Chord Energy Corp Q3 FY2025 earnings call

• Third quarter results showed solid operating performance with free cash flow above expectations and strong returns to shareholders.
• Chord has reduced diluted shares outstanding by approximately 11% since the Enerplus combination.
• Faster cycle times, lower downtime, and strong well performance led to raising oil volume guidance.
• 3 new 4-mile wells brought online below initial cost estimates.
• Progress in improving marketing cost structure with expected annual savings of $30 million to $50 million, half realized in 2025.
• Closed XTO transaction, adding production and capital for maintenance.
• Plan to bring in a second frac crew, with cycle times improved and capital lowered.
• Published 2024 Sustainability Report highlighting efforts on emissions, workforce health, etc.

Chord delivered solid operating performance in the third quarter with adjusted free cash flow of approximately $230 million. The company returned 69% of this free cash flow to shareholders through a base dividend and share repurchases. Chord raised oil volume guidance for the second time in 2025. On the well development side, 3 new 4-mile wells were brought online, all below initial cost estimates. The company expects 4-mile wells to make up up to 40% of the operated program in 2026, with 3-mile wells making up another 40%. Additionally, Chord drilled 11 alternate shape wells year-to-date, with execution strong and costs below initial estimates. The XTO transaction closed on October 31, adjusting fourth quarter production up by 4,000 barrels of oil per day and adding $15 million to full-year 2025 capital for XTO-related maintenance.

• Preliminary 2026 expectation is maintaining oil volumes of approximately 157,000 to 161,000 barrels per day.
• E&P capital flat in 2026 versus 2025 plus approximately $40 million for XTO volumes, resulting in total 2026 CapEx of roughly $1.4 billion.
• Expect 4-mile wells to be up to 40% of the operated program in 2026, with 3-mile wells making up another 40%.
• Soft guidance on 2026 provided now, formal guidance in February.

• Commodity volatility remains high, and Chord will monitor conditions closely.
• Significant flexibility to reduce activity if macro conditions warrant, but decisions will be thoughtful.
• Forward-looking statements subject to risks and uncertainties that could cause actual results to differ from disclosed ones.

Q: Scott Hanold asked about when benefits from 4-mile wells would be seen on capital efficiency.

A: Daniel Brown said the real benefit would be seen towards the later part of 2026 and into 2027.

Q: Scott Hanold followed up on quantifying CapEx impact in 2027.

A: Daniel Brown said they're still working through 2026 guidance and will give formal guidance in February.

Q: Derrick Whitfield asked about cost and execution differences between alternate and standup wells.

A: Daniel Brown and Darrin Henke discussed that alternate shaped wells have slight cost increases but strong execution, with cycle times reduced.

Q: John Abbott asked about XTO asset performance and 2026 production shape.

A: Daniel Brown said XTO asset performance is consistent with expectations, and 2026 production is expected to average at the midpoint of 157,000 to 161,000 barrels per day with cyclicality.

Q: Noah Hungness asked about TILs in 2026 program and EUR/capital ranges for 4-mile wells.

A: Daniel Brown said details will be in February guidance, and EUR for 4-mile wells is expected to be 90%-100% of two 2-mile wells.

Q: Oliver Huang asked about TIL drivers and non-op movement.

A: Daniel Brown discussed that fewer TILs are due to strong operated well performance, early online wells, and non-op contributions.

Q: David Deckelbaum asked about progression of cost reduction areas.

A: Daniel Brown said there are opportunities in various areas like D&C, production, and marketing.

Q: Kevin MacCurdy asked about lateral lengths/margins vs peers and Marcellus acreage.

A: Daniel Brown said they benchmark against peers and Marcellus is a noncore asset.

Q: Paul Diamond asked about XTO acreage integration and alternate shape well concentration.

A: Daniel Brown said XTO acreage will be developed towards the tail end of 2026, and alternate shape wells are somewhat spread out.

Q: Paul Cheng asked about alternate shape well EUR/production and dividend growth.

A: Daniel Brown said alternate shape wells have slight incremental capital but expected EUR similar to straight wells, and dividend is a capital allocation decision.

Q: Geoff Jay asked about production improvement deployment and impact on CapEx.

A: Daniel Brown and Darrin Henke discussed opportunities in technology like automation and 24-hour workover rigs, with potential impact on CapEx.

Q: Noel Parks asked about implications of 4-mile laterals and consolidation.

A: Daniel Brown said inter-well spacing is tailored to geology, and consolidation may have divergent views but they rely on data-driven decisions.