Chord Energy: Synergies Expected, High FCF Yield Remains Attractive

Core Viewpoint - Chord Energy (CHRD) is positioned as a leading oil and natural gas producer in the Williston Basin following its merger with Whiting Petroleum, with a focus on enhancing operational efficiencies and profitability through strategic initiatives and market conditions [2][3][13]. Financial Performance - In Q1, Chord reported a GAAP EPS of $4.65, aligning with Wall Street expectations, while revenue reached $1.09 billion, a 22% increase year-over-year, exceeding estimates by $324 million [3]. - The company produced oil at a rate of 99 MBopd, surpassing its guidance range, and declared a dividend of $1.25, yielding 3.8% on a trailing 12-month basis [3]. - Analysts project a 16% increase in operating EPS for the current year, with growth expected to moderate to mid-single digits through 2026 [6]. Mergers and Acquisitions - The $7.4 billion merger with Enerplus is anticipated to enhance scale in the Bakken shale region, potentially leading to improved profit growth and $200 million in synergies from operational efficiencies [3][4]. Market Outlook - The upcoming Q2 report may face challenges from increased in-basin production and temporary refinery shutdowns, although strong oil prices could provide a counterbalance [4]. - The options market anticipates a modest 4.0% stock price swing post-earnings, with expectations for non-GAAP EPS to rise to $5.5, a significant increase from $3.65 in the same quarter last year [5]. Valuation Metrics - Chord's current P/E ratio is approximately 8, with a forward EV/EBITDA of 2.9x, indicating a favorable valuation compared to the S&P 500 [7][9]. - The company is expected to normalize dividends near $6 per share, contributing to an attractive yield [7]. Technical Analysis - The stock has shown a bullish uptrend, with key resistance at $185 and support in the $160 to $165 range, although there are concerns about a potential false breakout above $180 [20][21]. Investment Recommendation - Analysts maintain a buy rating on Chord, citing its low earnings multiple and high free cash flow yield as attractive investment factors, especially following the merger with Enerplus [13][26].