Divestitures and Assets Held for Sale

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

2023 Divestitures and Assets Held for Sale

During the second quarter of 2023, the Company entered into separate agreements with multiple buyers to sell a majority of its non-core properties located outside of the Williston Basin for total estimated net cash proceeds (including purchase price adjustments) of $36.7 million (the “Non-core Asset Sales”). As of June 30, 2023, the Company completed certain of these divestitures and received total net cash proceeds (including purchase price adjustments) of $31.8 million, subject to customary post-closing adjustments. During the three and six months ended June 30, 2023, the Company recorded a pre-tax net loss on sale of $1.9 million for the divestiture of these non-core properties.

In addition, during the six months ended June 30, 2023, the Company completed certain non-operated wellbore divestitures in the Williston Basin for total net cash proceeds of $21.5 million, including $10.9 million for the reimbursement of capital expenditures incurred during the period.

Assets held for sale. The remainder of the Non-core Asset Sales are expected to close in the third quarter of 2023 for estimated net cash proceeds (including purchase price adjustments) of $4.9 million. As of June 30, 2023, the Company classified the assets and liabilities associated with these properties as held for sale on its Condensed Consolidated Balance Sheet.

The following table presents balance sheet data related to the assets held for sale:


	June 30, 2023

	(In thousands)
Assets:
Oil and gas properties	$	16,634
Less: accumulated depreciation, depletion and amortization	(6,244)
Total property, plant and equipment, net	10,390
Inventory	336
Total current assets held for sale	$	10,726
Liabilities:
Assets retirement obligations	$	13,036
Revenues and production taxes payable	296
Total current liabilities held for sale	$	13,332
Net liabilities	$	(2,606)

During the three and six months ended June 30, 2023, the Company recorded an impairment loss of $5.6 million to adjust the carrying value of the assets held for sale to their estimated fair value less costs to sell. The impairment loss was recorded within exploration and impairment expenses on the Condensed Consolidated Statements of Operations.

2022 Divestiture

OMP Merger. On February 1, 2022, the Company completed the merger of Oasis Midstream Partners LP (“OMP”) and OMP GP LLC with and into a subsidiary of Crestwood and received $160.0 million in cash and 20,985,668 common units of Crestwood (the “OMP Merger”). The OMP Merger represented a strategic shift for the Company and qualified for reporting as a discontinued operation under FASB ASC 205-20, Presentation of Financial Statements – Discontinued Operations (“ASC 205-20”).

See Note 11—Discontinued Operations for additional information on amounts reported as discontinued operations. See Note 6—Fair Value Measurements and Note 12—Investment in Unconsolidated Affiliate for additional information on the Company’s investment in Crestwood.

The Company recorded a pre-tax gain on sale of assets of $518.9 million, which included (i) the cash consideration of $160.0 million, (ii) the fair value of the Company’s retained investment in Crestwood of $568.3 million; less (iii) the book value of the Company’s investment in OMP of $198.0 million and (iv) transaction costs of $11.4 million. The gain on sale of assets was reported within income from discontinued operations attributable to Chord, net of income tax on the Company’s Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2022.

The Company had previously entered into long-term, fee-based contractual arrangements with OMP for midstream services, including (i) natural gas gathering, compression, processing and gas lift supply services; (ii) crude oil gathering, terminaling and transportation services; (iii) produced and flowback water gathering and disposal services; and (iv) freshwater distribution services. These contracts were assigned to Crestwood upon closing of the OMP Merger, and the Company has continuing involvement with Crestwood for these midstream services