Chord Energy CorpCHRD
Chord Energy Corp Income Taxes Disclosure
Income Taxes
The Company adopted ASU 2023-09 on a prospective basis in this Annual Report on Form 10-K for the year ended December 31, 2025, in accordance with the transition provisions.
A summary of the Company’s income before income taxes, income tax expense and income taxes paid for the year ended December 31, 2025 is set forth below:
| Year Ended December 31, 2025 | |||||
| (In thousands) | |||||
| Income before income taxes: | |||||
| United States | $ | 249,240 | |||
| Foreign | (5,756) | ||||
| Total income before income taxes | $ | 243,484 | |||
| Income tax expense: | |||||
| U.S. Federal | $ | 182,063 | |||
| Foreign | — | ||||
| U.S. State and Local | 16,962 | ||||
| Total income tax expense | $ | 199,025 | |||
Income taxes paid(1): | |||||
| U.S. Federal | $ | 73,000 | |||
| Foreign | 2,526 | ||||
| U.S. State and Local | 2,014 | ||||
| Total income taxes paid | $ | 77,540 | |||
__________________
(1) Income taxes paid for the years ended December 31, 2024 and 2023 were $53.7 million and $17.2 million, respectively.
The Company’s income tax expense for the years ended December 31, 2024 and 2023 consists of the following:
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In thousands) | ||||||||||||||
| Current: | ||||||||||||||
| Federal | $ | 42,422 | $ | 15,877 | ||||||||||
| U.S. State and local | (532) | 3,824 | ||||||||||||
| Total current tax expense | 41,890 | 19,701 | ||||||||||||
| Deferred: | ||||||||||||||
| Federal | 203,752 | 264,154 | ||||||||||||
| U.S. State and local | 18,169 | 31,394 | ||||||||||||
| Total deferred tax expense | 221,921 | 295,548 | ||||||||||||
| Total income tax expense | $ | 263,811 | $ | 315,249 | ||||||||||
The reconciliation of income taxes calculated at the U.S. federal statutory tax rate to the Company’s effective tax rate for the year ended December 31, 2025 is set forth below:
_________________
| Year Ended December 31, 2025 | |||||||||||
| % | (In thousands) | ||||||||||
| Total income before income taxes | $ | 243,484 | |||||||||
| U.S. federal statutory tax rate | 21.0 | % | $ | 51,132 | |||||||
State and local income taxes, net of federal tax benefit(1) | 7.0 | % | 16,962 | ||||||||
| Effects of changes in tax laws or rates | — | % | — | ||||||||
| Deferred tax on unremitted earnings | 6.7 | % | 16,371 | ||||||||
| Research and development tax credit | (2.1) | % | (5,000) | ||||||||
| Impact of return to provision and tax basis balance sheet | 2.3 | % | 5,533 | ||||||||
| Non-taxable or nondeductible items | |||||||||||
| Nondeductible executive compensation | 0.2 | % | 563 | ||||||||
| Goodwill impairment | 46.5 | % | 113,256 | ||||||||
| Other | 0.1 | % | 208 | ||||||||
| Total income tax expense | 81.7 | % | $ | 199,025 | |||||||
(1)State taxes in North Dakota make up the majority (greater than 50%) of the tax effect in this category.
The reconciliation of income taxes calculated at the U.S. federal statutory tax rate to the Company’s effective tax rate for the years ended December 31, 2024 and 2023 is set forth below:
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| (%) | (In thousands) | (%) | (In thousands) | |||||||||||||||||||||||
| U.S. federal statutory tax rate | 21.0 | % | $ | 233,612 | 21.0 | % | $ | 281,196 | ||||||||||||||||||
| State income taxes, net of federal income tax benefit | 2.5 | % | 27,779 | 2.6 | % | 35,219 | ||||||||||||||||||||
| Change in valuation allowance | 0.1 | % | 1,118 | — | % | — | ||||||||||||||||||||
| Other | 0.1 | % | 1,302 | (0.1) | % | (1,166) | ||||||||||||||||||||
| Annual effective tax expense | 23.7 | % | $ | 263,811 | 23.5 | % | $ | 315,249 | ||||||||||||||||||
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Deferred tax assets | |||||||||||
| Net operating loss carryforward | $ | 288,728 | $ | 292,978 | |||||||
| Bonus and equity-based compensation | 12,041 | 1,693 | |||||||||
| Other deferred tax assets | 19,108 | 19,593 | |||||||||
| Total deferred tax assets | 319,877 | 314,264 | |||||||||
| Less: Valuation allowance | (7,926) | (10,384) | |||||||||
| Total deferred tax assets, net | $ | 311,951 | $ | 303,880 | |||||||
| Deferred tax liabilities | |||||||||||
| Oil and natural gas properties | $ | 1,635,867 | $ | 1,521,016 | |||||||
| Investment in partnerships | 45,878 | 60,093 | |||||||||
| Tax on unremitted earnings | 210,840 | 194,469 | |||||||||
| Other deferred tax liabilities | 35,216 | 24,744 | |||||||||
| Total deferred tax liabilities | $ | 1,927,801 | $ | 1,800,322 | |||||||
| Total deferred tax liabilities, net | $ | (1,615,850) | $ | (1,496,442) | |||||||
The Company’s effective tax rate for the year ended December 31, 2025 was 81.7% of pre-tax income, as compared to an effective tax rate of 23.7% of pre-tax income for the year ended December 31, 2024. The effective tax rate for the year ended December 31, 2025 was higher than the federal statutory tax rate of 21% primarily as a result of the impact of non-deductible goodwill impairment. The effective tax rate for the year ended December 31, 2024 was higher than the federal statutory tax rate of 21% primarily as a result of state income taxes.
As of December 31, 2025, the Company had gross U.S. federal net operating loss (“NOL”) carryforwards of $1,013.0 million, of which approximately $928.7 million will not expire and $84.2 million will expire from 2032 to 2037. In addition, the Company had gross state NOL carryforwards of $2,001.3 million as of December 31, 2025, which expire between 2025 and 2042. The Company and Whiting both experienced an “ownership change” as defined by the Internal Revenue Code of 1986, as amended (the “Code”), in the past, including as a result of the Merger. Accordingly, under Section 382 of the Code, the Company’s NOL carryforwards and other tax attributes (collectively, “Tax Benefits”) are subject to various limitations going forward. However, the limitations applicable under Section 382 of the Code resulting from the Merger are not expected to have a material impact on the realizability of the Company’s deferred tax assets.
Tax Benefits are recorded as an asset to the extent that management assesses the utilization of such Tax Benefits to be more likely than not, and when the future utilization of some portion of the Tax Benefits is determined not to be more likely than not, then a valuation allowance is provided to reduce the Tax Benefits from such assets.
The Company’s estimated valuation allowance as of December 31, 2025 was $7.9 million, which relates to state NOL carryforwards and is approximately consistent with the valuation allowance as of December 31, 2024.
On May 31, 2024, the Company completed the Arrangement, and as a result recognized a net deferred tax liability of $1,179.2 million in its purchase price allocation as of the acquisition date primarily to reflect the difference between the tax basis and the fair value of Enerplus’ assets acquired and liabilities assumed. The Company did not record a Canadian deferred tax asset due to the lack of continued operations in Canada going forward.
Unrecognized Tax Benefits. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based not only on the technical merits of the tax position based on tax law, but also the past administrative practices and precedents of the taxing authority. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. As part of the Arrangement, an uncertain tax position was recorded for $15.5 million, which is included in deferred tax liabilities on the Company’s Consolidated Balance Sheet as of December 31, 2025, all of which would affect the effective tax rate if recognized.
With respect to income taxes, the Company’s policy is to account for interest charges as interest expense and any penalties as tax expense in its Consolidated Statements of Operations. The Company files U.S. federal income tax returns, Canadian federal tax returns and income tax returns in the various states and provinces where it operates.
As the Company has NOL carryforwards from previous tax years, which are utilized in open years, the Internal Revenue Service may examine the Company’s loss years back to the 2012 tax year. The Canadian federal tax returns are open from 2019 and forward.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The legislation, among other things, makes permanent, extends, or modifies certain provisions under the Inflation Reduction Act and Tax Cuts and Jobs Act. Significant provisions impacting the Company include (i) the permanent reinstatement of 100% bonus depreciation on qualified property, and (ii) the allowance for immediate and full expensing of domestic research and experimentation expenditures. The enactment of the OBBBA did not have a material impact on the Company’s effective tax rate for the year ended December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2020 | Mar 8, 2021 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.