Chord Energy Corporation (CHRD): Delivering Sustainable Value Through Operational Excellence and Strategic Combination

Published on September 24, 2024 | Ticker: CHRD

Chord Energy Corporation (CHRD) has delivered another quarter of strong operational and financial performance, further solidifying its position as a leading independent exploration and production (E&P) company in the Williston Basin. The company's unwavering commitment to capital discipline, operational efficiency, and responsible development has enabled it to generate robust free cash flow and return significant capital to shareholders.

Financials

In the first quarter of 2024, Chord reported net income of $199.4 million, reflecting the company's ability to navigate the dynamic commodity price environment. The company's annual net income for 2023 was $1,023,779,000, underscoring its consistent profitability. Chord's annual revenue for 2023 reached $3,896,641,000, while its annual operating cash flow and free cash flow stood at $1,819,851,000 and $914,178,000, respectively.

Operational Performance

During the first quarter of 2024, Chord's production volumes averaged 168,424 Boepd, with crude oil volumes accounting for 59% of the total. The company's lease operating expenses (LOE) were $10.39 per Boe, reflecting its ongoing efforts to optimize costs and drive operational efficiencies. Chord's gathering, processing, and transportation (GPT) expenses were $3.52 per Boe, and its production taxes averaged 8.5% of commodity sales.

Capital Expenditures and Cash Flow

Chord's capital expenditures (excluding capitalized interest) for the first quarter of 2024 were $257.7 million, with the company's E&P and other capital expenditures focused on developing its high-quality asset base in the Williston Basin. The company's net cash provided by operating activities was $406.7 million, underscoring its strong cash flow generation capabilities.

Liquidity

The company's financial position remains robust, with $1.3 billion of liquidity available as of March 31, 2024, including $296.4 million in cash and cash equivalents and $991.1 million of unused borrowing capacity under its credit facility. Chord's long-term debt stood at $396.3 million, with a fixed interest rate of 6.375% on its senior unsecured notes.

Return of Capital

Chord's return of capital strategy continues to be a key focus, as the company paid a base-plus-variable dividend of $3.25 per share in the first quarter of 2024. Additionally, the company repurchased $30.0 million of its common stock during the quarter, with $653.0 million remaining under its $750 million share repurchase program.

Outlook

Looking ahead, Chord has provided guidance for the second quarter and full year 2024. For the second quarter, the company expects oil volumes to be slightly higher than its original projections, while capital expenditures are also expected to be a bit higher. However, for the full year, Chord has maintained its previous oil volume and capital guidance, reflecting its commitment to managing the business for sustainable free cash flow generation.

Recent Developments

The company's pending combination with Enerplus Corporation, announced in February 2024, is expected to further enhance Chord's position in the Williston Basin. The transaction, which is expected to close in the second quarter of 2024, will bring together two premier operators with complementary asset bases and operational expertise. Chord believes the combination will drive accretion across key per-share metrics, including EBITDA, cash flow, and free cash flow, while also preserving the company's peer-leading return of capital program and fortress balance sheet.

Operational Excellence

Chord's focus on operational excellence, capital discipline, and responsible development has been a key driver of its success. The company's commitment to continuous improvement is evident in its record-setting drilling times, enhanced well performance, and progress on 3-mile lateral development. Chord's ability to quickly respond to operational challenges, such as the inclement weather in the first quarter, further demonstrates the resilience of its business model.

Sustainability Efforts

The company's sustainability efforts have also been a priority, with Chord lowering its emissions intensity and endorsing the World Bank's Zero Routine Flaring by 2030 initiative in 2023. The company's safety performance has also seen a dramatic improvement, underscoring its dedication to operating in a responsible manner.

Conclusion

As Chord looks to the future, the combination with Enerplus is expected to unlock significant synergies and accelerate the company's beneficial rate of change in improving returns and value creation. The integration planning process is progressing well, with both organizations working collaboratively to drive incremental value from the transaction.

Chord Energy Corporation has delivered another quarter of strong operational and financial performance, positioning the company for continued success. The pending combination with Enerplus is expected to further enhance Chord's position in the Williston Basin, driving accretion and preserving the company's commitment to shareholder returns. Chord's focus on operational excellence, capital discipline, and responsible development continues to be the foundation of its success, and the company remains well-positioned to create sustainable value for its shareholders.

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Chord Energy Corporation (CHRD): A Compelling Bet on the Resilient Williston Basin

Chord Energy's origins trace back to 2007 when it was founded as Oasis Petroleum Inc., focused on the acquisition, exploration, development, and production of crude oil, natural gas liquids, and natural gas in the Williston Basin. The company faced significant challenges in 2020, leading to a strategic bankruptcy filing. However, Oasis successfully emerged from this process with a significantly reduced debt load and a strengthened balance sheet, positioning it for future growth opportunities.