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Commitments and Contingencies | 6 Months Ended
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Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies As of June 30, 2022, the Company’s material off-balance sheet arrangements and transactions include $2.4 million in outstanding letters of credit under the Credit Facility and $8.0 million in net surety bond exposure issued as financial assurance on certain agreements. As of June 30, 2022, there have been no material changes to the Company’s commitments and contingencies disclosed in Note 22 — Commitments and Contingencies in the Company’s 2021 Annual Report, except as set forth below. Whiting Chapter 11 Cases On April 1, 2020, Whiting and certain of its subsidiaries (the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code. On June 30, 2020, the Debtors filed their proposed Joint Chapter 11 Plan of Reorganization of Whiting and its Debtor affiliates (as amended, modified and supplemented, the “Plan”). On August 14, 2020, the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) confirmed the Plan and on September 1, 2020, the Debtors satisfied all conditions required for Plan effectiveness and emerged from the Chapter 11 Cases. The filing of the Chapter 11 Cases allowed Whiting to, upon approval of the Bankruptcy Court, assume, assign or reject certain contractual commitments, including certain executory contracts. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such contract and, subject to certain exceptions, relieves Whiting from performing future obligations under such contract but entitles the counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. The claims resolution process is ongoing and certain of these claims remain subject to the jurisdiction of the Bankruptcy Court. To the extent that the Bankruptcy Court allows any unsecured claims against the Company, such claims may be satisfied through an issuance of the Company’s common stock or other remedy or agreement under and pursuant to the Plan. In connection with the closing of the Merger on July 1, 2022, the Company assumed Whiting’s obligations with respect to the Plan and, accordingly, has reserved 1,224,840 shares of common stock for potential future distribution to certain general unsecured claimants whose claim values are pending resolution in the Bankruptcy Court. Arguello Inc. and Freeport-McMoRan Oil & Gas LLC. Whiting Oil and Gas Corporation (“WOG”), a wholly-owned subsidiary of Whiting, had interests in federal oil and gas leases in the Point Arguello Unit located offshore in California. While those interests have expired, pursuant to certain related agreements (the “Point Arguello Agreements”), WOG may be subject to abandonment and decommissioning obligations. WOG and Whiting rejected the related contracts pursuant to the Plan. On October 1, 2020, Arguello Inc. and Freeport-McMoRan Oil & Gas LLC, individually and in its capacity as the designated Point Arguello Unit operator (collectively, the “FMOG Entities”) filed with the Bankruptcy Court an application for allowance of certain administrative claims arguing the FMOG Entities were entitled to recover Whiting’s proportionate share of decommissioning obligations owed to the U.S. government through subrogation to the U.S. government’s economic rights. The FMOG Entities’ application alleged administrative claims of approximately $25 million for estimated decommissioning costs owed to the U.S. government, at least $60 million of estimated decommissioning costs owed to the FMOG Entities and claims for certain other immaterial amounts. On September 14, 2020, the FMOG Entities also filed with the Bankruptcy Court proofs of claim for rejection damages to serve as an alternative course of action in the event that a court should determine that the FMOG Entities do not hold any applicable administrative claims. The U.S. government may also be able to bring claims against WOG directly for decommissioning costs. On February 18, 2021, WOG entered into a stipulation and agreed order with the United States Department of the Interior, Bureau of Safety & Environmental Enforcement (the “BSEE”) pursuant to which the BSEE withdrew its proofs of claims against Whiting and WOG and acknowledged their respective rights and obligations pursuant to the Plan. On March 26, 2021, the FMOG Entities withdrew their administrative claim for the recovery of Whiting’s proportionate share of costs incurred after August 31, 2020 to fulfill obligations owed to the U.S. government on the basis of subrogation to the U.S. government’s economic rights. The FMOG Entities continue to assert certain other administrative claims and have reserved the right to assert claims for the recovery of Whiting’s share of the decommissioning costs incurred after August 31, 2020 based on the theory of equitable subrogation. On September 14, 2021, Whiting and WOG filed an objection in the Bankruptcy Court, seeking an order partially disallowing the FMOG Entities’ claims. The Bankruptcy Court has not issued a ruling on the damages for rejection of the Point Arguello Agreements. Although WOG intends to vigorously pursue its objection in this legal proceeding, it is possible that a settlement with the FMOG Entities may be reached or that WOG may not prevail in this proceeding. If the FMOG Entities were to prevail on certain of their respective claims (including the reserved claims) on the merits, the Company enters into a settlement agreement or the U.S. government were to bring claims against WOG, the Company could be liable for claims that must be paid or otherwise satisfied under and pursuant to the Plan, including through an issuance of Chord common stock, cash payment or otherwise. It is possible that as a result of the legal proceedings associated with the bankruptcy claims administration process or the matter detailed above, the Bankruptcy Court may rule that the claims should be treated other than as general unsecured claims. Such an outcome could require the Company to make cash payments to settle those claims instead of or in addition to issuing shares of the Company’s common stock, and such cash payments could result in losses in future periods. In addition, it is also reasonably possible that a settlement with respect to such legal proceedings may be reached, in which case the settlement consideration would be paid or otherwise satisfied under and pursuant to the Plan, including through an equity issuance of the Company’s common stock, cash payment or otherwise. As of June 30, 2022, Whiting had $55 million of outstanding offers to settle claims from the Chapter 11 Cases. If accepted, these settlements would be paid in cash and would not result in the Company issuing shares of common stock to resolve such claims. However, such claims remain subject to the jurisdiction of the Bankruptcy Court and therefore, the ultimate amount of either a cash payment or number of shares of the Company’s common stock that may be issued to settle such claims is uncertain. As of the date of this report, the Company continues to evaluate the resolution of such claims. The Company expects to finalize the purchase price allocation, including the fair value of any assumed liabilities related to these claims, as soon as practicable, which will not extend beyond the one year measurement period under ASC 805. See Note 2—Summary of Significant Accounting Policies—The Merger for additional information.

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