Chord Energy's Earnings Miss and Goodwill Impairment Raise Questions on Investment Potential

Chord Energy reported Q2 earnings that missed expectations due to lower realized prices, higher operating expenses, and a goodwill impairment of $539 million. The company's 2025 guidance projects steady production and adjusted EBITDA of $2.4 billion. Despite recent headwinds, the goodwill impairment does not appear to materially affect Chord's operational efficiency or exposure to volatile commodity prices.

Chord Energy Corporation (CHRD) reported its second-quarter 2025 earnings, which fell short of expectations due to lower realized prices, higher operating expenses, and a significant goodwill impairment charge of $539 million. Despite these challenges, the company maintained operational stability and provided guidance for steady production and profitability for the remainder of the year.

The company reported adjusted earnings of $1.79 per share, missing the Zacks Consensus Estimate of $1.88 [1]. On a GAAP basis, Chord Energy reported a net loss of $6.77 per share due to the non-cash goodwill impairment charge. Total quarterly revenues of $1,181 million lagged the Zacks Consensus Estimate of $1,295 million. The top line declined from the prior year’s $1,261 million. The weak quarterly earnings resulted from lower average realized crude oil and natural gas liquid prices.

Chord Energy's oil production averaged 156.7 thousand barrels per day (MBopd), up from 118.1 MBopd in the prior-year quarter. Total production was 281.9 thousand barrels of oil equivalent per day (MBoepd), up from 207.2 MBoepd in the prior-year quarter. Natural gas production was recorded at 425.9 million cubic feet per day (MMcf/D), up from 291.5 MMcf/D a year ago. Natural gas liquids production totaled 54.1 MBbls/d, higher than the year-ago figure of 40.5 MBbls/d.

The average realized crude oil price was $61.62 per barrel, a decrease from the year-ago figure of $78.89. The average realized natural gas price was $1.10 per thousand cubic feet, up from 67 cents in the year-ago quarter. Realized natural gas liquids price decreased to $5.80 per barrel from the year-ago quarter’s $9.99.

Total expenses increased to $1,583.3 million, up from $987.1 million in the year-ago quarter. Lease operating expenses totaled $257 million, up from $176.6 million reported in the year-ago quarter. Gathering, processing and transportation expenses increased to $74.1 million from $63.1 million in the comparable period of 2024.

Despite the earnings miss, Chord Energy expects oil production of 151.8-154.1 MBopd and a total production of 272.5-278.3 MBoepd for 2025. The company expects adjusted EBITDA of $2.4 billion and an adjusted free cash flow of $850 million for the year. The company expects E&P and other capex between $1.32 billion and $1.38 billion. It plans to complete 115-135 gross operated wells in the third quarter of 2025.

The goodwill impairment does not appear to materially affect Chord Energy's operational efficiency or exposure to volatile commodity prices. The company's focus on operational stability and shareholder returns is evident in its recent share repurchase program of $1,000 million. The company's concentrated footprint in the Williston Basin leaves it exposed to local disruptions or tougher regulations, but its operational efficiency and production guidance suggest a steady path forward.

Chord Energy currently carries a Zacks Rank #3 (Hold), but investors interested in the energy sector may look at better-ranked stocks like Antero Midstream Corporation (AM), Enbridge Inc. (ENB), and Global Partners LP (GLP), each carrying a Zacks Rank #2 (Buy) at present [1].

References:
[1] https://finance.yahoo.com/news/chord-energy-stock-dips-2-160700944.html
[2] https://finance.yahoo.com/news/goodwill-impairment-rising-costs-might-101218169.html