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01/11 03:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects strong operational efficiency, improved free cash flow, and a strategic focus on AI and sustainability. Despite some unclear management responses, the company's proactive approach to technology and cost reduction, combined with an optimistic production outlook for 2026, suggests a positive sentiment. The strategic plan to redeploy resources and improve shareholder returns further supports this positive outlook.
Adjusted Free Cash Flow Approximately $230 million, with 69% returned to shareholders. This reflects strong operating performance and efficiency improvements.
Marketing Cost Savings Expected savings of $30 million to $50 million annually, with about half realized in 2025. This is due to contract simplifications and optimizations.
Free Cash Flow Per Share Grown over 20% since February and over 35% since the Enerplus transaction, driven by higher production, lower LOE, less capital, and improved marketing costs.
Capital Efficiency Improvements $120 million improvement in 2025 from controllable items, including higher production, lower LOE, less capital, and improved marketing costs.
Diluted Shares Outstanding Reduced by approximately 11% since the Enerplus combination, achieved through share repurchases.
4-mile wells: Chord brought online 3 new 4-mile wells since the last update, all below initial cost estimates with encouraging early production data. The company expects 7 such wells by year-end and plans to increase their share to 40% of the operated program in 2026.
Alternate shape wells: Chord drilled 11 and completed 8 alternate shape wells year-to-date, with costs trending below initial estimates. These wells are a small part of the long-term program but improve economics in certain PSUs.
XTO transaction: Chord closed the XTO transaction on October 31, adding 4,000 barrels of oil per day to fourth-quarter production and $15 million in capital for 2025 to support higher maintenance production levels in 2026. The acquisition aligns with Chord's long-term strategic objectives and enhances its footprint in the Williston Basin.
Inventory additions: Chord added inventory through leasing efforts and smaller acquisitions, maintaining low-cost inventory depth while adopting new technologies and driving efficiency.
Capital efficiency: Chord improved capital efficiency, achieving $120 million in improvements in 2025 from controllable items like higher production, lower LOE, less capital, and improved marketing costs.
Marketing cost structure: Chord optimized contracts across oil, gas, and water, realizing $30-$50 million in annual savings, with half achieved in 2025.
Sustainability initiatives: Chord published its 2024 Sustainability Report, highlighting efforts in emissions reductions, workforce health and safety, corporate governance, and philanthropy.
Capital allocation and flexibility: Chord plans to maintain oil volumes of 157,000-161,000 barrels per day in 2026 with a total CapEx of $1.4 billion, reflecting improved capital efficiency and flexibility to adjust activity based on market conditions.
Commodity Volatility: High commodity volatility remains a challenge, requiring the company to closely monitor conditions and maintain flexibility to reduce activity if macroeconomic conditions worsen.
Integration of XTO Assets: The integration of XTO assets requires additional capital and operational adjustments, which could pose challenges in maintaining efficiency and achieving expected production levels.
Capital Efficiency: While capital efficiency has improved, maintaining this trend amidst fluctuating market conditions and increased production targets could be challenging.
Regulatory and Sustainability Compliance: The company faces ongoing challenges in meeting sustainability and regulatory requirements, which are critical for long-term operational and reputational success.
Operational Flexibility: Maintaining operational flexibility to adapt to market conditions without compromising production targets or financial stability is a continuous challenge.
Oil Volume Guidance: Chord has raised oil volume guidance for the second time this year, driven by faster cycle times, lower downtime, and strong well performance. Preliminary expectations for 2026 include maintaining oil volumes of approximately 157,000 to 161,000 barrels per day.
4-Mile Well Program: Chord expects 4-mile wells to constitute up to 40% of the operated program in 2026, with 3-mile wells making up another 40%, resulting in approximately 80% longer lateral development next year.
Capital Expenditures (CapEx): Preliminary 2026 CapEx is expected to be roughly $1.4 billion, including $40 million for maintaining XTO volumes. This reflects approximately 4% higher oil volumes for $100 million less in capital compared to early 2024 pro forma capital budget.
Marketing Cost Savings: Chord expects annual savings of $30 million to $50 million from improved marketing cost structures, with about half of these savings realized in 2025.
XTO Transaction Impact: The XTO acquisition has adjusted fourth quarter production up by 4,000 barrels of oil per day and added $15 million to full-year 2025 capital to support higher maintenance production levels in 2026.
Operational Flexibility: Chord has significant flexibility to reduce activity if macroeconomic conditions warrant, with decisions based on thoughtful evaluations rather than short-term sentiment.
Base Dividend: $1.30 per share distributed as a base dividend.
Share Repurchases: 69% of free cash flow was utilized for share repurchases after the base dividend. Since the merger with Enerplus, diluted shares outstanding have been reduced by approximately 11%.
The earnings call reflects strong operational efficiency, improved free cash flow, and a strategic focus on AI and sustainability. Despite some unclear management responses, the company's proactive approach to technology and cost reduction, combined with an optimistic production outlook for 2026, suggests a positive sentiment. The strategic plan to redeploy resources and improve shareholder returns further supports this positive outlook.
The earnings call summary and Q&A reveal strong financial performance with free cash flow and share repurchases, indicating efficient capital allocation. The company is reducing capital guidance without impacting production, and operational efficiencies are expected to improve. The Q&A highlights promising 4-mile well results and potential cost reductions, adding to optimism. Despite some management vagueness, the overall sentiment is positive due to strategic initiatives and shareholder returns, predicting a stock price increase of 2% to 8%.
The earnings call summary reveals strong financial performance with increased free cash flow and efficient capital expenditure. Shareholder returns are maintained through significant share repurchases, reducing the share count by 9%. Despite slight oil differential weakening, other financial metrics remain robust. The Q&A section shows confidence in operational strategies, particularly with four-mile laterals, suggesting potential growth. However, management's avoidance of specifics in some areas introduces slight uncertainty. Overall, the positive financial outlook and strategic initiatives outweigh concerns, indicating a likely positive stock price movement over the next two weeks.
The earnings call presented strong financial performance with above-expectation free cash flow, increased shareholder returns, and a positive outlook on capital efficiency. The Q&A highlighted a conservative yet optimistic approach to capital expenditure and shareholder returns, indicating confidence in future performance. The increase in base dividends and share repurchases further supports a positive sentiment. Despite some challenges and risks, the overall tone and strategic decisions suggest a positive stock price movement in the short term.
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