On Wednesday, Piper Sandler reiterated an Overweight rating o Chord Energy Corp (NASDAQ:CHRD) shares.
The adjustment follows a review of the company’s fourth-quarter estimates and a reevaluation of asset productivity trends.
In fiscal year 2024, Chord Energy’s stock performance lagged, with a 24% decline, in contrast to the broader market indicators such as the XOP, which saw a 3% increase, and WTI crude prices that rose by 10%.
This underperformance was attributed to several factors, including weaker oil productivity, the company’s graduation from the Russell 2000, and a general cooling of sentiment towards oil stocks.
However, updated well data indicated that Chord Energy exhibited stronger well performance in the third quarter of 2024 when evaluated on a three-month cumulative oil production basis. This performance also showed improvement from the data in September of the same year.
Analysts at Piper Sandler reduced the price target slightly from $194.00 to $193.00. They believe that Chord Energy is set for a turnaround in fiscal year 2025, driven by a strategic shift towards developing longer lateral wells.
This approach is expected to provide clearer insight into the company’s long-term reinvestment prospects. Additionally, the recent acquisition of Enerplus (NYSE:ERF) is seen as a positive move, bringing some of the most promising remaining oil inventory in the lower 48 states into Chord Energy’s portfolio.
The company’s long-term guidance provided with its third-quarter 2024 results, which includes a $1.4 billion expenditure to maintain production levels at approximately 152 thousand barrels per day, is considered conservative by Piper Sandler.
This is especially in light of the increased allocation towards Enerplus resources and the development of three-mile lateral wells.
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