Chord Energy (US:CHRD)2025-05-07 16:02Financial Data and Key Metrics Changes - The company reported adjusted free cash flow for the first quarter of approximately $291 million, maintaining shareholder returns at 100% of free cash flow for the second consecutive quarter, repurchasing $216.5 million or about 2 million shares during the quarter [8][19] - The leverage ratio remained unchanged at about 0.3 times, indicating strong balance sheet strength [9][30] - Oil differentials in the first quarter averaged $2.3 below WTI, slightly weakening from the prior quarter but within the original guidance range [31] Business Line Data and Key Metrics Changes - First quarter oil volumes were above the top end of guidance, reflecting strong execution and well performance [7] - Operating expenses came in lower than expectations, driven by improvements in cost structure [7] - The company successfully drilled and completed its first four-mile lateral, achieving a total well cost approximately $1 million below the original budget [22][24] Market Data and Key Metrics Changes - Natural gas realizations were 63%, above the top end of guidance, benefiting from seasonally strong regional prices [31] - NGL realizations were 20% of WTI in the first quarter, just above the midpoint guidance [31] Company Strategy and Development Direction - The company plans to maintain a focus on share repurchases in the current environment, given the intrinsic value of shares relative to market prices [9] - The development plan includes a shift towards longer laterals, with a goal to convert over 80% of inventory to long laterals in the coming years, enhancing economic returns [16][92] - The company is committed to continuous improvement and efficiency, with initiatives aimed at reducing controllable costs across various business segments [13][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the pricing outlook has deteriorated and volatility has increased, but emphasized the company's operational and financial flexibility to navigate these conditions [9][19] - The company remains confident in its ability to generate significant free cash flow even at lower prices, supported by a strong balance sheet and low reinvestment rates [30][74] Other Important Information - The company announced a $30 million reduction to its full-year capital guidance, reflecting program efficiencies without impacting production targets [12][21] - The company plans to publish an updated sustainability report in the second half of the year, reflecting the integration of CORD and Enerplus [19] Q&A Session Summary Question: Activity levels and frac crew decisions for 2026 - Management indicated that the decision to bring back a second frac crew will depend on various factors, including oil prices and capital allocation opportunities [39][40] Question: Capital savings with the four-mile lateral program - Management expressed confidence in moving to a four-mile program quickly, citing positive results from initial wells [42][44] Question: Oil production cadence for 3Q and 4Q - Management anticipates oil production will fall as the company drops to a one crew program, with potential recovery if a second frac crew is added in the fourth quarter [46][47] Question: Maintenance capital for sustaining production rates - Management noted that maintaining a production rate of approximately 150,000 barrels per day would require a one and a half crew program [58] Question: Opportunities in marketing contracts and LOE - Management highlighted significant opportunities to renegotiate marketing contracts and improve LOE, which could positively impact free cash flow [62][66] Question: Potential footprint expansion with four-mile laterals - Management acknowledged that moving to four-mile laterals could open up previously uneconomic areas, improving overall returns [90][92]