• Adjusted Free Cash Flow: Approximately $312 million for the third quarter.
• Shareholder Returns: 75% of adjusted free cash flow returned to shareholders.
• Base Dividend: $1.25 per share.
• Variable Dividend: $0.19 per share.
• Share Repurchases: $146 million, representing 93% of capital return for the quarter.
• Oil Volumes: Toward the top end of guidance, driven by strong execution and well performance.
• Operating Expenses: Below expectations, contributing to improved operating margins.
• Capital Expenditures: $329 million, below the low end of guidance due to program efficiencies.
• Liquidity: $1.1 billion as of September 30, including $52 million of cash.
• Net Leverage: 0.3x as of September 30.
• Oil Realizations: Averaged about $1.50 below WTI.
• LOE (Lease Operating Expense): $9.56 per BOE.
• Cash GPT (Gathering, Processing, and Transportation): $2.91 per BOE.
• Cash G&A (General and Administrative): $27.9 million, excluding merger-related costs.
• Production Taxes: Averaged 9% of commodity sales.
• Cash Taxes: $13 million, below expectations.
• Fourth Quarter Oil Guidance: Midpoint of 152,000 barrels of oil per day.
• Full Year Capital Guidance: Trimmed due to improved program efficiencies.

• Warning! GuruFocus has detected 3 Warning Sign with CHRD.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Chord Energy Corp (NASDAQ:CHRD) delivered strong third-quarter results with oil volumes at the top end of guidance, driven by strong execution and well performance.
• The company generated adjusted free cash flow of approximately $312 million, exceeding expectations and supporting robust shareholder returns.
• Chord Energy Corp (NASDAQ:CHRD) announced the divestiture of DJ Basin assets, with plans to use proceeds for acquisitions and share repurchases, enhancing capital allocation flexibility.
• Operational efficiencies led to lower-than-expected capital expenditures and operating expenses, improving margins and capital efficiency.
• The company has successfully integrated Enerplus assets, capturing over $200 million in annual synergies, and is confident in its three-year plan to maintain steady oil volumes with controlled capital expenditures.

Negative Points

• Chord Energy Corp (NASDAQ:CHRD) experienced production curtailments due to wildfires in North Dakota, impacting fourth-quarter oil volumes by approximately 900 barrels per day.
• Natural gas realizations were below expectations due to depressed AECO pricing, impacting overall financial performance.
• The company faces challenges in maintaining production guidance due to variability in early production data and differences in flowback methodologies across the basin.
• There is uncertainty regarding the impact of potential changes in commodity prices on the company's three-year plan and capital allocation decisions.
• Chord Energy Corp (NASDAQ:CHRD) acknowledges that its current well spacing may be conservative, potentially limiting inventory expansion opportunities.

Q & A Highlights

Q: Are there various commodity price scenarios where you would alter the suggested spend in your three-year plan? And if you continue to see operational efficiencies, would that cause you to increase activity or maintain it and see a free cash flow boost? A: Daniel Brown, CEO: The plan is geared around the current commodity price environment. If we see increased efficiencies, we would maintain a flat production profile and let free cash flow increase. If market conditions change significantly, we would adjust our capital allocation accordingly.

Q: Can you provide some color on the updated 3-mile EURs and the challenges overcome to achieve similar EURs per foot? A: Daniel Brown, CEO: We've seen data that supports moving from an 80% to 100% scaling factor for the third mile. Darrin Henke, COO, added that since late summer of '23, they've been cleaning out to total depth, showing production benefits and confirming the 3-mile wells' recovery matches 2-mile wells on a per foot basis.

Q: Regarding the three-year outlook, does the $1.4 billion capital plan include full synergies from the Enerplus acquisition? A: Daniel Brown, CEO: The plan includes anticipated capital synergies from Enerplus but not continuous improvement efficiencies. Service costs and efficiencies will influence future adjustments. The plan does not include potential benefits from 4-mile wells, which could provide additional upside.

Q: How do you see well breakevens varying across your acreage, particularly with improved completions? A: Daniel Brown, CEO: Returns are similar between the Western acreage and the historic core due to longer laterals and wider spacing in the West. The core has better underlying geology, but we've achieved comparable economic returns by optimizing development strategies.

Q: What operational strategies are in place for the Enerplus acreage, and how does it integrate into your three-year plan? A: Daniel Brown, CEO: The plan includes a mix of 2-mile and 3-mile laterals, with a slight tilt towards Enerplus acreage initially. The integration focuses on applying Chord's techniques, such as longer laterals and optimized spacing, to enhance returns. The plan is spread across the field to maintain a balanced development approach.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.