10-K: Chord Energy 2025 Annual Report: Production Rises, Net Income Falls

Chord Energy reports increased production volumes and proved reserves in 2025, but net income significantly decreased due to lower commodity prices and a goodwill impairment.

Summary

• Net income for the year ended December 31, 2025, was $44.5 million, a 95% decrease from $848.6 million in 2024.
• Average daily production increased to 276,620 net Barrels of Oil Equivalent per day (Boepd) in 2025, up from 232,737 Boepd in 2024.
• Estimated net proved reserves grew to 917.5 MMBoe as of December 31, 2025, with 69% classified as proved developed and 56% as crude oil.
• Crude oil revenues decreased to $3,546.9 million in 2025 from $3,571.3 million in 2024, primarily due to lower realized prices.
• A non-cash goodwill impairment charge of $539.3 million was recognized in 2025, driven by a decrease in common stock price and lower commodity prices.
• Capital expenditures (excluding capitalized interest) totaled $1,357.9 million for 2025.
• Liquidity stood at $2,156.7 million as of December 31, 2025, comprising $189.5 million in cash and cash equivalents and $1,967.2 million in unused borrowing capacity under the Credit Facility.
• The company paid $5.20 per share in base cash dividends during 2025 and has $952.2 million remaining under its $1.0 billion share repurchase program authorized in August 2025.
• The 2025 Williston Basin Acquisition was completed on October 31, 2025, for $542.2 million in cash, adding developed and undeveloped oil and gas assets.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report. While operational metrics like production and reserves show growth, the significant decline in net income and the goodwill impairment are notable negatives, partially offset by strong liquidity and a commitment to shareholder returns.

Positives

• Average daily production increased to 276,620 net Boepd in 2025, demonstrating operational growth.
• Net proved reserves increased to 917.5 MMBoe as of December 31, 2025, with a high proportion (69%) of proved developed reserves, indicating a de-risked asset base.
• Maintained a strong liquidity position of $2,156.7 million, including $189.5 million in cash and $1,967.2 million in unused borrowing capacity.
• Continued commitment to shareholder returns, having paid $5.20 per share in base cash dividends in 2025 and with $952.2 million remaining under the $1.0 billion share repurchase program.
• Successfully completed the 2025 Williston Basin Acquisition for $542.2 million, expanding its asset base in a core operating region.
• Holds the largest acreage position of any operator in the Williston Basin, totaling 1,302,921 net leasehold acres, providing significant resource potential.
• Maintains operational control over the majority of its portfolio, with 89% of estimated net proved reserves attributable to operated properties, allowing for optimized capital allocation and cost management.
• Capturing substantially all natural gas production in North Dakota as of December 31, 2025, aligning with environmental goals and regulatory requirements.
• No near-term debt maturities, providing financial flexibility.

Negatives

• Net income significantly decreased by 95% to $44.5 million in 2025 from $848.6 million in 2024.
• Recognized a substantial non-cash goodwill impairment charge of $539.3 million in 2025, primarily due to lower common stock price and declining commodity prices.
• Average crude oil sales prices (without derivative settlements) decreased by $10.89 per barrel year-over-year to $62.78 per barrel in 2025.
• Average NGL sales prices (without derivative settlements) decreased by $2.70 per barrel year-over-year to $7.22 per barrel in 2025.
• Lease operating expenses (LOE) per Boe increased to $9.73 in 2025, mainly due to higher workover costs.
• Depreciation, depletion, and amortization (DD&A) expense increased by $362.4 million to $1,470.2 million in 2025.
• The effective tax rate rose to 81.7% in 2025, largely due to the non-deductible goodwill impairment charge.
• Net cash provided by operating activities decreased by $56.6 million compared to the prior year.

Risks

• Global geopolitical tensions and conflicts, such as those in Russia-Ukraine and the Middle East, may create heightened volatility in crude oil, NGL, and natural gas prices.
• Adverse developments in financial markets, including bank failures, increased interest rates, or government shutdowns, could negatively affect business operations, financial condition, and liquidity.
• A substantial or extended decline in commodity prices could adversely impact business, financial condition, results of operations, and the ability to meet capital expenditure obligations.
• The ability or willingness of OPEC+ to set and maintain production levels significantly impacts global oil prices.
• Drilling and producing crude oil and natural gas are high-risk activities with many uncertainties, including the application of horizontal drilling and completion techniques.
• Estimated net proved reserves are based on numerous assumptions that may prove inaccurate, materially affecting quantities and present value.
• Unavailability or high cost of drilling rigs, equipment, supplies, personnel, and oilfield services, or insufficient transportation for production, could hinder exploration and development plans.
• Geographic concentration of operations in the Williston Basin exposes the company to regional economic impacts, production delays, or interruptions.
• Dependence on a limited number of midstream providers for services and infrastructure poses risks to market access and price realizations.
• Development of proved undeveloped (PUD) reserves may take longer and require higher capital expenditures than currently anticipated, potentially reducing their present value or leading to reclassification.
• Undeveloped leasehold acreage is subject to expiration unless production is established or leases are renewed, which could result in substantial renewal costs or loss of drilling opportunities.
• Lack of operational control over non-operated drilling locations may limit influence over timing, costs, and production rates.
• Operations are subject to stringent federal, state, and local environmental, natural resources protection, and occupational health and safety laws and regulations, potentially leading to significant costs and liabilities.
• Uncertainty in U.S. trade policy, including changes in tariffs or trade agreements, could impact financial results.
• Failure to comply with federal, state, and local laws and regulations could result in substantial penalties and adversely affect production, gathering, and transportation capabilities.
• Strategic opportunities like acquisitions or dispositions may consume significant management resources or incur costs without fully realizing potential benefits.
• Increased stakeholder and market attention to corporate responsibility and ESG practices may impact business and access to financing.
• Risks arising from climate change, energy conservation measures, or initiatives promoting alternative energy could increase operating costs, restrict drilling, and reduce demand for products.
• Legislative and regulatory initiatives related to hydraulic fracturing could lead to increased costs, operating restrictions, or delays in well completion.
• Laws and regulations protecting threatened and endangered species or critical habitats could delay, restrict, or prohibit operations and incur substantial costs.
• Inability to acquire adequate water supplies for drilling and completion or to dispose of/recycle water economically and safely could impair production.
• Intense competition in the oil and gas industry for properties, capital, services, and personnel.
• Seasonal weather conditions could adversely affect drilling activities in operating areas.
• Acquisitions carry risks of integration difficulties, uncertainties in evaluating reserves and well performance, and potential liabilities.
• Potential losses may be incurred due to title defects in properties.
• Disputes or uncertainties may arise concerning royalty obligations.
• Increased costs of capital could adversely affect the business.
• Revolving credit facility and senior unsecured notes contain operating and financial restrictions that may limit business and financing activities.
• Substantial capital expenditures are required for exploration, development, and exploitation projects; inability to obtain needed capital could lead to lease expirations or reserve declines.
• Changes in tax laws or their interpretation, or the imposition of new or increased taxes or fees, may adversely affect operations and cash flows.
• Inability to utilize all or a portion of net operating loss carryforwards or other tax benefits to offset future taxable income.
• The cost of servicing debt and the ability to generate sufficient cash flows to meet current or future debt obligations could adversely affect the business, especially if more debt is incurred.
• The ability to declare and pay dividends is subject to certain considerations and limitations.
• Provisions in the amended and restated certificate of incorporation, bylaws, and Delaware law could discourage acquisition bids or merger proposals.
• Issuance of stock-based awards may dilute common stock holdings.
• The market price of common stock is subject to volatility, potentially exacerbated by a thin trading market.
• Involvement in legal, governmental, and regulatory proceedings could result in substantial liabilities.
• Profitability may be negatively impacted by inflationary pressures on labor, materials, and services.
• Terrorist attacks or cyber-attacks could have a material adverse effect on business, financial condition, or results of operations, potentially leading to information theft or data corruption.
• Risks associated with disruptive technologies, innovation, and competition, including artificial intelligence, could impact competitive edge and require significant resources for compliance.
• Ineffective internal controls could impact business and financial results.

Future Outlook

The company plans capital expenditures of approximately $1.35 billion to $1.45 billion in 2026, expecting to run four to five operated rigs and turn-in-line (TIL) 135 to 165 gross operated wells. It anticipates developing all proved undeveloped (PUD) reserves within five years. The company believes it has adequate liquidity to fund capital expenditures and meet contractual obligations for the foreseeable future. It will continue to pursue acquisitions to expand its inventory and expects its business strategy to generate sizable cash flow for capital returns. The Corps' formal decision on the Dakota Access Pipeline (DAPL) environmental impact study (EIS) is expected during the first quarter of 2026, with potential for Williston Basin crude oil prices to weaken if DAPL ceases operation. The company does not foresee an impairment of oil and gas properties at current price levels but would re-evaluate if prices materially decline or costs increase.

Management Comments

• Our mission is to responsibly produce hydrocarbons while exercising capital discipline, operating efficiently, improving continuously and providing a fun and rewarding environment for our employees.
• We are ideally positioned to generate strong free cash flow and enhance return of capital, while being responsible stewards of the communities and environment where we operate.
• Our management team is focused on maintaining a solid risk management process to preserve a strong balance sheet and protect our cash generation capabilities.
• We believe we have an attractive inventory that is resilient to commodity price fluctuations, which supports the sustainable generation of free cash flow.
• We foster a culture of innovation and continuous improvement, constantly looking for ways to strengthen our organizational agility and adaptability.
• We seek to maintain a culture of continuous improvement in ESG practices.
• Our goal is to create an environment where everyone on a Chord location is safe.
• We continue to make strides in reducing Scope 1 GHG emissions, and in particular methane emissions.

Industry Context

StockSavvy.ai notes that Chord Energy's increased production and reserve growth, despite a challenging commodity price environment and significant goodwill impairment, reflects a broader industry trend of consolidation and efficiency gains in mature basins like the Williston. The company's focus on capital discipline, return of capital, and ESG initiatives aligns with evolving investor expectations in the E&P sector, which is balancing energy security with sustainability concerns. The ongoing volatility in commodity prices and geopolitical tensions, as highlighted in the filing, remain a critical external factor for all E&P companies, influencing investment decisions and operational strategies. The company's strategic acquisitions, like the XTO assets, demonstrate a continued belief in the long-term value of core unconventional plays.

Comparison to Industry Standards

• Chord Energy's average daily production of 276,620 Boepd in 2025 positions it as a significant player in the Williston Basin, where it holds the largest acreage position.
• The company's proved developed reserves of 69% of total proved reserves (917.5 MMBoe) is a strong indicator of mature, de-risked assets, comparable to leading E&P companies focused on established unconventional plays.
• The return of capital program, including a $5.20/share annualized base dividend and a $1.0 billion share repurchase program, is competitive and aligns with peer-leading practices in the E&P sector, such as those seen in EOG Resources or Pioneer Natural Resources, which prioritize shareholder returns.
• The company's leverage framework for Adjusted FCF return (75%+ below 0.5x, 50%+ below 1.0x) demonstrates a conservative financial approach, often favored by investors seeking stability in cyclical industries.
• The 2025 Williston Basin Acquisition for $542.2 million from Exxon Mobil Corporation's XTO Energy Inc. is consistent with industry consolidation trends where larger, focused E&P companies acquire non-core assets from supermajors to enhance scale and efficiency in key basins.
• The company's gas capture rate in North Dakota, 'substantially all' as of December 31, 2025, meets or exceeds the NDIC's 91% goal, indicating strong environmental performance relative to regional regulatory standards.

Corporate Governance

Legal Proceedings

• Mandan, Hidatsa and Arikara Nation (MHA Nation) Title Dispute: Ongoing litigation regarding mineral rights under the Missouri and Little Missouri River riverbeds on the Fort Berthold Reservation. The D.C. Federal District Court denied dispositive motions on January 6, 2026, requiring a trial and full evidentiary record. A joint status report is due by February 17, 2026.
• Dakota Access Pipeline (DAPL) Environmental Impact Study (EIS): A U.S. District court ordered DAPL to halt oil flow and empty the pipeline in July 2020, pending an EIS. The U.S. Court of Appeals upheld the EIS need but allowed operation. The Corps completed the final EIS in December 2025, with a formal decision expected in Q1 2026. Three of five alternative actions considered in the draft EIS would require abandonment, removal, or reroute of the DAPL segment.
• General Litigation: The company is party to various legal and/or regulatory proceedings in the ordinary course of business, including commercial disputes, royalty claims, property damage claims, personal injury claims, regulatory compliance matters, and disputes with tax authorities.
• Climate Change Litigation: Increasing litigation risks from states, municipalities, and other plaintiffs against oil and gas companies for alleged contributions to climate change effects. The company is not currently a defendant but could be named in future actions.

Stakeholder Impact

• Shareholders: Impacted by a significant decrease in net income, but also by continued shareholder returns through $5.20/share in base dividends and an active $1.0 billion share repurchase program. Potential for dilution from stock-based awards.
• Employees: Benefit from a stated commitment to a rewarding environment, competitive compensation, professional development, and safety training. Safety performance is tied to compensation.
• Customers: Marketability of products is influenced by transportation infrastructure and quality specifications. Potential for increased costs or reduced demand due to evolving climate change policies.
• Suppliers/Service Providers: Demand for drilling rigs, equipment, and services is subject to industry cycles. The company seeks partners committed to safety.
• Creditors: Debt obligations include $1.5 billion in senior unsecured notes and a $2.75 billion revolving credit facility. Compliance with financial covenants and borrowing base redeterminations are key.
• Communities: The company aims to minimize environmental impact, reduce emissions, and supports charitable organizations. Operations on the Fort Berthold Indian Reservation are subject to tribal regulations and ongoing legal disputes.
• Regulatory Bodies: Subject to extensive federal, tribal, regional, state, and local laws and regulations, with non-compliance potentially leading to substantial penalties.

Next Steps

• Run four to five operated rigs during the majority of 2026.
• Turn-in-line (TIL) approximately 135 to 165 gross operated wells in 2026 with an average working interest of approximately 75%.
• Await the Corps' formal decision on DAPL's EIS, expected during the first quarter of 2026.
• Submit a joint status report in the MHA Nation title dispute by February 17, 2026, as a trial and full evidentiary record are needed for factual determinations.
• Undergo the next scheduled borrowing base redetermination for the Credit Facility on or about April 1, 2026.
• Continue to pursue acquisitions that add to or lengthen inventory.
• Evaluate the recoverability of oil and gas properties if commodity prices materially decline or costs materially increase.
• Continue taking steps to comply with new methane emissions requirements that became effective in 2024 and phase in over time.

Key Dates

Recommendation

The significant drop in net income and the goodwill impairment are concerning, reflecting a challenging commodity price environment. However, strong production growth, increasing proved reserves, robust liquidity, and a clear commitment to shareholder returns through dividends and buybacks provide a floor. The ongoing legal and regulatory uncertainties, particularly regarding DAPL and the MHA Nation title dispute, introduce unquantifiable risks. A 'Hold' recommendation is appropriate given the mixed signals and external uncertainties, suggesting investors monitor developments closely.

Keywords

Oil and Gas, E&P, Williston Basin, Crude Oil, Natural Gas, NGL, Proved Reserves, Production, Capital Expenditures, Share Repurchase, Dividends, Acquisitions, SEC Filing, 10-K, Financial Results, Energy, Exploration, Development, Hydraulic Fracturing, ESG, Cybersecurity, Commodity Prices, Goodwill Impairment, Liquidity, Debt, Methane Emissions, DAPL