. We provide leadership training and educational and professional development programs for employees at every level of the organization.
We also are proficient in capturing the natural gas that we produce, and, as of December 31, 2023, we were capturing substantially all of our natural gas production in North Dakota. We provide leadership training and educational and professional development programs for employees at every level of the organization.
The Department of Interior’s (“DOI’s”) comprehensive review of the federal leasing program resulted in a reduction in the volume of onshore land held for lease and an increased royalty rate.
The Department of Interior’s comprehensive review of the federal leasing program resulted in a reduction in the volume of onshore land held for lease, increased minimum bid requirements, and an increased royalty rate.
We have a short tenured and highly capable Board of Directors that is comprised of diverse and experienced energy industry professionals. Our Board of Directors is 80% independent and 63% of our independent directors are women.
We have a short tenured and highly capable Board of Directors that is comprised of diverse and experienced energy industry professionals. Our Board of Directors is 89% independent and 56% of our directors are women.
In addition, the Board of Directors believes it is important for directors to possess a diverse array of backgrounds, skills and achievements. When considering new candidates, the Nominating and Governance Committee, with input from the Board of Directors, takes these factors into account as set forth in its charter.
In addition, the Board of Directors believes it is important for directors to possess a diverse array of backgrounds, skills and achievements. When considering new candidates, the Nominating and Governance Committee, with input from the Board of Directors, takes these factors into account as set forth in its charter. As of February 16, 2024, 56% of our directors are women.
We believe that our Williston Basin acreage represents a premier position in a top oil basin in the United States that will continue to provide significant free cash flow generation. As of December 31, 2022, we had 963,009 net leasehold acres in the Williston Basin, which is the largest acreage position of any operator in the Williston Basin.
We believe that our Williston Basin acreage represents a premier position in a top oil basin in the United States that will continue to provide significant free cash flow generation. As of December 31, 2023, we had 1,029,263 net leasehold acres in the Williston Basin, which is the largest acreage position of any operator in the Williston Basin.
Such laws and regulations may substantially increase the costs of exploring for, developing or producing oil, NGLs and natural gas and our larger competitors may be able to better absorb the burden of such legislation and regulation, which would also adversely affect our competitive position.
Such laws and regulations may substantially increase the costs of exploring for, developing or producing oil, NGLs and natural gas and our larger competitors may be able to better absorb the burden of such legislation and regulation, which would also adversely affect our competitive position. See “Regulation” below as well as Item 1A.
(“Oasis”), was established on July 1, 2022 upon completion of the combination of Oasis and Whiting Petroleum Corporation (“Whiting”) in a merger of equals transaction (the “Merger”). Our mission is to responsibly produce hydrocarbons while exercising capital discipline, operating efficiently, improving continuously and providing a rewarding environment for our employees.
Chord, formerly known as Oasis Petroleum Inc. (“Oasis”), was established upon the completion of the merger of equals with Whiting Petroleum Corporation (“Whiting”) on July 1, 2022 (the “Merger”). Our mission is to responsibly produce hydrocarbons while exercising capital discipline, operating efficiently, improving continuously and providing a rewarding environment for our employees.
Institutional investors who provide financing to fossil fuel energy companies also have become more attentive to sustainable lending and investment practices that favor “clean” power sources, such as wind and solar, making those sources more attractive, and some of them may elect not to provide funding for fossil fuel energy companies.
Certain institutional investors who provide financing to fossil fuel energy companies also have become more attentive to sustainable lending practices and have shifted their investment practices to favor “clean” energy sources, such as wind and solar, and some of them may elect not to provide funding for fossil fuel energy companies.
Stockholders and bondholders currently invested in fossil fuel energy companies concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors.
Stockholders and bondholders currently invested in fossil fuel energy companies may elect in the future to shift some or all of their investments into non-fossil fuel energy-related sectors.
Separately, in June 2021, PHMSA issued an Advisory Bulletin advising pipeline and pipeline facility operators of applicable requirements to update their inspection and maintenance plans for the elimination of hazardous leaks and minimization of natural gas released from pipeline facilities.
Separately, in June 2021, PHMSA issued an Advisory Bulletin advising pipeline and pipeline facility operators of applicable requirements to update their inspection and maintenance plans for the elimination of hazardous leaks and minimization of natural gas released from pipeline facilities. PHMSA, together with state regulators, inspected these plans throughout 2022.
(2) Standardized Measure represents the present value of estimated future net cash flows from proved crude oil and natural gas reserves, less estimated future development, production, plugging and abandonment costs and income tax expenses, discounted at 10% per annum to reflect timing of future cash flows.
This change impacts the comparability of the periods presented. 13 Table of Contents (2) Standardized Measure represents the present value of estimated future net cash flows from proved crude oil and natural gas reserves, less estimated future development, production, plugging and abandonment costs and income tax expenses, discounted at 10% per annum to reflect timing of future cash flows.
The following table sets forth the number of gross and net undeveloped acres as of December 31, 2022 that will expire over the next three years unless production is established on the acreage prior to the expiration dates: Undeveloped acres expiring Gross Net Year ending December 31, 2023 2,110 1,539 2024 2,353 1,934 2025 405 405 We have not assigned any PUD reserves to locations scheduled to be drilled after lease expiration.
The following table sets forth the number of gross and net undeveloped acres as of December 31, 2023 that will expire over the next three years unless production is established on the acreage prior to the expiration dates: Undeveloped acres expiring Gross Net Year ending December 31, 2024 1,713 1,296 2025 1,003 632 2026 2,686 2,087 We have not assigned any PUD reserves to locations scheduled to be drilled after lease expiration.
The EPA also works together with the Department of Transportation (“DOT”) to implement GHG emissions limits on vehicles manufactured for operation in the United States. In recent years, there has been considerable uncertainty surrounding regulation of methane emissions.
The EPA also works together with the Department of Transportation (“DOT”) to implement GHG emissions limits on vehicles manufactured for operation in the United States. In recent years, there has been considerable focus on the regulation of methane emissions from the oil and gas sector.
As of December 31, 2022, we had $1.6 billion of liquidity available, including $593.2 million of cash and cash equivalents and $993.6 million of unused borrowing capacity available under the Credit Facility (defined in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”). • Commitment to excellence.
As of December 31, 2023, we had $1.3 billion of liquidity available, including $318.0 million of cash and cash equivalents and $991.1 million of unused borrowing capacity available under the Credit Facility (defined in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”). • Commitment to excellence.
Risk Factors—Risks related to the oil and gas industry and our business.” 14 Table of Content s Delivery commitments As of December 31, 2022, we had certain agreements with an aggregate requirement to deliver or transport a minimum quantity of approximately 44.7 MMBbl of crude oil, 17.0 MMBbl of NGLs, 494.2 Bcf of natural gas and 1.6 MMBbl of water, prior to any applicable volume credits, within specified timeframes, the majority of which are ten years or less.
Risk Factors—Risks related to the oil and gas industry and our business.” Delivery commitments As of December 31, 2023, we had certain agreements with an aggregate requirement to deliver or transport a minimum quantity of approximately 20.6 MMBbl of crude oil, 12.0 MMBbl of NGLs, 438.7 Bcf of natural gas and 1.6 MMBbl of water, prior to any applicable volume credits, within specified timeframes, the majority of which are five years or less.
See “Reconciliation of Standardized Measure to PV-10” below. 9 Table of Content s Reconciliation of Standardized Measure to PV-10 PV-10 is derived from Standardized Measure, which is the most directly comparable financial measure under GAAP. PV-10 is equal to Standardized Measure at the applicable date, before deducting future income taxes, discounted at 10%.
Reconciliation of Standardized Measure to PV-10 PV-10 is derived from Standardized Measure, which is the most directly comparable financial measure under GAAP. PV-10 is equal to Standardized Measure at the applicable date, before deducting future income taxes, discounted at 10%.
PHMSA, together with state regulators, inspected these plans throughout 2022. 21 Table of Content s These new regulatory actions or any future regulations adopted by PHMSA may impose more stringent requirements applicable to integrity management programs or other pipeline safety aspects of our operations, which could cause us to incur increased capital and operating costs and operational delays.
These new regulatory actions or any future regulations adopted by PHMSA may impose more stringent requirements applicable to integrity management programs or other pipeline safety aspects of our operations, which could cause us to incur increased capital and operating costs and operational delays.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDelaware law prohibits us from engaging in any business combination with any “interested stockholder,” meaning generally that a stockholder who beneficially owns more than 15% of our stock cannot acquire us for a period of three years from the date this person became an interested stockholder, unless various conditions are met, such as approval of the transaction by our Board of Directors.
Biggest changeIn addition, some provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including: • advance notice provisions for stockholder proposals and nominations for elections to the Board of Directors to be acted upon at meetings of stockholders; and • limitations on the ability of our stockholders to call special meetings. 55 Table of Contents Delaware law prohibits us from engaging in any business combination with any “interested stockholder,” meaning generally that a stockholder who beneficially owns more than 15% of our stock cannot acquire us for a period of three years from the date this person became an interested stockholder, unless various conditions are met, such as approval of the transaction by our Board of Directors.
Our operations are subject to federal, state and local laws and regulations related to environmental and natural resources protection and occupational health and safety which may expose us to significant costs and liabilities and result in increased costs and additional operating restrictions or delays.
Our operations are subject to federal, state and local laws and regulations related to environmental and natural resources protection and occupational health and safety which may expose us to significant costs and liabilities and may result in increased costs and additional operating restrictions or delays.
Significant acquisitions and other strategic transactions may involve other risks, including: • diversion of our management’s attention to evaluating, negotiating and integrating significant acquisitions and strategic transactions; • the challenge and cost of integrating acquired operations, information management and other technology systems and business cultures with those of our operations while carrying on our ongoing business; • difficulty associated with coordinating geographically separate organizations; • an inability to secure, on acceptable terms, sufficient financing that may be required in connection with expanded operations and unknown liabilities; and • the challenge of attracting and retaining personnel associated with acquired operations.
Significant acquisitions and other strategic transactions, including the Merger, may involve other risks, including: • diversion of our management’s attention to evaluating, negotiating and integrating significant acquisitions and strategic transactions; • the challenge and cost of integrating acquired and expanded operations, information management and other technology systems and business cultures with those of our operations while carrying on our ongoing business; • difficulty associated with coordinating geographically separate organizations; • an inability to secure, on acceptable terms, sufficient financing that may be required in connection with expanded operations and unknown liabilities; and • the challenge of attracting and retaining personnel associated with acquired operations.
Development of these reserves may take longer and require higher levels of capital expenditures than we currently anticipate. The future development of our PUD reserves is dependent on future commodity prices, costs and economic assumptions that align with our internal forecasts as well as access to liquidity sources, such as capital markets, the Credit Facility and derivative contracts.
Development of these reserves may take longer and require higher levels of capital expenditures than we currently anticipate. The future development of our PUD reserves is dependent on future commodity prices, costs and economic assumptions that align with our internal forecasts as well as access to liquidity sources, such as capital markets, our revolving credit facility and derivative contracts.
Based on specific market factors and circumstances at the time of prospective impairment reviews, and the continuing evaluation of development plans, production data, economics and other factors, we may be required to write down the carrying value of our oil and gas properties, which may result in a decrease in the amount available under the Credit Facility.
Based on specific market factors and circumstances at the time of prospective impairment reviews, and the continuing evaluation of development plans, production data, economics and other factors, we may be required to write down the carrying value of our oil and gas properties, which may result in a decrease in the amount available under our revolving credit facility.
We make and expect to continue to make substantial capital expenditures in our business for the development, exploitation, production and acquisition of crude oil, NGL and natural gas reserves. Based upon our anticipated five-year development plan and current costs, we project that we will incur capital costs of approximately $2.2 billion to develop our PUD reserves.
We make and expect to continue to make substantial capital expenditures in our business for the development, exploitation, production and acquisition of crude oil, NGL and natural gas reserves. Based upon our anticipated five-year development plan and current costs, we project that we will incur capital costs of approximately $2.7 billion to develop our PUD reserves.
Our revolving credit facility and the indentures governing our senior unsecured notes contains a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: • sell assets, including equity interests in our subsidiaries; • pay distributions on, redeem or repurchase our common stock or redeem or repurchase our debt; • make investments; • incur or guarantee additional indebtedness or issue preferred stock; • create or incur certain liens; • make certain acquisitions and investments; • redeem or prepay other debt; • enter into agreements that restrict distributions or other payments from our restricted subsidiaries to us; • consolidate, merge or transfer all or substantially all of our assets; • engage in transactions with affiliates; • create unrestricted subsidiaries; • enter into sale and leaseback transactions; and • engage in certain business activities.
Our revolving credit facility and the indentures governing our senior unsecured notes contain a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: • sell assets, including equity interests in our subsidiaries; • pay distributions on, redeem or repurchase our common stock or redeem or repurchase our debt; • make investments; • incur or guarantee additional indebtedness or issue preferred stock; • create or incur certain liens; • make certain acquisitions and investments; • redeem or prepay other debt; • enter into agreements that restrict distributions or other payments from our restricted subsidiaries to us; • consolidate, merge or transfer all or substantially all of our assets; • engage in transactions with affiliates; • create unrestricted subsidiaries; • enter into sale and leaseback transactions; and • engage in certain business activities.
In addition, the 10% discount factor we use when calculating discounted future net revenues may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and natural industry in general.
In addition, the 10% discount factor we use when calculating discounted future net revenues may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and natural gas industry in general.
We may or may not be able to complete any such steps on satisfactory terms. In addition, the revolving credit facility borrowing base is subject to periodic redeterminations. We could be forced to repay a portion of our bank borrowings under the revolving credit facility due to redeterminations of our borrowing base.
We may or may not be able to complete any such steps on satisfactory terms. In addition, our revolving credit facility borrowing base is subject to periodic redeterminations. We could be forced to repay a portion of our bank borrowings under our revolving credit facility due to redeterminations of our borrowing base.
We review our proved oil and gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. In addition, we assess our unproved properties periodically for impairment on a property-by-property basis based on remaining lease terms, drilling results or future plans to develop acreage.
We review our proved oil and gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. In addition, we assess our unproved properties periodically for impairment on a prospect-by-prospect basis based on remaining lease terms, drilling results or future plans to develop acreage.
Our ability to secure access to pipeline infrastructure on favorable economic terms could affect our competitive position. In addition, midstream service providers could change or impose more stringent specifications on the quality of our production they are willing to accept, including the gravity and sulphur content of our crude oil and the Btu content of our natural gas.
Our ability to secure access to pipeline infrastructure on favorable economic terms could affect our competitive position. In addition, midstream service providers could change or impose more stringent specifications on the quality of our production they are willing to accept, including the gravity and sulfur content of our crude oil and the Btu content of our natural gas.
Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative sentiment toward the Company, our customers, and our industry and to the diversion of investment to other industries, which could have a negative impact on the Company and our access to and costs of capital.
Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative sentiment toward us, our customers and our industry and to the diversion of investment to other industries, which could have a negative impact on us and our access to and costs of capital.
Seasonal weather conditions adversely affect our ability to conduct drilling activities in some of the areas where we operate. Our crude oil, NGL and natural gas operations are adversely affected by seasonal weather conditions. In the Williston Basin, drilling and other crude oil, NGL and natural gas activities cannot be conducted as effectively during the winter months.
Seasonal weather conditions could adversely affect our ability to conduct drilling activities in some of the areas where we operate. Our crude oil, NGL and natural gas operations could be adversely affected by seasonal weather conditions. In the Williston Basin, drilling and other crude oil, NGL and natural gas activities cannot be conducted as effectively during the winter months.
It is difficult to predict whether such inflationary pressures will have a materially negative impact to our overall financial and operating results in 2023; however, such inflationary pressures are not expected to materially impact our overall liquidity position, cash requirements or financial position, or the ability to conduct our day-to-day drilling, completion and production activities.
It is difficult to predict whether such inflationary pressures will have a materially negative impact to our overall financial and operating results in 2024; however, such inflationary pressures are not expected to materially impact our overall liquidity position, cash requirements or financial position, or the ability to conduct our day-to-day drilling, completion and production activities.
Our internal controls over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
Our internal controls over financial reporting may not prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
The inability or failure of our significant customers to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results. See “Part II. Item 8.—Financial Statements and Supplementary Data—Note 22—Significant Concentrations” for additional information on significant concentrations with major customers.
The inability or failure of our significant customers to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results. See “Part II. Item 8.—Financial Statements and Supplementary Data—Note 20—Significant Concentrations” for additional information on significant concentrations with major customers.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information about our realized crude oil prices and average price differentials relative to NYMEX WTI for the years ended December 31, 2022, 2021 and 2020. Additionally, the refining capacity in the U.S.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information about our realized crude oil prices and average price differentials relative to NYMEX WTI for the years ended December 31, 2023, 2022 and 2021. Additionally, the refining capacity in the U.S.
Compliance with current and future environmental laws, executive orders, regulations and permit requirements governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing activities, the injection of waste streams into disposal wells, or any inability to secure transportation and access to disposal wells with sufficient capacity to accept all of our flowback and produced water on economic terms may increase our operating costs and cause delays, interruptions or termination of our operations, the extent of which cannot be predicted but that could be materially adverse to our business and results of operations. 43 Table of Content s Competition in the oil and gas industry is intense, making it more difficult for us to acquire properties, market crude oil, NGLs and natural gas and secure and retain trained personnel.
Compliance with current and future environmental laws, executive orders, regulations and permit requirements governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing activities, the injection of waste streams into disposal wells or any inability to secure transportation and access to disposal wells with sufficient capacity to accept all of our flowback and produced water on economic terms may increase our operating costs and cause delays, interruptions or termination of our operations, the extent of which cannot be predicted but that could be materially adverse to our business and results of operations. 48 Table of Contents Competition in the oil and gas industry is intense, making it more difficult for us to acquire properties, market crude oil, NGLs and natural gas and secure and retain trained personnel.
If we fail to realize the benefits we anticipate from an acquisition, our results of operations and stock price may be adversely affected. We may incur losses as a result of title defects in the properties in which we invest.
If we fail to realize the benefits we anticipate from an acquisition, including the Merger, our results of operations and stock price may be adversely affected. We may incur losses as a result of title defects in the properties in which we invest.
Our ability to drill and develop these locations depends on a number of uncertainties, including crude oil, NGL and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, gathering system and pipeline transportation constraints, access to and availability of water sourcing and distribution systems, regulatory approvals and other factors.
Our ability to drill and develop these locations depends on a number 44 Table of Contents of uncertainties, including crude oil, NGL and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, gathering system and pipeline transportation constraints, access to and availability of water sourcing and distribution systems, regulatory approvals and other factors.
The U.S. economy has experienced significant increases in inflation rates since 2021 from, among other things, supply chain disruptions and governmental stimulus or fiscal policies adopted in response to the COVID-19 pandemic. Although U.S. inflation rates have shown signs of moderating, we cannot predict any future trends in the rate of inflation.
The U.S. economy experienced significant increases in inflation rates beginning in 2021 from, among other things, supply chain disruptions and governmental stimulus or fiscal policies adopted in response to the COVID-19 pandemic. Although U.S. inflation rates have shown signs of moderating, we cannot predict any future trends in the rate of inflation.
Continued high levels of inflation would further raise our costs for labor, materials and services, due to a combination of factors, including: (i) global supply chain disruptions resulting in limited availability of certain materials and equipment (including drill pipe, casing and tubing), (ii) increased demand for fuel and steel, (iii) increased demand for services coupled with a limited availability of service providers and (iv) labor shortages, which would negatively impact our profitability and cash flows.
The re-emergence of high levels of inflation would further raise our costs for labor, materials and services, due to a combination of factors, including: (i) global supply chain disruptions resulting in limited availability of certain materials and equipment (including drill pipe, casing and tubing), (ii) increased demand for fuel and steel, (iii) increased demand for services coupled with a limited availability of service providers and (iv) labor shortages, which would negatively impact our profitability and cash flows.
We may be subject to risks in connection with acquisitions because of integration difficulties, uncertainties in evaluating recoverable reserves, well performance and potential liabilities and uncertainties in forecasting crude oil, NGL and natural gas prices and future development, production and marketing costs.
We may be subject to risks in connection with acquisitions, including the Merger, because of integration difficulties, uncertainties in evaluating recoverable reserves, well performance and potential liabilities and uncertainties in forecasting crude oil, NGL and natural gas prices and future development, production and marketing costs.
In the past, there have been periods when this discount has substantially increased due to the production of crude oil in the area increasing to a point that it temporarily surpasses the available pipeline transportation, rail transportation and refining capacity in the area.
In the past, there have been periods when this discount has substantially increased due to the production of crude oil in the area increasing to a point that it temporarily 42 Table of Contents surpasses the available pipeline transportation, rail transportation and refining capacity in the area.
Moreover, despite our or our third-party partners’ security measures there can be no assurance that such measures will be sufficient to protect our information technology systems from hacking, ransomware attacks, employee error, malfeasance, system error, faulty password management or other irregularities.
Moreover, despite our or our third-party partners’ security measures there can be no assurance that such measures will be sufficient to protect our IT systems from hacking, ransomware attacks, employee error, malfeasance, system error, faulty password management or other irregularities.
Financial Statements and Supplementary Data—Note 26—Supplemental Oil and Gas Reserve Information — Unaudited” for additional information about our estimated crude oil and natural gas reserves and the PV-10 and Standardized Measure as of December 31, 2022, 2021 and 2020. In order to prepare our estimates, we must project production rates and the timing of development expenditures.
Financial Statements and Supplementary Data—Note 24—Supplemental Oil and Gas Reserve Information — Unaudited” for additional information about our estimated crude oil and natural gas reserves and the PV-10 and Standardized Measure as of December 31, 2023, 2022 and 2021. In order to prepare our estimates, we must project production rates and the timing of development expenditures.
One or more of these factors may increase our costs of doing business on the Fort Berthold Indian Reservation and may have an adverse impact on our ability to effectively transport products within the Fort Berthold Indian Reservation or to conduct our operations on such lands.
One or more of these factors may increase our costs of doing business 41 Table of Contents on the Fort Berthold Indian Reservation and may have an adverse impact on our ability to effectively transport products within the Fort Berthold Indian Reservation or to conduct our operations on such lands.
For the year ended December 31, 2022, changes in our estimate of expected credit losses was not material. In addition, our crude oil, NGL and natural gas derivative arrangements expose us to credit risk in the event of nonperformance by counterparties.
For the year ended December 31, 2023, changes in our estimate of expected credit losses was not material. In addition, our crude oil and natural gas derivative arrangements expose us to credit risk in the event of nonperformance by counterparties.
We seek to mitigate these inflationary impacts by reviewing our pricing agreements on a regular basis and entering into agreements with our service providers to manage costs and availability of certain services that are utilized in our operations.
We seek to mitigate these inflationary impacts by reviewing our pricing agreements on a regular basis and entering into agreements 56 Table of Contents with our service providers to manage costs and availability of certain services that are utilized in our operations.
If cash generated by operations or cash available under the revolving credit facility is not sufficient to meet our capital requirements, the failure to obtain additional financing could result in a curtailment of our operations relating to development of our drilling locations, which in turn could lead to a possible expiration of our leases and a 47 Table of Content s decline in our estimated net proved reserves, and could adversely affect our business, financial condition and results of operations.
If cash generated by operations or cash available under our revolving credit facility is not sufficient to meet our capital requirements, the failure to obtain additional financing could result in a curtailment of our 52 Table of Contents operations relating to development of our drilling locations, which in turn could lead to a possible expiration of our leases and a decline in our estimated net proved reserves, and could adversely affect our business, financial condition and results of operations.
In the Williston Basin, our acreage must be drilled before lease expiration, generally within three to five years, in order to hold the acreage by production. Unless production is established within the spacing units covering the undeveloped acres on which some of the locations are identified, the leases for such acreage will 39 Table of Content s expire.
In the Williston Basin, our acreage must be drilled before lease expiration, generally within three to five years, in order to hold the acreage by production. Unless production is established within the spacing units covering the undeveloped acres on which some of the locations are identified, the leases for such acreage will expire.
Any significant future price changes will have a material effect on the quantity and present value of our estimated net proved reserves. 35 Table of Content s If crude oil, NGL and natural gas prices decline, or for an extended period of time remain at depressed levels, we may be required to take write-downs of the carrying values of our oil and gas properties.
Any significant future price changes will have a material effect on the quantity and present value of our estimated net proved reserves. 40 Table of Contents If crude oil, NGL and natural gas prices decline, or for an extended period of time remain at depressed levels, we may be required to take write-downs of the carrying values of our oil and gas properties.
On February 4, 2022, the Department 36 Table of Content s of the Interior issued an official opinion stating that the minerals beneath the Missouri River riverbed located on the Fort Berthold Indian Reservation belong to the MHA Nation and not the state of North Dakota, overturning a 2020 Trump-agency decision that gave the state of North Dakota ownership.
On February 4, 2022, the Department of the Interior issued an official opinion stating that the minerals beneath the Missouri River riverbed located on the Fort Berthold Indian Reservation belong to the MHA Nation and not the state of North Dakota, overturning a 2020 Trump-agency decision that gave the state of North Dakota ownership.
Failure to drill sufficient wells in order to hold acreage will result in a substantial lease renewal cost, or if renewal is not feasible, loss of our lease and prospective drilling opportunities . As of December 31, 2022, approximately 99% of our total net acreage in the Williston Basin was held by production.
Failure to drill sufficient wells in order to hold acreage will result in a substantial lease renewal cost, or if renewal is not feasible, loss of our lease and prospective drilling opportunities . As of December 31, 2023, approximately all of our total net acreage in the Williston Basin was held by production.
Moreover, failure or a perception (whether or not valid) of failure to implement ESG strategies or achieve ESG goals or commitments, including any GHG emission reduction or 41 Table of Content s carbon intensity goals or commitments, could result in private litigation and damage our reputation, cause investors or consumers to lose confidence in us, and negatively impact our operations.
Moreover, failure or a perception (whether or not valid) of failure to implement ESG strategies or achieve ESG goals or commitments, including any GHG emission reduction or carbon intensity goals or commitments, could result in private litigation and damage our reputation, cause investors or consumers to lose confidence in us and negatively impact our operations.
Judgments and estimates to determine accruals related to legal, governmental and regulatory proceedings could change from period to period, and such changes could be material. 52 Table of Content s Our profitability may be negatively impacted by inflation in the cost of labor, materials and services and general economic, business or industry conditions.
Judgments and estimates to determine accruals related to legal, governmental and regulatory proceedings could change from period to period, and such changes could be material. Our profitability may be negatively impacted by inflation in the cost of labor, materials and services and general economic, business or industry conditions.
If we reduce our use of derivatives as a result of the Dodd-Frank Act and regulations, our 49 Table of Content s results of operations may become more volatile and our cash flows may be less predictable, which could adversely affect our ability to plan for and fund capital expenditures.
If we reduce our use of derivatives as a result of the Dodd-Frank Act and regulations, our results of operations may become more volatile and our cash flows may be less predictable, which could adversely affect our ability to plan for and fund capital expenditures.
Risks that we face while completing our wells include, but are not limited to, the following: • the ability to fracture stimulate the planned number of stages; • the ability to run tools the entire length of the wellbore during completion operations; 34 Table of Content s • the ability to successfully clean out the wellbore after completion of the final fracture stimulation stage; and • protecting nearby producing wells from the impact of fracture stimulation.
Risks that we face while completing our wells include, but are not limited to, the following: • the ability to fracture stimulate the planned number of stages; • the ability to run tools the entire length of the wellbore during completion operations; 39 Table of Contents • the ability to successfully clean out the wellbore after completion of the final fracture stimulation stage; and • protecting nearby producing wells from the impact of fracture stimulation.
The development of our PUD reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our undeveloped reserves may not be ultimately developed or produced. Approximately 23% of our estimated net proved reserves were classified as PUD as of December 31, 2022.
The development of our PUD reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our undeveloped reserves may not be ultimately developed or produced. Approximately 29% of our estimated net proved reserves were classified as PUD as of December 31, 2023.
Such changes in interpretation could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, such changes in interpretation could result in legal or other proceedings.
Such changes in interpretation 50 Table of Contents could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, such changes in interpretation could result in legal or other proceedings.
The process of integrating assets could cause an interruption of, or loss of momentum in, the activities of our business. Members of our senior management may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage our business.
The process of integrating assets, including those obtained in the Merger, could cause an interruption of, or loss of momentum in, the activities of our business. Members of our senior management may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage our business.
Risks related to the oil and gas industry and our business A substantial or extended decline in commodity prices, for crude oil and, to a lesser extent, NGLs and natural gas, may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.
A substantial or extended decline in commodity prices, for crude oil and, to a lesser extent, NGLs and natural gas, may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.
See “Item 1. Business—Regulation—Regulation of transportation and sales of crude oil” for more information about the regulations relating to the transport of crude oil by rail. 37 Table of Content s Limited takeaway capacity can result in significant discounts to our realized prices.
See “Item 1. Business—Regulation—Regulation of transportation and sales of crude oil” for more information about the regulations relating to the transport of crude oil by rail. Limited takeaway capacity can result in significant discounts to our realized prices.
To the extent that societal pressures or political or other factors are involved, it is possible that the Company could be subject to additional governmental investigations, private litigation or activist campaigns as stockholders may attempt to effect changes to the Company’s business or governance practices.
To the extent that societal pressures or political or other factors are involved, it is possible that we could be subject to additional governmental investigations, private litigation or activist campaigns as stockholders may attempt to effect changes to our business or governance practices.
Severe winter weather conditions limit and may temporarily halt our ability to operate during such conditions. These constraints and the resulting shortages or high costs could delay or temporarily halt our operations and materially increase our operating and capital costs. See “Item 1.
Severe winter weather conditions limit and may temporarily halt our ability, or the ability of our suppliers and service providers, to operate during such conditions. These constraints and the resulting shortages or high costs could delay or temporarily halt our operations and materially increase our operating and capital costs. See “Item 1.
Any of these risks could adversely affect our ability to conduct operations or result in substantial losses to us as a result of: 38 Table of Content s • injury or loss of life; • damage to and destruction of property, natural resources and equipment; • pollution and other environmental damage; • regulatory investigations and penalties; • suspension of our operations; and • repair and remediation costs.
Any of these risks could adversely affect our ability to conduct operations or result in substantial losses to us as a result of: • injury or loss of life; • damage to and destruction of property, natural resources and equipment; • pollution and other environmental damage; 43 Table of Contents • regulatory investigations and penalties; • suspension of our operations; and • repair and remediation costs.
Our amended and restated certificate of incorporation, as amended, authorizes our Board of Directors to issue preferred stock without stockholder approval. If our Board of Directors elects to issue preferred stock, it could be more difficult for a third 50 Table of Content s party to acquire us.
Our amended and restated certificate of incorporation, as amended, authorizes our Board of Directors to issue preferred stock without stockholder approval. If our Board of Directors elects to issue preferred stock, it could be more difficult for a third party to acquire us.
Please see “Involvement in legal, governmental and regulatory proceedings could result in substantial liabilities” for a discussion of risks related to such proceedings. 45 Table of Content s Risks related to our financial position Increased costs of capital could adversely affect our business.
Please see “Involvement in legal, governmental and regulatory proceedings could result in substantial liabilities” for a discussion of risks related to such proceedings. Risks related to our financial position Increased costs of capital could adversely affect our business.
Any significant inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves” below. 33 Table of Content s The ability or willingness of OPEC+ to set and maintain production levels has a significant impact on oil prices.
Any significant inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves” below. 38 Table of Contents The ability or willingness of OPEC+ to set and maintain production levels has a significant impact on oil prices.
Department of the Treasury and the Internal Revenue Service are 48 Table of Content s expected to release regulations and interpretive guidance relating to the CAMT, and any significant variance from our current interpretation could result in a change in the expected application of the CAMT to us and adversely affect our operations and cash flows.
Department 53 Table of Contents of Treasury and the Internal Revenue Service are expected to release regulations and interpretive guidance relating to the CAMT, and any significant variance from our current interpretation could result in a change in the expected application of the CAMT to us and adversely affect our operations and cash flows.
If the indebtedness under our senior unsecured notes were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full.
If the indebtedness under our senior unsecured notes were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in 51 Table of Contents full.
If we become an applicable corporation and our CAMT liability is greater than our regular U.S. federal income tax liability for any particular tax year, the CAMT liability would effectively accelerate our future U.S. federal income tax obligations, reducing our cash flows in that year, but provide an offsetting credit against our regular U.S. federal income tax liability in future tax years.
If our CAMT liability is greater than our regular U.S. federal income tax liability for any particular tax year, the CAMT liability would effectively accelerate our future U.S. federal income tax obligations, reducing our cash flows in that year, but provide an offsetting credit against our regular U.S. federal income tax liability in future tax years.
These factors include the following: • worldwide and regional economic and political conditions impacting the global supply and demand for crude oil, NGLs and natural gas; • the actions of OPEC+ countries, including Russia; • the price and quantity of imports of foreign crude oil, NGLs and natural gas; • political conditions in or affecting other crude oil, NGL and natural gas producing countries, including the current conflicts in and among the Middle East and conditions in South America, China, India and Russia; • the level of global exploration and production; • the level of global crude oil, NGL and natural gas inventories; • events that impact global market demand, including impacts from wars, such as the ongoing conflict between Russia and Ukraine, conflicts and global health epidemics and concerns such as the COVID-19 pandemic; • localized supply and demand fundamentals and regional, domestic and international transportation availability; • weather conditions and natural disasters; • domestic and foreign governmental laws, regulations and policies, including, among others, the IRA, environmental requirements and the discouragement of the use of fuels that emit GHGs and encouragement of the use of alternative energy sources; • speculation as to future commodity prices and the speculative trading of crude oil, NGL and natural gas futures contracts; • changing consumer or market preferences, stockholder activism or activities by non-governmental organizations to limit certain sources of funding for the energy sector or restrict the exploration, development and production of crude oil, NGLs and natural gas and related infrastructure; • price and availability of competitors’ supplies of crude oil, NGLs and natural gas; • technological advances affecting energy consumption; and • the price and availability of alternative fuels.
These factors include the following: • worldwide and regional economic and political conditions impacting the global supply and demand for crude oil, NGLs and natural gas; • the actions by the members of OPEC+ with respect to oil production levels and announcements of potential changes in such levels, including the ability of the OPEC+ countries to agree on and comply with supply limitations; • the price and quantity of imports of foreign crude oil, NGLs and natural gas; 37 Table of Contents • political conditions in or affecting other crude oil, NGL and natural gas producing countries, including the current conflicts in and among the Middle East and conditions in South America, China, India and Russia; • the level of global exploration and production; • the level of global crude oil, NGL and natural gas inventories; • events that impact global market demand, including impacts from wars, such as the ongoing conflicts between Russia and Ukraine and between Hamas and Israel and global health epidemics and concerns such as the COVID-19 pandemic; • localized supply and demand fundamentals and regional, domestic and international transportation availability; • weather conditions and natural disasters; • domestic and foreign governmental laws, regulations and policies, including, among others, the IRA, environmental requirements and the discouragement of the use of fuels that emit GHGs and encouragement of the use of alternative energy sources; • speculation as to future commodity prices and the speculative trading of crude oil, NGL and natural gas futures contracts; • changing consumer or market preferences, stockholder activism or activities by non-governmental organizations to limit certain sources of funding for the energy sector or restrict the exploration, development and production of crude oil, NGLs and natural gas and related infrastructure; • price and availability of competitors’ supplies of crude oil, NGLs and natural gas; • technological advances affecting energy consumption; and • the price and availability of alternative fuels.
The successful acquisition of producing properties requires an assessment of several factors, including: • recoverable reserves; • future crude oil, NGL and natural gas prices and their appropriate differentials; • development and operating costs; • potential for future drilling and production; • validity of the seller’s title to the properties, which may be less than expected at the time of signing the purchase agreement; and • potential environmental and other liabilities, together with associated litigation of such matters.
The successful acquisition of producing properties requires an assessment of several factors, including: • recoverable reserves; • future crude oil, NGL and natural gas prices and their appropriate differentials; • development and operating costs; • potential for future drilling and production; • validity of the seller’s title to the properties, which may be less than expected at the time of signing the purchase agreement; and • potential environmental and other liabilities, together with associated litigation of such matters. 49 Table of Contents The accuracy of these assessments is inherently uncertain.
In connection with the Merger, we assumed certain pre-petition general unsecured claims of Whiting which remain subject to the jurisdiction of the United States Bankruptcy Court for the Southern District of Texas. As of December 31, 2022, we had reserved 1,224,840 shares of common stock for potential future distribution to settle such general unsecured claims.
In connection with the Merger, we assumed certain pre-petition general unsecured claims of Whiting, which were subject to the jurisdiction of the United States Bankruptcy Court for the Southern District of Texas and had reserved 1,224,840 shares of common stock for potential future distribution to settle such general unsecured claims.
Rising interest rates and the state of the general economy have brought unprecedented uncertainty to the near-term economic outlook.
Elevated interest rates and the state of the general economy have brought uncertainty to the near-term economic outlook.
Moreover, as the sophistication and volume of cyber-attacks continue to increase, we may be required to expend significant additional resources to further enhance our digital security and information technology infrastructure or to remediate vulnerabilities, and we may face difficulties in fully anticipating or implementing adequate preventive measures or mitigating potential harm.
Moreover, as the sophistication and volume of cyber-attacks continue to increase, we may be required to expend significant additional resources to further enhance our digital security and IT infrastructure or to remediate vulnerabilities, including through the use of artificial intelligence, and we may face difficulties in fully anticipating or implementing adequate preventive measures or mitigating potential harm.
Derivative assets and liabilities arising from derivative contracts with the same counterparty are reported on a net basis, as all counterparty contracts provide for net settlement. At December 31, 2022, we had commodity derivatives in place with eleven counterparties and a total net commodity derivative liability of $328.9 million.
Derivative assets and liabilities arising from derivative contracts with the same counterparty are reported on a net basis, as all counterparty contracts provide for net settlement. At December 31, 2023, we had commodity derivatives in place with nine counterparties and a total net commodity derivative liability of $3.6 million.
As of December 31, 2022, we had an aggregate of 321 net acres expiring in 2023, 1,934 net acres expiring in 2024 and 405 net acres expiring in 2025 in the Williston Basin. The cost to renew such leases may increase significantly and we may not be able to renew such leases on commercially reasonable terms or at all.
As of December 31, 2023, we had an aggregate of 1,296 net acres expiring in 2024, 632 net acres expiring in 2025 and 2,087 net acres expiring in 2026 in the Williston Basin. The cost to renew such leases may increase significantly and we may not be able to renew such leases on commercially reasonable terms or at all.
Our obligations under our revolving credit facility are collateralized by perfected first priority liens and security interests on substantially all of our oil and gas assets, including mortgage liens on oil and gas properties having at least 85% of the 46 Table of Content s reserve value as determined by reserve reports, and if we are unable to repay our indebtedness under the revolving credit facility, the lenders could seek to foreclose on our assets.
Our obligations under our revolving credit facility are collateralized by perfected first priority liens and security interests on substantially all of our oil and gas assets, including mortgage liens on oil and gas properties having at least 85% of the reserve value as determined by reserve reports.
We expect to consider from time to time further strategic opportunities that may involve acquisitions, dispositions, investments in joint ventures, partnerships, and other strategic alternatives that may enhance stockholder value, any of which may result in the use of a significant amount of our management resources or significant costs, and we may not be able to fully realize the potential benefit of such transactions.
Should we fail to comply with all applicable statutes, rules, regulations and orders of FERC, the CFTC or the FTC, we could be subject to substantial penalties and fines. 45 Table of Contents We expect to consider from time to time further strategic opportunities that may involve acquisitions, dispositions, investments in joint ventures, partnerships and other strategic alternatives that may enhance stockholder value, any of which may result in the use of a significant amount of our management resources or significant costs, and we may not be able to fully realize the potential benefit of such transactions.
In addition, as of December 31, 2022, a total of 2,072,139 shares of common stock were available for future issuance under our equity incentive plans, including 1,016,613 shares of common stock reserved for future issuance under the Oasis Petroleum Inc. 2020 Long Term Incentive Plan (the “2020 LTIP”) and 1,055,526 shares of common stock reserved for future issuance under the Whiting Petroleum Corporation 2020 Equity Incentive Plan, which we assumed in connection with the Merger.
In addition, as of December 31, 2023, a total of 2,201,501 shares of common stock were available for future issuance under our equity incentive plans, including 1,002,681 shares of common stock reserved for future issuance under the Oasis 2020 Long Term Incentive Plan (the “2020 LTIP”) and 1,198,820 shares of common stock reserved for future issuance under the Whiting 2020 Equity Incentive Plan (the “Whiting Equity Incentive Plan”), which we assumed in connection with the Merger.
The exercise of all or any number of outstanding warrants or the issuance of stock-based awards may dilute your holding of shares of our common stock. As of December 31, 2022, we had 4,979,513 outstanding warrants to purchase shares of our common stock and 1,291,761 outstanding stock–based awards.
The exercise of all or any number of outstanding warrants or the issuance of stock-based awards may dilute your holding of shares of our common stock. As of December 31, 2023, we had 3,232,654 outstanding warrants to purchase shares of our common stock and 839,039 outstanding stock–based awards.
Notwithstanding our election to pursue aspirational ESG-related targets in the future, we may receive pressure from investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to implement such goals because of potential costs or technical or operational obstacles.
Notwithstanding our election to pursue aspirational ESG-related targets in the future, we may receive pressure from investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to implement such goals because of potential costs or technical or operational obstacles. 46 Table of Contents In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
Moreover, there is a risk that we could ultimately be liable for unknown obligations related to acquisitions, which could materially adversely affect our financial condition, results of operations or cash flows.
We may not be able to collect on such indemnification because of disputes with the sellers or their inability to pay. Moreover, there is a risk that we could ultimately be liable for unknown obligations related to acquisitions, which could materially adversely affect our financial condition, results of operations or cash flows.
The market price of our common stock is subject to volatility. The liquidity for our common shares has been below historical levels, and the market price of our common stock could be subject to wide fluctuations.
As of October 19, 2023, all claims were resolved and we released the previously reserved shares of common stock. The market price of our common stock is subject to volatility. The liquidity for our common shares has been below historical levels, and the market price of our common stock could be subject to wide fluctuations.
Those risks could increase if we incur more debt. As of December 31, 2022, we had no outstanding borrowings and $6.4 million of outstanding letters of credit under our revolving credit facility and $400.0 million of 6.375% senior unsecured notes outstanding.
As of December 31, 2023, we had no outstanding borrowings and $8.9 million of outstanding letters of credit under our revolving credit facility and $400.0 million of 6.375% senior unsecured notes outstanding.
Any increased regulation or suspension of crude oil, NGL and natural gas exploration and 40 Table of Content s production, or revision or reinterpretation of existing laws and regulations, that arise out of these incidents or otherwise could result in delays and higher operating costs.
Any increased regulation or suspension of crude oil, NGL and natural gas exploration and production, or revision or reinterpretation of existing laws and regulations, that arise out of these incidents or otherwise could result in delays and higher operating costs. Such costs or significant delays could have a material adverse effect on our business, financial condition and results of operations.
These potential impacts, while uncertain and difficult to predict, may negatively affect our business, including, without limitation, our operating results, financial position 42 Table of Content s and liquidity, the duration of any potential disruption of our business, how and the degree to which the pandemic may impact our customers, supply chain and distribution network, the health of our employees, the productivity and sustainability of our workforce, our insurance premiums, costs attributable to our emergency measures, payments from customers and uncollectible accounts, limitations on travel, the availability of industry experts and qualified personnel and the market for our securities.
These potential impacts, while uncertain and difficult to predict, may negatively affect our business, including, without limitation, our operating results, financial position and liquidity, the duration of any potential disruption of our business, how and the degree to which the pandemic may impact our customers, supply chain and distribution network, the health of our employees, the productivity and sustainability of our workforce, our insurance premiums, costs attributable to our emergency measures, payments from customers and uncollectible accounts, limitations on travel, the availability of industry experts and qualified personnel and the market for our securities. 47 Table of Contents Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of crude oil and natural gas wells and adversely affect our production.
In addition, the European Union and other non-U.S. jurisdictions are implementing regulations with respect to the derivatives market. To the extent we transact with counterparties in foreign jurisdictions, we may become subject to such regulations. The cost of servicing, and the ability to generate enough cash flows to meet, our current or future debt obligations could adversely affect our business.
To the extent we transact with counterparties in foreign jurisdictions, we may become subject to such regulations. 54 Table of Contents The cost of servicing, and the ability to generate enough cash flows to meet our current or future debt obligations could adversely affect our business. Those risks could increase if we incur more debt.
These costs may include making organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants. These efforts may come at the potential cost of revenues and human resources that could be utilized to continue to enhance our product offerings, and such increased costs and diversion of resources may adversely affect our operating margins.
These efforts may come at 57 Table of Contents the potential cost of revenues and human resources that could be utilized to continue to enhance our product offerings, and such increased costs and diversion of resources may adversely affect our operating margins.
In the event DAPL were to cease operating, we would anticipate Williston Basin crude oil prices to weaken materially before improving as the market adapts to rail transportation. A portion of our crude oil and NGL production is transported to market centers by rail.
Our risk is not concentrated at DAPL as we have alternative outlets to sell our crude oil production using multiple modes of transportation. In the event DAPL were to cease operating, we would anticipate Williston Basin crude oil prices to weaken materially before improving as the market adapts to rail transportation.
Such costs or significant delays could have a material adverse effect on our business, financial condition and results of operations. With regard to our physical purchases and sales of energy commodities, we must also comply with anti-market manipulation laws and related regulations enforced by FERC, the CFTC and the FTC.
With regard to our physical purchases and sales of energy commodities, we must also comply with anti-market manipulation laws and related regulations enforced by FERC, the CFTC and the FTC.
In addition, certain cyber incidents, such as unauthorized surveillance or a data breach, may remain undetected for an extended period.
Cyber-attacks may also be performed in a manner that does not require gaining unauthorized access, such as by causing denial-of-service attacks. In addition, certain cyber incidents, such as unauthorized surveillance or a data breach, may remain undetected for an extended period.
Based on our current interpretation of the IRA and the CAMT and a number of operational, economic, accounting and regulatory assumptions, we do not anticipate being an applicable corporation in 2023, but we may become an applicable corporation in a subsequent tax year.
Based on our current interpretation of the IRA and the CAMT and a number of operational, economic, accounting and regulatory assumptions, we do not anticipate the CAMT materially increasing our U.S. federal income tax liability in the near term.
Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of the problems. We often are not entitled to contractual indemnification for environmental liabilities or title defects in excess of the amounts claimed by us before closing and acquire properties on an “as is” basis.
We often are not entitled to contractual indemnification for environmental liabilities or title defects in excess of the amounts claimed by us before closing and acquire properties on an “as is” basis. Indemnification from the sellers will generally be effective only during a limited time period after the closing and subject to certain dollar limitations and minimums.
Although the length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable, this conflict could continue to lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences, as well as increases in cyber-attacks and espionage.
Although the length, impact and outcome of the military conflicts between Russia and Ukraine and between Hamas and Israel are highly unpredictable, these conflicts could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability and other material and adverse effects on macroeconomic conditions.
Techniques used in cyber-attacks often range from highly sophisticated efforts to electronically circumvent network security to more traditional intelligence gathering and social engineering aimed at obtaining information necessary to gain access. Cyber-attacks may also be performed in a manner that does not require gaining unauthorized access, such as by causing denial-of-service attacks.
We, or our business partners, may rely upon outdated information technology (“IT”) or software systems that may be at a higher risk of error, failure and cyber breach. Techniques used in cyber-attacks often range from highly sophisticated efforts to electronically circumvent network security to more traditional intelligence gathering and social engineering aimed at obtaining information necessary to gain access.
Global geopolitical tensions may create heightened volatility in oil, gas and NGL prices and could adversely affect our business, financial condition and results of operations. On February 24, 2022, Russian military forces commenced a military operation in Ukraine and the sustained conflict and disruption in the region that has occurred since this date is expected to continue.
Risks related to the oil and gas industry and our business Global geopolitical tensions may create heightened volatility in oil, NGL and natural gas prices and could adversely affect our business, financial condition and results of operations.
We may fail to realize the anticipated benefits and synergies expected from the Merger, which could adversely affect our business, financial condition and operating results. The Merger could also result in difficulties in being able to hire, train or retain qualified personnel to manage and operate the Company’s properties.
The synergies attributable to the Arrangement may vary from expectations. The combined company may fail to realize the anticipated benefits and synergies expected from the Arrangement, which could adversely affect the combined company’s business, financial condition and operating results.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−2 removed3 unchanged
Biggest change(3) On August 3, 2022, we announced our new share repurchase program, in which our Board of Directors authorized share repurchases of up to $300 million of our common stock. 56 Table of Content s Stock Performance Graph.
Biggest change(3) On October 25, 2023, our Board of Directors authorized a new share repurchase program of up to $750 million of our common stock, which resulted in the expiration of the $300 million share repurchase program authorized in August 2022. 61 Table of Contents Stock Performance Graph.
The performance graph shown below compares the cumulative total return to our common stockholders as compared to the cumulative total returns on the Standard and Poor’s 500 Index (“S&P 500”) and the Standard and Poor’s 500 Oil & Gas Exploration & Production Index (“S&P 500 O&G E&P”) for the period of November 20, 2020 (the date we emerged from bankruptcy and our common stock commenced trading) through December 31, 2022.
The performance graph shown below compares the cumulative total return to our common stockholders as compared to the cumulative total returns on the Standard and Poor’s 500 Index (“S&P 500”) and the Standard and Poor’s 500 Oil & Gas Exploration & Production Index (“S&P 500 O&G E&P”) for the period of November 20, 2020 (the date we emerged from bankruptcy and our common stock commenced trading) through December 31, 2023.
Unregistered Sales of Securities. There were no sales of unregistered securities during the year ended December 31, 2022. Securities Authorized for Issuance Under Equity Compensation Plans. Information concerning securities authorized for issuance under our equity compensation plans will be disclosed in our definitive proxy statement for our 2023 Annual Meeting of Stockholders. Issuer Purchases of Equity Securities.
Unregistered Sales of Securities. There were no sales of unregistered securities during the year ended December 31, 2023. Securities Authorized for Issuance Under Equity Compensation Plans. Information concerning securities authorized for issuance under our equity compensation plans will be disclosed in our definitive proxy statement for our 2024 Annual Meeting of Stockholders. Issuer Purchases of Equity Securities.
The comparison was prepared based upon the following assumptions: 1. $100 was invested in our common stock, the S&P 500 and the S&P 500 O&G E&P on November 20, 2020 at the closing price on such date; and 2. Dividends were reinvested. 57 Table of Content s
The comparison was prepared based upon the following assumptions: 1. $100 was invested in our common stock, the S&P 500 and the S&P 500 O&G E&P on November 20, 2020 at the closing price on such date; and 2. Dividends were reinvested. Item 6. [Reserved] 62 Table of Contents
As of February 24, 2023, the number of record holders of our common stock was 311. Based on inquiry, management believes that the number of beneficial owners of our common stock as of February 24, 2023 was approximately 93,847. On February 24, 2023, the last sale price of our common stock, as reported on the Nasdaq, was $136.18 per share.
As of February 16, 2024, the number of record holders of our common stock was 285. Based on inquiry, management believes that the number of beneficial owners of our common stock as of February 16, 2024 was approximately 109,816. On February 16, 2024, the last sale price of our common stock, as reported on the Nasdaq, was $163.71 per share.
The following table contains information about our acquisition of equity securities during the three months ended December 31, 2022: Period Total Number of Shares Exchanged (1)(2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)(3) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1 – October 31, 2022 21,438 $ 153.81 — $ 300,000,000 November 1 – November 30, 2022 8,251 156.25 — 300,000,000 December 1 – December 31, 2022 206,063 133.45 203,314 272,898,821 ___________________ (1) During the fourth quarter of 2022, we withheld 32,438 shares of common stock to satisfy tax withholding obligations upon vesting of certain equity-based awards.
The following table contains information about our acquisition of equity securities during the three months ended December 31, 2023: Period Total Number of Shares Exchanged (1)(2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)(3) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1 – October 31, 2023 117,632 $ 164.17 117,632 $ 746,489,046 November 1 – November 30, 2023 237,162 161.94 232,359 708,864,811 December 1 – December 31, 2023 160,480 161.15 160,480 683,003,178 ___________________ (1) During the fourth quarter of 2023, we withheld 4,803 shares of common stock to satisfy tax withholding obligations upon vesting of certain equity-based awards.
(2) During the fourth quarter of 2022, we repurchased 203,314 shares of common stock at a weighted average price of $133.30 per common share for a total cost of $27.1 million as part of our publicly announced share repurchase program.
(2) During the fourth quarter of 2023, we repurchased 510,471 shares of common stock at a weighted average price of $162.20 per common share for a total cost of $82.8 million, excluding accrued excise tax of $0.2 million, under our publicly announced share repurchase program.
In 2022, we paid an aggregate amount of cash dividends of $27.03 per share of common stock, including base dividends of $3.67 per share of common stock, variable dividends of $8.36 per share of common stock and a special cash dividend of $15.00 per share of common stock.
In 2023, we paid an aggregate amount of cash dividends of $11.88 per share of common stock, including base dividends of $5.00 per share of common stock and variable dividends of $6.88 per share of common stock. On February 21, 2024, we declared a base-plus-variable dividend of $3.25 per share of common stock.
Removed
On February 22, 2023, we declared a base plus variable dividend of $4.80 per share of common stock. These dividends will be payable on March 21, 2023 to stockholders of record as of March 7, 2023.
Added
These dividends will be payable on March 19, 2024 to stockholders of record as of March 5, 2024. In October 2023, we introduced a new $750 million share repurchase program. See “Part I. Item 1. Business—Business Strategy—Maximize returns” for additional information on the return of capital plan.
Removed
In August 2022, we introduced a return of capital plan that includes a base dividend of $1.25 per share per quarter ($5.00 per share annualized) and a $300 million share-repurchase program. See “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments” for additional information on the return of capital plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

102 edited+32 added−68 removed43 unchanged
Biggest changeThis increase was primarily due to higher crude oil prices year-over-year and an increase in crude oil volumes purchased and then subsequently sold. 64 Table of Content s Expenses and other income (expense) The following table summarizes our operating expenses, gain on sale of assets, net other expenses, income tax benefit, net income from continuing operations, income from discontinued operations attributable to Chord, net of income tax and net income attributable to Chord for the years presented: Year Ended December 31, 2022 2021 (In thousands, except per Boe of production) Operating expenses Lease operating expenses $ 443,373 $ 203,933 Other services expenses 187 47 Gathering, processing and transportation expenses 141,644 122,614 Purchased oil and gas expenses 671,935 379,972 Production taxes 229,571 76,835 Depreciation, depletion and amortization 369,659 126,436 Exploration and impairment 2,204 2,763 General and administrative expenses 209,299 80,688 Total operating expenses 2,067,872 993,288 Gain on sale of assets, net 4,867 222,806 Operating income 1,583,789 809,444 Other income (expense) Net loss on derivative instruments (208,128) (589,641) Net gain from investment in unconsolidated affiliate 34,366 — Interest expense, net of capitalized interest (29,349) (30,806) Other income (expense) 2,901 (1,010) Total other expense, net (200,210) (621,457) Income from continuing operations 1,383,579 187,987 Income tax benefit 46,884 973 Net income from continuing operations 1,430,463 188,960 Income from discontinued operations attributable to Chord, net of income tax 425,696 130,642 Net income attributable to Chord $ 1,856,159 $ 319,602 Costs and expenses (per Boe of production) Lease operating expenses $ 10.14 $ 9.63 Gathering, processing and transportation expenses 3.24 5.79 Production taxes 5.25 3.63 Lease operating expenses.
Biggest changeThis increase was primarily due to an increase in crude oil volumes purchased and then subsequently sold, partially offset by lower crude oil prices year-over-year. 67 Table of Contents Expenses and other income (expense) The following table summarizes our operating expenses and other income (expense) for the periods presented: Year Ended December 31, 2023 2022 (In thousands, except per Boe of production) Operating expenses Lease operating expenses $ 658,938 $ 443,560 Gathering, processing and transportation expenses 180,219 141,644 Purchased oil and gas expenses 761,325 671,935 Production taxes 260,002 229,571 Depreciation, depletion and amortization 598,562 369,659 Exploration and impairment 35,330 2,204 General and administrative expenses 126,319 209,299 Total operating expenses 2,620,695 2,067,872 Gain (loss) on sale of assets, net (2,764) 4,867 Operating income 1,273,182 1,583,789 Other income (expense) Net gain (loss) on derivative instruments 63,182 (208,128) Net gain from investment in unconsolidated affiliate 21,330 34,366 Interest expense, net of capitalized interest (28,630) (29,349) Other income 9,964 2,901 Total other expense, net 65,846 (200,210) Income from continuing operations 1,339,028 1,383,579 Income tax (expense) benefit (315,249) 46,884 Net income from continuing operations 1,023,779 1,430,463 Income from discontinued operations attributable to Chord, net of income tax — 425,696 Net income attributable to Chord $ 1,023,779 $ 1,856,159 Costs and expenses (per Boe of production) Lease operating expenses $ 10.41 $ 10.14 Gathering, processing and transportation expenses 2.85 3.24 Production taxes 4.11 5.25 Lease operating expenses.
Dividends During the year ended December 31, 2022, we declared base plus variable cash dividends of $12.03 per share of common stock, or $373.0 million in aggregate, and a special cash dividend of $15.00 per share of common stock, or $307.4 million in aggregate.
During the year ended December 31, 2022, we declared base-plus-variable cash dividends of $12.03 per share of common stock or, $373.0 million in aggregate, and a special cash dividend of $15.00 per share of common stock, or $307.4 million in aggregate.
Periodic revisions to the estimated reserves and related future net cash flows may be necessary as a result of a number of factors, including reservoir performance, changes to Company’s anticipated five-year development plan, changes to commodity prices, cost changes, technological advances, new geological or geophysical data or other economic factors.
Periodic revisions to the estimated reserves and related future net cash flows may be necessary as a result of a number of factors, including reservoir performance, changes to the Company’s anticipated five-year development plan, changes to commodity prices, cost changes, technological advances, new geological or geophysical data or other economic factors.
In addition, while we are unable to predict future commodity prices, we do not believe that an impairment of our oil and gas properties is reasonably likely to occur in the near future at current price levels; however, we would evaluate the recoverability of the carrying value of our oil and gas properties as a result of a future material or extended decline in the price of crude oil, NGLs or natural gas or a material increase in the costs of labor, materials or services.
While we are unable to predict future commodity prices, we do not believe that an impairment of our oil and gas properties is reasonably likely to occur in the near future at current price levels; however, we would evaluate the recoverability of the carrying value of our oil and gas properties as a result of a future material or extended decline in the price of crude oil, NGLs or natural gas or a material increase in the costs of labor, materials or services.
Our purchased oil and gas sales are derived from the sale of crude oil and natural gas purchased through our marketing activities primarily to optimize transportation costs, for blending to meet pipeline specifications or to cover production shortfalls.
Our purchased oil and gas sales are derived from the sale of crude oil, NGLs and natural gas purchased through our marketing activities primarily to optimize transportation costs, for blending to meet pipeline specifications or to cover production shortfalls.
The Consolidated Balance Sheets and Consolidated Statements of Operations have been recast from prior periods to reflect the OMP Merger (defined below) as a discontinued operation. Refer to “Part II, Item 8. Financial Statements and Supplementary Data—Note 13—Discontinued Operations.” In addition, the following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance.
The Consolidated Balance Sheets and Consolidated Statements of Operations have been recast from prior periods to reflect the OMP Merger (defined below) as a discontinued operation. Refer to “Part II, Item 8. Financial Statements and Supplementary Data—Note 11—Discontinued Operations.” In addition, the following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance.
We account for oil and gas properties under the successful efforts method of accounting. See “Item 8. Financial Statements and Supplementary Data—Note 4—Summary of Significant Accounting Policies—Property, Plant and Equipment” for additional information. Estimated quantities of reserves Our independent reserve engineers prepare our estimates of crude oil, NGL and natural gas reserves.
We account for oil and gas properties under the successful efforts method of accounting. See “Item 8. Financial Statements and Supplementary Data—Note 2—Summary of Significant Accounting Policies—Property, Plant and Equipment” for additional information. Estimated quantities of reserves Our independent reserve engineers prepare our estimates of crude oil, NGL and natural gas reserves.
Cash flows The Consolidated Statements of Cash Flows have not been recast for discontinued operations, therefore the discussion below concerning cash flows from operating activities, investing activities and financing activities includes the results of both continuing operations and discontinued operations. See “Item 8. Financial Statements and Supplementary Data—Note 13—Discontinued Operations” for disclosure of cash flow impacts attributable to discontinued operations.
Cash flows The Consolidated Statements of Cash Flows have not been recast for discontinued operations, therefore the discussion below concerning cash flows from operating activities, investing activities and financing activities includes the results of both continuing operations and discontinued operations. See “Item 8. Financial Statements and Supplementary Data—Note 11—Discontinued Operations” for disclosure of cash flow impacts attributable to discontinued operations.
These gathering systems, which originate at the wellhead, reduce the need to transport barrels by truck from the wellhead, helping remove trucks from local highways and reduce greenhouse gas emissions. As of December 31, 2022, substantially all of our gross operated crude oil production was connected to gathering systems.
These gathering systems, which originate at the wellhead, reduce the need to transport barrels by truck from the wellhead, helping remove trucks from local highways and reduce greenhouse gas emissions. As of December 31, 2023, substantially all of our gross operated crude oil production was connected to gathering systems.
There were no borrowings outstanding under the Credit Facility (defined below) as of December 31, 2022; however, on a quarterly basis, we pay a commitment fee on the average amount of borrowing base capacity not utilized during the quarter and fees calculated on the average amount of letter of credit balances outstanding during the quarter.
There were no borrowings outstanding under the Credit Facility (defined below) as of December 31, 2023; however, on a quarterly basis, we pay a commitment fee on the average amount of borrowing base capacity not utilized during the quarter and fees calculated on the average amount of letter of credit balances outstanding during the quarter.
For example, a higher fair value measurement of oil and gas properties increases the likelihood of future impairment charges if reserves quantities and/or commodity prices are lower, or operating and/or development costs are higher, than those which were used to measure the fair value on the acquisition date.
For example, a higher fair value measurement of oil and gas properties increases the likelihood of future impairment charges if reserve quantities and/or commodity prices are lower, or operating and/or development costs are higher, than those which were used to measure the fair value on the acquisition date.
We also have contracts which include provisions for the delivery, transport or purchase of a minimum volume of crude oil, NGLs, natural gas and water within specified time frames, the majority of which are ten years or less.
We also have contracts which include provisions for the delivery, transport or purchase of a minimum volume of crude oil, NGLs, natural gas and water within specified time frames, the majority of which are five years or less.
Financial Statements and Supplementary Data—Note 4—Summary of Significant Accounting Policies” for the significant accounting policies and estimates made by management as well as the expected impact of recent accounting pronouncements on our consolidated financial statements.
Financial Statements and Supplementary Data—Note 2—Summary of Significant Accounting Policies” for the significant accounting policies and estimates made by management as well as the expected impact of recent accounting pronouncements on our consolidated financial statements.
The following are the accounting policies, estimates and judgments used in preparation of our consolidated financial statements which we consider most critical: Method of accounting for oil and gas properties GAAP provides two alternative methods to account for oil and gas properties known as the successful efforts method and the full cost method.
The following are the accounting policies, estimates and judgments used in preparation of our consolidated financial statements which we consider most critical: 73 Table of Contents Method of accounting for oil and gas properties GAAP provides two alternative methods to account for oil and gas properties known as the successful efforts method and the full cost method.
Accordingly, the natural gas sales prices for the periods prior to three-stream reporting were higher compared to the periods subsequent to three-stream reporting since the natural gas sales price included the value of NGLs. The conversion to three-stream reporting did not impact our total reported revenues. Purchased oil and gas sales .
Accordingly, the natural gas sales prices for the periods prior to three-stream reporting were higher compared to the periods subsequent to three-stream reporting since the natural gas sales price included the value of NGLs. The conversion to three-stream reporting did not impact our total reported revenues.
The Credit Facility includes a requirement that the Company maintain a Current Ratio (as defined in the Credit Facility) of no less than 1.0 to 1.0 as of the last day of any fiscal quarter.
Our Credit Facility includes a requirement that we maintain a Current Ratio (as defined in the Credit Facility) of no less than 1.0 to 1.0 as of the last day of any fiscal quarter.
Accordingly, the results of operations presented herein report the results of legacy Oasis prior to the closing of the Merger on July 1, 2022 and the results of Chord (including legacy Whiting) from July 1, 2022 through December 31, 2022, unless otherwise noted.
Accordingly, the 64 Table of Contents results of operations presented herein report the results of legacy Oasis prior to the closing of the Merger on July 1, 2022 and the results of Chord (including legacy Whiting) from July 1, 2022 through December 31, 2023, unless otherwise noted.
We record our income taxes in accordance with ASC 740, Income Taxes , which results in the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.
Income taxes Our provision for taxes includes both federal and state income taxes. We record our income taxes in accordance with ASC 740, Income Taxes , which results in the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.
We cannot reasonably predict future commodity prices; however, assuming all other factors are held constant, a 10% decrease in the SEC Price for crude oil and natural gas would decrease our estimated net proved reserves by 9.5 MMBoe and decrease the PV-10 by $2.2 billion, and a 10% increase in the SEC Price for crude oil and natural gas would increase our estimated net proved reserves by 7.5 MMBoe and increase the PV-10 by $2.2 billion.
We cannot reasonably predict future commodity prices; however, assuming all other factors are held constant, a 10% decrease in the SEC Price for crude oil and natural gas would decrease our estimated net proved reserves by 21.7 MMBoe and decrease the PV-10 by $1.7 billion, and a 10% increase in the SEC Price for crude oil and natural gas would increase our estimated net proved reserves by 17.6 MMBoe and increase the PV-10 by $1.7 billion.
Our income tax benefit was recorded at (3.4)% of pre-tax income from continuing operations for the year ended December 31, 2022 and (0.5)% of pre-tax income from continuing operations for the year ended December 31, 2021.
Our income tax expense was recorded at 23.5% of pre-tax income from continuing operations for the year ended December 31, 2023, and our income tax benefit was recorded at (3.4)% of pre-tax income from continuing operations for the year ended December 31, 2022.
For the year ended December 31, 2022, we recognized $2.9 million of other income compared to $1.0 million of other expense for the year ended December 31, 2021. This $3.9 million increase in other income was primarily due to an increase in interest income year-over-year associated with higher balances in certain of our money market accounts. Income tax benefit.
For the year ended December 31, 2023, we recognized $10.0 million of other income, net as compared to $2.9 million for the year ended December 31, 2022. The $7.1 million increase was primarily due to an increase in interest income year-over-year associated with higher balances in our money market accounts. Income tax (expense) benefit.
Cash flows provided by (used in) financing activities Net cash used in financing activities of $823.1 million for the year ended December 31, 2022 was primarily attributable to dividends paid to stockholders of $654.7 million, payments of $152.0 million to repurchase common stock and payments of $41.8 million for income tax withholdings on vested equity-based compensation awards.
For the year ended December 31, 2022, net cash used in financing activities of $823.1 million was primarily attributable to dividends paid to stockholders of $654.7 million, payments made to repurchase common stock of $152.0 million and payments for income tax withholdings on vested equity-based compensation awards of $41.8 million, partially offset by proceeds from the exercise of outstanding warrants of $19.8 million.
Income from discontinued operations attributable to Chord, net of income tax. Income from discontinued operations attributable to Chord, net of income tax for the year ended December 31, 2022 represents income from OMP for the period prior to the completion of the OMP Merger on February 1, 2022.
Income from discontinued operations attributable to Chord, net of income tax for the year ended December 31, 2022 of $425.7 million represents income from OMP from January 1, 2022 to the completion of the OMP Merger on February 1, 2022.
The estimable future commitments under these agreements (excluding deliveries from future production and applicable volume credits) were $519.5 million as of December 31, 2022.
The estimable future commitments under these agreements (excluding deliveries from future production and applicable volume credits) were $391.6 million as of December 31, 2023.
The uncertainties resulting from potential economic outcomes of monetary policy decisions of central banks, coupled with geopolitical risks associated with the continued Russian invasion of Ukraine make it difficult to predict future impacts to commodity prices.
The uncertainties resulting from the potential economic outcomes of monetary policy decisions of central banks, coupled with the geopolitical risks associated with the continued military conflicts between Russia and Ukraine and between Hamas and Israel, make it difficult to predict future impacts to commodity prices.
Transaction and integration costs associated with business combinations are expensed as incurred. We may adjust the provisional amounts recorded in a business combination during the measurement period which extends for up to one year after the acquisition date. 72 Table of Content s The Merger was accounted for as a business combination under the acquisition method of accounting.
Transaction and integration costs associated with business combinations are expensed as incurred. We may adjust the provisional amounts recorded in a business combination during the measurement period which extends for up to one year after the acquisition date.
Revenues Our crude oil, NGL and natural gas revenues are derived from the sale of crude oil, NGL and natural gas production. These revenues do not include the effects of derivative instruments and may vary significantly from period to period as a result of changes in volumes of production sold or changes in commodity prices.
These revenues do not include the effects of derivative instruments and may vary significantly from period to period as a result of changes in volumes of production sold or changes in commodity prices.
As of December 31, 2022, we had dividends payable of $30.6 million related to dividend equivalent rights accrued on equity-based compensation awards, including $5.9 million that was recorded under accrued liabilities and $24.8 million that was recorded under other liabilities on the Consolidated Balance Sheet.
At December 31, 2023, we had dividends payable of $37.6 million related to dividend equivalent rights accrued on equity-based compensation awards, including $23.8 million that was recorded under accrued liabilities and $13.8 million that was recorded under other liabilities on the Consolidated Balance Sheet.
Business—Exploration and Production Operations—Estimated net proved reserves” for additional information on the revisions to our estimated net proved reserves. Our estimated net proved reserves and PV-10 were determined using the SEC Price. The SEC Price was $93.67 per Bbl for crude oil and $6.36 per MMBtu for natural gas for the year ended December 31, 2022.
See “Item 1. Business—Exploration and Production Operations—Estimated net proved reserves” for additional information on the revisions to our estimated net proved reserves. Our estimated net proved reserves and PV-10 were determined using the SEC Price. The SEC Price was $78.22 per Bbl for crude oil and $2.64 per MMBtu for natural gas for the year ended December 31, 2023.
(2) The effect of derivative settlements includes the cash received or paid for the cumulative gains or losses on our commodity derivatives settled in the periods presented but does not include proceeds from derivative liquidations or payments for derivative modifications. Our commodity derivatives do not qualify for or were not designated as hedging instruments for accounting purposes. Crude oil revenues.
(2) The effect of derivative settlements includes the cash received or paid for the cumulative gains or losses on our commodity derivatives settled in the periods presented but does not include proceeds from derivative liquidations or payments for derivative modifications.
The factors used to determine the undiscounted future cash flows and fair value require significant judgment and assumptions, including future production volumes based upon estimates of proved reserves, future commodity prices (adjusted for basis differentials) and estimates of future operating and development costs. These factors are generally consistent with those used in the planning and budgeting processes.
The factors used to determine the undiscounted future cash flows and fair value require significant judgment and assumptions, including future production volumes based upon estimates of proved reserves, future commodity prices (adjusted for basis 74 Table of Contents differentials) and estimates of future operating and development costs.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2021 Annual Report on Form 10-K filed with the SEC on February 25, 2022 under the subheading “Cash flows.” The following table summarizes our change in cash flows: Year Ended December 31, 2022 2021 (In thousands) Net cash provided by operating activities $ 1,924,026 $ 914,136 Net cash used in investing activities (682,562) (920,769) Net cash provided by (used in) financing activities (823,096) 161,190 Increase in cash and cash equivalents $ 418,368 $ 154,557 Cash flows provided by operating activities Net cash provided by operating activities was $1,924.0 million for the year ended December 31, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Annual Report on Form 10-K filed with the SEC on February 28, 2023 under the subheading “Cash flows.” The following table summarizes our change in cash flows: Year Ended December 31, 2023 2022 (In thousands) Net cash provided by operating activities $ 1,819,851 $ 1,924,026 Net cash used in investing activities (1,430,306) (682,562) Net cash used in financing activities (664,698) (823,096) Increase (decrease) in cash and cash equivalents $ (275,153) $ 418,368 Cash flows provided by operating activities Net cash provided by operating activities was $1,819.9 million for the year ended December 31, 2023.
For purposes of the Current Ratio, the Credit Facility’s definition of total current assets includes unused commitments under the Credit Facility, which were $993.6 million as of December 31, 2022, and excludes current hedge assets, which were $23.7 million as of December 31, 2022.
For purposes of the Current Ratio, the Credit Facility’s definition of total current assets includes unused commitments under the Credit Facility, which were $991.1 million as of December 31, 2023, and excludes current hedge assets, which were $37.4 million as of December 31, 2023.
We estimate the fair value of proved oil and gas properties using an income approach that converts future cash flows to a single discounted amount.
If the carrying amount is not recoverable, we will recognize an impairment by adjusting the carrying amount of the oil and gas properties to fair value. We estimate the fair value of proved oil and gas properties using an income approach that converts future cash flows to a single discounted amount.
Business—Exploration and Production Operations—Marketing.” 60 Table of Content s Our average net realized crude oil prices and average price differentials are shown in the tables below for the periods presented: 2022 Year ended December 31, 2022 Q1 Q2 Q3 Q4 Average Realized Crude Oil Prices ($/Bbl) (1) $ 95.34 $ 111.79 $ 93.13 $ 83.74 $ 92.98 Average Price Differential ($/Bbl) (2) $ 1.22 $ 2.82 $ 1.63 $ 0.99 $ 1.52 Average Price Differential Percentage (2) 1.3 % 2.5 % 1.8 % 1.2 % 1.6 % 2021 Year ended December 31, 2021 Q1 Q2 Q3 Q4 Average Realized Crude Oil Prices ($/Bbl) (1) $ 56.09 $ 65.53 $ 70.11 $ 76.37 $ 67.49 Average Price Differential ($/Bbl) (2) $ 1.58 $ 0.61 $ 0.43 $ 0.24 $ 0.70 Average Price Differential Percentage (2) 2.8 % 0.9 % 0.6 % 0.3 % 1.0 % __________________ (1) Realized crude oil prices do not include the effect of derivative contract settlements.
Business—Exploration and Production Operations—Marketing.” Our average net realized crude oil prices and average price differentials are shown in the tables below for the periods presented: 2023 Year ended December 31, 2023 Q1 Q2 Q3 Q4 Average Realized Crude Oil Prices ($/Bbl) (1) $ 76.04 $ 73.89 $ 83.22 $ 77.88 $ 77.85 Average Price Differential ($/Bbl) (2) $ — $ 0.14 $ 0.69 $ (0.52) $ 0.07 Average Price Differential Percentage (2) — % 0.2 % 0.8 % (0.7) % 0.1 % 2022 Year ended December 31, 2022 Q1 Q2 Q3 Q4 Average Realized Crude Oil Prices ($/Bbl) (1) $ 95.34 $ 111.79 $ 93.13 $ 83.74 $ 92.98 Average Price Differential ($/Bbl) (2) $ 1.22 $ 2.82 $ 1.63 $ 0.99 $ 1.52 Average Price Differential Percentage (2) 1.3 % 2.5 % 1.8 % 1.2 % 1.6 % __________________ (1) Realized crude oil prices do not include the effect of derivative contract settlements.
We recorded a $208.1 million net loss on derivative instruments for the year ended December 31, 2022, which included a net loss of $224.2 million associated with our contracts to manage commodity price risk, offset by an unrealized gain of $16.1 million associated with an embedded derivative related to the contingent consideration included within the 2021 agreement to sell our upstream assets in the Permian Basin.
We recorded a $63.2 million net gain on derivative instruments for the year ended December 31, 2023, which was primarily comprised of a net gain of $56.4 million associated with our contracts to manage commodity price risk and a net gain of $6.8 million associated with an embedded derivative related to the contingent consideration included within the 2021 agreement to sell our upstream assets in the Permian Basin.
For discussion related to changes in financial condition and results of operations for the year ended December 31, 2021 (Successor) compared to the period from November 20, 2020 through December 31, 2020 (Successor) and the period from January 1, 2020 through November 19, 2020 (Predecessor), refer to “Part II, Item 7.
For discussion related to changes in financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to “Part II, Item 7.
Purchased oil and gas expenses increased $292.0 million to $671.9 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021 primarily due to higher crude oil prices year-over-year and an increase in crude oil volumes purchased. Production taxes .
Purchased oil and gas expenses increased $89.4 million to $761.3 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily due to an increase in crude oil volumes purchased, offset by lower crude oil prices year-over-year. Production taxes.
Future production is based upon a combination of inputs and assumptions, including the timing and pace of our development plans, as well as estimates of reserve quantities.
These factors are generally consistent with those used in the planning and budgeting processes. Future production is based upon a combination of inputs and assumptions, including the timing and pace of our development plans, as well as estimates of reserve quantities.
For purposes of the Current Ratio, the Credit Facility’s definition of total current liabilities excludes current hedge liabilities, which were $341.5 million as of December 31, 2022. 69 Table of Content s Cash flows used in investing activities Net cash used in investing activities was $682.6 million for the year ended December 31, 2022.
For purposes of the Current Ratio, the Credit 71 Table of Contents Facility’s definition of total current liabilities excludes current hedge liabilities, which were $14.2 million as of December 31, 2023. Cash flows used in investing activities Net cash used in investing activities was $1,430.3 million for the year ended December 31, 2023.
Our planned 2023 E&P capital expenditures are expected to be approximately $825 million to $865 million. We expect to run four operated rigs during 2023 and plan to complete 90 to 94 gross operated wells with an average working interest of approximately 73%.
Our planned 2024 E&P capital expenditures are expected to be approximately $905 million to $945 million. We expect to run four operated rigs during the majority of 2024 and plan to TIL approximately 103 to 113 gross operated wells with an average working interest of approximately 75%.
We estimate the expected undiscounted future cash flows by field and compare such undiscounted amounts to the carrying amount to determine if the asset is recoverable. If the carrying amount is not recoverable, we will recognize an impairment by adjusting the carrying amount of the oil and gas properties to fair value.
Impairment of proved oil and gas properties We review proved oil and gas properties for impairment whenever events and circumstances indicate that their carrying value may not be recoverable. We estimate the expected undiscounted future cash flows by field and compare such undiscounted amounts to the carrying amount to determine if the asset is recoverable.
For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. As of December 31, 2022 and 2021, we had no unrecognized tax benefits.
For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Merger The Merger was accounted for as a business combination under the acquisition method of accounting.
Senior unsecured notes. As of December 31, 2022, we had $400.0 million of 6.375% senior unsecured notes (the “Senior Notes”) that mature on June 1, 2026. Interest on the senior unsecured notes is payable semi-annually on June 1 and December 1 of each year. See “Item 8. Financial Statements and Supplementary Data—Note 15—Long-Term Debt” for more information.
We were in compliance with the financial covenants in the Credit Facility at December 31, 2023. See “Item 8. Financial Statements and Supplementary Data—Note 13—Long-Term Debt” for additional information. Senior unsecured notes. As of December 31, 2023, we had $400.0 million of 6.375% senior unsecured notes (the “Senior Notes”) that mature on June 1, 2026.
We recorded income from discontinued operations attributable to Chord, net of income tax of $425.7 million for the year ended December 31, 2022. This was primarily comprised of a gain on sale of $518.9 million and midstream revenues of $23.3 million, offset by income tax expense of $101.1 million, midstream expenses of $13.2 million and interest expense of $3.7 million.
This was primarily comprised of a gain on sale of $518.9 million and midstream revenues of $23.3 million, offset by income tax expense of $101.1 million, midstream expenses of $13.2 million and interest expense of $3.7 million.
Our capital expenditures are summarized in the following table (in thousands): Successor Predecessor Year Ended December 31, Period from November 20, 2020 through December 31, 2020 Period from January 1, 2020 through November 19, 2020 2022 2021 Capital expenditures E&P $ 495,947 $ 168,189 $ 14,839 $ 194,004 Other capital expenditures (1) 11,771 2,277 179 7,071 Total E&P and other capital expenditures 507,718 170,466 15,018 201,075 Acquisitions (2) (2,275) 586,030 — — Total capital expenditures from continuing operations 505,443 756,496 15,018 201,075 Discontinued operations (3) 3,396 49,123 3,054 24,266 Total capital expenditures (4) $ 508,839 $ 805,619 $ 18,072 $ 225,341 __________________ (1) Other capital expenditures includes items such as infrastructure capital, administrative capital and capitalized interest.
Our capital expenditures are summarized in the following table: Year Ended December 31, 2023 2022 2021 (In thousands) Capital expenditures E&P $ 920,841 $ 495,947 $ 168,189 Other capital expenditures (1) 5,626 11,771 2,277 Total E&P and other capital expenditures (2) 926,467 507,718 170,466 Acquisitions (3) 361,609 (2,275) 586,030 Total capital expenditures from continuing operations 1,288,076 505,443 756,496 Discontinued operations (4) — 3,396 49,123 Total capital expenditures (5) $ 1,288,076 $ 508,839 $ 805,619 __________________ (1) Other capital expenditures includes items such as infrastructure capital, administrative capital and capitalized interest.
During the year ended December 31, 2021, average natural gas sales prices, without derivative settlements, were $6.28 per Mcf. Effective July 1, 2022 we elected to report crude oil, NGLs and natural gas separately on a three-stream basis. Prior to this, we reported on a two-stream basis and NGLs were reported with the natural gas stream.
Effective July 1, 2022, we elected to report crude oil, NGLs and natural gas separately on a three-stream basis. Prior to this, we reported on a two-stream basis and NGLs were reported with the natural gas stream.
Our revenues for the year ended December 31, 2022 increased primarily due to the Merger, which significantly expanded our operations in the Williston Basin.
Lease operating expenses increased $215.4 million to $658.9 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily due to the Merger, which significantly expanded our operations in the Williston Basin.
We cannot predict the amounts or timing of future reserve revisions, and if such revisions are significant, they could significantly affect future depletion expense, the carrying amount of our proved oil and gas properties, the realizability of our deferred tax assets and the Standardized Measure. See “Item 1.
Accordingly, reserve estimates are generally different from the quantities of crude oil, NGL and natural gas that are ultimately recovered. We cannot predict the amounts or timing of future reserve revisions, and if such revisions are significant, they could significantly affect future depletion expense, the carrying amount of our proved oil and gas properties and the Standardized Measure.
The net loss of $224.2 million associated with our contracts to manage commodity price risk was comprised of a loss of $561.1 million from settled contracts, partially offset by an unrealized gain of $336.9 million.
The net loss of $224.2 million on commodity derivative contracts was comprised of a realized loss of $561.1 million on settled commodity derivative contracts, partially offset by an unrealized gain of $336.9 million related to the change in fair value of our commodity derivative contracts. Investment in unconsolidated affiliate.
For a discussion on cash flows for the year ended December 31, 2021 (Successor) compared to the period from November 20, 2020 through December 31, 2020 (Successor) and the period from January 1, 2020 through November 19, 2020 (Predecessor), refer to “Part II, Item 7.
For a discussion on cash flows for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to “Part II, Item 7.
See “Results of Operations” above for additional information on the impact of volumes and prices on revenues and for additional information on increases and decreases in certain expenses between periods. Working capital.
See “Results of Operations” above for additional information on the impact of volumes and prices on revenues and for additional information on increases and decreases in operating expenses between periods. Working capital. Our working capital is primarily impacted due to the factors discussed above, coupled with the timing of cash receipts and disbursements.
Market Conditions Our revenue, profitability and ability to return cash to stockholders depend substantially on factors beyond our control, such as economic, political and regulatory developments as well as competition from other sources of energy. Prices for crude oil, NGLs and natural gas have experienced significant fluctuations in recent years and may continue to fluctuate widely in the future.
Market Conditions Our revenue, profitability and ability to return cash to stockholders depend substantially on factors beyond our control, such as economic, geopolitical, political and regulatory developments as well as competition from other sources of energy.
The actual outcome of these future tax consequences could differ significantly from our estimates, which could impact our financial position, results of operations and cash flows. 73 Table of Content s We also account for uncertainty in income taxes recognized in the financial statements in accordance with GAAP by prescribing a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return.
We also account for uncertainty in income taxes recognized in the financial statements in accordance with GAAP by prescribing a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return.
The increase in net cash provided by operating activities of $1,009.9 million from the year ended December 31, 2021 was due primarily to higher revenues from crude oil, NGL and natural gas sales due to higher commodity prices and our expanded operations following the Merger.
The decrease in net cash provided by operating activities of $104.2 million from the year ended December 31, 2022 was primarily due to an increase in operating expenses, partially offset by an increase in revenues from crude oil, NGL and natural gas sales.
Our cash flows depend on many factors, including the price of crude oil, NGL and natural gas and the success of our development and exploration activities as well as future acquisitions.
We believe, however, we have adequate liquidity to fund our capital expenditures and meet our contractual obligations during the next 12 months and the foreseeable future. Our cash flows depend on many factors, including the price of crude oil, NGL and natural gas and the success of our development and exploration activities as well as future acquisitions.
(4) Total capital expenditures (including acquisitions) reflected in the table above differs from the amounts for capital expenditures and acquisitions shown in the statements of cash flows in our consolidated financial statements because amounts reflected in the table include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statements of cash flows are presented on a cash basis. 70 Table of Content s In 2022, our total E&P and other capital expenditures were $507.7 million, an increase of $337.3 million as compared to 2021.
(5) Total capital expenditures (including acquisitions) reflected in the table above differs from the amounts for capital expenditures and acquisitions shown in the statements of cash flows in our consolidated financial statements because amounts reflected in the table above include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statements of cash flows are presented on a cash basis. 72 Table of Contents For the year ended December 31, 2023, our total E&P and other capital expenditures increased $418.7 million to $926.5 million as a result of the Merger, which significantly expanded our operations in the Williston Basin.
We believe that for the substantial majority of these agreements, our future production will be adequate to meet our delivery commitments or that we can purchase sufficient volumes of crude oil, NGLs and natural gas from third parties to satisfy our minimum volume commitments.
We believe that for the substantial majority of these agreements, our future production will be adequate to meet our delivery commitments or that we can purchase sufficient volumes of crude oil, NGLs and natural gas from third parties to satisfy our minimum volume commitments. 70 Table of Contents Long-term debt Our long-term debt consists of a senior secured revolving line of credit that is generally used to support our working capital requirements and $400.0 million of 6.375% senior unsecured notes.
Our effective tax rate for the year ended December 31, 2022 was lower than the effective tax rate for the year ended December 31, 2021 primarily due to the impact of releasing a substantial majority of the valuation allowance on our net deferred tax assets in 2022, coupled with 2021 restructuring impacts.
Our effective tax rate for the year ended December 31, 2023 was higher than the effective tax rate for the year ended December 31, 2022 primarily due to the impact of releasing substantially all of the remaining valuation allowance on our net deferred tax assets in 2022. Income from discontinued operations attributable to Chord, net of income tax.
We have a senior secured revolving credit facility (the “Credit Facility”) with a borrowing base of $2.75 billion and elected commitments of $1.0 billion that is due July 1, 2027. As of December 31, 2022, we had no borrowings outstanding and $6.4 million of outstanding letters of credit, resulting in an unused borrowing capacity of $993.6 million.
Senior secured revolving line of credit. We have a senior secured revolving credit facility (the “Credit Facility”) with a borrowing base of $2.5 billion and elected commitments of $1.0 billion that is due July 1, 2027.
On February 22, 2023, we declared a base cash dividend of $1.25 per share of common stock and a variable cash dividend of $3.55 per share of common stock. The dividends will be payable on March 21, 2023 to shareholders of record as of March 7, 2023.
Dividends During the year ended December 31, 2023, we declared base-plus-variable cash dividends of $11.88 per share of common stock, or $508.6 million in aggregate. On February 21, 2024, we declared a base-plus-variable dividend of $3.25 per share of common stock. The dividends will be payable on March 19, 2024 to shareholders of record as of March 5, 2024.
This prospective change impacts the comparability of the periods presented. 62 Table of Content s The following table summarizes the changes in production and average realized prices for the periods presented: Year Ended December 31, 2022 2021 Production data Crude oil (MBbls) 25,457 13,489 NGLs (MBbls) (1) 7,026 — Natural gas (MMcf) (1) 67,428 46,157 Oil equivalents (MBoe) 43,722 21,182 Average daily production (Boepd) 119,785 58,032 Average daily crude oil production (Bopd) 69,746 36,956 Average sales prices Crude oil (per Bbl) Average sales price $ 92.98 $ 67.49 Effect of derivative settlements (2) (19.48) (18.94) Average realized price after the effect of derivative settlements (2) $ 73.50 $ 48.55 NGLs (per Bbl) (1) Average sales price $ 26.23 $ — Effect of derivative settlements (2) 0.71 — Average realized price after the effect of derivative settlements (2) $ 26.94 $ — Natural gas (per Mcf) (1) Average sales price $ 6.30 $ 6.28 Effect of derivative settlements (2) (1.04) (0.32) Average realized price after the effect of derivative settlements (2) $ 5.26 $ 5.96 __________________ (1) For periods prior to July 1, 2022 , we reported crude oil and natural gas on a two-stream basis, and NGLs were combined with the natural gas stream when reporting revenues, production data and average sales prices.
The following table summarizes our revenues, production data and average realized prices for the periods presented: Year Ended December 31, 2023 2022 (In thousands) Revenues Crude oil revenues $ 2,835,962 $ 2,366,995 NGL revenues (1) 177,715 184,288 Natural gas revenues (1) 118,734 425,013 Purchased oil and gas sales 764,230 670,174 Other services revenues — 324 Total revenues $ 3,896,641 $ 3,646,794 Production data Crude oil (MBbls) 36,427 25,457 NGLs (MBbls) (1) 13,047 7,026 Natural gas (MMcf) (1) 82,953 67,428 Oil equivalents (MBoe) 63,300 43,722 Average daily production (Boepd) 173,425 119,785 Average daily crude oil production (Bopd) 99,801 69,746 Average sales prices Crude oil (per Bbl) Average sales price $ 77.85 $ 92.98 Effect of derivative settlements (2) (6.93) (19.48) Average realized price after the effect of derivative settlements (2) $ 70.92 $ 73.50 NGLs (per Bbl) (1) Average sales price $ 13.62 $ 26.23 Effect of derivative settlements (2) 0.22 0.71 Average realized price after the effect of derivative settlements (2) $ 13.84 $ 26.94 Natural gas (per Mcf) (1) Average sales price $ 1.43 $ 6.30 Effect of derivative settlements (2) (0.08) (1.04) Average realized price after the effect of derivative settlements (2) $ 1.35 $ 5.26 __________________ (1) For periods prior to July 1, 2022 , we reported crude oil and natural gas on a two-stream basis, and NGLs were combined with the natural gas stream when reporting revenues, production data and average sales prices.
Material cash requirements Our material cash requirements from known obligations include repayment of outstanding borrowings and interest payment obligations related to our long-term debt, obligations to plug, abandon and remediate our oil and gas properties at the end of their productive lives, payment of income taxes, severance benefits payable to employees terminated in connection with the Merger, obligations associated with outstanding commodity derivative contracts that settle in a loss position, obligations to pay dividends on vested equity awards that include dividend equivalent rights and obligations associated with our leases.
Volumes (Bbl) Weighted Average Prices Commodity Settlement Period Derivative Instrument Total Daily Sub-Floor Floor Ceiling Crude oil 2024 Two-way collars 825,000 3,000 $ 66.65 $ 81.94 Crude oil 2025 Three-way collars 1,095,000 3,000 $ 55.00 $ 70.00 $ 81.62 Crude oil 2026 Three-way collars 270,000 3,000 $ 50.00 $ 65.00 $ 83.70 Material cash requirements Our material cash requirements from known obligations include repayment of outstanding borrowings and interest payment obligations related to our long-term debt, obligations to plug, abandon and remediate our oil and gas properties at the end of their productive lives, payment of income taxes, obligations associated with outstanding commodity derivative contracts that settle in a loss position, obligations to pay dividends on vested equity awards that include dividend equivalent rights and obligations associated with our leases.
OMP Merger On February 1, 2022, we completed the merger of Oasis Midstream Partners LP (“OMP”) and OMP GP LLC, OMP’s general partner (“OMP GP”) with and into a subsidiary of Crestwood Equity Partners LP (“Crestwood”) and, in exchange for the interests in OMP and OMP GP owned by us, we received $160.0 million in cash and 20,985,668 common units representing limited partner interests of Crestwood (the “OMP Merger”).
In addition, on February 1, 2022, we completed the merger of Oasis Midstream Partners LP (“OMP”) and OMP GP, OMP’s general partner, with and into a subsidiary of Crestwood Equity Partners LP (“Crestwood”) (the “OMP Merger”). The OMP Merger qualified for reporting as a discontinued operation.
(3) Represents capital expenditures attributable to our midstream assets that were classified as discontinued operations. See “Recent Developments — OMP Merger” for additional information.
(3) Excludes amounts attributable to the Merger. (4) Represents capital expenditures attributable to our midstream assets that were classified as discontinued operations related to the OMP Merger.
In August 2022, our Board of Directors authorized a new share-repurchase program covering up to $300.0 million of our common stock, which resulted in the expiration of the $150.0 million share-repurchase program. We repurchased $27.1 million shares of common stock under this program in 2022.
Share Repurchase Program In October 2023, our Board of Directors authorized a new share repurchase program covering up to $750 million of our common stock, which replaced the existing $300 million share repurchase program that was authorized in August 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022. Overview We are an independent E&P company with quality and sustainable long-lived assets in the North Dakota and Montana regions of the Williston Basin.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 28, 2023.
In addition, as of December 31, 2022, we had outstanding natural gas basis swaps that cover notional volumes of 5,920 MMBtu for 2023. As of December 31, 2022, we did not have any commodity derivative contracts that cover production volumes in 2024. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” as well as “Part I, Item 1A.
As of December 31, 2023, our commodity derivative contracts cover 5,762 MBbls of our crude oil production for 2024, as well as 2,457 MBbls of our crude oil production for 2025 and 651,600 MMBtu of our natural gas production for 2025. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” and “Part I, Item 1A.
The production tax rate as a percentage of crude oil, NGL and natural gas sales was 7.7% for the year ended December 31, 2022, compared to 6.5% for the year ended December 31, 2021.
The production tax rate as a percentage of crude oil, NGL and natural gas sales was 8.3% for the year ended December 31, 2023 as compared to 7.7% for the year ended December 31, 2022. This increase was primarily due to an increase in natural gas production volumes, coupled with lower average natural gas sales prices. Depreciation, depletion and amortization.
Results of Operations Comparability of Financial Statements The results of operations presented below relate to the periods ended December 31, 2022 and 2021. The Merger was accounted for as of July 1, 2022.
Results of Operations Comparability of Financial Statements The results of operations presented below relate to the periods ended December 31, 2023 and 2022. On July 1, 2022, we completed the merger of equals transaction with Whiting Petroleum Corporation (“Whiting”) (the “Merger”).
For discussion related to changes in financial condition and results of operations for the year ended December 31, 2021 (Successor) compared to the period from November 20, 2020 through December 31, 2020 (Successor) and the period from January 1, 2020 through November 19, 2020 (Predecessor), refer to “Part II, Item 7.
Financial Statements and Supplementary Data—Note 11—Discontinued Operations” for additional information. For discussion related to changes in financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to “Part II, Item 7.
In addition, a higher fair value measurement of oil and gas properties results in higher depletion expense in future periods which reduces our future earnings. Impairment of proved oil and gas properties We review proved oil and gas properties for impairment whenever events and circumstances indicate that their carrying value may not be recoverable.
In addition, a higher fair value measurement of oil and gas properties results in higher depletion expense in future periods which reduces our future earnings. 75 Table of Contents
Commodity prices increased during 2022 due to a combination of factors, including disruptions to global commodity markets resulting from the Russian invasion of Ukraine, continued restraint of supply by OPEC+ and domestic oil and gas producers in the United States and higher demand as a result of increased global economic activity levels due to easing of restrictions associated with the COVID-19 pandemic.
Commodity prices decreased during 2023 due to a combination of factors, including slowing demand growth as a result of decreased global economic activity levels and higher levels of production from domestic oil and gas producers in the United States and other non-OPEC+ countries.
In addition, there was a decrease of $206.9 million in proceeds from divested assets whereby we received net proceeds from divestitures of $376.1 million during the year ended December 31, 2021 primarily related to the sale of our upstream assets in the Permian Basin, compared to $160.0 million in connection with the completion of the OMP Merger in February 2022.
We had a decrease in proceeds from divestitures of $114.8 million year-over-year, whereby we received net proceeds from divestitures of $160.0 million in connection with the completion of the OMP Merger in February 2022 compared to $54.4 million primarily due to the sale of non-core properties and non-operated wellbore divestitures during year ended December 31, 2023.
Exploration and impairment expenses were $2.2 million for the year ended December 31, 2022, which was consistent with the year ended December 31, 2021. General and administrative expenses. Our general and administrative (“G&A”) expenses increased $128.6 million to $209.3 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
General and administrative expenses. Our general and administrative (“G&A”) expenses decreased $83.0 million to $126.3 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
During the ordinary course of business, there may be transactions and calculations for which the ultimate tax determination is uncertain.
During the ordinary course of business, there may be transactions and calculations for which the ultimate tax determination is uncertain. The actual outcome of these future tax consequences could differ significantly from our estimates, which could impact our financial position, results of operations and cash flows.
Prior periods have been recast so that the basis of presentation is consistent with that of the 2022 consolidated financial statements. See “Item 8. Financial Statements and Supplementary Data—Note 13—Discontinued Operations” for additional information.
Accordingly, the results of operations of OMP have been classified as discontinued operations in the Consolidated Statement of Operations for the period from January 1, 2022 to February 1, 2022. Prior periods have been recast so that the basis of presentation is consistent with that of the 2022 consolidated financial statements. See “Item 8.
Our NGL and natural gas production volumes were also negatively impacted by the winter storms that occurred during 2022 discussed above. During the year ended December 31, 2022, average natural gas sales prices, without derivative settlements, were $6.30 per Mcf and average NGL sales prices, without derivative settlements, were $26.23 per barrel.
During the year ended December 31, 2022, average natural gas sales prices, without derivative settlements, were $6.30 per Mcf, and average NGL sales prices, without derivative settlements, were $26.23 per barrel. Purchased oil and gas sales . Purchased oil and gas sales increased $94.1 million to $764.2 million for the year ended December 31, 2023.
LOE per Boe increased $0.51 per Boe to $10.14 per Boe for the year ended December 31, 2022 primarily due to higher costs. 65 Table of Content s Gathering, processing and transportation expenses.
LOE per Boe increased $0.27 per Boe to $10.41 per Boe for the year ended December 31, 2023 primarily due to increases in workover costs of $0.58 per Boe, partially offset by decreases in fixed and variable costs of $0.28 per Boe. Gathering, processing and transportation expenses.
During the year ended December 31, 2021, we recorded a $589.6 million net loss on derivative instruments, which included a loss of $601.6 million associated with our contracts to manage commodity price risk, offset by an unrealized gain of $12.0 million associated with an embedded derivative related to the contingent consideration included within the 2021 agreement to sell our upstream assets in the Permian Basin.
During the year ended December 31, 2022, we recorded a $208.1 million net loss on derivative instruments, which included a net loss of $224.2 million associated with our commodity derivatives contracts, partially offset by an unrealized gain of $16.1 million associated with our contract that includes contingent consideration.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSimilar to other companies in our industry, we have experienced an increase in the costs of labor, materials and services during 2022 due to a combination of factors, including: (i) global supply chain disruptions resulting in limited availability of certain materials and equipment (including drill pipe, casing and tubing), (ii) increased demand for fuel and steel, (iii) increased demand for services coupled with a limited availability of service providers and (iv) labor shortages.
Biggest changeSimilar to other companies in our industry, we experienced an increase in the costs of labor, materials and services beginning in 2022 due to a combination of factors, including: (i) global supply chain disruptions, (ii) increased demand for materials and services after COVID-19 and (iii) labor shortages. The combination of these factors increased our operating costs and capital expenditures.
To partially reduce price risk caused by these market fluctuations, we have entered into derivative instruments in the past and expect to enter into derivative instruments in the future to cover a significant portion of our future production.
To partially reduce price risk caused by these market fluctuations, we have entered into derivative instruments in the past and expect to enter into derivative instruments in the future to cover a portion of our future production.
See “Item 8. Financial Statements and Supplementary Data—Note 15—Long-Term Debt” for additional information on the interest incurred on the Credit Facility. We do not currently, but may in the future, utilize interest rate derivatives to mitigate interest rate exposure in an attempt to reduce interest rate expense related to debt issued under the Credit Facility.
See “Item 8. Financial Statements and Supplementary Data—Note 13—Long-Term Debt” for additional information on the interest incurred on the Credit Facility. We do not currently, but may in the future, utilize interest rate derivatives to mitigate interest rate exposure in an attempt to reduce interest rate expense related to debt issued under the Credit Facility.
It is difficult to predict whether such inflationary pressures will have a materially negative impact to our overall financial and operating results in 2023; however, such inflationary pressures are not expected to materially impact our overall liquidity position, cash requirements or financial position, or the ability to conduct our day-to-day drilling, completion and production activities.
It is difficult to predict whether such inflationary pressures will have a materially negative impact to our overall financial and operating results in 2024; however, such inflationary pressures are not expected to materially impact our overall liquidity position, cash requirements or financial position, or the ability to conduct our day-to-day drilling, completion and production activities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Market Conditions and Commodity Prices,” for further discussion on the commodity price environment. See “Item 8. Financial Statements and Supplementary Data—Note 9—Derivative Instruments” for additional information regarding our derivative instruments.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Market Conditions and Commodity Prices,” for further discussion on the commodity price environment. See “Item 8. Financial Statements and Supplementary Data—Note 7—Derivative Instruments” for additional information regarding our derivative instruments.
These entities participate in our wells primarily based on their ownership in leases on which we choose to drill. We have limited ability to control participation in our wells. For the year ended December 31, 2022, our credit losses on joint interest receivables were immaterial.
These entities participate in our wells primarily based on their ownership in leases on which we choose to drill. We have limited ability to control participation in our wells. For the year ended December 31, 2023, our credit losses on joint interest receivables were immaterial.
Derivative assets and liabilities arising from our derivative contracts with the same counterparty are also reported on a net basis, as all counterparty contracts provide for net settlement. See “Item 8. Financial Statements and Supplementary Data—Note 9— Derivative Instruments” and “Note 8—Fair Value Measurements” for additional information regarding our commodity derivative contracts.
Derivative assets and liabilities arising from our derivative contracts with the same counterparty are also reported on a net basis, as all counterparty contracts provide for net settlement. See “Item 8. Financial Statements and Supplementary Data—Note 7— Derivative Instruments” and “Note 6—Fair Value Measurements” for additional information regarding our commodity derivative contracts.
At December 31, 2022, we had no borrowings and $6.4 million of outstanding letters of credit issued under the Credit Facility, which were subject to varying rates of interest based on (i) the total outstanding borrowings (including the value of all outstanding letters of credit) in relation to the borrowing base and (ii) whether the loan is a Term SOFR Loan or an ABR Loan (each as defined in the amended and restated credit agreement).
At December 31, 2023, we had no borrowings and $8.9 million of outstanding letters of credit issued under the Credit Facility, which were subject to varying rates of interest based on (i) the total outstanding borrowings (including the value of all outstanding letters of credit) in relation to the borrowing base and (ii) whether the loan is a Term SOFR Loan or an ABR Loan (each as defined in the amended and restated credit agreement).
Interest rate derivatives would be used solely to modify interest rate exposure and not to modify the overall leverage of the debt portfolio. 75 Table of Content s Counterparty and customer credit risk. Joint interest receivables arise from billing entities which own partial interest in the wells we operate.
Interest rate derivatives would be used solely to modify interest rate exposure and not to modify the overall leverage of the debt portfolio. 76 Table of Contents Counterparty and customer credit risk. Joint interest receivables arise from billing entities which own partial interest in the wells we operate.
See “Part I, Item 1A.—Risk Factors—Our profitability may be negatively impacted by inflation in the cost of labor, materials and services and general economic, business or industry conditions” for additional information. 76 Table of Content s
See “Part I, Item 1A.—Risk Factors—Our profitability may be negatively impacted by inflation in the cost of labor, materials and services and general economic, business or industry conditions” for additional information. 77 Table of Contents
If the NYMEX WTI crude oil price for calendar year 2023 or 2024 is less than $45 per barrel, then each calendar year thereafter our right to receive any remaining earn-out payments is terminated. As of December 31, 2022, the fair value of this contingent consideration was $60.9 million. See “Item 8.
If the NYMEX WTI crude oil price for calendar year 2023 or 2024 is less than $45 per barrel, then each calendar year thereafter our right to receive any remaining earn-out payments is terminated. As of December 31, 2023, the fair value of this contingent consideration was $42.7 million.
A 10% increase in natural gas prices would increase the fair value of this unrealized derivative liability position by approximately $2.2 million, while a 10% decrease in natural gas prices would decrease the fair value of this unrealized derivative liability position by approximately $5.8 million. See “Item 7.
A 10% increase in natural gas prices would decrease the fair value of this unrealized derivative asset position by approximately $0.2 million, while a 10% decrease in natural gas prices would increase the fair value of this unrealized derivative asset position by approximately $0.2 million. See “Item 7.
We seek to mitigate these inflationary impacts by reviewing our pricing agreements on a regular basis and entering into agreements with our service providers to manage costs and availability of certain services that are utilized in our operations.
Costs of certain materials and services remained elevated in 2023, and inflationary pressures could continue or increase in 2024. We seek to mitigate these inflationary impacts by reviewing our pricing agreements on a regular basis and entering into agreements with our service providers to manage costs and availability of certain services that are utilized in our operations.
The fair value of our unrealized natural gas derivative positions at December 31, 2022 was a net liability of $16.0 million.
The fair value of our unrealized natural gas derivative positions at December 31, 2023 was a net asset of $0.3 million.
A 10% increase in crude oil prices would increase the fair value of this unrealized derivative liability position by approximately $102.4 million, while a 10% decrease in crude oil prices would decrease the fair value of this unrealized derivative liability position by approximately $99.2 million.
A 10% increase in crude oil prices would decrease the fair value of this unrealized derivative asset position by approximately $31.0 million, while a 10% decrease in crude oil prices would increase the fair value of this unrealized derivative asset position by approximately $30.8 million.
The fair value of our unrealized crude oil derivative positions at December 31, 2022 was a net liability position of $291.9 million.
The fair value of our unrealized crude oil derivative positions at December 31, 2023 was a net asset of $7.6 million.
Financial Statements and Supplementary Data—Note 9—Derivative Instruments” for additional information. Interest rate risk. At December 31, 2022, we had $400.0 million of senior unsecured notes at a fixed cash interest rate of 6.375% per annum.
In January 2024, we received $25.0 million related to the 2023 earn-out payment. See “Item 8. Financial Statements and Supplementary Data—Note 7—Derivative Instruments” for additional information. Interest rate risk. At December 31, 2023, we had $400.0 million of senior unsecured notes at a fixed cash interest rate of 6.375% per annum.
Removed
The fair value of our unrealized NGL derivative positions at December 31, 2022 was a net asset of $2.8 million. A 10% increase or decrease in NGL prices would decrease or increase, respectively, the fair value of this unrealized derivative asset position by approximately $0.6 million.
Removed
The combination of these factors increased our operating costs and capital expenditures in 2022, which in turn negatively impacted our operating results and cash flows.
Removed
We believe that these inflationary pressures could continue in 2023 for certain costs, such as the costs of workover rigs, even if inflationary pressures were to level-off for certain other costs, such as steel and tubular goods.

Other CHRD 10-K year-over-year comparisons