Chord Energy (US:CHRD)2022-02-24 20:26Financial Data and Key Metrics Changes - In Q4 2021, the company reported net income of $292 million or $7.34 per diluted share, compared to $198 million or $5 per share in the previous quarter [10] - Adjusted net income for Q4 was $168 million or $4.23 per diluted share, up from $142 million or $3.57 per share in Q3 [10] - Adjusted EBITDAX increased to $226 million from $201 million in the previous quarter, driven by better commodity prices and a slight increase in oil production [10] - Production averaged 92,800 BOE per day in Q4, slightly up from 92,100 BOE per day in Q3, with oil production averaging 52,900 barrels per day, an increase from 51,800 barrels in Q3 [10] Business Line Data and Key Metrics Changes - The company invested approximately $66 million in CapEx during Q4, bringing 16 gross, 12 net wells into production, and drilled 17 gross, 10.4 net operated wells [12] - Lease operating expenses were $62 million or $7.31 per BOE for Q4, impacted by expensed workovers [13] - Cash G&A expenses totaled $12 million for Q4, averaging around $1.16 per BOE for the year [13] Market Data and Key Metrics Changes - Natural gas prices benefited from a premium at the Ventura point compared to Henry Hub, while NGL prices averaged around 37% of WTI oil in Q4, up from less than 20% in the same quarter last year [11][13] - The company reported a significant increase in proved reserves, totaling 326 million BOE with a pretax PV10 value of $4.4 billion at year-end, compared to 260 million BOE and $1.2 billion at year-end 2020 [13][14] Company Strategy and Development Direction - The company initiated its first-ever regular dividend of $0.25 per share, marking the first step in a capital return plan [16] - Management is focused on a methodical approach to returning capital to shareholders, including potential stock buybacks and variable dividends [17][36] - The company anticipates a higher activity level in 2022, with larger working interests in wells drilled and completed in the Sanish Field due to acquisitions [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, expecting to generate over $900 million in EBITDA and over $500 million in adjusted free cash flow under a $70 WTI price scenario [21] - The company is cautious about the M&A environment, noting challenges due to rising commodity prices but remains open to opportunities [25] - Management emphasized the importance of maintaining a strong balance sheet while pursuing growth and returning capital to shareholders [45] Other Important Information - The company has a strong financial position entering 2022, with plans to continue pursuing acquisition opportunities while returning capital to shareholders [20] - The company is actively managing inflationary pressures and has locked in many big-ticket items for the first half of 2022 [18] Q&A Session Summary Question: What drove the strong production in Q4? - Management noted good performance from wells and new completion techniques being tested, particularly in the Sanish Field [22][23] Question: What is the outlook for M&A opportunities? - Management is monitoring the M&A environment closely, considering both small bolt-on opportunities and larger deals, but remains cautious due to high commodity prices [25] Question: How does the company view its return of capital strategy? - Management confirmed that the dividend is the first step, with more to come, including potential stock buybacks and variable dividends [32][36] Question: What is the expected production cadence for 2022? - Management indicated a slow first half of the year with significant growth expected in the second half due to drilling and completion activities [37][39] Question: How will free cash flow be utilized? - Management aims to balance returning capital to shareholders while maintaining flexibility for acquisitions, with a focus on keeping a strong balance sheet [45][46]