Whiting (WLL) and Oasis (OAS) Complete Combination, Establishing Chord Energy (CHRD)
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Chord Energy Corporation (NASDAQ: CHRD) ("Chord" or the "Company") today announced the successful completion of the combination of Whiting Petroleum Corporation ("Whiting") and Oasis Petroleum Inc. ("Oasis"), creating a scaled unconventional U.S. oil producer with a premier Williston Basin position with top tier assets across approximately 972,000 net acres, combined first quarter production of 171.1 thousand boepd (historical Oasis has been adjusted for three stream reporting), and enhanced free cash flow generation. Chord's common stock is expected to begin trading on the NASDAQ Global Select Market under the ticker symbol "CHRD" on July 5, 2022. The new company is headquartered in Houston.
The word "chord" is frequently used to describe multiple musical notes sounded simultaneously and harmoniously, while an alternative definition is a line segment joining two points on a circle. Chord Energy represents the joining of separate entities whose complementary strengths create something more formidable than either independent entity. Together the new company is positioned to prosper and deliver value creation through the constantly evolving energy landscape.
"We are excited to establish Chord Energy, which will build on the proud legacies and extraordinary talent and capabilities of Whiting and Oasis," said Danny Brown, Chord's President and Chief Executive Officer. "With a premier Williston Basin position, a peer-leading balance sheet, significant scale and enhanced free cash flow generation, Chord is positioned to succeed. Chord will execute a focused strategy to enhance value delivery to our shareholders and maintain a strong commitment to safety, gas capture and emissions reduction. I want to thank all of our talented employees for their dedication to operating safely and with integrity as we integrate our two companies."
Chord is well positioned to drive significant shareholder value. With added scale, high-quality assets and sustainable free cash generation, Chord has significant financial strength anchored by an attractive balance sheet, with an expected net debt(1) to EBITDAX(1) ratio of approximately 0.2x as of June 30, 2022, which is pro forma for Oasis' $15/share special dividend announced June 16, 2022 and the $6.25/share cash merger consideration paid to Whiting shareholders in connection with the closing of the merger.
The Company expects to return 60% of its free cash flow to shareholders in the second half of 2022 through its base dividend, variable dividends, and share buybacks, and as previously announced, has a $150MM share repurchase program in place. Chord expects to pay a base dividend of $0.585 per share beginning in the third quarter of 2022 and expects to use variable dividends and share repurchases to return the full targeted amount. The transaction is expected to be accretive to key per-share metrics, including E&P cash flow, E&P free cash flow, return of capital and net asset value. Chord expects to realize administrative and operational cost savings of at least $65MM on an annual basis by the second half of 2023.
(1) Non-GAAP financial measure. Please see "Non-GAAP Financial Measures" below.
As previously announced, Chord's executive leadership team includes:
- Danny Brown, President & Chief Executive Officer (previously Oasis' CEO)
- Chip Rimer, Executive Vice President & Chief Operating Officer (previously Whiting's COO)
- Michael Lou, Executive Vice President & Chief Financial Officer (previously Oasis' CFO)
- Scott Regan, Executive Vice President, General Counsel & Secretary (previously Whiting's GC)
Additional members of Chord's senior leadership team announced today include:
- Charles Ohlson, Senior Vice President Base Production
- Richard Robuck, Senior Vice President Corporate Planning & Investor Relations
- Jason Swaren, Senior Vice President Operations
- Jennifer Charbonneau, Vice President HSE & Supply Chain
- Kevin Kelly, Vice President Sustainability
- Michael King, Vice President Asset Management
- Lara Kroll, Vice President Accounting
- Alex Wall, Vice President Business Development
Chord's 10-member Board of Directors has equal representation from Whiting and Oasis and was selected to ensure that the Company has the right mix of skills, experience and perspectives to provide strong corporate governance. Members include:
- Lynn A. Peterson, Executive Chair
- Danny Brown, President and Chief Executive Officer
- Douglas E. Brooks
- Susan M. Cunningham
- Samantha Holroyd
- Paul J. Korus
- Kevin S. McCarthy
- Anne Taylor
- Cynthia L. Walker
- Marguerite N. Woung-Chapman
For more information on Chord's Board of Directors and senior leadership team, please visit the Company's website at www.chordenergy.com.
In conjunction with the closing of the merger, Chord has entered into an amended and restated credit facility, with the following key updates:
- Borrowing base increased to $2B with elected commitments totaling $800MM
- The lending group from the historical Oasis credit facility continues to support Chord, and Wells Fargo, National Association, will serve as the administrative agent
- The maturity date was extended to July 2027
- The amended and restated credit facility includes, among other provisions, a reduction to pricing for borrowings under the facility by 125 basis points, an improved covenant package, and more flexibility for restricted payments and investments
Immediately prior to the merger closing, the combined company's bank cash balance exceeded $670MM, which is before the payment of the $6.25/share merger consideration to Whiting shareholders and the $15/share special dividend to Oasis shareholders. Chord's pro forma debt consists of $400MM of senior unsecured notes outstanding with nothing drawn on the amended and restated credit facility.
Chord is providing updated guidance for Oasis and initial guidance for Whiting for 2Q22. Oasis' total 2Q volumes have been adjusted to include current three stream reporting assumptions, and Chord expects to formally report on a three stream basis for 3Q22. Oasis increased its initial three stream uplift assumption above two stream Mboe/d numbers from 9% to 18% based on more precise analysis, as it prepares to formally roll out three stream reporting in November, 2022. The updated guidance included below is not intended to represent quarterly results, as such guidance remains subject to the completions of accounting and financial close and reporting processes.
Pro Forma Chord
Oil Volumes (Mbbl/d)
40.6 – 41.4
48.0 – 49.0
88.6 – 90.4
Total Volumes (Mboe/d)
74.7 – 75.9
81.7 – 82.9
156.4 – 158.8
Oil Premium / (Discount) to WTI $ per Bbl
$3.10 - $3.80
($0.35) – $0.35
$1.20 - $1.95
Gas Revenue ($/boe)
$37.00 - $38.50
$34.00 - $35.50
$35.50 - $37.00
LOE per Boe
$9.50 - $10.00
$10.15 - $10.65
$9.85 - $10.10
GP&T per Boe
$4.25 - $4.75
$1.00 - $1.50
$2.30 - $3.30
Cash G&A ($MM)
$13.0 - $14.5
$8.0 - $9.5
$21.0 - $24.0
7.1% - 7.35%
7.2% - 7.4%
7.1% - 7.4%
$50 - $58
$115 - $130
$165 - $188
Cash Interest ($MM)
$6.9 - $7.1
$2.0 - $3.5
$8.9 - $10.6
Cash Taxes ($MM)
$0.0 - $0.0
$0.0 - $2.0
$0.0 - $2.0
Note: Cash G&A excludes one-time transaction related expenses.
As previously announced, in accordance with the terms of the merger agreement, Whiting shareholders are receiving 0.5774 shares of Oasis common stock and $6.25 in cash for each share of Whiting common stock owned. The Oasis board of directors declared a special dividend of $15.00 per share, which will be paid to the Oasis shareholders of record as of June 29, 2022 on or about July 8, 2022. Former Whiting shareholders will own approximately 53% and former Oasis shareholders will own approximately 47% of Chord on a fully diluted basis.
With the completion of the transaction, as of today, Whiting common stock will no longer be listed for trading. Whiting previously traded under the ticker symbol "WLL." Oasis will continue to trade under the ticker symbol "OAS" until July 5, 2022 when Chord is expected to begin trading under the symbol "CHRD."
Citi served as financial advisor and Kirkland & Ellis LLP served as legal advisor to Whiting. Tudor, Pickering, Holt & Co. and RBC Capital Markets LLC served as financial advisors and Vinson & Elkins LLP served as legal advisor to Oasis.
Chord Energy is an independent exploration and production company with quality and sustainable long-lived assets in the Williston Basin. Chord is uniquely positioned with a best-in-class balance sheet and is focused on rigorous capital discipline and generating free cash flow by operating efficiently, safely and responsibly to develop its unconventional onshore oil-rich resources in the continental United States. For more information, please visit the Company's website at www.chordenergy.com.
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