CHRD — Q2 2026 Financial Report Analysis

Chord Energy, an oil producer focused on North Dakota's Williston Basin, turned a $389.9 million loss a year ago into a $525.2 million profit ($9.28 per diluted share) in the second quarter of 2026. Most of the swing comes from two things. Oil prices jumped after conflict in the Middle East and the effective closure of the Strait of Hormuz, and Chord's average oil sale price rose 53% to $93.99 a barrel. And the year-ago quarter carried a one-off $539.3 million write-down of goodwill (an accounting asset left over from past acquisitions). Underneath both, the operations did their part: oil output of 165.4 thousand barrels a day was at the top of the company's own guidance range, and capital spending came in slightly below the middle of it.

At a glance

• $93.99 per barrel realized oil price, up from $61.62. The "realized" price is what Chord actually got for its oil. Higher prices added $340.4 million to oil revenue compared with the first quarter alone, and they are the main reason profit came back.
• $413.4 million of adjusted free cash flow, nearly three times last year's $140.8 million. This is the cash left after running the wells, paying interest and taxes, and drilling new wells. It is the pool that pays dividends and buybacks.
• $93.1 million paid out on hedges. Chord had locked in prices well below where oil traded. Those contracts cost it real cash this quarter, about $7 a barrel on its oil, and they will keep limiting how much of any further price spike reaches shareholders.

The quarter in numbers

n/m = not meaningful, because the year-ago figure was a loss. "Boe" means barrels of oil equivalent, a way of adding oil, natural gas liquids (NGLs) and natural gas into one volume figure.

Two notes on the table. First, the 84% jump in total revenues overstates the business's growth. Total revenues include $678.4 million of "purchased oil and gas sales": oil and gas Chord buys from others and resells, mainly to manage pipeline transport and blending. That line roughly tripled from $230.3 million a year ago, but it costs almost as much to buy as it brings in ($671.7 million of matching expense), so it added only about $6.7 million of margin. The cleaner growth figure is sales from Chord's own production, up 57.2%. Second, the operating margin (the share of revenue left after operating costs, before interest, hedging results and tax) of 27.7% is measured against that inflated total. Against own-production sales alone, operating income would be about 40% of revenue.

Takeaway: This quarter's profit is mostly an oil price story. Chord sold only 5.6% more oil than a year ago but got 52.5% more per barrel. Its hedges then cost it $93.1 million in cash. Management's full-year forecast assumes $75 WTI for the second half, and it implies second-half free cash flow of roughly $565 million, about two-thirds of the first half's $734.5 million. So Q2 looks like a high point unless oil stays well above that level.

Where the money came from

Oil did all the work. Crude oil revenue was $1,415.0 million, against $878.9 million a year ago. Compared with the first quarter, the filing splits the increase into $340.4 million from higher prices and $78.3 million from selling more barrels. Chord also sold its oil at a $1.27 premium to WTI (West Texas Intermediate, the US benchmark oil price). A year ago it sold at a $2.15 discount. This gap is called the "differential", and it mostly reflects pipeline costs and local demand. A premium is unusual for Bakken crude. Management's own guidance assumes it returns to a small discount in the second half: a $0.70 discount to $0.30 premium in Q3, and a $1.50 discount to $0.50 premium in Q4.

Gas prices collapsed. Chord's natural gas sold for an average of $0.94 per thousand cubic feet (Mcf), down from $3.14 in the first quarter and $1.10 a year ago. That is 32% of the Henry Hub benchmark price. The filing blames the drop from Q1 on seasonal weather lowering index prices. Even its Marcellus gas in Appalachia fell from $6.40 to $2.10. Gas revenue was just $34.7 million, about 2% of production sales, so the weakness barely dents results. But it is a reminder that Chord is effectively a pure oil company.

Output beat plan, helped by timing. Oil volumes of 165.4 thousand barrels a day were up from 158.0 in Q1. Management credits strong "base production", meaning output from existing wells, helped by workovers (repairs that revive older wells), chemical treatments and AI-tuned pumping. It also brought new wells online earlier than planned: 66 gross operated wells started producing in the quarter. It now has 26 wells drilled with 4-mile horizontal sections, a long-lateral design that spreads one well's fixed costs over more rock, and it reports their costs and early results are in line with expectations.

Costs moved up with prices

• Production taxes rose to $125.9 million ($4.83 per boe) from $69.0 million ($2.69). These taxes are a percentage of sales, so they rise with oil prices. The rate rose to 8.4% of sales, partly because fewer North Dakota wells now qualify for an extraction-tax exemption.
• Lease operating expense (LOE), the day-to-day cost of keeping wells running, was $10.28 per boe, up from $10.02 a year ago and $9.87 in Q1. Versus Q1, the filing cites $10.0 million of higher variable costs, $9.6 million of higher fixed costs and $6.6 million of more workover spending. Management raised its full-year LOE guidance midpoint to $10.30 per boe. So it expects the extra well-repair spending to continue.
• Depletion (the accounting charge for oil pumped out of the ground) rose to $409.2 million, from $377.0 million. Over the first half, the depletion rate rose $1.11 per boe to $15.24, and the filing attributes this to a decrease in proved developed reserves.

What the headline numbers hide

• GAAP profit is flattered by a paper hedging gain. The $525.2 million of net income includes a $107.9 million net gain on derivatives. That gain combines a $201.0 million unrealized gain with a $93.1 million realized loss. The unrealized part is paper only: the futures curve fell by quarter-end, so open contracts were worth more. The realized part is cash Chord actually paid out on contracts that settled. Strip out the paper gain and similar non-cash items, and adjusted net income was $361.7 million, or $6.44 a share. That is the better guide to recurring earnings. For the first half as a whole, derivatives were a $133.6 million net loss.
• Operating cash flow was boosted by timing. Cash from operations was $1,116.2 million, more than double net income. But $224.8 million of that came from working-capital timing, meaning bills paid later and cash collected sooner than usual. Without it, operating cash flow would be about $891 million. Over the full first half the timing effect evened out to $59.1 million, and operating cash flow of $1,623.6 million comfortably exceeded net income of $633.8 million. That is normal for a driller, because depletion is a large non-cash charge.
• The year-ago loss was a one-off. Q2 2025 included the $539.3 million goodwill impairment, which was triggered by a fall in Chord's share price. Excluding it and the other adjustments, last year's adjusted net income was $103.2 million. Also, the 2026 year-to-date tax rate (18.9%) was helped by a $41.8 million tax benefit booked in Q1 to correct an error in the 2025 tax provision. That is another item that won't repeat. The Q2 tax rate on its own was a normal 23.6%.
• Buybacks helped EPS only modestly. Diluted weighted shares fell about 2% year on year, to 56.6 million from 57.8 million. Chord bought back $147.4 million of stock in Q2 at an average of $133.47. Nearly all the per-share improvement came from operations and oil prices, not the shrinking share count.
• Receivables grew because prices rose. Accounts receivable rose to $1,338.0 million from $1,116.7 million at year-end. That is consistent with higher oil prices and bigger resale volumes, and it was offset by a $199.1 million rise in revenue and production taxes payable. There is no sign of collection problems.
• The balance sheet is in good shape. Chord has $1.5 billion of senior notes, nothing drawn on its credit facility, and $611.6 million of cash, so net debt is about $888 million. Liquidity totals $2.58 billion. The CEO says leverage fell below half a turn, meaning net debt is under 0.5 times a year's EBITDA.

Outlook

Management left its full-year targets unchanged: oil volumes of 161 thousand barrels a day and capital spending of $1.4 billion, both at the midpoint. It expects about $3.0 billion of adjusted EBITDA and $1.3 billion of adjusted free cash flow for 2026, assuming $75 WTI and $3.00 Henry Hub gas for the second half and including hedges. The quarterly path:

• Q3: oil volumes of 161.5–164.5 thousand barrels a day, with capex falling to $360–390 million as Chord drops its second frac crew (the crew that completes new wells).
• Q4: oil volumes of 156.0–159.0 thousand barrels a day and capex of $242–292 million. Fewer new wells come online, because completions were pulled forward into Q2.
• Shareholder returns: Chord returned 54% of Q2 free cash flow through the $1.30 quarterly dividend and buybacks. Management says it expects to raise that to 75% of free cash flow in Q3, now that leverage is below its half-turn threshold. The next $1.30 dividend was paid on September 4.

Our read. The guidance math points to a softer second half. Full-year EBITDA of about $3.0 billion, minus the first half's $1,636.5 million, leaves about $1.36 billion for the remaining two quarters. That is well below Q2's $923.5 million run rate, and it reflects the $75 oil assumption, falling Q4 volumes and expected weaker differentials. Hedges cap the upside. At June 30, Chord had about 11.1 million barrels of second-half 2026 oil hedged, roughly 60,000 barrels a day or a bit over a third of expected output. Those hedges use fixed-price swaps at $66.82 and collars with ceilings of $76.76–$87.02, all below Q2's realized price. If oil stays near Q2 levels, unhedged barrels and the move to a 75% payout should keep Q3 shareholder returns high. If it falls toward $75, the lower capex is what protects free cash flow. The two things to watch in the Q3 report are whether oil volumes hold near the 163,000-barrel midpoint as completion activity drops, and whether LOE stays near the raised $10.30 per boe guidance as workover spending continues.