Chord Energy Corp true 0001486159 0001486159 2024-05-31 2024-05-31

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K/A

(Amendment No. 1)

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 31, 2024

 

 

CHORD ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-34776   80-0554627
(State or other jurisdiction
of incorporation)		   (Commission
File Number)		   (IRS Employer
Identification No.)
 

1001 Fannin Street, Suite 1500

Houston, Texas

   77002
  (Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (281) 404-9500

Not Applicable

(Former Name or Former Address, If Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading
Symbol(s)

  

Name of each exchange
on which registered

Common Stock   CHRD   The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Introductory Note.

As reported in a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission by Chord Energy Corporation (“Chord” or the “Company”) on June 6, 2024 (the “Original Form 8-K”), on May 31, 2024, the Company and Spark Acquisition ULC, an unlimited liability company organized and existing under the laws of the Province of Alberta, Canada and a wholly owned subsidiary of Chord (“Canadian Sub”), completed the previously announced strategic business combination transaction with Enerplus Corporation, a corporation existing under the laws of the Province of Alberta, Canada (“Enerplus”), whereby Canadian Sub acquired all of the issued and outstanding Enerplus common shares pursuant to the arrangement agreement entered into by and among Chord, Canadian Sub and Enerplus on February 21, 2024, and effected by way of a plan of arrangement under the Business Corporations Act (Alberta) (the “Arrangement”).

This Current Report on Form 8-K/A (this “Amendment”) amends and supplements the Original Form 8-K to provide the pro forma financial statements described in Item 9.01 below and to file certain exhibits to the Original Form 8-K. No other modifications to the Original Form 8-K are being made by this Amendment. This Amendment should be read in connection with the Original Form 8-K, which provides a more complete description of the Arrangement.

 

Item 9.01

Financial Statements and Exhibits.

 

  (b)

Pro Forma Financial Information.

The following unaudited pro forma condensed combined financial information of the Company, attached as Exhibit 99.1 hereto:

 

  •  

Unaudited Pro Forma Condensed Combined Financial Statements as of and for the three months ended March 31, 2024 and for the year ended December 31, 2023; and

 

  •  

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

 

  (d)

Exhibits.

 

Exhibit
Number

   

Description

23.1    Consent of KPMG LLP relating to Enerplus Corporation.
23.2    Consent of Netherland, Sewell & Associates, Inc. relating to Enerplus Corporation.
23.3    Consent of McDaniel & Associates Consultants Ltd. relating to Enerplus Corporation.
99.1    Unaudited Pro Forma Condensed Combined Financial Statements as of and for the three months ended March 31, 2024 and for the year ended December 31, 2023.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    CHORD ENERGY CORPORATION
Date: August 7, 2024    
    By:  

/s/ Shannon B. Kinney

      Shannon B. Kinney
      Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary

 

3

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors of Chord Energy Corporation

We consent to the use of our report dated February 21, 2024, which appears in the Annual Report on Form 40-F of Enerplus Corporation and subsidiaries (the “Entity”) for the fiscal year ended December 31, 2023, on the consolidated financial statements of the Entity, which comprise the consolidated balance sheets as of December 31, 2023 and 2022, the related consolidated statements of income/(loss) and comprehensive income/(loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes, which is incorporated by reference in the Registration Statements (No. 333- 262192 and 333- 266127) on Form S-8, and No. 333- 271727 on Form S-3 of Chord Energy Corporation.

/s/ KPMG LLP

Chartered Professional Accountants

August 7, 2024

Calgary, Canada

Exhibit 23.2

 

LOGO

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS

We hereby consent to the references to our firm, in the context in which they appear, and to the references to and the incorporation by reference to the Registration Statement No. 333-262192 and No. 333-266127 on Form S-8 and to the Registration Statement No. 333-271727 on Form S-3 of Chord Energy Corporation (the “Company”) of our reserves report dated February 20, 2024, included in the Annual Report on Form 40-F of Enerplus Corporation for the fiscal year ended December 31, 2023, as well as in the notes to the financial statements included therein, incorporated by reference in this Current Report on Form 8-K/A dated August 7, 2024, in accordance with the requirements of the Securities Act of 1933, as amended.

 

NETHERLAND, SEWELL & ASSOCIATES, INC.
By:  

/s/ Richard B. Talley, Jr.

  Richard B. Talley, Jr., P.E.
  Chairman and Chief Executive Officer

Houston, Texas

August 7, 2024

Exhibit 23.3

 

LOGO

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS

We hereby consent to the references to our firm, in the context in which they appear, and to the references to and the incorporation by reference to the Registration Statement No. 333-262192 and No. 333-266127 on Form S-8 and to the Registration Statement No. 333-271727 on Form S-3 of Chord Energy Corporation (the “Company”) of our reserves report dated February 21, 2024, included in the Annual Report on Form 40-F of Enerplus Corporation for the fiscal year ended December 31, 2023, as well as in the notes to the financial statements included therein, incorporated by reference in this Current Report on Form 8-K/A dated August 7, 2024, in accordance with the requirements of the Securities Act of 1933, as amended.

 

McDANIEL & ASSOCIATES CONSULTANTS LTD.
By:   /s/ Jared W. B. Wynveen
  Jared W. B. Wynveen, P. Eng
  Executive Vice President

Calgary, Alberta

August 7, 2024

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On May 31, 2024, Chord Energy Corporation (“Chord” or the “Company”) completed the arrangement contemplated by the Arrangement Agreement, dated as of February 21, 2024 (the “Arrangement Agreement”), by and among Chord, Enerplus Corporation (“Enerplus”) and Spark Acquisition ULC, a wholly-owned subsidiary of Chord (such transaction, the “Arrangement”). Pursuant to the Arrangement Agreement, each Enerplus shareholder received 0.10125 shares of common stock of Chord, par value of $0.01 per share (the “Chord Common Stock”) and $1.84 in cash, in exchange for each Enerplus common share held as of the Effective Time (as defined in the Arrangement Agreement).

Chord and Enerplus prepared their respective historical financial statements in accordance with U.S. GAAP. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), Chord was treated as the acquirer for accounting purposes and accounted for the Arrangement as an acquisition of a business.

The unaudited pro forma condensed combined balance sheet at March 31, 2024 was prepared as if the Arrangement had occurred on March 31, 2024. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2024 and for the year ended December 31, 2023 were prepared as if the Arrangement had occurred on January 1, 2023. The unaudited pro forma condensed combined financial statements have been derived from the historical consolidated financial statements of the Company and Enerplus.

The unaudited pro forma condensed combined financial statements and underlying pro forma adjustments are based upon currently available information and include certain estimates and assumptions made by the Company’s management; accordingly, actual results could differ materially from the pro forma information. Significant estimates and assumptions include the preliminary purchase price allocation, based on estimates of, and assumptions related to, the fair value of the assets acquired and liabilities assumed as of the Effective Time that were applied as if the transaction occurred on March 31, 2024. Management believes that the assumptions used to prepare the unaudited pro forma condensed combined financial statements and accompanying notes provide a reasonable and supportable basis for presenting the significant estimated effects of the Arrangement. The following unaudited pro forma condensed combined statements of operations do not purport to represent what the Company’s results of operations would have been if the Arrangement had occurred on January 1, 2023. The unaudited pro forma condensed combined balance sheet does not purport to represent what the Company’s financial position would have been if the Arrangement had occurred on March 31, 2024. The unaudited pro forma condensed combined financial statements should be read together with the following:

 

  (i)

Company’s audited historical consolidated financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 26, 2024;

 

  (ii)

Enerplus’ audited historical consolidated financial statements and related notes filed with SEDAR+ on February 21, 2024 and included in its Annual Report on Form 40-F for the fiscal year ended December 31, 2023, filed with the SEC on February 21, 2024;

 

  (iii)

Company’s unaudited historical condensed consolidated financial statements and related notes included in its Quarterly Report on Form 10-Q for the three months ended March 31, 2024, filed with the SEC on May 9, 2024; and

 

  (iv)

Enerplus’ unaudited historical condensed consolidated financial statements and related notes for the three months ended March 31, 2024 filed with SEDAR+ on May 8, 2024 and included on Form 6-K filed with the SEC on May 8, 2024.

The unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 of SEC Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” using assumptions set forth in the notes herein. Article 11 permits presentation of reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). The Company has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial statements.

Chord Energy Corporation

Pro Forma Condensed Combined Balance Sheet (Unaudited)

As of March 31, 2024

(In thousands)

 

     As Reported     Enerplus As
Adjusted –
Note 2		     Transaction
Accounting
Adjustments –
Note 3		         Pro Forma
Combined
Chord		  
ASSETS           

Current assets

           

Cash and cash equivalents

    $ 296,354     $ 33,412     $ (537,559 )    (a)   $ —   
         207,793     (b)  

Accounts receivable, net

      982,062       252,571       1,432     (c)     1,236,065  

Inventory

      78,118       2,350       —          80,468  

Prepaid expenses

      30,135       13,394       (10,145 )    (c)     33,384  

Derivative instruments

      26,540       —        —          26,540  

Other current assets

      2,033       13,004       —          15,037  
  

 

 

    

 

 

    

 

 

      

 

 

  

Total current assets

      1,415,242       314,731       (338,479 )        1,391,494  

Property, plant and equipment

           

Oil and gas properties (successful efforts method)

      6,575,306       7,887,965       (2,634,182 )    (a)     11,829,089  
         —      (c)  

Other property and equipment

      49,087       103,957       (92,963 )    (a)     60,081  

Less: accumulated depreciation, depletion and amortization

      (1,218,284 )      (6,429,847 )      6,429,847     (a)     (1,218,284 ) 
  

 

 

    

 

 

    

 

 

      

 

 

  

Total property, plant and equipment, net

      5,406,109       1,562,075       3,702,702         10,670,886  
  

 

 

    

 

 

    

 

 

      

 

 

  

Derivative instruments

      22,231       —        —          22,231  

Investment in unconsolidated affiliate

      114,181       —        —          114,181  

Long-term inventory

      28,360       5,257       —          33,617  

Operating right-of-use assets

      19,218       23,851       —          43,069  

Deferred tax assets

      —        131,527       (131,527 )    (d)     —   

Goodwill

      —        —        466,016     (a)     466,016  

Other assets

      20,173       884       3,076     (e)     24,133  
  

 

 

    

 

 

    

 

 

      

 

 

  

Total assets

    $ 7,025,514     $ 2,038,325     $ 3,701,788       $ 12,765,627  
  

 

 

    

 

 

    

 

 

      

 

 

  
LIABILITIES AND STOCKHOLDERS’ EQUITY           

Current liabilities

           

Accounts payable

    $ 39,511     $ 9,440     $ —        $ 48,951  

Revenues and production taxes payable

      592,888       185,581       —          778,469  

Accrued liabilities

      545,820       162,152       12,896     (a)     779,577  
         3,076     (e)  
         37,252     (f)  
         11,994     (g)  
         6,387     (h)  

Current portion of long-term debt

      —        80,600       (1,722 )    (a)     78,878  

Accrued interest payable

      8,532       —        —          8,532  

Derivative instruments

      19,523       368       —          19,891  

Advances from joint interest partners

      2,484       —        —          2,484  

Current operating lease liabilities

      13,691       11,460       —          25,151  

Other current liabilities

      22,671       —        —          22,671  
  

 

 

    

 

 

    

 

 

      

 

 

  

Total current liabilities

      1,245,120       449,601       69,883         1,764,604  
  

 

 

    

 

 

    

 

 

      

 

 

  

Long-term debt

      396,324       93,504       (56,425 )    (a)     641,196  
         207,793     (b)  

Deferred tax liabilities

      122,288       118,648       1,056,284     (d)     1,297,220  

Asset retirement obligations

      155,696       117,631       (6,377 )    (a)     266,950  

Derivative instruments

      3,022       —        —          3,022  

Operating lease liabilities

      15,993       13,067       —          29,060  

Other liabilities

      11,893       —        —          11,893  
  

 

 

    

 

 

    

 

 

      

 

 

  

Total liabilities

      1,950,336       792,451       1,271,158         4,013,945  
  

 

 

    

 

 

    

 

 

      

 

 

  

Commitments and contingencies

           

Stockholders’ equity

           

Common stock

      459       2,694,403       (2,694,196 )    (a)     666  

Treasury stock

      (523,288 )      —        —          (523,288 ) 

Additional paid-in capital

      3,575,557       13,531       3,718,399     (a)     7,307,487  

Retained earnings

      2,022,450       (1,160,719 )      1,160,719     (a)     1,966,817  
         (37,252 )    (f)  
         (11,994 )    (g)  
         (6,387 )    (h)  

Accumulated other comprehensive loss

      —        (301,341 )      301,341     (a)     —   
  

 

 

    

 

 

    

 

 

      

 

 

  

Total stockholders’ equity

      5,075,178       1,245,874       2,430,630         8,751,682  
  

 

 

    

 

 

    

 

 

      

 

 

  

Total liabilities and stockholders’ equity

    $ 7,025,514     $ 2,038,325     $ 3,701,788       $ 12,765,627  
  

 

 

    

 

 

    

 

 

      

 

 

  

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

Chord Energy Corporation

Pro Forma Condensed Combined Statement of Operations (Unaudited)

Three Months Ended March 31, 2024

(In thousands, except per share data)

 

     As Reported     Enerplus As
Adjusted –
Note 2		     Transaction
Accounting
Adjustments –
Note 3		         Pro Forma
Combined
Chord		      

Revenues

             

Oil, NGL and gas revenues

    $ 748,162     $ 332,835     $ —        $ 1,080,997    

Purchased oil and gas sales

      337,098       —        —          337,098    
  

 

 

    

 

 

    

 

 

      

 

 

    

Total revenues

      1,085,260       332,835       —          1,418,095    

Operating expenses

             

Lease operating expenses

      159,206       72,799       —          232,005    

Gathering, processing and transportation expenses

      53,984       32,464       —          86,448    

Purchased oil and gas expenses

      335,762       —        —          335,762    

Production taxes

      63,911       29,436       —          93,347    

Depreciation, depletion and amortization

      168,894       92,510       8,537     (a)     269,941    

General and administrative expenses

      25,712       32,026       4,417     (b)     62,155    

Exploration and impairment

      6,154       —        —          6,154    
  

 

 

    

 

 

    

 

 

      

 

 

    

Total operating expenses

      813,623       259,235       12,954         1,085,812    

Gain on sale of assets, net

      1,302       —        —          1,302    
  

 

 

    

 

 

    

 

 

      

 

 

    

Operating income

      272,939       73,600       (12,954 )        333,585    

Other income (expense)

             

Net gain (loss) on derivative instruments

      (27,577 )      (2,775 )      —          (30,352 )   

Net gain (loss) from investment in unconsolidated affiliate

      16,296       —        —          16,296    

Interest expense, net of capitalized interest

      (7,592 )      (3,098 )      (1,725 )    (c)     (12,415 )   

Other income

      2,826       3,441       —          6,267    
  

 

 

    

 

 

    

 

 

      

 

 

    

Total other income (expense), net

      (16,047 )      (2,432 )      (1,725 )        (20,204 )   
  

 

 

    

 

 

    

 

 

      

 

 

    

Income from continuing operations

      256,892       71,168       (14,679 )        313,381    

Income tax expense

      (57,539 )      (5,032 )      3,523     (d)     (59,048 )   
  

 

 

    

 

 

    

 

 

      

 

 

    

Net income

    $ 199,353     $ 66,136     $ (11,156 )      $ 254,333    
  

 

 

    

 

 

    

 

 

      

 

 

    

Earnings per share:

             

Basic

    $ 4.79           $ 4.08     (e)

Diluted

    $ 4.65           $ 4.00     (e)

Weighted average shares outstanding:

             

Basic

      41,648       —        —          62,328     (e)

Diluted

      42,747       —        —          63,607     (e)

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

Chord Energy Corporation

Pro Forma Condensed Combined Statement of Operations (Unaudited)

Year Ended December 31, 2023

(In thousands, except per share data)

 

     As Reported     Enerplus As
Adjusted –
Note 2		     Transaction
Accounting
Adjustments –
Note 3		         Pro Forma
Combined
Chord		        

Revenues

             

Oil, NGL and gas revenues

    $ 3,132,411     $ 1,546,086     $ —        $ 4,678,497    

Purchased oil and gas sales

      764,230       —        —          764,230    

Other services revenues

      —        —        —          —     
  

 

 

    

 

 

    

 

 

      

 

 

    

Total revenues

      3,896,641       1,546,086       —          5,442,727    

Operating expenses

             

Lease operating expenses

      658,938       272,747       —          931,685    

Gathering, processing and transportation expenses

      180,219       145,576       —          325,795    

Purchased oil and gas expenses

      761,325       —        —          761,325    

Production taxes

      260,002       135,131       —          395,133    

Depreciation, depletion and amortization

      598,562       377,495       77,960     (a)     1,054,017    

General and administrative expenses

      126,319       65,664       23,342     (b)     270,958    
         37,252     (c)    
         11,994     (d)    
         6,387     (e)    

Exploration and impairment

      35,330       —        —          35,330    
  

 

 

    

 

 

    

 

 

      

 

 

    

Total operating expenses

      2,620,695       996,613       156,935         3,774,243    

Gain (loss) on sale of assets, net

      (2,764 )      —        —          (2,764 )   
  

 

 

    

 

 

    

 

 

      

 

 

    

Operating income

      1,273,182       549,473       (156,935 )        1,665,720    

Other income (expense)

             

Net gain on derivative instruments

      63,182       31,317       —          94,499    

Net gain from investment in unconsolidated affiliate

      21,330       —        —          21,330    

Interest expense, net of capitalized interest

      (28,630 )      (15,120 )      (6,781 )    (f)     (50,531 )   

Other income

      9,964       1,760       —          11,724    
  

 

 

    

 

 

    

 

 

      

 

 

    

Total other income (expense), net

      65,846       17,957       (6,781 )        77,022    
  

 

 

    

 

 

    

 

 

      

 

 

    

Income from continuing operations

      1,339,028       567,430       (163,716 )        1,742,742    

Income tax (expense)

      (315,249 )      (111,354 )      39,292     (g)     (387,311 )   
  

 

 

    

 

 

    

 

 

      

 

 

    

Net income from continuing operations

    $ 1,023,779     $ 456,076     $ (124,424 )      $ 1,355,431    
  

 

 

    

 

 

    

 

 

      

 

 

    

Earnings from continuing operations per share:

             

Basic

    $ 24.59           $ 21.80       (h)  

Diluted

    $ 23.51           $ 21.15       (h)  

Weighted average shares outstanding:

             

Basic

      41,490       —        —          62,170       (h)  

Diluted

      43,398       —        —          64,078       (h)  

The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

 

1.

Basis of Presentation

The unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 using assumptions set forth in the notes herein. Article 11 permits presentation of reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur, otherwise known as Management’s Adjustments. The Company has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial statements.

On May 31, 2024, the Arrangement was completed, and the Company issued 20,680,097 shares of Chord Common Stock and paid $375.8 million in cash to Enerplus shareholders. Pursuant to the Arrangement Agreement, each Enerplus shareholder received 0.10125 shares of Chord Common Stock and $1.84 in cash, in exchange for each Enerplus common share held as of the Effective Time. The Arrangement was accounted for using the acquisition method of accounting in accordance with ASC 805, with Chord treated as the accounting acquirer. The Company’s allocation of the preliminary purchase price with respect to the Arrangement is based on estimates of, and assumptions related to, the fair value of the assets acquired and liabilities assumed as of the Effective Time that were applied as if the transaction occurred on March 31, 2024. The Company intends to finalize the valuations and purchase price allocation as soon as practicable within the measurement period, but in no event later than one year following the closing date of the Arrangement. Accordingly, the pro forma adjustments are preliminary, have been made solely for the purpose of providing pro forma financial information and are subject to revision based on a final determination of fair value as of the closing date of the Arrangement. Differences between preliminary estimates and the final allocation of the consideration paid may have a material impact on the accompanying unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined balance sheet at March 31, 2024 was prepared as if the Arrangement had occurred on March 31, 2024. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2024 and for the year ended December 31, 2023 were prepared as if the Arrangement had occurred on January 1, 2023. The unaudited pro forma condensed combined financial statements have been derived from the historical consolidated financial statements of the Company and Enerplus.

For purposes of preparing the unaudited pro forma condensed combined financial statements, certain pro forma adjustments were translated from Canadian dollars to United States dollars using historical exchange rates.

The unaudited pro forma condensed combined financial statements and underlying pro forma adjustments are based upon currently available information and include certain estimates and assumptions made by management; accordingly, actual results could differ materially from the pro forma information. Management believes the assumptions provide a reasonable and supportable basis for presenting the estimated significant effects of the transactions described above. These unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and may or may not provide an indication of results in the future.

2.

Arrangement Reclassification Adjustments

Certain reclassifications have been made in the historical presentation of Enerplus’ financial statements to conform to the Company’s historical presentation.

Balance Sheet as of March 31, 2024

 

          Balance Sheet
As of March 31, 2024
(In thousands)		  

Enerplus Caption

   

Chord Caption

    Enerplus
Historical		     Reclassification
Adjustments		     Ref.     Enerplus
As Adjusted		  

Current Assets

            

Cash and cash equivalents

    Cash and cash equivalents    $ 33,412     $ —        $ 33,412  

Accounts receivable, net of allowance for doubtful accounts

    Accounts receivable, net      252,571       —          252,571  
   Inventory      —        2,350       (i)       2,350  
   Prepaid expenses      —        13,394       (i)       13,394  

Derivative financial assets

    Derivative instruments (current asset)      —        —          —   

Other current assets

    Other current assets      28,748       (15,744 )      (i)       13,004  
     

 

 

    

 

 

      

 

 

  

Total current assets

         314,731       —          314,731  
     

 

 

    

 

 

      

 

 

  

Property and equipment:

            

Crude oil and natural gas properties (full cost method)

    Oil and gas properties (successful efforts method)      1,551,081       6,336,884       (ii)       7,887,965  

Other capital assets

    Other property and equipment      10,994       92,963       (iii)       103,957  
     

 

 

    

 

 

      

 

 

  

Total property and equipment

         1,562,075       6,429,847         7,991,922  
   Less: accumulated depreciation, depletion and amortization      —        (6,429,847 )      (ii) (iii)       (6,429,847 ) 
     

 

 

    

 

 

      

 

 

  

Total property and equipment, net

         1,562,075       —          1,562,075  
   Derivative instruments      —        —          —   
   Investment in unconsolidated affiliate      —        —          —   
   Long-term inventory      —        5,257       (iv)       5,257  

Right-of-use assets

    Operating right-of-use assets      23,851       —          23,851  

Deferred income tax asset

    Deferred tax assets      131,527       —          131,527  

Other long-term assets

    Other assets      6,141       (5,257 )      (iv)       884  
     

 

 

    

 

 

      

 

 

  

Total assets

       $ 2,038,325     $ —        $ 2,038,325  
     

 

 

    

 

 

      

 

 

  

Current liabilities

            

Accounts payable and other current liabilities

    Accounts payable    $ 357,541     $ (348,101 )      (v)     $ 9,440  
   Revenues and production taxes payable      —        185,581       (v)       185,581  
   Accrued liabilities      —        162,152       (v)       162,152  
   Accrued interest payable      —        —          —   

Derivative financial liabilities

    Derivative instruments (current liability)      —        368       (v)       368  
   Advances from joint interest partners      —        —          —   

Current portion of lease liabilities

    Current operating lease liabilities      11,460       —          11,460  

Current portion of long-term debt

    Other current liabilities      80,600       —          80,600  
     

 

 

    

 

 

      

 

 

  

Total current liabilities

         449,601       —          449,601  
     

 

 

    

 

 

      

 

 

  

Long-term debt

    Long-term debt      93,504       —          93,504  

Deferred income tax liability

    Deferred tax liabilities      118,648       —          118,648  

Asset retirement obligation

    Asset retirement obligations      117,631       —          117,631  
   Derivative instruments (long-term liability)      —        —          —   

Lease liabilities

    Operating lease liabilities      13,067       —          13,067  
   Other liabilities      —        —          —   
     

 

 

    

 

 

      

 

 

  

Total liabilities

         792,451       —          792,451  
     

 

 

    

 

 

      

 

 

  

Equity

            

Share capital

    Common stock      2,694,403       —          2,694,403  
   Treasury stock      —        —          —   

Paid-in capital

    Additional paid-in capital      13,531       —          13,531  

Accumulated deficit

    Retained earnings      (1,160,719 )      —          (1,160,719 ) 

Accumulated other comprehensive loss

    Accumulated other comprehensive loss      (301,341 )      —          (301,341 ) 
     

 

 

    

 

 

      

 

 

  

Total equity

         1,245,874       —          1,245,874  
     

 

 

    

 

 

      

 

 

  

Total liabilities and equity

       $ 2,038,325     $ —        $ 2,038,325  
     

 

 

    

 

 

      

 

 

  

 

(i)

Represents the reclassification of balances contained in “Other current assets” on Enerplus’ historical balance sheet into “Inventory” and “Prepaid expenses” to conform to the Company’s balance sheet presentation.

(ii)

Represents the reclassification of balances contained in “Crude oil and natural gas properties (full cost method)” on Enerplus’ historical balance sheet into “Less: accumulated depreciation, depletion and amortization” to conform to the Company’s balance sheet presentation.

(iii)

Represents the reclassification of balances contained in “Other capital assets” on Enerplus’ historical balance sheet into “Less: accumulated depreciation, depletion and amortization” to conform to the Company’s balance sheet presentation.

(iv)

Represents the reclassification of balances contained in “Other long-term assets” on Enerplus’ historical balance sheet into “Long-term inventory” to conform to the Company’s balance sheet presentation.

(v)

Represents the reclassification of balances contained in “Accounts payable and other current liabilities” on Enerplus’ historical balance sheet into “Revenues and production taxes payable”, “Accrued liabilities” and “Derivative instruments (current liability)” to conform to the Company’s balance sheet presentation.

Statement of Operations for the three months ended March 31, 2024

 

          Statement of Operations
Three Months Ended March 31, 2024
(In thousands)		  

Enerplus Caption

   

Chord Caption

    Enerplus
Historical		     Reclassification
Adjustments		     Ref.     Enerplus
As Adjusted		  

Revenues

            

Crude oil and natural gas sales

    Oil, NGL and gas revenues    $ 362,037     $ (29,202 )      (i)     $ 332,835  
   Purchased oil and gas sales      —        —          —   

Commodity derivative instruments gain/(loss)

    Other services revenues      (2,775 )      2,775       (ii)       —   
     

 

 

    

 

 

      

 

 

  
  

Total operating revenues

      359,262       (26,427 )        332,835  
     

 

 

    

 

 

      

 

 

  

Expenses

            

Operating

    Lease operating expenses      102,001       (29,202 )      (i)       72,799  

Transportation

    Gathering, processing and transportation expenses      32,464       —          32,464  
   Purchased oil and gas expenses      —        —          —   

Production taxes

    Production taxes      29,436       —          29,436  

General and administrative

    General and administrative expenses      24,257       7,769       (iii)       32,026  

Depletion, depreciation and accretion

    Depreciation, depletion and amortization      92,510       —          92,510  

Interest

         3,530       (3,530 )      (iv)       —   

Other expense/(income)

         (3,873 )      3,873       (v)       —   

Transaction costs

         7,769       (7,769 )      (iii)       —   
   Exploration and impairment      —        —          —   
     

 

 

    

 

 

      

 

 

  
  

Total operating expenses

      288,094       (28,859 )        259,235  
     

 

 

    

 

 

      

 

 

  
   Gain on sale of assets, net      —        —          —   
     

 

 

    

 

 

      

 

 

  
   Operating income      71,168       2,432         73,600  
     

 

 

    

 

 

      

 

 

  
   Net gain (loss) on derivative instruments      —        (2,775 )      (ii)       (2,775 ) 
   Net gain from investment in unconsolidated affiliate      —        —          —   
   Interest expense, net of capitalized interest      —        (3,098 )      (iv) (v)       (3,098 ) 
   Other income (expense)      —        3,441       (v)       3,441  
     

 

 

    

 

 

      

 

 

  
   Total other income (expense), net      —        (2,432 )        (2,432 ) 
     

 

 

    

 

 

      

 

 

  

Income/(Loss) Before Taxes

    Income from continuing operations      71,168       —          71,168  

Income tax expense (benefit)

            

Current income tax expense/(recovery)

    Income tax (expense) benefit      2,445       2,587       (vi) (vii)       (5,032 ) 

Deferred income tax expense/(recovery)

         2,587       (2,587 )      (vi)       —   
     

 

 

    

 

 

      

 

 

  
   Total income tax expense (benefit)      5,032       —          (5,032 ) 
     

 

 

    

 

 

      

 

 

  

Net Income/(Loss)

    Net income attributable to Chord    $ 66,136     $ —        $ 66,136  
     

 

 

    

 

 

      

 

 

  

 

(i)

Represents the reclassification of balances contained in “Operating” on Enerplus’ historical income statement into “Oil, NGL and gas revenues” to conform to the Company’s accounting policy.

(ii)

Represents the reclassification of balances contained in “Commodity derivative instruments gain/(loss)” on Enerplus’ historical income statement into “Net gain (loss) on derivative instruments” to conform to the Company’s income statement presentation.

(iii)

Represents the reclassification of balances contained in “Transaction costs” on Enerplus’ historical income statement into “General and administrative expenses” to conform to the Company’s income statement presentation.

(iv)

Represents the reclassification of balances contained in “Interest” on Enerplus’ historical income statement into “Interest expense, net of capitalized interest” to conform to the Company’s income statement presentation.

(v)

Represents the reclassification of balances contained in “Other expense/(income)” on Enerplus’ historical income statement into “Interest expense, net of capitalized interest” and “Other income (expense)” to conform to the Company’s income statement presentation.

(vi)

Represents the reclassification of balances contained in “Deferred income tax expense/(recovery)” on Enerplus’ historical income statement into “Income tax (expense) benefit” to conform to the Company’s income statement presentation.

(vii)

Represents the presentation of balances contained in “Current income tax expense/(recovery)” and “Deferred income tax expense/(recovery)” on Enerplus’ historical income statement as a negative value within “Income tax (expense) benefit” to conform to the Company’s income statement presentation.

Statement of Operations for the year ended December 31, 2023

 

          Statement of Operations  
          Year Ended December 31, 2023  
          (In thousands)  

Enerplus Caption

   

Chord Caption

    Enerplus
Historical		     Reclassification
Adjustments		     Ref.     Enerplus
As Adjusted		  

Revenues

              

Crude oil and natural gas sales

    Oil, NGL and gas revenues    $ 1,663,016     $ (116,930 )      (i)       $ 1,546,086  
   Purchased oil and gas sales      —        —            —   

Commodity derivative instruments gain/(loss)

    Other services revenues      31,317       (31,317 )      (ii)         —   
     

 

 

    

 

 

        

 

 

  
  

Total operating revenues

      1,694,333       (148,247 )          1,546,086  
     

 

 

    

 

 

        

 

 

  

Expenses

              

Operating

    Lease operating expenses      389,677       (116,930 )      (i)         272,747  

Transportation

    Gathering, processing and transportation expenses      145,576       —            145,576  
   Purchased oil and gas expenses      —        —            —   

Production taxes

    Production taxes      135,131       —            135,131  

General and administrative

    General and administrative expenses      65,664       —            65,664  

Depletion, depreciation, accretion, and impairment

    Depreciation, depletion and amortization      377,495       —            377,495  

Interest

         17,597       (17,597 )      (iii)         —   

Foreign exchange (gain)/loss

         60       (60 )      (iv)         —   

Transaction costs and other expense/(income)

         (4,297 )      4,297       (v)         —   
   Exploration and impairment      —        —            —   
     

 

 

    

 

 

        

 

 

  
  

Total operating expenses

      1,126,903       (130,290 )          996,613  
     

 

 

    

 

 

        

 

 

  
   Gain on sale of assets, net      —        —            —   
     

 

 

    

 

 

        

 

 

  
   Operating income      567,430       (17,957 )          549,473  
     

 

 

    

 

 

        

 

 

  
   Net gain (loss) on derivative instruments      —        31,317       (ii)         31,317  
   Net gain from investment in unconsolidated affiliate      —        —            —   
   Interest expense, net of capitalized interest      —        (15,120 )      (iii)       (v)       (15,120 ) 
   Other income (expense)      —        1,760       (iv)       (v)       1,760  
     

 

 

    

 

 

        

 

 

  
  

Total other income (expense), net

      —        17,957           17,957  
     

 

 

    

 

 

        

 

 

  

Income/(Loss) Before Taxes

    Income from continuing operations      567,430       —            567,430  

Income tax expense (benefit)

              

Current income tax expense/(recovery)

    Income tax (expense) benefit      27,183       84,171       (vi)       (vii)       (111,354 ) 

Deferred income tax expense/(recovery)

         84,171       (84,171 )      (vi)         —   
     

 

 

    

 

 

        

 

 

  
   Total income tax expense (benefit)      111,354       —            (111,354 ) 
     

 

 

    

 

 

        

 

 

  

Net Income/(Loss)

    Net income attributable to Chord    $ 456,076     $ —          $ 456,076  
     

 

 

    

 

 

        

 

 

  

 

(i)

Represents the reclassification of balances contained in “Operating” on Enerplus’ historical income statement into “Oil, NGL and gas revenues” to conform to the Company’s accounting policy.

 

(ii)

Represents the reclassification of balances contained in “Commodity derivative instruments gain/(loss)” on Enerplus’ historical income statement into “Net gain (loss) on derivative instruments” to conform to the Company’s income statement presentation.

 

(iii)

Represents the reclassification of balances contained in “Interest” on Enerplus’ historical income statement into “Interest expense, net of capitalized interest” to conform to the Company’s income statement presentation.

 

(iv)

Represents the reclassification of balances contained in “Foreign exchange (gain)/loss” on Enerplus’ historical income statement into “Other income (expense)” to conform to the Company’s income statement presentation.

(v)

Represents the reclassification of balances contained in “Transaction costs and other expense/(income)” on Enerplus’ historical income statement into “Interest expense, net of capitalized interest” and “Other income (expense)” to conform to the Company’s income statement presentation.

 

(vi)

Represents the reclassification of balances contained in “Deferred income tax expense/(recovery)” on Enerplus’ historical income statement into “Income tax (expense) benefit” to conform to the Company’s income statement presentation.

 

(vii)

Represents the presentation of balances contained in “Current income tax expense/(recovery)” and “Deferred income tax expense/(recovery)” on Enerplus’ historical income statement as a negative value within “Income tax (expense) benefit” to conform to the Company’s income statement presentation.

3.

Arrangement Preliminary Acquisition Accounting and Pro Forma Adjustments and Assumptions

Balance Sheet

The unaudited pro forma condensed combined balance sheet at March 31, 2024 reflects the following adjustments:

 

  (a)

As the accounting acquirer, Chord accounted for the Arrangement using the acquisition method of accounting for business combinations in accordance with ASC 805. Chord’s allocation of the preliminary purchase price with respect to the Arrangement is based on estimates of, and assumptions related to, the fair value of the assets acquired and liabilities assumed as of the Effective Time that were applied as if the transaction occurred on March 31, 2024. Because the unaudited pro forma condensed combined financial statements have been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on the financial position and results of operations of the combined company may be materially different from the pro forma amounts included herein. Chord expects to finalize the purchase price allocation as soon as reasonably practicable, which will not extend beyond the one-year measurement period provided under ASC 805.

The preliminary purchase price allocation is subject to change due to several factors, including, but not limiting to, the following:

 

  •  

Changes in the estimated fair value of Enerplus’ identifiable assets acquired and liabilities assumed as of the closing date of the Arrangement, which could result from changes in oil and gas properties estimates, discount rates and other factors; and

 

  •  

The tax basis of Enerplus’ assets and liabilities as of the closing date of the Arrangement.

The tables below represent the preliminary value of the total consideration and its allocation to the net assets acquired (in thousands, except per share amounts).

 

     Enerplus Shares Outstanding(1)      Chord Shares
Issued (2)		      Per Share Price(3)      Purchase Price
Consideration (4)		  

Chord shares issued to legacy Enerplus shareholders

         20,680      $ 180.47      $ 3,732,137  

Plus: Cash consideration per eligible share of legacy Enerplus common shares issued and outstanding

      204,246           1.84        375,813  

Plus: Cash consideration to settle legacy Enerplus awards

               102,393  

Plus: Cash consideration to payoff legacy Enerplus debt contemporaneously with close

               53,433  

Plus: Cash consideration to pay a retention bonus to legacy Enerplus employees

               5,920  
           

 

 

  

Preliminary arrangement consideration

             $ 4,269,696  

 

(1)

The Enerplus shares outstanding consist of Enerplus common shares issued and outstanding as of May 31, 2024.

(2)

The Chord shares issued consists of Chord Common Stock issued to legacy Enerplus shareholders on May 31, 2024.

(3)

The per share price applied to Enerplus’ common shares issued and outstanding reflects the opening price per share of Chord Common Stock as of May 31, 2024. The per share price attributable to the cash consideration is the cash consideration per share amount as stipulated in the Arrangement Agreement.

(4)

The Enerplus bank credit facilities balance reflects the principal outstanding (inclusive of unamortized debt issuance costs) as of March 31, 2024. The final purchase price will be based upon the Enerplus bank credit facilities as of the closing date and, therefore, will be different from the amount shown above.

     Preliminary Purchase Price
Allocation		  

Assets Acquired

   

Cash and cash equivalents

    $ 33,412  

Accounts receivable, net

      254,003  

Inventory

      2,350  

Prepaid expenses

      3,249  

Other current assets

      13,004  

Oil and gas properties (successful efforts method)

      5,253,783  

Other property and equipment

      10,994  

Long-term inventory

      5,257  

Operating right-of-use assets

      23,851  

Other assets

      884  
  

 

 

  

Total assets acquired

      5,600,787  
  

 

 

  

Liabilities Assumed

   

Accounts payable

      9,440  

Revenues and production taxes payable

      185,581  

Accrued liabilities

      175,048  

Current portion of long-term debt

      78,878  

Derivative instruments (current liability)

      368  

Current operating lease liabilities

      11,460  

Long-term debt

      37,079  

Deferred tax liabilities

      1,174,932  

Asset retirement obligations

      111,254  

Operating lease liabilities

      13,067  
  

 

 

  

Total liabilities assumed

      1,797,107  
  

 

 

  

Net Assets Acquired

    $ 3,803,680  

Goodwill Acquired

      466,016  
  

 

 

  

Purchase price consideration

    $ 4,269,696  
  

 

 

  

 

  (b)

Represents the incremental borrowings of $207.8 million used to finance the closing of the Arrangement using Chord’s existing revolving credit facility.

The amount of incremental borrowings reflected in the unaudited pro forma condensed combined financial statements represents the total cash necessary to effectuate the Arrangement less the sum of (i) the historical cash balance at Chord as of March 31, 2024 and (ii) the historical cash balance at Enerplus as of March 31, 2024. The actual amount of incremental borrowings will be informed by cash balances as of the closing date and, therefore, will be different from the amount presented in the unaudited pro forma condensed combined financial statements as of March 31, 2024.

 

  (c)

Represents the adjustment to align Enerplus’ historical treatment of capital project prepayments with Chord’s accounting policy. The impact to Oil and gas properties (successful efforts method) is recorded through the preliminary fair value measurement of Enerplus’ oil and gas properties acquired by Chord as described in 3(a) above.

 

  (d)

Represents the adjustment to deferred income taxes to record the acquisition of a net deferred tax liability. This is primarily the result of the purchase price allocated to the acquired oil and gas properties in excess of their acquired tax basis. Additionally, represents the elimination of Enerplus’ Canadian entities’ historical deferred tax asset. The deferred tax adjustment assumes a forecasted blended statutory rate of 24.0%. Because the tax rates used for these unaudited pro forma condensed combined financial statements are an estimate, the blended rate will likely vary from the actual effective rate in periods subsequent to the completion of the Arrangement.

 

  (e)

Represents the adjustment of $3.1 million for deferred financing costs incurred by Chord related to the amendment entered into by Chord on the closing date of the Arrangement to increase the borrowing base and commitment amounts on its existing revolving credit facility.

 

  (f)

Represents the accrual of $37.3 million of estimated transaction costs expected to be incurred by Chord subsequent to March 31, 2024. These transaction costs are preliminary estimates; the final amounts and the resulting effect on Chord’s financial position may differ significantly.

 

  (g)

Represents the accrual of $12.0 million of severance costs incurred by Chord subsequent to March 31, 2024 payable to certain Enerplus officers and Chord directors whom were terminated pursuant to the Arrangement.

 

  (h)

Represents the accrual of $6.4 million of estimated employee bonuses payable to Chord employees in connection with the Arrangement. These bonuses are preliminary estimates; the final amounts and the resulting effect on Chord’s financial position may differ significantly.

Statement of Operations

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2024 reflects the following adjustments:

 

  (a)

Represents the incremental depreciation, depletion and amortization expense related to the assets acquired in the Arrangement, which is based on the preliminary purchase price allocation. Depletion was calculated using the unit-of-production method under the successful efforts method of accounting. The depletion expense was adjusted for (i) the revision to the depletion rate reflecting the acquisition costs and the reserves volumes attributable to the acquired oil and gas properties and (ii) the difference in depletion methodology under the successful efforts method of accounting applied by Chord compared to the full cost method of accounting applied by Enerplus. The pro forma depletion rate attributable to the Arrangement was $12.47 per barrel of oil equivalent. This adjustment also includes an increase in accretion expense attributable to asset retirement obligations of $0.3 million for the three months ended March 31, 2024 due to Chord’s higher credit-adjusted risk-free rate as compared to Enerplus.

 

  (b)

Represents the adjustment to expense certain historical costs originally capitalized by Enerplus under the full cost method of accounting to align with Chord’s accounting policy under the successful efforts method of accounting.

 

  (c)

Represents the net increase to interest expense resulting from the (i) elimination of interest expense on Enerplus’ bank credit facilities, (ii) incremental interest expense for the amortization of the fair value adjustment to Enerplus’ senior notes assumed by Chord, (iii) reduction of interest expense to align with Chord’s capitalized interest accounting policy, (iv) incremental interest expense for borrowings on Chord’s existing credit facility to finance the closing of the Arrangement and (v) incremental interest expense for the amortization of deferred financing costs related to the amendment entered into by Chord on the closing date of the Arrangement to increase the borrowing base capacity and commitment amounts on Chord’s revolving credit facility as follows:

 

     Three Months Ended March 31, 2024  
     (In thousands)  

Elimination of interest expense on Enerplus’ bank credit facilities

    $ 2,472  

Incremental interest expense for amortization of remeasurement of legacy Enerplus’ senior notes

      (647 ) 

Reduction of interest expense related to capitalized interest to align with Chord’s accounting policy

      558  

Incremental interest expense for borrowings on Chord’s revolving credit facility

      (3,859 ) 

Incremental interest expense for amortization of deferred financing costs

      (249 ) 
  

 

 

  

Net transaction accounting adjustments to interest expense

    $ (1,725 ) 
  

 

 

  

A 0.125% change in the variable interest rate of Chord’s revolving credit facility or a $10 million change in the amount financed would increase or decrease interest expense presented in the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2024 by $0.1 million and $0.2 million, respectively.

 

  (d)

Represents the estimated income tax impact of the pro forma adjustments from the Arrangement at the estimated blended federal and state statutory rate of approximately 24% for the three months ended March 31, 2024. Because the tax rates used for these unaudited pro forma condensed combined financial statements are an estimate, the blended rate will likely vary from the actual effective rate in periods subsequent to the completion of the Arrangement.

 

  (e)

The table below represents the calculation of the weighted average shares outstanding and earnings per share included in the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2024. As the Arrangement is being reflected in the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2024 as if it had occurred on January 1, 2023, the calculation of weighted average shares outstanding for basic and diluted earnings per share assumes that the shares issuable related to the Arrangement have been outstanding for the entire period.

     Three Months Ended March 31, 2024  
     (In thousands, except per share data)  

Pro forma net income

    $  254,333  

Basic shares:

   

Chord shares outstanding (weighted average per statement of operations)

      41,648  

Chord shares issued in exchange for legacy Enerplus shares as part of consideration transferred

      20,680  
  

 

 

  

Pro forma weighted average common shares outstanding, basic

      62,328  
  

 

 

  

Diluted shares:

   

Pro forma weighted average shares outstanding, basic

      62,328  

Dilutive effect of shares convertible from Chord share based awards

      500  

Dilutive effect of shares convertible from Chord in-the-money warrants

      779  
  

 

 

  

Pro forma weighted average common shares outstanding, diluted

      63,607  
  

 

 

  

Earnings attributable to Chord per share, basic

    $ 4.08  

Earnings attributable to Chord per share, diluted

    $ 4.00  

Anti-dilutive weighted average common shares:

   

Potential common shares

      2,238  

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 reflects the following adjustments:

 

(a)

Represents the incremental depreciation, depletion and amortization expense related to the assets acquired in the Arrangement, which is based on the preliminary purchase price allocation. Depletion was calculated using the unit-of-production method under the successful efforts method of accounting. The depletion expense was adjusted for (i) the revision to the depletion rate reflecting the acquisition costs and the reserves volumes attributable to the acquired oil and gas properties and (ii) the difference in depletion methodology under the successful efforts method of accounting applied by Chord compared to the full cost method of accounting applied by Enerplus. The pro forma depletion rate attributable to the Arrangement was $12.19 per barrel of oil equivalent. This adjustment also includes an increase in accretion expense attributable to asset retirement obligations of $1.3 million for the year ended December 31, 2023 due to Chord’s higher credit-adjusted risk-free rate as compared to Enerplus.

 

(b)

Represents the adjustment to expense certain historical costs originally capitalized by Enerplus under the full cost method of accounting to align with Chord’s accounting policy under the successful efforts method of accounting.

 

(c)

Represents $37.3 million of estimated transaction costs expected to be incurred by Chord subsequent to March 31, 2024. These transaction costs are preliminary estimates; the final amounts and the resulting effect on Chord’s results of operations may differ significantly. These costs are nonrecurring and will not affect Chord’s statement of operations beyond 12 months after the closing of the Arrangement.

 

(d)

Represents $12.0 million of severance costs incurred by Chord subsequent to March 31, 2024 payable to certain Enerplus officers and Chord directors whom were terminated pursuant to the Arrangement. These costs are nonrecurring and will not affect Chord’s statement of operations beyond 12 months after the closing of the Arrangement.

 

(e)

Represents $6.4 million of estimated employee bonuses payable to Chord employees in connection with the Arrangement. These bonuses are preliminary estimates; the final amounts and the remaining effect on Chord’s results of operations may differ significantly. These costs are nonrecurring and will not affect Chord’s statement of operations beyond 12 months after the closing of the Arrangement.

 

(f)

Represents the net increase to interest expense resulting from the (i) elimination of interest expense on Enerplus’ bank credit facilities, (ii) incremental interest expense for the amortization of the fair value adjustment to Enerplus’ senior notes assumed by Chord, (iii) reduction of interest expense to align with Chord’s capitalized interest accounting policy, (iv) incremental interest expense for borrowings on Chord’s existing credit facility to finance the closing of the Arrangement and (v) incremental interest expense for the amortization of deferred financing costs related to the amendment entered into by Chord on the closing date of the Arrangement to increase the borrowing base capacity and commitment amounts on Chord’s revolving credit facility as follows:

     Year Ended December 31, 2023  
     (In thousands)  

Elimination of interest expense on Enerplus’ bank credit facilities

    $ 10,078  

Incremental interest expense for amortization of remeasurement of legacy Enerplus’ senior notes

      (2,593 ) 

Reduction of interest expense related to capitalized interest to align with Chord’s accounting policy

      2,168  

Incremental interest expense for borrowings on Chord’s revolving credit facility

      (15,436 ) 

Incremental interest expense for amortization of deferred financing costs

      (998 ) 
  

 

 

  

Net transaction accounting adjustments to interest expense

    $ (6,781 ) 
  

 

 

  

A 0.125% change in the variable interest rate of Chord’s revolving credit facility or a $10 million change in the amount financed would increase or decrease interest expense presented in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 by $0.3 million and $0.7 million, respectively.

 

(g)

Represents the estimated income tax impact of the pro forma adjustments from the Arrangement at the estimated blended federal and state statutory rate of approximately 24% for the year ended December 31, 2023. Because the tax rates used for these unaudited pro forma condensed combined financial statements are an estimate, the blended rate will likely vary from the actual effective rate in periods subsequent to the completion of the Arrangement.

 

(h)

The table below represents the calculation of the weighted average shares outstanding and earnings per share included in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023. As the Arrangement is being reflected in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 as if it had occurred on January 1, 2023, the calculation of weighted average shares outstanding for basic and diluted earnings per share assumes that the shares issuable related to the Arrangement have been outstanding for the entire year.

 

    Year Ended December 31, 2023  
    (In thousands, except per share data)  

Pro forma net income

   $  1,355,431  

Basic shares:

  

Chord shares outstanding (weighted average per statement of operations)

     41,490  

Chord shares issued in exchange for legacy Enerplus shares as part of consideration transferred

     20,680  
 

 

 

  

Pro forma weighted average common shares outstanding, basic

     62,170  
 

 

 

  

Diluted shares:

  

Pro forma weighted average shares outstanding, basic

     62,170  

Dilutive effect of shares convertible from Chord share based awards

     944  

Dilutive effect of shares convertible from Chord in-the-money warrants

     964  
 

 

 

  

Pro forma weighted average common shares outstanding, diluted

     64,078  
 

 

 

  

Earnings attributable to Chord per share, basic

   $ 21.80  

Earnings attributable to Chord per share, diluted

   $ 21.15  

Anti-dilutive weighted average common shares:

  

Potential common shares

     3,709  

4.

Supplemental Pro Forma Crude Oil, Natural Gas and Natural Gas Liquids Reserves Information

The following tables present the estimated pro forma combined net proved developed and undeveloped crude oil, natural gas and natural gas liquids (“NGL”) reserves prepared as of December 31, 2023, along with a summary of changes in the quantities of net remaining proved reserves during the year ended December 31, 2023. The pro forma combined standardized measure of discounted future net cash flows relating to proved reserves as of December 31, 2023, as well as changes to the standardized measure for the year ended December 31, 2023, are also presented.

The pro forma combined reserves, production and standardized measure have been prepared in accordance with FASB ASC Topic 932 – Extractive Activities – Oil and Gas. Further, this pro forma combined reserves, production and standardized measure information gives effect to the Arrangement as if it had been completed on January 1, 2023; however, the proved reserves and standardized measures presented below represent the respective estimates made as of December 31, 2023, by the Company and Enerplus while they were separate companies. These estimates have not been updated for changes in development plans or other factors, which have occurred or may occur subsequent to December 31, 2023, or subsequent to the completion of the Arrangement. This pro forma information has been prepared for illustrative purposes and is not intended to be a projection of future results of the combined company. With respect to the disclosures below, the amounts were determined by referencing the “Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves” reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and the “Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Crude Oil and Natural Gas Reserves Quantities” reported in Enerplus’ Annual Report on Form 40-F for the year ended December 31, 2023; an explanation of the underlying methodology applied, as required by SEC regulations, can be found within the Annual Report on Form 10-K for the Company and the Annual Report on Form 40-F for Enerplus.

 

     Crude Oil (MBbl)  
     Chord Historical      Enerplus Historical      Pro Forma Combined  

Proved reserves

         

Net proved reserves at December 31, 2022

      381,288        148,953        530,241  

Revision of previous estimates

      (38,073 )       (14,905 )       (52,978 ) 

Extensions, discoveries and other additions

      53,207        28,551        81,758  

Sales of reserves in place

      (3,999 )       (952 )       (4,951 ) 

Purchase of reserves in place

      12,375        —         12,375  

Production

      (36,427 )       (18,532 )       (54,959 ) 
  

 

 

     

 

 

     

 

 

  

Net proved reserves at December 31, 2023

      368,371        143,115        511,486  
  

 

 

     

 

 

     

 

 

  

Proved developed reserves:

         

December 31, 2022

      272,529        80,809        353,338  

December 31, 2023

      241,362        69,755        311,117  

Proved undeveloped reserves:

         

December 31, 2022

      108,759        68,144        176,903  

December 31, 2023

      127,009        73,360        200,369  

     Natural Gas (MMcf)  
     Chord Historical      Enerplus Historical      Pro Forma Combined  

Proved reserves

         

Net proved reserves at December 31, 2022

      814,926        877,468        1,692,394  

Revision of previous estimates

      (33,308 )       (168,462 )       (201,770 ) 

Extensions, discoveries and other additions

      62,273        40,173        102,446  

Sales of reserves in place

      (3,067 )       (1,079 )       (4,146 ) 

Purchase of reserves in place

      20,060        —         20,060  

Production

      (82,953 )       (82,775 )       (165,728 ) 
  

 

 

     

 

 

     

 

 

  

Net proved reserves at December 31, 2023

      777,931        665,325        1,443,256  
  

 

 

     

 

 

     

 

 

  

Proved developed reserves:

         

December 31, 2022

      689,651        624,988        1,314,639  

December 31, 2023

      640,180        519,714        1,159,894  

Proved undeveloped reserves:

         

December 31, 2022

      125,275        252,480        377,755  

December 31, 2023

      137,751        145,611        283,362  

 

     NGL (MBbl)  
     Chord Historical      Enerplus Historical      Pro Forma Combined  

Proved reserves

         

Net proved reserves at December 31, 2022

      138,451        27,100        165,551  

Revision of previous estimates

      (5,270 )       675        (4,595 ) 

Extensions, discoveries and other additions

      15,046        4,303        19,349  

Sales of reserves in place

      (53 )       (119 )       (172 ) 

Purchase of reserves in place

      3,052        —         3,052  

Production

      (13,047 )       (4,170 )       (17,217 ) 
  

 

 

     

 

 

     

 

 

  

Net proved reserves at December 31, 2023

      138,179        27,789        165,968  
  

 

 

     

 

 

     

 

 

  

Proved developed reserves:

         

December 31, 2022

      115,227        16,342        131,569  

December 31, 2023

      105,702        15,038        120,740  

Proved undeveloped reserves:

         

December 31, 2022

      23,224        10,758        33,982  

December 31, 2023

      32,477        12,751        45,228  

 

     Total (MBoe)  
     Chord Historical      Enerplus Historical      Pro Forma Combined  

Proved reserves

         

Net proved reserves at December 31, 2022

      655,560        322,298        977,858  

Revision of previous estimates

      (48,894 )       (42,307 )       (91,201 ) 

Extensions, discoveries and other additions

      78,632        39,550        118,182  

Sales of reserves in place

      (4,563 )       (1,251 )       (5,814 ) 

Purchase of reserves in place

      18,770        —         18,770  

Production

      (63,300 )       (36,498 )       (99,798 ) 
  

 

 

     

 

 

     

 

 

  

Net proved reserves at December 31, 2023

      636,205        281,792        917,997  
  

 

 

     

 

 

     

 

 

  

Proved developed reserves:

         

December 31, 2022

      502,698        201,316        704,014  

December 31, 2023

      453,760        171,412        625,172  

Proved undeveloped reserves:

         

December 31, 2022

      152,862        120,982        273,844  

December 31, 2023

      182,445        110,380        292,825  

The pro forma combined standardized measure of discounted future net cash flows relating to proved crude oil, natural gas and NGL reserves as of December 31, 2023 are as follows:

 

     Year Ended December 31, 2023  
     (In thousands)  
     Chord Historical      Enerplus Historical      Pro Forma Combined  

Future cash inflows

    $ 31,882,940      $ 10,888,013      $ 42,770,953  

Future production costs

      (13,815,882 )       (3,824,062 )       (17,639,944 ) 

Future development costs

      (3,055,823 )       (1,803,944 )       (4,859,767 ) 

Future income tax expense

      (2,573,017 )       (1,078,714 )       (3,651,731 ) 
  

 

 

     

 

 

     

 

 

  

Future net cash flows

      12,438,218        4,181,293        16,619,511  

10% annual discount for estimating timing of cash flows

      (5,447,578 )       (1,308,753 )       (6,756,331 ) 
  

 

 

     

 

 

     

 

 

  

Standardized measure of discounted future net cash flows

    $ 6,990,640      $ 2,872,540      $ 9,863,180  
  

 

 

     

 

 

     

 

 

  

The changes in the pro forma combined standardized measure of discounted future net cash flows relating to proved crude oil, natural gas and NGL reserves as of December 31, 2023 are as follows:

 

     Year Ended December 31, 2023  
     (In thousands)  
     Chord Historical      Enerplus Historical      Pro Forma Combined  

January 1, 2023

    $ 11,494,475      $ 5,529,264      $ 17,023,739  

Net changes in prices and production costs

      (6,138,846 )       (4,590,215 )       (10,729,061 ) 

Net changes in future development costs

      (92,072 )       (505,114 )       (597,186 ) 

Sales of crude oil and natural gas, net

      (2,033,251 )       (992,632 )       (3,025,883 ) 

Extensions

      864,249        879,358        1,743,607  

Purchases of reserves in place

      373,913        —         373,913  

Sales of reserves in place

      (75,097 )       (24,617 )       (99,714 ) 

Revisions of previous quantity estimates

      (1,142,960 )       648,098        (494,862 ) 

Previously estimated development costs incurred

      574,607        531,061        1,105,668  

Accretion of discount

      1,445,215        588,421        2,033,636  

Net change in income taxes

      1,419,851        808,916        2,228,767  

Changes in timing and other

      300,556        —         300,556  
  

 

 

     

 

 

     

 

 

  

December 31, 2023

    $ 6,990,640      $ 2,872,540      $ 9,863,180  
  

 

 

     

 

 

     

 

 

  
v3.24.2.u1
Document and Entity Information
May 31, 2024
Cover [Abstract]  
Entity Registrant Name Chord Energy Corp
Amendment Flag true
Entity Central Index Key 0001486159
Document Type 8-K/A
Document Period End Date May 31, 2024
Entity Incorporation State Country Code DE
Entity File Number 001-34776
Entity Tax Identification Number 80-0554627
Entity Address, Address Line One 1001 Fannin Street
Entity Address, Address Line Two Suite 1500
Entity Address, City or Town Houston
Entity Address, State or Province TX
Entity Address, Postal Zip Code 77002
City Area Code (281)
Local Phone Number 404-9500
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock
Trading Symbol CHRD
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Description As reported in a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission by Chord Energy Corporation (“Chord” or the “Company”) on June 6, 2024 (the “Original Form 8-K”), on May 31, 2024, the Company and Spark Acquisition ULC, an unlimited liability company organized and existing under the laws of the Province of Alberta, Canada and a wholly owned subsidiary of Chord (“Canadian Sub”), completed the previously announced strategic business combination transaction with Enerplus Corporation, a corporation existing under the laws of the Province of Alberta, Canada (“Enerplus”), whereby Canadian Sub acquired all of the issued and outstanding Enerplus common shares pursuant to the arrangement agreement entered into by and among Chord, Canadian Sub and Enerplus on February 21, 2024, and effected by way of a plan of arrangement under the Business Corporations Act (Alberta) (the “Arrangement”). This Current Report on Form 8-K/A (this “Amendment”) amends and supplements the Original Form 8-K to provide the pro forma financial statements described in Item 9.01 below and to file certain exhibits to the Original Form 8-K. No other modifications to the Original Form 8-K are being made by this Amendment. This Amendment should be read in connection with the Original Form 8-K, which provides a more complete description of the Arrangement.
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