Chord Energy Buys $550M Williston Basin Assets From Exxon’s XTO

Core Viewpoint - Chord Energy is acquiring Williston Basin assets from Exxon Mobil's XTO Energy for $550 million, enhancing its position in the Bakken shale with significant operational and financial benefits [1][4]. Company Summary - The acquisition involves 48,000 net acres, with 86% operated and 100% held by production, and is expected to yield approximately 9,000 barrels of oil equivalent per day, of which 78% is oil [1]. - The deal adds 90 net drilling locations to Chord's inventory, allowing for efficient three- and four-mile laterals, which aligns with the company's strategy to lower breakeven costs [2]. - CEO Danny Brown emphasized that the acquisition is "highly accretive" and will support sustainable free cash flow generation while maintaining net leverage below 0.6x, with expectations to drop below 0.5x by mid-2026 [3]. Industry Context - The acquisition reflects a broader trend of consolidation in the U.S. shale industry, where companies are acquiring premium acreage as drilling inventory becomes limited [4]. - Chord has been active in mergers and acquisitions, including its previous mergers with Oasis Petroleum and Whiting Petroleum, and its recent combination with Enerplus, indicating a commitment to disciplined growth [4]. - Exxon Mobil's sale of these assets aligns with its strategy to streamline its unconventional portfolio and focus on its Permian Basin operations and global LNG growth [5]. Financial Strategy - Chord Energy has reaffirmed its shareholder return policy, committing to distribute at least 50% of adjusted free cash flow when leverage is between 0.5x and 1.0x, and over 75% when below 0.5x [5]. - The company has repurchased $83 million in shares in the third quarter, demonstrating a focus on balancing growth with capital returns [5]. Future Positioning - If the acquisition is completed, Chord Energy will be positioned as one of the most inventory-rich operators in the Bakken, enhancing its flexibility for long-lateral development and ability to sustain free cash flow through commodity cycles [6].