Chord Energy Corporation (CHRD)

How it makes money

Chord sells the hydrocarbons it lifts out of the ground at prevailing market prices: it is a price taker on a commodity, not a company that sets its own prices. Revenue comes from three product streams — crude oil, NGL and natural gas — plus a fourth line, 'purchased oil and gas sales', where Chord buys third-party barrels and resells them, largely to make use of its transportation capacity. For fiscal 2025 total revenues were $4,877.1 million: crude oil revenues $3,546.9 million, NGL revenues $138.3 million, natural gas revenues $212.0 million and purchased oil and gas sales $980.0 million. Crude oil is by far the dominant stream. Chord markets its own production in-house rather than through an agent, signs sales contracts with purchasers that hold pipeline capacity, and uses commodity derivatives and physical delivery contracts to manage price and basis-differential risk. Because production from shale wells declines steeply after the first year, revenue has to be continually replaced with new drilling — capital spending is not optional growth, it is maintenance.

Chord sells an undifferentiated commodity at a price set by world markets, so it has no brand, no switching costs and no network effects. What it does have is the largest leasehold position of any operator in the Williston Basin — 1,302,921 net acres at the end of 2025, essentially all held by production — and the company argues that the size and concentration of that acreage let it achieve cost, recovery and production efficiencies through large, repeatable development programmes. That is a real but limited edge: it is an advantage over other operators in the same basin, in the form of lower cost per barrel and a long inventory of drilling locations. It does nothing to protect Chord when the oil price itself falls, and it can be eroded as the best locations are drilled first. A beginner should read this as 'better placed than its neighbours', not as 'protected from the cycle'.

Chord's revenue tracks the oil price, and the oil price is one of the most cyclical variables in the economy. The company itself explains that the prices it receives are largely a function of market supply and demand; that demand is driven by general economic conditions, access to markets, weather and other seasonal conditions including hurricanes and tropical storms; and that over- or under-supply can produce substantial price volatility, which it says has been historically volatile and is expected to remain so. On the supply side it points to OPEC+ production decisions as having a significant impact on prices, and to geopolitical tension as a source of volatility. Two amplifiers matter for a beginner. First, the volume side is fairly steady in the short run — a well that is drilled produces regardless of price — so a price swing passes almost undiluted into revenue, and profit swings harder still because costs are largely fixed. Second, prices realised at the wellhead in the Williston Basin depend on transport and refining capacity out of the basin, so local bottlenecks can widen the discount to benchmark crude even when the benchmark holds up. The industry's own investment cycle then feeds back: high prices pull in rigs and service costs, low prices strand them.

Key risks

• A prolonged fall in the oil price — Chord discloses that a substantial or extended decline in commodity prices — for crude oil above all, and to a lesser extent NGL and natural gas — may adversely affect its business, financial condition and results of operations, and its ability to meet capital expenditure obligations and financial commitments. It adds that the willingness of OPEC+ to set and maintain production levels has a significant impact on oil prices, and that global geopolitical tensions may create heightened volatility in prices.
• Everything is in one basin — The company states that substantially all of its producing properties and operations are located in the Williston Basin, making it vulnerable to the risks of operating in a concentrated geographic area. It also warns that seasonal weather conditions can adversely affect drilling: in the Williston Basin, activity cannot be conducted as effectively during the winter months and severe conditions may temporarily halt operations, raising operating and capital costs.
• Reserve estimates rest on assumptions that may prove wrong — Chord discloses that its estimated net proved reserves are based on many assumptions that may turn out to be inaccurate, and that estimating reserves requires interpretation of technical data and assumptions about future economic conditions and prices. It separately warns that development of its proved undeveloped (PUD) reserves may take longer and require higher capital spending than anticipated, so those undeveloped reserves may never be developed or produced, and that scheduled drilling locations may not yield hydrocarbons in commercially viable quantities.
• Dependence on a few midstream providers and on transport capacity — The company states that it depends upon a limited number of midstream providers for a large portion of its midstream services, and that failing to obtain and maintain access to the infrastructure needed to deliver crude oil, natural gas and NGL to market may adversely affect earnings and cash flows. It also flags that unavailability or high cost of drilling rigs, equipment, supplies, personnel and oilfield services, or insufficient transportation for its production, could stop it executing its drilling plans on budget and on time — and that insufficient transportation or refining capacity in the Williston Basin can cause significant swings in the prices it actually realises at the wellhead.
• Environmental, climate and hydraulic-fracturing regulation — Chord discloses that its operations are subject to federal, state, tribal and local environmental, natural-resource and occupational health and safety laws that may expose it to significant costs, liabilities, operating restrictions and delays, and that this body of regulation has been trending more expansive and stringent. It specifically identifies risks from climate-change policy, energy conservation measures and initiatives favouring alternative energy — which could raise operating costs, restrict drilling and reduce demand for its production — from legislative and regulatory initiatives on hydraulic fracturing, from endangered-species and habitat protection rules, and from difficulty acquiring water for drilling and completion or disposing of it safely.
• Acquisitions, integration and non-operated wells — The company warns that acquisitions carry risk from integration difficulties, uncertainty in evaluating recoverable reserves and well performance, potential liabilities, and the difficulty of forecasting prices and future development, production and marketing costs — a live concern given the Enerplus arrangement completed in May 2024. It also notes that it is not the operator of all of its drilling locations, so for those assets it may not control the timing of exploration or development, the costs involved, or the rate of production.
• Capital intensity, debt and cost of capital — Chord discloses that its exploration, development and exploitation projects require substantial capital expenditure and that it may be unable to obtain capital or financing on satisfactory terms, which could lead to lease expiry or a decline in estimated reserves. It adds that increased costs of capital could adversely affect the business, that its revolving credit facility and the indentures governing its senior unsecured notes contain operating and financial restrictions, and that the cost of servicing debt and generating enough cash flow to meet current or future obligations could adversely affect the business — a risk that grows if more debt is incurred. It also warns that its ability to declare and pay dividends is subject to certain considerations and limitations.
• Credit concentration on a few buyers — The company states that it is subject to credit risk because its crude oil, NGL and natural gas receivables are concentrated with several significant customers, that this concentration may raise overall credit risk since those buyers can be similarly affected by the same economic conditions, and that it does not require all customers to post collateral. Failure, insolvency or liquidation of a significant customer may adversely affect its financial results.
• Cyber-attacks, litigation, inflation and trade policy — Among its general risk factors Chord lists terrorist attacks and cyber-attacks, which could result in information theft or data corruption and have a material adverse effect on the business; involvement in legal, governmental and regulatory proceedings that could result in substantial liabilities; inflationary pressure on the cost of labour, materials and services; risks from disruptive technologies, innovation and competition, including artificial intelligence; and uncertainty in U.S. trade policy, including changes in tariffs, trade agreements or other trade restrictions.

Top customers account for 33% of revenue

For the year ended 31 December 2025 sales to Phillips 66 Company accounted for approximately 21% and sales to Marathon Petroleum Supply & Trading LLC for approximately 12% of total product sales — roughly a third of the total between the two. No other purchaser accounted for more than 10%. The pattern is recurring rather than one-off: Phillips 66 was about 19% in 2024, and in 2023 Phillips 66 was about 20% and Gunvor USA LLC about 14%. Chord's own reading is that, because other markets and pipeline connections are available, losing any single customer would not have a material adverse effect on its results or cash flows — the barrels would find another buyer. The concentration therefore shows up mainly as credit exposure: the company notes it does not require all customers to post collateral, and the insolvency of a significant buyer could hurt its results.