Earnings call transcript: Chord Energy beats Q4 2024 expectations

Chord Energy Corp (CHRD) reported its fourth-quarter 2024 earnings, significantly surpassing analysts’ expectations with an earnings per share (EPS) of $3.49 compared to the forecasted $2.96. The company’s revenue reached 1.45 billion dollars, exceeding the anticipated 1.12 billion dollars. Following the earnings announcement, Chord Energy’s stock experienced a 4.03% increase, closing at $112.93. According to InvestingPro analysis, the stock is currently trading near its 52-week low of $107.24, suggesting potential value opportunity. The company maintains a "GREAT" financial health score of 3.19/5, reflecting strong fundamentals despite recent price movements.

Key Takeaways

• Chord Energy’s Q4 2024 EPS of $3.49 exceeded forecasts by 17.9%.
• Revenue of 1.45 billion dollars surpassed expectations by 29.5%.
• Stock price rose by 4.03% after the earnings release.
• The company increased its base dividend by 4%.
• Operational efficiencies led to reduced drilling cycle times.

Company Performance

Chord Energy demonstrated robust performance in Q4 2024, with significant improvements in operational efficiency and financial metrics. The company returned 944 million dollars to shareholders over the year and repurchased over 5% of its shares. These efforts were supported by a low net leverage of 0.3x at year-end, showcasing strong financial health. The company also reported a successful transition to longer lateral drilling, enhancing production efficiency. InvestingPro data reveals an impressive dividend yield of 9.35% and a notably low P/E ratio of 5.83, suggesting the stock may be undervalued relative to its peers. For deeper insights into Chord Energy’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: 1.45 billion dollars, up from 1.12 billion dollars forecasted.
• Earnings per share: $3.49, compared to the forecast of $2.96.
• Adjusted free cash flow: 282 million dollars in Q4 2024.
• Base dividend increased by 4% to $1.3 per share.

Earnings vs. Forecast

Chord Energy’s actual EPS of $3.49 was 17.9% higher than the projected $2.96. The revenue of 1.45 billion dollars exceeded expectations by 29.5%. This performance marks a significant beat compared to previous quarters, highlighting the company’s strategic execution and operational efficiencies.

Market Reaction

Following the earnings release, Chord Energy’s stock rose by 4.03%, closing at $112.93. This movement reflects positive investor sentiment, driven by the company’s strong financial performance and optimistic outlook. The stock’s rise places it closer to its 52-week high of $190.23, indicating robust market confidence.

Outlook & Guidance

For 2025, Chord Energy projects a capital investment of 1.4 billion dollars and expects production levels between 152,000 and 153,000 barrels of oil per day. The company anticipates generating 860 million dollars in free cash flow, with a reinvestment rate of approximately 60%. Additionally, Chord Energy is exploring potential monetization of its Marcellus assets. InvestingPro subscribers have access to 10+ exclusive ProTips about CHRD, including detailed analysis of the company’s debt levels, cash flow coverage, and long-term performance metrics. The platform’s Fair Value analysis suggests the stock is currently undervalued, presenting a potential opportunity for value investors.

Executive Commentary

CEO Danny Brown emphasized, "Chord has become a basin leader and our improved scale has driven a highly efficient program." COO Darren Henke added, "We view this three-year outlook as conservative," signaling confidence in the company’s future performance. Brown also noted, "We want to maximize value delivery to shareholders," underscoring Chord Energy’s commitment to shareholder returns.

Risks and Challenges

• Potential volatility in oil prices could impact revenue.
• Regulatory changes in the energy sector may pose challenges.
• Operational risks associated with the transition to longer lateral drilling.
• Market competition in the Williston Basin remains intense.
• Economic uncertainties could affect overall demand for energy.

Q&A

During the earnings call, analysts inquired about the potential for reduced capital expenditures and the performance of 4-mile lateral drilling technology. Discussions also covered non-operated Marcellus gas production and possible asset sales, reflecting strategic considerations for capital allocation and growth.

Full transcript - Chord Energy Corp (CHRD) Q4 2024:

Andrew, Conference Call Moderator: Good morning, ladies and gentlemen, and welcome to the Acorda Energy Fourth Quarter twenty twenty four Earnings Call. This call is being recorded on Wednesday, 02/26/2025. I would now like to turn the conference over to Bob Bakunaskis. Please go ahead.

Bob Bakunaskis, Unspecified Executive, Chord Energy: Thanks, Andrew. Good morning, everyone. This is Bob Bakunaskis, and today we are reporting fourth quarter twenty twenty four financial and operational results. We are delighted to have you on the call. I’m joined today by Danny Brown, our CEO Michael Lew, our Chief Strategy and Commercial Officer Darren Henke, our COO Richard Robuck, our CFO as well as other members of the team.

Please be advised that our remarks, including the answers to your questions, include statements that we believe to be forward looking statements within the meaning of the Private Securities Litigation Reform Act. These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently disclosed in our earnings releases and conference calls. Those risks include, among others, matters that we have described in our earnings releases as well as in our filings with the Securities and Exchange Commission, including our annual report on Form 10 K and our quarterly reports on Form 10 Q. We disclaim any obligation to update these forward looking statements. During this conference call, we will make reference to non GAAP measures and reconciliations to the applicable GAAP measures can be found in our earnings releases and on our website.

We may also reference our current investor presentation, which you can find on our website. And with that, I’ll turn the call over to our CEO, Danny Brown. Thanks, Bob.

Danny Brown, CEO, Chord Energy: Good morning, everyone, and thanks for joining our call. Over the next few minutes, I plan to reflect on Chord’s twenty twenty four accomplishments, provide a brief overview on fourth quarter performance and resulting return of capital, and then turn the discussion to our 2025 outlook. From there, I’ll turn it to Darren, who will comment on Chord’s operations. Darren will then pass it to Richard for more details on our financial results before we open it up for Q

: and A. So

Danny Brown, CEO, Chord Energy: starting with 2024, last year was a transformational year for our organization as we solidified our leading position in the Williston Basin by entering into a combination with another leader in the basin, Enerplus (NYSE:ERF). The combination closed in May of last year and we successfully extracted significant value from the integration by focusing on incorporating best practices from both organizations, which allowed us to capture substantial operational and corporate synergies. And notably, we executed this transaction while maintaining our commitment to balance sheet strength, capital discipline and peer leading return of capital. My sincere thank you to all the employees who through their commitment and dedication have placed us in a great position to succeed. And to that point, I believe this is the best position the company has been in since I arrived four years ago.

Cord has become a basin leader and our improved scale has driven a highly efficient program capable of generating flat to slight volume growth with low maintenance capital, resulting in high amounts of sustainable free cash flow. We have enhanced our economics by adopting leading edge practices such as long laterals and conservative spacing, which have lowered our breakevens and extended inventory life. As we look to the future, Cord’s substantial low cost inventory generates attractive economics and allows for continued lower investment rates, robust free cash flow and attractive return of capital. In short, we’ve demonstrated consistent delivery for shareholders and have additional catalyst for future upside. Our capital efficient development and solid operational performance resulted in strong free cash generation last year and a significant portion of this was returned to shareholders.

In 2024, on a pro form a basis, Cord returned $944,000,000 to shareholders. And in recent quarters, you’ve likely noted that we’ve leaned harder into share repurchases to take advantage of what we view as a value disconnect in our share price. Since closing the Enerplus transaction, Cord has repurchased greater than 5% of its shares outstanding and we expect a continued focus on share repurchases in the current environment, which should yield per share growth across all key metrics. One example of this can be seen on Slide six of our presentation, where we show that Cord has grown oil production per share at a 12% compounded annual growth rate over the last three years. And importantly, we did this while simultaneously preserving our balance sheet and paying out approximately $2,000,000,000 in dividends.

Given our strong inventory and low reinvestment rate and what we see as a compelling valuation on both an absolute and relative basis, which we highlight on Slide four, we see no reason why strong per share growth won’t continue. Turning to fourth quarter results, Core delivered another great quarter with solid operating results yielding free cash flow above expectations, which supported robust shareholder returns. Specifically, fourth quarter oil volumes were above the midpoint of guidance reflecting strong execution and well performance, while capital was below expectations largely reflecting fluctuations in program timing. Operating expenses also came in below expectations as the team continues to focus on improving cash margins. My thanks to our field, development and execution teams for delivering favorable results across the board in the fourth quarter and really all of 2024.

Fantastic job by all. This strong performance led to adjusted free cash flow for the fourth quarter of approximately $282,000,000 and Cord stepped up shareholder returns to 100% of free cash flow to take advantage of the discount we see in our shares. Share repurchases comprise all of our return of capital for the quarter after accounting for the base dividend, which was increased by 4% to $1.3 per share. Turning our attention to 2025. As you’ll recall, this past November, Cord released its first multiyear outlook and our 2025 guidance released last night demonstrates we’re off to a strong start.

Despite some stretches of brutally cold weather, the asset is performing well and our latest projections, including the impacts of this weather, are reflected in our first quarter guidance. As for the details surrounding our 2025 plan, this year we intend to run a maintenance program and are currently running five rigs, which we expect to decrease to four by mid year. Additionally, we are currently running one full time frac crew and one spot crew. We expect a turn in line between 130 to 150 gross operated wells in 2025, including 22 to 32 in the first quarter. The remainder of 2025 tilts are expected to be spread out across the year.

Average working interest in 2025 is expected to be approximately 80% a little over 40% of the 2025 turn in lines are expected to be three mile laterals, which should increase to over 50% in 2026 and 2027. In addition to the operated program, we expect to invest between $2.00 $5,000,000 and $225,000,000 on non operated opportunities with approximately 80% of that in the Williston with the balance in Marcellus. The 2025 program is expected to deliver production similar to pro form a 2024 or between 152,000 to 153,000 barrels boiled per day with $1,400,000,000 of capital investment. This is approximately $90,000,000 less than last year on a same same basis and does include around $10,000,000 which slipped from the fourth quarter of last year into the first quarter of this year. At benchmark prices of $70 per barrel of oil and $3.5 per MMBtu of natural gas, we expect to generate approximately $860,000,000 of free cash flow in 2025 with a reinvestment rate of around 60% for the year.

As we progress through the year, Cord will continue to have a laser focus on improving our already strong capital efficiency and delivering strong investment returns. In Slide seven of our investor presentation, you can find a third party research firm’s assessment of Chords’ capital efficiency versus peers in 2024 and 2025, where you’ll see that we’re on the better end of capital productivity and one of the few companies improving efficiency year on year. This reflects improving productivity partially driven by our pivot towards longer laterals, which Darren will discuss a bit more. And speaking of turning this over to Darren, the last thing I wanted to cover before doing so is our commitment to sustainability. Chord is proud of our work providing reliable and affordable sources of energy so critical to every aspect of modern living.

And we do this while maintaining a commitment to operating in a sustainable and responsible manner. On this front, Cord continues to make progress on our already strong sustainability initiatives with a focus on putting safety first, minimizing our environmental impact and being a good partner in our communities. So to summarize, Chord had a great 2024. We’re off to a strong start in 2025 and we believe we offer a unique value proposition to investors with a compelling opportunity to invest in quality assets with proven execution, strong investment returns and substantial return of capital to shareholders. And with that, I’ll turn it over to Darren.

Darren Henke, COO, Chord Energy: Thanks, Danny. Operationally, Cord continues to hit our stride and we’re off to a great start on our three year plan issued in November. We view this three year outlook as conservative as it assumes no further improvements in capital efficiency relative to our year end 2024 capabilities. Thus, the outlook includes no incremental benefits from faster cycle times, additional three mile laterals or four mile laterals, all of which are focal points for the organization. Currently, the three year plan projects over 50% to be three mile laterals and Chord’s total inventory is over sixty percent three mile laterals on a lateral adjusted foot basis.

We believe we can increase this percentage materially over the next few years, improving the economics associated with both our three year plan and our overall inventory. Just a quick update on four mile laterals. Core successfully drilled and completed our first four mile lateral and we just reached a TD exceeding 30,400 feet while cleaning out the frac plugs. We’re planning several more four mile laterals in 2025 and with success are likely to implement many more in 2026 and beyond. As a reminder, our initial approach to four mile wells will be converting two, two mile DSUs to one, four mile DSU.

However, similar to Chord’s evolution on the three mile program, as we make progress on execution and drive the risk adjusted returns higher, we ultimately could look to convert some of our existing three mile inventory into four mile wells. Since we’re on the topic of longer laterals, I’d like to discuss some nuances of these longer wells given how unique they are to Cord’s story. Slide nine highlights the economic benefits of three mile laterals, which deliver 50% more EUR than two mile wells for only 20% more capital. This relationship is consistent when comparing wells with analogous geology and well spacing. Over the past several years, Cord has drilled fewer two mile wells in the core and shifted towards more three mile wells on its western acreage.

On the lower right hand side of Slide 9, you can see a contrast between a two mile core well and a three mile well on our Western acreage. The F and D cost for the Western 3 mile well is actually better than the core two mile well as lower D and C cost per foot more than offset the lower EUR per foot. Said another way, longer laterals outside the core actually have similar or better returns than two mile wells inside the core. As core wells generally have higher costs given the depth, pressure and other complexities that need to be managed. Well productivity and EUR are certainly key factors for generating attractive returns, but the cost side is equally important.

The production profile of longer laterals also differs from shorter laterals. All else equal, a three mile well will deliver a slightly higher IP, stay flat longer and exhibit shallower declines than a two mile well. When comparing analog well performance per foot of lateral, initially three mile wells typically will typically be lower than two mile wells as the higher IP is more than offset by the 50% longer lateral. However, over time, the longer flat period and shallower declines will lead the three mile well to catch up to the two mile well on an EUR per foot basis. As Danny alluded to last quarter, Chorus choke methodology is more restrictive than most peers, which prevents sand flowback and ultimately lengthens the life of our ESPs, saving costs.

We have been implementing this more restrictive choke program on the Enerplus wells, which will impact the optics of initial IP rates per foot on a year over year basis. Again, per foot performance is the appropriate way to judge well productivity over the long term, but early data is often misleading. On Slide 10, you can see Cord’s twenty twenty three and twenty twenty four lateral length adjusted average well productivity relative to drilling and completion costs. By dividing well productivity per foot by drilling and completion costs per foot, it gives a sense as to the overall capital efficiency of the program. As you can see, the twenty twenty four program is superior to twenty twenty three and we expect the twenty twenty five, 20 20 six and 20 20 seven programs at a minimum to deliver similar capital efficiency as twenty twenty four.

Turning to inventory, Slide five shows Chord’s inventory depth and breakeven pricing versus peers as assembled by an independent research firm, which strives to use similar modeling methods across each company represented. The key takeaway is Core’s inventory is very competitive with peers. While we evaluate our inventory differently than the third party, we believe their analysis is objective and consistent. Additionally, we overlaid valuation multiples into the analysis to illustrate Chord’s attractive valuation, particularly in light of our relative inventory depth and quality. Lastly, I wanted to comment on Chord’s operational efficiency.

Our teams continue to execute with excellence and aim to drive cycle times lower for both drilling and completions. On the drilling side, we reduced cycle times on three mile wells by about one point five days in 2024 versus 2023 and regularly set new records on the Enerplus acreage. On the completion side, our full time frac crews using somo frac operations on most pads, which has driven down non productive time. Lateral feet completed per day has increased by about 40% as compared to zipper fracs, generating well cost savings and reaching first production quicker. Finally, downtime continues to be minimized as the core team successfully navigated very frigid weather in January and February, keeping outages brief and getting volumes back online quickly.

To sum it up, Cord is driving continuous improvement and innovation on our asset base and it’s really showing in our execution and our delivery. I’ll now turn it over to Richard.

Richard Robuck, CFO, Chord Energy: Thanks, Darren.

Bob Bakunaskis, Unspecified Executive, Chord Energy: I’ll discuss fourth quarter performance in more detail and give some color on 2025 guidance as well. In the fourth quarter, Core generated adjusted free cash flow of $282,000,000 which was above expectations due to strong volumes, better gas and NGL realizations, lower capital and good cost control. Oil volumes were above midpoint guidance while total volumes were above the top end reflecting strong well performance. Oil realizations in the fourth quarter averaged about $1.5 below WTI, which was flat to prior quarters. We expect coil differentials to widen some in the first quarter of twenty twenty five following an increase in basin production growth in the fourth quarter, but it will improve gradually over the course of the year.

NGL realizations were 14% of WTI in the fourth quarter near the top end of our guidance range. Natural gas realizations were stronger than expected at 43% of Henry Hub. Realized gas prices in The Bakken benefited due to improving differentials for the regional benchmarks such as Ventura and AECO, which narrowed the gap against Henry Hub in the fourth quarter. This typically happens when winter weather hits and in fact the benchmarks can exceed Henry Hub at times. This strength driven largely by cold weather persisted in the first quarter which is reflected in our guidance.

As a reminder, certain marketing fixed fees are deducted from our NGL and natural gas prices. This drives higher operating leverage which hurts realizations for both NGL and natural gas in times of weaker prices, but realizations improve rapidly with higher prices as we saw in the fourth quarter and continue to see in the first quarter. Given gas prices exhibit seasonal volatility, we expect our realizations to follow a similar pattern and to be weaker in the second and third quarters and stronger in the first and fourth. The net impact of seasonality is reflected in our full year guidance with the first quarter realizations exceeding the full year expectations. Turning to operating costs.

Fourth quarter LOE was below our expectation at $9.6 per BOE reflecting better downtime and lower workover costs. 2025 LOE guidance reflects modest escalation relative to 2024, but this may prove conservative as it did in 2024 depending on downtime and work overspend levels. Fourth quarter cash GPT was $2.86 per BOE, in line with our guidance. Fourth quarter cash G and A was $31,200,000 excluding $9,000,000 of merger related costs and quarterly G and A is expected to continue to trend downward in 2025 as we realize further synergies. Production taxes averaged 8.4% of commodity sales in the fourth quarter and cash taxes were in line with our expectations.

We expect full year 2025 cash taxes to approximate 3% to 10% of EBITDA and first quarter cash taxes to approximate 1% to seven percent of EBITDA each at oil prices of $60 to $80 per barrel. Fourth quarter adjusted CapEx of $325,000,000 excludes $5,200,000 of reimbursed non operated capital and was $10,000,000 below midpoint guidance, largely reflecting minor shifts in timing to 2025. Even with this shift, we are still planning on investing $1,400,000,000 in 2025 and $365,000,000 of that is in the first quarter. From February 2025, the company completed its annual semi annual borrowing base redetermination setting the borrowing base at $2,750,000,000 and increasing the aggregate amount of elected commitments to $2,000,000,000 As of 12/31/2024, Cord had $445,000,000 drawn under its revolver, $400,000,000 of senior unsecured notes, $37,000,000 of cash and $31,000,000 of letters of credit. Net leverage remained at 0.3 times at year end twenty twenty four as we returned 100% of our free cash flow to investors across the quarter.

Separately, Cord layered on some hedges since our last update. Our derivative position as of February 24 can be found in our latest investor presentation. In closing, thanks again to the Cord team for all their hard work on the integration front and for the intense focus on improving day to day operations. We are pleased with the substantial progress that we’ve made over 2024, the continued performance of the team and the position that they put the organization in to succeed going forward. So with that, I’ll hand the call over to Andrew for questions.

Andrew, Conference Call Moderator: Thank you. Our first question is from Scott Hanold from RBC. Please go ahead.

: Yes. Hey, thanks all. Can you give just some context around your outlook for capital in 2025 and maybe even going forward? I mean, there’s obviously you have a low and a high end of the range. But can you just give us some sense of what could drive you to lower end of the range this year?

Is it like increasing just a simulfrac or just more experience with that? And what is the potential to see downside pressure on that $1,400,000,000 kind of three year outlook?

Danny Brown, CEO, Chord Energy: Hey, Scott, it’s Danny. Thanks for the question. So as we look at 2025, we’re always going to provide ranges around these things. I do think is when we put this out in November of last year and as we’ve rolled forward that plan, we’ve taken a somewhat static view and don’t include improvements in efficiency, cycle times, that sort of things in this. And so to the degree we see incremental improvements on that and candidly we see that year on year, Industry does and we certainly do too.

That will roll through to the benefit of the overall program. So again, we like to be slightly conservative on these things and my expectation is we’ve got probably more downward pressure than upward pressure on that number. Certainly, we’ll work through the year. I’ve mentioned before, we do like to have, from a service standpoint, we do like to always be in the market a bit. And so we’ve always got contracts rolling off and on and those things can move either direction.

I’ll tell you where I sit now relative to commodity and activity levels. I think we’re probably flat maybe some looseness in that along certain line items. So a number of things could drive us lower. I think importantly, if we see better well performance, that’s another thing that could drive us lower because we’re really not trying to chase capital up. The intent is to drill to deliver a maintenance production level.

And if we see our wells performing stronger and hanging in and we certainly have seen in the past encouraging things along those lines, we’d probably let capital float down a little bit to maintain that production level. So I think we’ve got several things that could push it down. Over a three year timeframe to the second part of your question, as Darren mentioned, this was all a static look, improving no efficiencies relative to November of last year. And so as four mile laterals may come into the program, as we will continue to get better just on the existing three mile and two mile legacy developments, all of that will aneur to the benefit of the capital program in sort of the out years 2026 and 2027. So when we rolled that out, we said we thought it was a little conservative and we weren’t going to put something out there that we didn’t have high confidence we could meet or exceed and I still feel the same way.

: Okay. That’s appreciate that. And part of that too and I hate to try to layer another question there, but I guess I missed it if you said it, but is the simul fracs your current pace of is it basically doing full simul fracs for the year? Is that included in the plan as well?

Danny Brown, CEO, Chord Energy: Well, we’ve got on I mentioned we’ve got one partial crew and one full crew. We’re doing simul fracs with the full crew. We’re actually doing we’re not necessarily doing simul fracs with that partial crew. And so for that full crew, that is all assuming simul frac. But as that efficiency improves, clearly you see some benefits, you can see some benefits from that.

But I think we’ve got a lot of that baked in.

: Okay, okay, got it. And then for my follow-up question, can we touch on shareholder returns? I mean, obviously giving 100% of free cash flow was very robust in all buybacks like look your stocks up today, but it’s still quite a bit under where you did your buybacks in fourth quarter. I mean, does that should we look at that as pretty indicative of what you all might do in going forward here, especially with your very low leverage? Does it make sense to continue to kind of push it towards that 100% in all incrementally being buybacks?

Danny Brown, CEO, Chord Energy: Well, what I’ll say Scott is that we have at the end of the day, it’s really a capital allocation decision. And as we look at that sort of incremental free cash flow generated above the 75%, we have to think about what we do with it. And with our leverage position where it is sort of retiring incremental debt doesn’t make a lot of sense and we see our shares at this level as a really compelling capital investment opportunity. Thank you.

Andrew, Conference Call Moderator: Your next question is from Derrick Whitfield from Texas Capital. Please go ahead.

Richard Robuck, CFO, Chord Energy: Good morning all and thanks for taking my questions.

Danny Brown, CEO, Chord Energy: Thanks Dirk.

Richard Robuck, CFO, Chord Energy: Regarding three mile laterals, I want to thank you for your disclosures on slides nine and ten as it’s been quite challenging to compare well productivity per foot between two and three mile laterals when there are over four variables you have to control for in that analysis. Maybe setting aside cost for a moment, where are you seeing the CIM curves per foot meaningfully start to converge in the life of the well? And then specific to cost, are you seeing better cycle times with three mile laterals given the benefit of additional reps?

Danny Brown, CEO, Chord Energy: So I’ll start with the ladder first. We absolutely are doing these things faster. And I think with like anything, as you get more practice, you get better and better at them. And we’re certainly seeing that with three mile laterals, not just with the drilling and completion. But I think importantly, getting cleaned out to tow and not just the cycle times, the cost associated with getting down to the toe of the well to clean that out.

With respect to convergence on an EUR per foot basis, I think it’s after about six months, we start to see that converge pretty well. We’re getting to sort of till the 95% on an equivalent basis of two on a per foot EUR recovery after around six months and you’re essentially all the way there within a one year timeframe. So that first three or four months is really where you see the difference in the QEURs. And so if you’re focusing on that very early well time data, it can be misleading as Darren pointed out. But within about six months, you’re there and you’re all the way there within a year.

Richard Robuck, CFO, Chord Energy: Terrific. And then regarding your first four mile lateral, could you speak to what operational challenges you observed, if any? And then what do you see as the cost benefit for transitioning from three mile to four mile laterals after accounting for the cycle times?

Danny Brown, CEO, Chord Energy: I’m going to ask Derik to respond to that because he’s been real close to this first well as you can imagine.

Darren Henke, COO, Chord Energy: Yes, Derik, knock on wood, boy, the first four mile wells really gone off without a hitch. We spud rig release was fourteen point five days, the fastest well suspended in the basin, four mile lateral at this point. And then the frac job went beautifully. The Being able to pump the frac stages at the tow, we were somewhat concerned about what kind of rate we’d be able to get going through all that pipe with the friction losses, but all that went really well. And we just as of this morning, we just reached TD drilling out the frac plugs and we’re able to do that in one run as well.

So, like I say, knock on wood, operationally it’s going very well. We see similar to get to the second part of your question relative to the performance of a four mile well. We think we’ll see the same kind of uplift going from three miles to two miles. We’ll see similar uplifts going from four miles, going from three miles to a four mile well. And we’re also looking at a lot of alternate shapes.

People have different names for them in the basin, but we’re looking at ways to really dramatically change our inventory to three miles and four miles and perhaps down the road even beyond that. So a lot of work going on there and none of that as Danny said is in our three year plan. It’s not baked into our long term inventory either at this point.

Richard Robuck, CFO, Chord Energy: Great update. Thanks for your time.

Bob Bakunaskis, Unspecified Executive, Chord Energy: Yes, sir.

Andrew, Conference Call Moderator: Your next question is from Neal Dingmann from Truist. Please go ahead.

Neal Dingmann, Analyst, Truist: Good morning. Thanks for the time guys. The end of my question is just now with the integration, I guess, really my question is on just your operational efficiencies for you and Darren. You continue to see the improvement now going from the two to three miles and three to four miles. I’m just wondering when you sort of see things set up this year, can you continue to sort of chip away at that?

And if so, where do you think some of those efficiency gains will be coming from?

Danny Brown, CEO, Chord Energy: So Neil, appreciate the question. It’s again with incremental reps, you just get better. And so we’re starting to get some reps under our belt from a three mile perspective. And so we’ve seen that happen. Certainly, we saw a dramatic improvement last year from an efficiency perspective as we move to the adopt simulfrac across the fleet.

And so I think you’ll see us continue to grind down incremental improvements on three miles. We’re at serial number one of a four mile. And so we’ve got plans to do a few more of those over the course of the year. And I think you’ll probably see dramatic improvement on those, even with the strong start that Darren just mentioned. And so I’m sure the program won’t be without its hiccups, they all are.

But what we know is as we get more practice on these things and we do more, we see we seem to drive efficiencies efficiencies pretty quickly into the programs and far surpass our original expectations going in. At least that’s been my history with this industry and with this organization. So I think we’ll again, you’ll see sort of a steady incremental improvements on the three mile, probably significant improvements on the four mile, which as we’ve talked about, this four mile program is really contemplated early on to replace two mile wells. But if we’re able to see sort of consistent delivery and uplift, you could see us start to replat some of these three miles to take advantage of the four mile uplift as well.

Neal Dingmann, Analyst, Truist: I like that upside. And then just a question on M and A. As it stands out, I think you all have ample more certainly ample inventory. But with that said, pristine balance sheet, I mean, again, I guess my question is what does the M and A landscape sort of look like to you today and how actively do you think you all could be out there doing something?

Danny Brown, CEO, Chord Energy: Well, to your point, Neal, I think we are we think we’ve got a great inventory set here far better than what we often feel like we get credit for. So I’m happy with the inventory position. And like I’ve said, it’s not just about we do think there’s advantages to scale in this industry, but at the end of the day, the size has to make you better, not just bigger. And you’ve seen us be, I’d say, patient. And we’ve picked our spots on what where we have decided to do M and A.

And I think you’ll see us continue to do that. And if we see a way that we think delivers true shareholder value through an M and A transaction, that’s something we’ll evaluate because that’s what we want to do is deliver value to shareholders, but it has to do that at the end of the day. So I think you’ll continue to see us be patient. And if we do something, we’ll recognize that it has to be something that delivers full cycle value.

Neal Dingmann, Analyst, Truist: That makes sense. Thank you so much.

Danny Brown, CEO, Chord Energy: Thanks, Neil.

Andrew, Conference Call Moderator: Your next question is from Oliver Huang from TPH. Please go ahead.

Oliver Huang, Analyst, TPH: Good morning, all, and thanks for taking the questions. Just wanted to kind of start out on gas and NGL realizations. I know in the prepared remarks, you kind of alluded to a fixed component there. And I see that you all have underwritten $3.5 in your outlook. Just thinking, if we’re seeing some sort of upside to gas prices towards $4 in 2026 or an improvement in the AECO market, is there any sort of rule of thumb or sensitivity in terms of what sort of uplift we might see for your cash flow streams?

Bob Bakunaskis, Unspecified Executive, Chord Energy: Yes, I mean, I think that’s a great question. You’re spot on that, as the price starts to tick up, you’ll continue to see us tick up. I think the thing to watch for is like what’s happening with NGL prices at the same time, because you’ve seen that impact as well because we’re allocating to both gas and NGL. But you’re definitely right. As gas prices go up, we will be scaling incrementally to capture that value.

Oliver Huang, Analyst, TPH: Okay. Makes sense. And maybe just on the non op side, I know there isn’t always great line of sight to when the activity shows up, but just kind of given how it’s being flagged with a decent magnitude out of the Williston, any sort of color you’re able to speak to on who the primary operators that we should be aware of for this year, if there’s any specific part of the basin the activity is likely to be concentrated in or if it takes a roughly similar mix versus what we’ve kind of seen from your operated portfolio?

Michael Lew, Chief Strategy and Commercial Officer, Chord Energy: Oliver, this is Michael. Good question on the non op side. We’re seeing a good mix of operators really across the basin. So you can kind of look at basin activity as a whole and our non op program is probably a proxy for that. Overall.

Activity continues to be in the core kind of part of the basin overall. So we’re still seeing quite a bit of that activity in very good parts of the basin. I think it’s very similar returns to our operated program. So I don’t think you’ll see any kind of diminishment of returns or anything like that, that we’re expecting across the program. So really good returns on both the operated side and the non operated side.

So we’re excited about the program. We’re seeing activity from a bunch of other operators. We think we can learn from them as well. So we’ll be continuing to watch data to make sure that there’s a lot of people testing different things across the basin. Not as many people talk about them because they’re in some bigger companies, but we’ll be watching it closely and making sure that we continue to improve our operations on that front as well.

Oliver Huang, Analyst, TPH: Makes sense. Thanks for the time.

Neal Dingmann, Analyst, Truist: Thank you. Thanks, Oliver.

Andrew, Conference Call Moderator: Your next question is from John Abbott from Wolfe Research. Please go ahead.

John Abbott, Analyst, Wolfe Research: Good morning and thank you for taking our questions. My first question is on tariffs. It’s not on the cost side, but if tariffs were implemented, how do you think the impact would be to your oil and gas NGL realizations?

Danny Brown, CEO, Chord Energy: John, this is Danny. Thanks for the question. I think in general when you think about tariffs, when a tariff is implemented, generally it’s to the benefit of the domestic producer. And I don’t think it would probably be much different here. I think from a refining from an oil perspective, there’s probably some level of incremental pain felt by the refiners and the foreign producers and maybe small incremental benefit to the domestic producer.

I don’t think it’s dramatic, but I think that’s probably you probably see a small incremental pull from the domestic barrel. And so that’s kind of how we think about it. Now what I can’t say is what the butterfly effect of tariffs do, we may see slightly a slight pull from a demand side on our barrels, which should put some upward pressure on pricing there. To what degree, I’m not sure. But then it has a broader effect too.

How does it affect overall demand? Where does and where the prices go from just the supply demand perspective? So lots of moving parts there, but just on its pure if you isolated that one thing, I think probably an incremental pull on domestic barrels.

John Abbott, Analyst, Wolfe Research: Appreciate it. And then for our follow-up question, I mean, we’ve seen the improvement in natural gas prices. What is your latest thoughts on maintaining your non op Marcellus position?

Danny Brown, CEO, Chord Energy: Well, we think we’ve got a we have been the beneficiary in both Williston and for the non op production we had in Marcellus of the higher natural gas prices here recently. We think Marcellus is a great asset. It is under a very capable and good producer. But as we’ve mentioned before, it’s not a core portion of the portfolio and we’re going to look to see how we maximize value delivery to shareholders from that asset over time.

John Abbott, Analyst, Wolfe Research: Thank you very much for taking our questions.

Danny Brown, CEO, Chord Energy: Thanks, John.

Andrew, Conference Call Moderator: Your next question is from Josh Silverstein from UBS. Please go ahead.

Bob Bakunaskis, Unspecified Executive, Chord Energy0: Thanks. Good morning, guys. Just wanted to follow-up on the buyback. I know you were at 100% this quarter, but would you guys consider using the balance sheet to go above 100 just given where the stock is trading at? I’m just curious given the valuation of the stock.

Thanks.

Danny Brown, CEO, Chord Energy: Yes, I appreciate it, Josh. As I said, it’s really a capital allocation decision for us. And so you’ve seen this in the past and use the balance sheet to make compelling capital allocation decisions. And so I’ll sort of leave it at that. Ultimately, we’ve got away increasing leverage relative to capital investment opportunities, etcetera.

But it’s something clearly we talk about and we do think our shares are pretty compelling where we’re at right now.

Bob Bakunaskis, Unspecified Executive, Chord Energy0: Got it. And then just on the inventory duration, I know you mentioned around ten years before, I know it’s somewhat of a third party estimate, but could you go into what you guys are assuming from an inventory standpoint? Does ten years assume three miles? How many wells in the Middle Bakken? Is there anything left in the 3 Forks?

Just to kind of give a more color around that. Thanks.

Danny Brown, CEO, Chord Energy: Yes. I’d say our inventory, I think, is fairly conservative. Josh, it’s essentially a Middle Bakken only program. We’ve got very little 3 Forks. There’s a little bit.

We’re talking small single digit percentage in our inventory that’s associated with Three Forks. So it’s really a middle Bakken program, pretty conservatively spaced program. And yes, so as we are able to potentially see some of these longer laterals convert areas of the field because of the improved economics into areas that actually become nice and attractive investment opportunities. We have the potential to see this, march higher. And candidly to the degree that we determine that maybe we’re a little too loose in our spacing in some areas, we could see some more inventory come in as a result of that as well.

I will tell you, it is not I want to effectively drain the resource with as few straws as possible because that’s the most capital efficient way to do it and that’s going to be what delivers us the strongest returns. And so we are not into manufacturing inventory, but if it determines that if we determine that we are too loose and we’re leaving resource in the ground that offers strong returns, then we’ll look at maybe tightening up our spacing a bit. I don’t think that will be dramatic, But when you consider our 1,300,000 acres position up there, even a small sort of tightening up spacing has a not immaterial impact on overall inventory. So I’d say our sort of in summary, I’d say our inventory, we see it as maybe somewhat conservative and I’ll leave it at that.

Bob Bakunaskis, Unspecified Executive, Chord Energy0: Thanks.

Andrew, Conference Call Moderator: Your next question is from Paul Diamond from Citi. Please go ahead.

Bob Bakunaskis, Unspecified Executive, Chord Energy1: Thank you. Good morning. Thanks for taking the call. So you talked about the conversion and general conversion of two mile DSUs to one four mile, but also that opportunity set to kind of extend the three mile inventory that’s currently 60% of your inventory set. Just wanted to see if you could kind of dial in how much of that 60% is potentially convertible.

Is it all just matters on the economics of the well or just kind of how to think about that?

Danny Brown, CEO, Chord Energy: Yes, I’d say generally speaking, Paul, we think we’ve got sort of I’d call it greater than 50% from a three mile inventory perspective currently. And so then there’s a balance that is part of the balance is two mile inventory. We’ve got some that are actually lower than that. And then we’ve got some areas where we may have some four mile opportunities. And so it’s a mix outside that 50%.

Our goal would be and our objective would be to get up to around 80% into that three mile plus sort of space. And so we actually have a slide in our investor deck where I think we talk about what our objective is. And maybe our objective is to get it actually even higher than 80% candidly, but we recognize there’s going to be some areas where we’re landlocked. It may be somewhat difficult to do that. So but I think as an aspirational goal for ourselves getting to eighty percent three mile or greater, is something we’re certainly shooting for.

As we are able to see strong performance from a four mile well, if and when we see that, then I think we’ll really go back to the drawing board from our overall DSU layout and say where can we re space some of these three miles to four miles to see the upside. So that we need to get this first well producing, we need to get a few more wells in the ground before we really undertake that effort. Because as you can imagine, replanting out the whole basin, not a trivial thing to do and we need to see some results first.

Bob Bakunaskis, Unspecified Executive, Chord Energy1: Understood. Appreciate the clarity. Just a quick follow-up. You all talked about dropping a rate midyear. You’re talking about just the timing of that, what could cause it to kind of be pulled forward or push back and how that really portends into the trend of CapEx for the year.

Is that to be I know we should expect to be front half weighted, but is that more Q1 and just how to think about the timing of all this?

Darren Henke, COO, Chord Energy: Yes, the fifth rig we’re looking at letting go plus or minus midyear at this point. So I don’t think you’ll see a lot of impact to 2025 production associated with that rig getting laid down. What could change the timing on that rig? Just well productivity, if we see better improvements in run time than what we forecasted in our plan. So we need less production from the wedge, then you could maybe see us release that rig earlier.

That’d be a positive thing for the overall program and while our production team is focused on that every day working to improve our run times and minimize downtime. So that’s a level a lot of people don’t think about relative to the capital program and maintaining maintenance levels of production that Danny referenced earlier. So that’s a color that we can share with you at this time, Paul.

Bob Bakunaskis, Unspecified Executive, Chord Energy1: Understood. Appreciate the clarity. I’ll leave it there.

Andrew, Conference Call Moderator: Your next question is from Noah Houghness from Bank of America. Please go ahead.

Bob Bakunaskis, Unspecified Executive, Chord Energy2: Good morning, guys. For my first question, I wanted to ask, we’ve seen some competition on the midstream side in the Bakken. And I was just wondering, is there a read through here for you all that maybe you guys could renegotiate or have lower GT and T costs?

Danny Brown, CEO, Chord Energy: Well, Noah, I’d say that we’re always looking at opportunities to make sure that we’re getting the best price and the best netback pricing. And so we have we’ve got contracts in place as those roll off. Clearly, we’re going to negotiate hard to get the best deal for ourselves. I’d say even before some of those contracts roll off, we have opportunities as we’ve grown in scale where we can, there may be things that we can do that are win wins for both organizations that, even while we’re under contract, it can make things better for us as we move forward and we’re always looking at those things. I’ll ask Michael to add any incremental comments he’s got.

Michael Lew, Chief Strategy and Commercial Officer, Chord Energy: Yes. No, I mean, you kind of mentioned it. There is a lot of competition. There is pretty mature systems out there across water, gas, oil, kind of all the different pipeline pieces, which that just creates competition, which is fantastic for us. We’ve got a big program that spreads kind of throughout the basin.

So there are a lot of options for us in the basin, and as you mentioned, very competitive. So hopefully all those costs we can continue to work on as Danny mentioned.

Bob Bakunaskis, Unspecified Executive, Chord Energy2: That’s great to hear. And then for my second question, I wanted to ask on the non op Marcellus. As we’ve seen gas prices ramp up here and the gas macro looks more and more attractive. What kind of gas production are you guys baking into your 25 corporate guidance from that non op Marcellus position?

Danny Brown, CEO, Chord Energy: Yes, this is Danny again. So currently we’re thinking between 130,000,000 to 140,000,000 cubic feet coming through that coming through our non op position there in Marcellus.

Bob Bakunaskis, Unspecified Executive, Chord Energy2: Is there just as a quick follow-up or clarification, is there any seasonality in that production profile?

Michael Lew, Chief Strategy and Commercial Officer, Chord Energy: In general, it’s going to be relatively flat. In general, it’s going to be relatively flat. You are seeing that grow a little bit here. Obviously with the gas price coming up at the end of last year into early part of this year, you’re going to see a little additional activity. We’ll see where that continues to hold from a gas price scenario that there is a lot of kind of activity in the area.

And I think that those as you’re seeing across all gas basins, you’re seeing activity come up with that gas price. So there is potentially some upside there if you see gas prices hold at a good level. Great, great returns. So fantastic rock, great returns. So we’re really excited from a capital allocation standpoint to put it there if gas prices hold kind of where they’re at or better.

Bob Bakunaskis, Unspecified Executive, Chord Energy2: Sounds good. Thanks for taking our questions.

Danny Brown, CEO, Chord Energy: Thank you. Thanks, Noah.

Andrew, Conference Call Moderator: The next question is from David Deckelbaum from TD Cowen. Please go ahead. Once again, the next question is from David Deckelbaum from TD Cowen. Please go ahead.

Bob Bakunaskis, Unspecified Executive, Chord Energy3: Thanks for getting me on guys. And good morning to you all. I wanted to ask just a follow-up on the Marcellus. How do you think about that position, I guess, strategically now? And is this something that you might view as a source of funds over the next couple of years?

Just again, given the prevailing price there and obviously the non op position, you’ve been able to take advantage of attractive share buyback opportunities right now and arguably maybe that’s an asset that you’re not getting credit for. Is that something that’s under serious considerations as with the improvement in the gas strip?

Danny Brown, CEO, Chord Energy: Hey, David, this is Danny. So I’ll say that as we said, we think that’s a great asset. It’s got strong returns associated with it. It’s under a great operator, but it’s not core to our portfolio. And so we’ve acknowledged that that’s not a core position for us.

And what we want to do is maximize value delivery to shareholders out of that asset. And one option obviously that we’re thinking about is a potential monetization there and then what we do with the again, so any proceeds we would get out of that would be a capital allocation decision for ourselves at that moment.

Bob Bakunaskis, Unspecified Executive, Chord Energy3: I appreciate that. And then just curious as we think about capital efficiency improvements in 2025 versus 2024, I guess that you guys highlighted. Are you more or less holding productivity flat and just assuming obviously increases in lateral length, but improvements in incremental cycle times? Because I think it was obviously you guys have highlighted the relative improvement in cycle times to peers in 2024, but I guess like how do you think about just capturing efficiencies with longer laterals as it relates back to just cycle time improvements?

Danny Brown, CEO, Chord Energy: Well, the three year plan we have currently and kind of how we’re viewing the 2025 program doesn’t incorporate a whole lot of incremental improvements relative to where we were, I would say, toward the back half of last year. And so that program, any incremental efficiency gains that we find should roll straight through to sort of improving our overall ability to deliver ultimately free cash flow, both this year and over the three year timeframe. So and I fully expect that we will see those because we’ve always seen them and we’ve got a whole team that’s focused really intently on that. And again, it also doesn’t incorporate any significant uplift we would see in capital efficiency from a successful four mile program, which as Darren said, we’ve got our first one now drilled out to tow. So my expectation is as we see those efficiencies roll through, we’ll see them roll through either through likely to lower CapEx spending for ourselves and incremental free cash flow from that lower CapEx level.

But again, we’ve put out both for ’25 and for the three year plan. We want to make sure we’ve got something out there that we can achieve or beat. And I feel because we’ve got these efficiencies still in front of us, I feel pretty good about

Neal Dingmann, Analyst, Truist: that. Thanks, Danny. Appreciate it. Thanks, David.

Andrew, Conference Call Moderator: Your next question is from Noel Parks from Tuohy Brothers Investment Research. Please go ahead.

Neal Dingmann, Analyst, Truist: Hi, good morning. Just had a couple of things. One thing, just trying to really wrap my head around the whole notion of four mile laterals. As far as you know at this point, are there any new or unexpected frac protection issues introduced when you’re doing four milers? I mean, I guess, specifically if you’re in like a horseshoe shape or is it really just essentially the same as a pad with multiple two milers?

Danny Brown, CEO, Chord Energy: Yes. So no really incremental frac protect issues that we can think of. And the four milers we’re looking at doing now are really straight four milers. And so it’s which we think is the most efficient way to do things. We do look at alternate well shapes.

If we can’t go to straight, we’ll look at alternate because we recognize that capital efficiency of that incremental foot of lateral is almost always going to be better. But the best incremental foot is going to be straight incremental foot. And so as we’re looking at four miles, that’s really what we’re doing right now is straight four miles and no difference in frac protect concerns relative to what you would see if you were doing two, two miles.

Neal Dingmann, Analyst, Truist: Great. Thanks a lot. And one thing just looking at the reserves, was there Enerplus from the Enerplus locations, any reduction in industry sorry, inventory that pushed out in the five year CapEx rule? And I’m just curious if as far as Enerplus, everything you’re really planning to do as far as high grading is essentially done at this point with the integration?

Danny Brown, CEO, Chord Energy: Yes. So we as we brought the Enerplus reserves over into our system, clearly we had to follow U. S. And SEC rules as opposed to Canadian rules that Enerplus followed. So that rolls through.

We also like to we generally take a bit of conservative stance on our PUD bookings. And so we’re not fully booked out to the five years. And that has been a long standing practice of the organization. And so, yes, so the reserves we’ve released incorporate both those effects.

Neal Dingmann, Analyst, Truist: Great. Thanks a lot. Fantastic.

Andrew, Conference Call Moderator: Thanks, There are no further questions at this time. I will now turn the call over to Danny Brown with closing remarks.

Danny Brown, CEO, Chord Energy: All right. Thanks, Andrew. Well, to close out, I want to thank all of our employees for their continued hard work and dedication. Our strategic actions coupled with our fantastic operations team have created what we believe is a valuable and increasingly rare asset. Cord has substantial yet low decline and high oil cut production base, which is paired with a deep portfolio of highly economic lower risk, conservatively spaced and oil rich inventory.

We feel great about what we’ve accomplished and have a lot of confidence in our ability to deliver going forward. And with that, I appreciate everyone’s interest and thanks for joining our call.

Andrew, Conference Call Moderator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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