Chord Energy Corp Q2 FY2025 earnings call

• Second quarter adjusted free cash flow was ~$141 million, with 92% returned to shareholders. Oil volumes were above top end of guidance. - Operations saw improvements: cycle times reduced, well performance robust, downtime levels better than anticipated. Full year capital reduced by $50 million vs original budget. - Expedited 4-mile lateral program, now anticipate seven wells online by year-end; Rystedt well performance strong. - Continuous improvement initiatives using data analytics, machine learning, AI to increase free cash flow, including optimizing ESP to rod lift conversion, gas lift efficiency, reservoir modeling, and planning tools. - Sustainability focus: safety first, minimizing environmental impact, updating sustainability report in fall. - 2025 CapEx guidance at $1.35 billion, a dramatic improvement from 2024's ~$1.5 billion pro forma capital budget. Drilling efficiency gains with spud-to-rig release times down ~a day year-over-year; completed seven alternate shape wells below budget. Completions: simulfrac operations drive faster cycle times, pumping hours per day up 20% vs last year, savings per well ~$300,000. Facilities have best-in-class costs.

Chord Energy's second quarter performance was strong. Second quarter oil volumes exceeded guidance. Adjusted free cash flow for the second quarter was approximately $141 million, with 92% of this free cash flow returned to shareholders. Oil differentials in the second quarter averaged $2.15 below WTI, within guidance range. Gas and NGLs pricing was lower sequentially due to seasonality. Lease operating expenses (LOE) were $10.02 per Boe, at the higher end of guidance. Production taxes were below expectations due to nonrecurring refund for stripper wells. Cash G&A expenses were below guidance, with full year guidance reduced by $7 million.

• Free cash flow outlook improved 20% since February; free cash flow per share has grown 25% since February; pro forma free cash flow per share up more than 35% since Enerplus transaction. - 2025 CapEx reduced by $50 million vs original budget. - Full year LOE per Boe guidance unchanged. - Adjusted full year production tax guidance based on first half performance. - Lowered full year cash G&A guidance by $7 million. - Full year cash tax range lowered to 3.5% to 6.5% of EBITDA at WTI prices $60-$80 per barrel. - Intends to redeploy a second frac crew in fourth quarter, volumes to trough in Q4 2025 and grow in early 2026; 2026 program to be discussed in November.

Forward-looking statements subject to risks and uncertainties as described in SEC filings, including matters that could cause actual results to differ from disclosed, such as commodity price fluctuations, operational risks like downtime, and impact of regulatory changes.

Q: Scott Hanold asked about context on 4-mile wells' risk-reward and Marcellus monetization.

A: Darrin Henke said permitting for 4-mile is well underway; Daniel Brown said Marcellus is a great asset but not core, focused on maximizing value.

Q: Oliver Huang asked for more detail on Rystedt well.

A: Darrin Henke said Rystedt well execution was nearly flawless, outperformed type curve by 30%, will be more intelligent after completing more wells.

Q: Derrick Whitfield asked about corporate level breakeven with 4-mile laterals.

A: Daniel Brown said ~50% of inventory moving to 4-mile could yield ~$5 improvement, with other initiatives also driving improvement.

Q: Derrick Whitfield asked about AI's cost gains.

A: Daniel Brown said AI is early, permeating all aspects, decentralized but impactful; Michael Lou added teams embracing change, working with outside vendors and looking outside industry for improvements.

Q: John Abbott asked about AI implementation cost and internal vs external.

A: Daniel Brown said cost is small, data was cleaned up via mergers, training programs, internal excitement; Michael Lou added teams embracing change, working with outside vendors.

Q: John Abbott asked about 2026 factors and oil growth.

A: Daniel Brown said focused on free cash flow per share, 4Q oil production trough, TIL count movement, confident in 2026 plan to be discussed in November.

Q: Kevin MacCurdy asked about 4-mile CapEx savings and 4Q guide.

A: Daniel Brown said 4-mile CapEx savings de minimis this year, TIL count movement impacts production but capital program not drastically different; completion activities in 4Q benefit 2026.

Q: Paul Diamond asked about 4-mile CapEx lower level and relationship with 2/3 miles.

A: Daniel Brown said increased geometry gives capital efficiency, repetition will lead to incremental benefits.

Q: Geoff Jay asked about milestones for 50% 4-mile program.

A: Daniel Brown said need to ensure mechanical success and repeatability of 4-mile well drilling, completion, and production.

Q: Noah Hungness asked about TILs impact and midstream egress.

A: Daniel Brown said TILs drilled in 4Q benefit 2026; Michael Lou said Chord has good egress, more options better, could lower GP&T costs long-term.