Chord Energy (CHRD) 8 May 242024 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Chord Energy First Quarter 2024 Earnings Call. [Operator Instructions] This call is being recorded on Wednesday, May 8, 2024. And I would now like to turn the conference over to Mr. Richard Robuck, Chief Financial Officer. Thank you. ahead. go Please

XX-K today statements morning, questions, disclosed are reporting could Good results. conference our to and and is Robuck. Commission, that Strategy call. I'm our Richard delighted Michael our Thanks, our Lou, risks the including our first on everyone. obligation Reform Henke, These other and to earnings quarter we're in Chief joined our these annual include, different report results calls. Those Litigation releases the matters described the things, include on among our risks have that operating earnings currently Danny forward-looking of to our XXXX Form and Today, Brown, believe Securities COO; to our materially well have as with subject within your cause disclaim CEO; we Ina. including statements. forward-looking any that Officer our you This statements by in actual XX-Q. financial filings We We're and uncertainties our Commercial forward-looking quarterly we Exchange the Chief Darrin the of members update as that be statements remarks, releases answers be on and Act. Officer; Private team. Please other those Form to advised meaning to be Securities reports from and

the measures, to in which the on reference Danny and also over our During this can our investor We on to conference and be I'll website. With will current that, presentation, call, releases CEO, website. reconciliations we our non-GAAP GAAP to turn our find earnings call measures references applicable our Brown. make can you found may

it call. I'll year quarter capital, right review Thank you Enerplus with open provide little first to Good I detail our to before will for outlook color so a my combination performance is Henke. Darrin morning, our pending it stand-alone some our Richard. very of our on and to to get then give full on comments. Thanks, plan busy Darrin morning, results. know I to joining passing and Q&A. up for over a this everyone. return passing updates We'll some back it Richard before financial operations our more on

what performance. quarter. and announced and So in summary, strong We Enerplus of very impactful operational important great another a a with quarter delivered combination

XXXX above expectations, to quarter driven strong oil First And that time due activity cycle demonstrating for the want moment North resiliency team take I unusually in in volumes and during the through cold performance Chord well to by a tremendous to weather resulted accelerated improvements. January. thank Dakota swept

significant quickly we experienced downtime, Chord back most and online safely. got fast, the team responded and While production importantly,

I production the the dividend a first items, material adjusted just quarter pending of return during our believe happen. The strong which given in the Chord's our saw that We to shareholders. To million expectations. per flow the share generation, cash was base and $XXX free generated above in to led gratitude $X.XX in dividend financial my declared to we'll we per had return $X.XX information I we all free performance personal this accordance and of variable with the million, cash of nonpublic our repurchases flow to the of performance flow possession of the we quarter quarter, extend and In XX% given limited robust with of cash and Enerplus, were $XX end, capital of free share. on which best combination has in some framework, share with associated fact, these that basin of those want made it underpinned

last which year reflects stand-alone on Chord guidance, basis. full quarter and a night, had we Additionally, issued second

than originally little second beginning higher were faster I mentioned at the improvements capital quarter expected operational be volumes of and oil the we Given anticipated, the projecting what are year. a is and proceeding than earlier, the program to development

While volume or February to reflects managing guidance are This the you'll outlook. sustainable flat+ we running maximize program. with capital ahead oil to full change cash year of Chord's commitment from didn't notice a flow the schedule, we business free our

the peaking we date, Given original and with drilling has out first second XX% rig. our to a window our our activity half frac strong beat performance quarter, to quarter expectations free the including cash second plan reduced flow the in relative the year the of as crew capital in in

announced to In addition synergy previously the us to profile, more delivery and strong us annual capture a to yielding more of allow a derisk and position resources well stable assign this our XXXX. help program, for should production integration

were we expect month announce to Speaking Enerplus this combination close XX. we that the to pleased integration, of May on yesterday later

while half since expect pro still base we well we report the close, for second to as forma plans update reminder, on As review period the in abbreviated the working X of combined intend development quarter, as and organizations. Upon Act quarter to Hart-Scott-Rodino when results we'll the integrate expired And Enerplus second separate guidance time, include guidance combined that second fully companies a companies. integration teams for have in to X provide August. of April prepare fulsome expectations for for more our will under work the enterprise, the been on a working asset to both month We the also issue X. which of

team the and acquisition shareholder has vote Chord's ensure The help performance our scheduled operational maintaining applying for years, reminder, and the As multiple realize May merger. Oasis the synergies announced while underlying these XX. Chord to the May from strong for transactions we integrated a expected is is and few Enerplus' business. even shareholder keeps integration the learnings scheduled over past exceed XX efforts XTO of vote Whiting and and is better getting including

industrial logic like strategic continues the X remain benefits to the grow. and of the confident I'd in we on, deal. transaction, the moments these and conviction through few move We reviewing extremely of The merits integration planning, combination long moving a financial has of level the team in spend believed the Before our as Chord to organizations. of

assets top-tier Enerplus of First, and returns X of some practices the best in enhance our to of long-lived plainly, the improves the basin, inventory which by in expects development quality of Enerplus the combining where and To basin. put in core has operating Chord companies. inventory the believe brings best the we it the acreage

the grateful how great from efforts, incremental am transaction. Through cultures attitudes road for at in the to the with of also and future forward, together business. for working you've involved in similar. in very scale, both combined our are utilizing potential are million well, this very in a great maps positive excitement let are $XXX by Chord we've process previously practices process confident learned stand-alone the deal. To around noted their going synergies very building achieving done and Second, that organizations the upside and the I both see organizations enhanced want our eagerness efforts to best employee job all while results number. Integration value the integration And to drive I know up the driving we putting organization,

across EBITDA, cash all Third, including key and flow. share metrics, the cash free flow drives per combination accretion

a allows of with move Enerplus rate forward. To a as the as beneficial and economic improving creation, deal the the capital of forma it accelerates combination sheet, giving to organization before it Bank's our in of tremendous relates sustainability affordable balance by returns words Routine preserves sum up, peer-leading over intensity fortress and sustainable we progress to and very us significantly organization. And program remain Chord just structure pro the and delivering its manner, addition, it reliable maintain to World Chord's committed Flaring Zero In turning and change energy a return initiative. XXXX is optionality value exciting it and to Darrin. a few our time XXXX, lowered the a endorsed for In we finally, because responsible emissions officially on

the basis, our in efforts a improvement a for the a our website. After involve and transaction, up, everyone performance. I'd their ESG to pending company. To through dramatic topics safety report the providing report important to the of driving sustainability to preliminary key team that, sustainability great XXXX forward sustainability thank to excited report, plans start XXXX, Enerplus. beyond. And reflecting publish a forward stand-alone Enerplus and metrics a progress closing our things saw remain Enerplus XXXX our transaction publishing a combined expect with also the to on with and encourage Chord like close these had and In review summary we for on We over on for sum to to it Chord year. and full turn Darrin. sustainability We look I'll

as Thanks, excellence. to quarter We team had the solid execute with Danny. continues a

in progress January team recent Our there rebounded performance times, weather and cycle laterals, quickly are has Chord in our wedge rebound date. mitigate and facility enhanced making continue be design place to executed while the by disruptions. The processes outages. we when the Operationally, we well the on strong of we're improving has benefited to production and to about our which, equipment production years XX and X-mile base downtime quickly from from encouraged

uplift analog days, the is and contribution compared the X-mile is performance an increasing the from wells clearly exceeding on early lateral. We're still one which it's time. to seeing can average, or While area, each expectations meeting prospect also in our furthest observe of over portions

of that TILd in investor in X we've find ] where [ year. last can wells quarter provided the X-mile on Slide performance You details of presentation, updated on our Woods third additional data Painted were

we X-mile a will volumes to uplift. which constraints incremental keep X-mile the lateral anticipated wells important This initial production the details provided for below It's forecast foot generally analogs. that productivity XX% equal, mostly Additionally, band all on time understand the X-mile period. managed reflects also over production facility the per expected certain in be and from flowback, initially and else

well leads X-mile X-mile given catches higher However, over which shallower time, to with lateral the wells declines, ultimately the per foot recovery. production up

locations, about by the to progress about and note, made release, We of Chord spud deliver XXXX average X.X set comes leveraging well This Drilling a now has wells. declined days drill new to days over is efficiency taking wellbore as X-mile a rig as using I for capital. expect X-mile roughly in XX the completing in record. while which times in a section infrastructure should XX% drilling, drilled vertical primarily to more out on cleaning EUR from similar-sized basin X-mile XX% more quarter, XX well. approximately roads and first wells the and significant our facilities. Chord well to capital XX% X-mile

essentially all side, our over light be likely the especially assumption on our this and strong point. We possibility could this the implied mile. the of progress in progress in have On upside cleanouts if there asked get third TD productivity a at cleanout frequently is wells for and made past we XX% are year. X-mile reaching We believe to Chord's

get to given production However, sufficient determine effectively X-mile year that and TILs take can weighted, back-end EUR it later were until our we declines assumptions. the whether increase XXXX history will our to uplift this analyze

and well on we I for for advanced X-mile TD see we what of our are performance which embracing essentially give Chord I execution As said, improvement pressures. credit significantly our reaching to we team continuous culture all cleanouts, the our production like has laterals. and on the

things allow room and to drive is resource could in both strong sum as either capabilities levers world-class our and The provides Enerplus operator to a pricing. see advance to the Enerplus a and Bakken basin, further as premier stand-alone. more to than efficiencies will with breakeven up, running So company the lower value we combination the Chord with additional economics, create additional

the to while all reduce expect to we the being We operate. I'll back our good while turn environmental over stewards it our lower continuing now footprint, to Richard. where in costs communities supply

Thanks, first look Enerplus, impacts combined of of we'll post pro will up, free include be $XXX as a the heads million. cash quarter, my not guidance regarding quick Darrin. Chord adjusted generated A forma close. In comments incorporating flow

at and of largely end at operating cash were offset below gas our the range, and were costs realizations the Looking while that the strong projections. X natural puts lower volumes February takes, capital high costs

the were guidance. volumes about midpoint quarter, midpoint were volumes first while Our in up strong above guidance, total X% X.X% our of

assets. conjunction with adjusted $XXX million of which be of CapEx, nonoperated reimbursed will million sales quarter in $X First excluded of CapEx

basis, As in accelerated quarter we averaged in results year from February, and in that expected we $X.XX which no below what guidance realizations to mentioned, slightly our reflected favorable there capital guidance. bit volumes Danny our first second full is changes first in outlined program were $X.XX, guidance. and quarter February. Oil spending midpoint the WTI, in On a oil quarter has a

operating. the to through improve oil first pricing look we be expected begins quarter As the year, XXXX, the than the balance is wider rest the as with pipeline of of expected differential TMX Bakken to

discount modest our in were WTI. NGL percent full to reflect crude with to below midpoint the while WTI we realizations year, realizations fell guidance, guidance range. For of gas a realizations expect as a line

our and our realizations price NGLs fees prices. With NGL levels, marketing higher deducted As price. realizations prices drives at from low the prices. realized percent from a as reminder, This for of hurts leverage, weaker are fixed trading gas both resulted at certain times the lower deducted in of which gas a benchmark operating gas fees and

realizations gas prices environments where However, improve in should quickly rise.

We updated XXXX into market conditions guidance. our have current incorporated the

performance first $X.XX Turning GPT costs, original We to remains workover full $XX.XX unchanged. Production Full the of the year costs. slightly and the was quarter made cash volumes commodity full G&A, was excluding first taxes first quarter. towards X.X% and in tax original latest which better for BOE sales end timing account quarter the costs. averaged due LOE adjusted in we our guidance and than expectations guidance was to and of higher to per BOE in expectations payments the was spending. was $XX.X guidance. Chord than strong million the our quarter in LOE better GPT reiterated quarter, our year range. per forecast. Cash first was which transaction lower and the given year of first our no

pay the half the For expect X% XX% to X% second second of year. to to we X% the EBITDA EBITDA of of which in increases quarter, to

be with year generally X% $XX in relative team our expect initial 'XX, taxes at of other we cash back in to pay pricing to dedication closing, to to expect half and full XXXX, timing higher $XX to the and For 'XX barrel, of their expectations. In X% from ranging front work the which we due is WTI deductions of like hard factors. In to line half year the EBITDA, a company. the to and the I'd thank to for our

return and I'll contribution Ina questions. returns, peer-leading flow for our sustainable call up shows capital. With of strong in the Your free to that, hand cash over back

question Neal comes [Operator Instructions] Truist first from line Securities. Your Dingmann of from the

want know continuing I'm guidance just my commitment if Nice fair to you some relatively relatively X. given that Danny, around post it this, given, that. or just maybe and it I the to potential in just quarter. flat. seemed same Enerplus said, you first staying X believe see, Enerplus, Darrin's stay you guidance would is your you're like if didn't to you been has And I to X and plans, that remarks do assume is mentioned I'm with able these Chord that your wondering, rigs, to time on that downside running team maybe to question what raise talk wondering, to around your D&C to prepared specifically, can And suggested are CapEx operational efficiencies continue you

what and organization. -- are -- we're the think for we Yes, I as thanks And well -- we're many are is hasn't we've that's think run sort And right really think What a question, times down. to not of I that Cycle interested an we've that that's of thoughts organization. talked -- We got in Neal. our on fair. times through. -- about improving way higher. The doing changed. the chasing flat+ we're program coming kind that's efficiencies production the higher

the to we'll And activity probably through free more so have and of activity, more otherwise, plowing out cash more these see move pull keep the similar flow capital of as that we what just into we're of would able about system. to through, as system, been flow sort instead efficiencies let to our it

that. see Love to

cut just then where And today, rework What outside wondering, Or a wondering, plan, back a going do maybe an workover typical to assume specifically. or be think that workover abnormal, your how kind but I'm with I'm you've I will the or workover of what what you it it some workover forward? on a without do should something just envision ramp rigs, Enerplus? job we would call if I'm done about trying up? that secondly, LOE plan? Enverus all is recently workover plan or about you program. on of just get idea weather, future would you of just nice Okay. plan on sort you is

ask maybe Darrin but a in to moment, thoughts I'll just Yes. here first. give commentary provide my some

expect, it. a we've program. is I should in you workover some There's think got what rig Neal, seasonality significant probably

quarters, portion of that beneficiaries better. may and LOE We of emits. We've get lower So we of that and some a can do it's than it should work little cost optimize big to the as be others. that system in hard really a try really, higher be recognize and been cost sort structure. the efficiencies through working more our We our

that's rigs, an more is tower comparable rigs I'd that flowing a could Enerplus include moving us, for things. But they different say, perspective, from basis. operations from to to efficient their and of certainly on focus number of a well reducing program of So on have, ours barrel, the lots more a workover sort

focus huge Darrin other And but on to so thoughts on continuous a it. ask his anticipate amount of changes than provide don't improvement, our I'll I maybe

-- and run on as year, able ] able been quarter costs Neal, that just possible. to We've our efficient we've been really conduct also we rod the need times reduce of most historically. rigs our improve repair by we third our we've maybe many how on XX%, last since our operations operator [ about as so actually we being don't Yes, did jobs focusing to workover

when Enerplus experiencing. slightly run at times Chord, at what been Enerplus longer you the quarter look to has are So relative than

as workover a the think times I we'll glean decrease put in efficiencies, additional to in able X well we some companies program. so overall together, the be when as And run increase

line Cowen. TD question from from the next Deckelbaum of your comes And David

more summer surprised you ask year. full I I on historical the the the the given be the year. But even just of half year second TILs the know the quarter. to that a bias follow-up year, to for back unchanged. or guidance half in Obviously, from a that you'd just budget. unless about And increased more about in producing seem wanted we this flattish I left of uptick there, if back it that the would capital throughout else within flat? that was guys and the of think you back the implication side less program obviously should the that something volumes talked first is pretty incorrectly. and half year, those is there's I the keep know otherwise the would that to you thinking have guys that production managing be about that seasonality there I'm the would fit half impacting But that production

Yes. David. Thanks the question, for

-- actually fewer crew of in year we we'll we in year having window think a and front TILs I half the anticipate back as maybe drilling than a the half the out rig. frac the of

quarter. So our fall the as we into activity, we anticipate third actually, move will

result the a going as of so tilted to TIL the that year, the half front toward that, back And of is be half the year. of balance slightly not

that's of profile production you're instead should production do provide is more the impact to what see. of And stable to more a going sort quarter-on-quarter. provide, a so cyclical it profile, going think And I that's

go bit continue strong the not and free see more just slow really flow chase we cash as higher we a looking to as down again, faster. little activity to through. flow activity let So we're We'll performance,

repermit talk too some early to potential synergies of lot doing the the Enerplus. kind of know about on the some intrigued those. some But some it's you better of about timeline their know to of obviously and at laterals your probably potentially are revisit that. appreciate Has impactful And some as of guys with changed on is I around commentary own assets? that of of I -- go-forward that until maybe can us on look that's a not integrating think likely some the achieving increased success program. XXXX? about a how Or in these you you something X-mile still basis, you've the locations had I

we've see is won't plan a standpoint, wells full development that separate appropriate so program XXXX, that post -- we're doing, so Well, as impact close. in really development new together integrated in We I XXXX, for and working to until of we're been really likely from we're think until close. a as not organizations get new the probably put

been the the -- used And spring. so internally, coiling phrase we we've

we as So as we're soon as that planning in can development point. we'll to spring I getting ready until on together, coiling we largely we effect put up go done sort jump full this plans anticipate of Once the much We've close. close, will here, integrated integration XXXX. as into which

least through you'll I really think practice a at benefits, see So in move standpoint, XXXX. those from

of those a synergy in So XXXX. captures lot

process replatting, to with takes a that respect obviously little Now and repermitting longer.

to need we'll geometry acreage play the so out. replatting And put the together, of games

and planned But moving later may activity roll should from for through the I'd from so maybe the that maybe later laterals of to the X-mile an XXXX synergy future planned into savings in say, currently the early some maybe replatting and little that opportunity moving be And X-mile see laterals year. of impact over laterals in, standpoint, X-mile process. we plan a development in

from comes from next the question Annis line Stifel. of your John And

potential the with development For hasn't on it? the into yet. active and Enerplus simul-frac cost on front. if not area thoughts one, simul-frac been Chord staying And program provide the on incorporating mistaken, associated has savings my your Can I'm first the one you leaned really that's synergies,

thing. to do Sure Happy that.

So implementing produced recycle water in we as you're as their job than great simul-fracs do. a has exactly right. operations they well Enerplus more frac done

forward. really are those so some implement that we learnings And going this intend midyear year immediately to

combine minus savings simul-fracking work you the the well $XXX,XXX so recycling when along out with per or savings. going water in probably And the to is plus

something that well vapor gas forward. to Some our other with use facilities, gas capture as is and implement see done really has things you'll Chord going recovery help they of as more far that units well as their off that's capturing Enerplus

included the Are Makes savings in target? $XXX those synergy clarification. sense. million And a already quick

are savings about numbers. in talked The those I've

sense. Makes

you either expectations planned have analogs laterals the across For my ultimate X-mile savings work basin? the any EUR, with later preliminary subsurface follow-up, you done regarding this potential the and for offer from year, or can cost

in lateral X-mile some incremental We think I on it's underwrite of program, for lateral from we've delivery that. just at degradation we looking that as degradation similar standpoint, to X-mile mile. us a days a a be delivery, anticipate looked obviously sort X incremental the early mile of as would fourth X-mile at opposed obviously, So like we'll to

X-mile think a that conservative a place that mile. in to I a from that more a we'll data to much little we've plow so confident of maybe us little some as increase encouraged as too X-mile get we're into through on proppant the we'll end been our we appropriately X we're as standpoint, And feel our get provide drilling technical we shouldn't we from we that on from X- the Again, very I'd X challenge toward clarity can a say perspective, more that placement we that proppant for standpoint. the provide a miles. too -- process, out of the year. But that X confident mile learnings

that there's of you've bring the roads cetera. the similar miles, can the you section huge that coil, long, coiled still technical from the think we et will cleanout challenge some the challenge us. cleanout is a a for will certainly, have pipe. But probably that's big existing do require anticipate moving lateral X just that and stick the it pad, leveraging you in think probably to sort advantages we tubing got, the X of to I vertical about most, with well, In be facilities

program that opportunity. imagine development real And can you program so X-mile a provides a X going X-mile from to development if

X-mile lend a big so well mile be itself lending to I'm But how And a is we're for miles. development, Certainly, to a where but doesn't X-mile we instead X replacing X sure itself that uplift not got geometry development. could is really us. X-mile much envisioning of well X-mile

so that's -- what we're really what we're And about. that's excited

extend that And we've John, basis, that in The XX% to we're a little mile, the to is combined our on add about a X-mile talking stand-alone, been X a XX% category, to continue X-mile Chord of being XX% means category. just inventory to able about to open which bit. in on identified that is

of or more mentioned, mile, a So X to program. the more portion will, the larger Danny X either just opportunities, us X-mile will you capital lateral if efficiency give shapes, have inventory into the to across get increasing thus as that

we there's just left program, a add to that. in of X opportunity So think and the mile the lot will

Instructions] [Operator line next your Mitchell Sean Partners. Daniel of from the And Energy from question comes

on drill of year-over-year. times improvements mud, drill the et impressive the or fluids, had size -- drilling designed more about that, this form the sorry Is times drilling around improvement of guys hammer well cetera? You in

laterals And clean the bottom no that laterals but also to It's has the it's of And down bit driving and get bit vendors can great design, place. question. quickly, the head hit on nail having doing times with that. we team a on with of problem a done while that the a pipe that respect you use the cemented front. cycle advancing drill wellbores in and our we we're to able working the our drilling fabulous combination The drilling our properties of job keep mud and to how good really the course, on with mud design and the we're

So what with continuous not it's we've -- individual one historically. area. It's done to rest Chord's We're improvement. any going it's commitment to just really never

We the to mean drive to sit continue have to doesn't set focus fastest for additional wins down basin, comfortable the well record cycle We'll be going but back results. times. we're look and with those and those X-mile for the in that

be I are follow-up, and about some, the Got would talking do helpful. Eagle the Bakken peers does in but How you think several it? or of Enerplus that about think And any refracs guys a maybe you think the around Ford. it. refrac your competitors about color just market? Do

Yes.

our but do to program -- think to right refracs, I opportunities think we're development those. areas got the where some particularly And We now we really development as do is area. have candidly, compelling. we we open We greenfield program to in have the within we've opportunity see refracs. in

-- already it to into area. that to area. of frac costs already like We've areas, in, the in shut doing at got all protect difficult back there's going refrac that. Those protected in would moment because for associated them to with we've wells justify itself So wells refracs and wells is in, shut areas expense got the the that be frac

And focus a so us. that I think stand-alone you'll program see as for on in us manner refracs

others. from and We're we'll forward. We are move learning practices our own observing

the were I expectations field we've in understimulated, you generally the to few the relative refrac a the the a is upfront. really in good of are legacy job pretty One place. think organizations reasons speaking, and program modern wells But did areas first least a do original that. And in got at go like maybe that

maybe maybe much so on program some the we're bone as or others, not looking that interesting at. an but still for there's meat And

time. back to no closing Brown, for remarks. further are now this I the hand Mr. There CEO, Danny questions at will call

Thanks, process. forward to everyone improving Chord's merits the call. of the beneficial market relates on with thing company. are our that to progress appreciate the that, excited our change strong rate our to Ina. doing employees through and out, success. today continued time backbone also which And more of commitment everyone's for creation than capital and pride being allocators returns ever Enerplus, move close interest and combination the to right with shareholders. We and I we joining we our value dedication really for want thank about because and our as remain on ourselves their Well, in look the it as they will for to updating We thanks to accelerate

This for Thank participating. concludes call. today's you

disconnect. all may You