Chord Energy Corp Q4 FY2024 earnings call

Key Points

• 2024 was transformational with integration of Enerplus in May, capturing operational and corporate synergies while maintaining balance sheet strength and capital discipline.
• Fourth quarter 2024: strong operating results led to adjusted free cash flow of approximately $282 million, with shareholder returns including 100% of free cash flow via share repurchases and a 4% increase in the base dividend to $1.30 per share.
• 2025 outlook: maintenance capital program with 5 rigs reducing to 4 by midyear, expecting 130-150 gross wells (22-32 in Q1), ~80% working interest, $205-225 million in non-operated investments (80% in Williston, balance in Marcellus), and focus on capital efficiency and sustainability. Operational highlights include longer laterals, conservative spacing, improved economics, cycle time reductions, and sustainability efforts.

No detailed breakdown of product segments by revenue contribution provided in the transcript.

Guidance Points

• 2025 capital investment expected to be $1.4 billion, with $365 million in Q1.
• Expected free cash flow in 2025 at $70 oil/ $3.50 gas is approximately $860 million with a reinvestment rate of around 60%.
• First quarter guidance reflects impacts of brutal cold weather, with 22-32 gross wells.

Risks

• Forward-looking statements subject to risks and uncertainties described in earnings releases and SEC filings, including market, operational, and regulatory risks that could cause actual results to differ from forward-looking statements.

Q: Give context around 2025 capital outlook and what could drive to lower end of range?

A: Danny Brown noted 2025 guidance includes no incremental efficiency improvements, and factors like better well performance, service contract movements, and incremental operational efficiencies could drive lower capital spend. Over three years, improvements in existing developments could benefit out years.

Q: On simulfrac pace and inclusion in plan?

A: Danny Brown stated one full crew is doing simulfracs, with efficiency improvements baked in.

Q: On shareholder returns and buybacks?

A: Danny Brown mentioned share repurchases as a compelling capital investment opportunity given the company's leverage position and view of undervalued shares.

Q: On three-mile laterals convergence and cycle times?

A: Danny Brown said convergence on EUR per foot basis is seen after ~6 months, and cycle times are improving with more reps. Darrin Henke added first four-mile lateral went well with fast spud rig release and successful frac job.

Q: On M&A landscape and activity?

A: Danny Brown stated the company is patient with M&A, looking for transactions that deliver true shareholder value and leveraging its strong inventory and balance sheet.

Q: On gas and NGL realizations sensitivity to price changes?

A: Michael Lou said gas price increases would incrementally capture value, with NGL prices also impacting cash flow streams.

Q: On non-op Marcellus activity and operators?

A: Michael Lou noted non-op Marcellus has good returns, with activity across the basin and similar returns to operated program.

Q: On tariffs impact to oil/gas NGL realizations?

A: Danny Brown said tariffs would likely benefit domestic producers with a small incremental pull on domestic barrels, though broader demand effects are complex.

Q: On buyback use of balance sheet above 100%?

A: Danny Brown said it's a capital allocation decision, weighing leverage and investment opportunities, with shares seen as compelling.

Q: On inventory duration and convertibility?

A: Danny Brown said inventory is conservative, with aspirational goal of 80%+ in three-mile or higher, needing results from four-mile wells before replatting.

Q: On Marcellus strategic view and monetization?

A: Danny Brown said Marcellus is a great asset under a good operator but not core, with potential monetization to maximize shareholder value.

Q: On four-mile laterals frac protection and reserves?

A: Danny Brown said no unexpected frac protection issues with four-mile laterals, and reserves incorporate conservative PUD bookings and Enerplus integration effects.