Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chord Energy Corp (CHRD, Financial) reported strong operational performance with oil volumes exceeding expectations due to improved well performance and accelerated activity.
- The company generated $204 million in adjusted free cash flow during the quarter, surpassing expectations and allowing for a substantial return of 75% of this cash flow to shareholders.
- Chord Energy Corp (CHRD) announced a strategic combination with Enerplus, expected to close on May 31, 2024, which is anticipated to bring significant synergies and enhance asset quality.
- Operational improvements have led to a faster development program, maintaining full-year oil volume and capital guidance despite running ahead of schedule in the second quarter.
- Chord Energy Corp (CHRD) has successfully integrated multiple transactions in the past, applying these learnings to potentially exceed synergy targets with the Enerplus integration.
Negative Points
- Despite strong performance, Chord Energy Corp (CHRD) experienced significant downtime due to unusually cold weather in North Dakota, impacting production.
- The company's share repurchases were limited during the quarter due to possession of material non-public information related to the pending combination with Enerplus.
- Natural gas realizations fell below the company's forecast projections, impacted by lower market prices and fixed marketing fees.
- Chord Energy Corp (CHRD) anticipates higher capital expenditure in the second quarter as the development program proceeds faster than originally planned.
- While synergies from the Enerplus combination are expected, the full integration and realization of these benefits will require careful management and could present execution risks.
Q & A Highlights
Q: Hi. Morning, guys. Nice quarter. Danny, my first question is maybe on your post-Enerplus D&C plans, maybe just what you can talk around this. Specifically, I believe Chord has been running around two to three rigs and, Enerplus, two. And I'm just wondering -- you mentioned something on your prepared remarks that it seemed like you suggested that guidance would stay relatively the same or you didn't want to raise guidance yet given your commitment to staying relatively flat. And I'm just wondering, with that said, is it fair to assume potential downside to CapEx if these operational efficiencies that you and Darrin's team are continuing to see if you're able to continue to do that?
A: I think that's -- thanks for the question, Neal. Yeah, I think that's fair. What we -- we're doing really well as an organization. The efficiencies are coming through. Cycle times are improving down, and what we're not -- we're not interested in chasing production higher and higher. We think of sort of a flat plus program that we've talked about many times as kind of the right way to run the organization.
Q: Thanks, Danny, Michael, Richard, and team. I wanted to ask a follow-up just on guidance for this year. Obviously, you left the full year unchanged, and just given the historical bias to producing more in the back half of the year, I was surprised that the implication is that you'd more or less be flattish from the second quarter. I know that there's obviously pretty even tills throughout the first half and the back half of the year.
A: Thanks for the question, David. I think we'll actually -- we anticipate having maybe fewer tills in the back half of the year than in the front half of the year as we window out a frac crew and a drilling rig. So our activity, actually, we anticipate will fall as we move into the third quarter. And so as a result of that, that till balance is going to be slightly tilted toward the front half of the year, not the back half of the year.
Q: Hey. Good morning, guys, and thanks for taking my questions. For my first one, staying on the synergies, Enerplus has been active on the simulfrac front, and if I'm not mistaken, that's one area Chord hasn't really leaned into yet. Can you provide your thoughts on incorporating the simulfrac development program and the potential cost savings associated with it?
A: Sure thing. Happy to do that. So you're exactly right. Enerplus has done a great job implementing simulfracs, as well as they recycle more produced water in their frac operations than we do. And so those are some learnings that we intend to implement immediately, really mid-year this year going forward. And so the savings, when you combine the recycling the water along with simulfrac, it's probably going to work out plus or minus $100,000 per well in savings.
Q: Good morning, guys. Thanks for taking my question. You guys had impressive improvements on drill times year over year. Is this improvement around more the size of the hammer or well designed in the form of drilling fluids, drilling mud, et cetera?
A: That's a great question. The team has done a fabulous job driving down our cycle times on the drilling front. And it's a combination of working with our vendors on bit design and advancing our bit design. You hit the nail on the head with respect to the drilling mud that we use and the properties of that mud and how we're able to drill the well bores really quickly, but also keep the laterals clean while we're doing that.
Q: Great color. Thanks again for taking my questions.
A: Thanks, Ina. Well, to close out, we appreciate everyone's time today and interest in our company. I also want to thank our employees for their continued commitment and dedication because they really are the backbone to our success.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
