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Chord Energy (CHRD) - 2024 Q4 - Earnings Call Transcript
CHRDChord Energy (CHRD)2025-02-26 20:10
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Financial Data and Key Metrics Changes - In 2024, Chord Energy returned 944milliontoshareholders,withasignificantportionthroughsharerepurchases,reflectingastrongcommitmenttocapitaldisciplineandshareholderreturns[13][14]−TheadjustedfreecashflowforQ42024wasapproximately944 million to shareholders, with a significant portion through share repurchases, reflecting a strong commitment to capital discipline and shareholder returns [13][14] - The adjusted free cash flow for Q4 2024 was approximately 282 million, exceeding expectations due to strong volumes and cost control [39] - The company increased its base dividend by 4% to 1.30pershare[17]BusinessLineDataandKeyMetricsChanges−Chord′soilproductionpersharegrewata121.30 per share [17] Business Line Data and Key Metrics Changes - Chord's oil production per share grew at a 12% compounded annual growth rate over the last three years, demonstrating effective capital-efficient development [14] - Fourth quarter oil volumes were above the midpoint of guidance, indicating strong operational performance [15][40] Market Data and Key Metrics Changes - Oil realization in Q4 averaged about 1.50 below WTI, with expectations for widening differentials in Q1 2025 due to increased basin production [40] - NGL realizations were 14% from WTI, near the top end of guidance, while natural gas realizations were stronger than expected at 43% of Henry Hub [41] Company Strategy and Development Direction - Chord Energy solidified its leading position in the Williston Basin through a combination with Enerplus, focusing on operational synergies and best practices [10] - The company plans to maintain a capital-efficient development program in 2025, with expectations to run a maintenance capital program and decrease rig count mid-year [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong inventory and low-cost structure, projecting approximately 860millionoffreecashflowin2025[21]−Thecompanyremainsfocusedonsustainabilityandoperationalefficiency,aimingtominimizeenvironmentalimpactwhiledeliveringreliableenergy[23]OtherImportantInformation−Chordsuccessfullydrilledandcompleteditsfirstfour−milelateralwell,indicatingprogressinoperationalcapabilitiesandpotentialforfutureefficiencygains[27][72]−Thecompanycompleteditssemiannualborrowingbaseredetermination,settingtheborrowingbaseat860 million of free cash flow in 2025 [21] - The company remains focused on sustainability and operational efficiency, aiming to minimize environmental impact while delivering reliable energy [23] Other Important Information - Chord successfully drilled and completed its first four-mile lateral well, indicating progress in operational capabilities and potential for future efficiency gains [27][72] - The company completed its semiannual borrowing base redetermination, setting the borrowing base at 2.75 billion [47] Q&A Session Summary Question: Can you provide context around your outlook for capital in 2025? - Management indicated that the 2025 capital outlook is conservative and does not include potential efficiency improvements, with several factors that could drive capital lower [50][52] Question: Is the simulfrac included in the plan for 2025? - The full crew is performing simulfracs, while the partial crew is not, with expectations for efficiency improvements [58][59] Question: Can you discuss shareholder returns and the potential for buybacks? - Management confirmed a capital allocation decision to continue returning 100% of free cash flow to shareholders, with a focus on buybacks given the current stock valuation [60][62] Question: What operational challenges were observed with the first four-mile lateral? - The first four-mile well was completed successfully without significant issues, indicating strong operational performance [72] Question: What are the expectations for operational efficiencies moving forward? - Management expects continued improvements in efficiency as the company gains more experience with three-mile and four-mile laterals [80][81] Question: How does the company view the M&A landscape? - Management remains patient regarding M&A opportunities, focusing on transactions that deliver true shareholder value [86] Question: What is the outlook for gas production from the non-op Marcellus position? - Management views the Marcellus asset positively but emphasizes it is not a core part of the portfolio, focusing on maximizing shareholder value [110][111]