Chord Energy (US:CHRD)2021-08-05 19:03Financial Data and Key Metrics Changes - The company reported a net loss of $62 million or $1.57 per share for Q2 2021, compared to a loss of $1 million or $0.02 per share in the previous quarter [9] - Adjusted net income was $118 million or $3.01 per share, up from $108 million or $2.79 per share in the previous quarter [9] - EBITDAX for Q2 2021 was $176 million, slightly higher than $170 million in the previous quarter, attributed to higher production and commodity prices [9] Business Line Data and Key Metrics Changes - Average production for the quarter was 92,600 barrels of oil equivalent (BOE), with 58% being crude oil, compared to 89,900 BOE in the first quarter [10] - Oil production remained flat at approximately 53,000 barrels per day, with an increase in ethane recoveries contributing to higher BOE production [10] - The company adjusted its oil production forecast to 50,000 to 53,000 barrels per day and total production to 88,000 to 92,000 BOE per day for the year [10] Market Data and Key Metrics Changes - Oil differentials in Q2 were narrower than the lower end of guidance, benefiting from the stabilization of transportation interruptions and improved basin production levels [16] - Pipeline utilization has trended downward, with increased rail movements reflecting alternative marketing arrangements [17] Company Strategy and Development Direction - The company is focused on optimizing its asset base and taking advantage of favorable commodity prices, with expectations to generate approximately $700 million in EBITDAX and over $425 million in free cash flow for 2021 [8] - Recent business development activities include divesting Redtail assets and acquiring assets in Mountrail County, North Dakota, aimed at creating a more focused asset portfolio [19] - The company plans to maintain a balance between returning capital to shareholders and expanding its inventory, deferring decisions on capital returns until economic conditions stabilize [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position due to solid assets and a strong balance sheet, while acknowledging the volatility in oil prices [7] - The company is committed to reducing emissions and improving transparency in its operations, working with third parties to measure and document emissions [22] Other Important Information - Capital expenditures (CapEx) for Q2 were $58 million, with guidance for full-year CapEx tightened to $240 million to $252 million [11][13] - Lease operating expenses were $64 million or $7.61 per BOE, with guidance for LOE adjusted to $235 million to $245 million [14] Q&A Session Summary Question: Timeline for returning capital to shareholders - Management indicated that updates on capital returns could be expected by the end of the year or early next year, emphasizing the need for sustainable decisions [26] Question: Share buybacks versus cash payments - Management acknowledged discussions around share buybacks, considering the current share price and dividend balance [27] Question: Operational activity in the Sanish Field - Management confirmed plans for increased activity in the Sanish Field in 2022, including drilling 3-mile laterals [28][30] Question: Appetite for additional M&A - Management expressed a cautious approach to M&A, balancing shareholder returns with long-term sustainability [35] Question: Update on ultra-long lateral development - Management confirmed plans for 3-mile laterals in 2022, which are expected to significantly increase returns [36][37]