Chord Energy Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 8, 2024

There are 9 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the Cord Energy First Quarter 2024 Earnings Call. And answer session. This call is being recorded on Wednesday, May 8, 2024. And I would now like to turn the conference over to Mr. Richard Robach, Chief Financial Officer.

Operator

Thank you. Please go ahead.

Speaker 1

Thanks, Ina. Good morning, everyone. This is Richard Robach. Today, we're reporting our Q1 2024 financial and operating results. We're delighted to have you on our call.

Speaker 1

I'm joined today by Danny Brown, our CEO Michael Liu, our Chief Strategy Officer and Chief Commercial Officer Darren Henke, our COO and other members of the team. Please be advised that our remarks, including the answers to your questions, include statements that we believe to be forward looking statements within the meaning of the Private Securities Litigation Reform Act. These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently disclosed in our earnings releases and conference calls. Those risks include, among other things, matters that we have described in our earnings releases as well as our filings with the Securities and Exchange Commission, including our annual report on Form 10 ks and our quarterly reports on Form 10 Q. We disclaim any obligation to update these forward looking statements.

Speaker 1

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

Speaker 2

Thanks, Richard. Good morning, everyone. Thank you for joining our call. I know this is a very busy morning, so I'll get right to my comments. I plan to review our Q1 performance and return of capital, our full year standalone outlook and provide some updates on our pending combination with Enerplus before passing it over to Darren Henke.

Speaker 2

Darren will give some color on operations before passing it back to Richard for a little more detail on our financial results. We'll then open it up to Q and A. So in summary, what a great quarter. We announced a very important and impactful combination with Enerplus and delivered another quarter of strong operational performance. Q1 2024 resulted in oil volumes above expectations driven by strong well performance and accelerated activity due to cycle time improvements.

Speaker 2

And I want to take a moment to thank the CORE team for demonstrating tremendous resiliency during the unusually cold weather that swept through North Dakota in January. While we experienced significant downtime, the CORD team responded quickly and got production back online fast and most importantly safely. In fact, I believe we had some of the best performance in the basin on these items and I just want to extend my personal gratitude to all those that made it happen. The strong production we saw in the Q1 has underpinned Cord's financial performance and led to robust free cash flow generation, which was above expectations. We generated $204,000,000 of adjusted free cash flow during the quarter and, in accordance with our return of capital framework, will return 75% of discrete cash flow to shareholders.

Speaker 2

To that end, given our base dividend of $1.25 per share and our share repurchases in the quarter of $30,000,000 which were limited given the possession of material non public information associated with the pending combination with Enerplus, we declared a variable dividend of $1.69 per share. Additionally, last night, we had issued 2nd quarter and full year guidance, which reflects Cord on a stand alone basis. Given the operational improvements I mentioned earlier, the development program is proceeding faster than originally anticipated, and Q2 oil volumes and capital are expected to be a little higher than what we were projecting at the beginning of the year. While we are running ahead of schedule, you'll notice we didn't change our full year oil volume or capital guidance from the February outlook. This reflects Cord's commitment to managing the business to maximize sustainable free cash flow with a flat plus program.

Speaker 2

Given our strong performance to date, including the 16% free cash flow beat in the 1st quarter, our plan has capital peaking in the 2nd quarter with reduced activity relative to our original expectations in the second half of the year as we window out a frac crew and drilling rig. In addition to yielding a more stable production profile, this should help derisk the delivery of our previously announced annual program, allow us to assign more resources to integration and synergy capture and position us well for a strong 2025. Speaking of integration, we were pleased to announce yesterday that we expect to close the Enerplus combination later this month on May 31. As a reminder, our review period under the Hart Scott Rodino Act expired on April 5 and since that time, the teams of both companies have been working to prepare for integration while still working as separate organizations. Upon close, we expect to issue abbreviated combined guidance for the Q2, which will include 1 month of Enerplus as well as second half guidance for the pro form a enterprise and we'll also work to fully integrate the development plans of the 2 companies.

Speaker 2

We intend to provide a more fulsome update on expectations for the combined asset base when we report 2nd quarter results in August. As a reminder, Cord's shareholder vote is scheduled for May 14 and Enerplus's shareholder vote is scheduled for May 24. Cord has integrated multiple transactions over the past few years, including the XTO acquisition and the Oasis and Whiting merger. The team keeps getting better and applying the learnings from these integration efforts is expected to help ensure we realize and even exceed our announced synergies while maintaining strong operational performance of the underlying business. Before moving on, I'd like to spend a few moments reviewing the merits of the deal.

Speaker 2

The Core team has long believed in the industrial logic of a combination of these two organizations. We remain extremely confident in the strategic and financial benefits of the transaction. And as we move through integration planning, our conviction level continues to grow. 1st, Enerplus brings top tier assets in the core of the basin, which improves the quality of our long lived inventory and where Core expects to enhance returns by combining the best development and operating practices of the 2 companies. To put it plainly, we believe Enerplus has some of the best inventory and acreage in the basin.

Speaker 2

2nd, by utilizing combined best practices at enhanced scale, we are very confident in achieving the $150,000,000 in synergies previously noted and see potential upside to this number. Integration efforts are going very well with both organizations working together to drive incremental value from the transaction. Through the process of building roadmaps for the future organization, we've learned that our cultures are very similar, and I want to let both organizations know how grateful I am for their positive attitudes eagerness and excitement around the deal. To all the core employees involved in the integration efforts, you've done a great job driving the process forward while also putting up great results in our stand alone business. 3rd, the combination drives accretion across all key per share metrics, including EBITDA, cash flow and free cash flow.

Speaker 2

In addition, the structure of the deal allows us to maintain a peer leading return of capital program and preserves a fortress balance sheet, giving the pro form a organization tremendous optionality as we move forward. To sum it up, the combination with Enerplus significantly accelerates Cord's beneficial rate of change as it relates to improving economic returns and value creation, and it is a very exciting time for our organization. And finally, because we remain committed to delivering affordable and reliable energy in a sustainable and responsible manner, just a few words on our sustainability progress before turning it over to Darren. In 2023, Cord lowered its emissions intensity and officially endorsed the World Bank's 0 routine flaring by 2,030 initiative. We also saw a dramatic improvement in our safety performance.

Speaker 2

I'd like to thank the team for their efforts on these important topics and encourage everyone to review our sustainability report on our website. After closing the Enerplus transaction, our preliminary plans for 2024 involve publishing a sustainability report Cord on a stand alone basis and providing a summary of key ESG and sustainability metrics for Enerplus. In 2025, we expect to publish a full sustainability report reflecting the combined company. To sum things up, Cord had a great start to the year. We remain excited to close the pending transaction with Enerplus and look forward to driving forward progress through 2024 and beyond.

Speaker 2

And with that, I'll turn it over to Darren.

Speaker 3

Thanks, Danny. We had a solid quarter as the team continues to execute with excellence. Our wedge production benefited from strong well performance and improving cycle times, while our base production rebounded quickly from the January weather disruptions. The core team has enhanced our facility design in recent years and has the equipment and processes in place to mitigate downtime and rebound quickly when there are outages. Operationally, we continue to be encouraged by the progress we're making on 3 mile laterals, of which we've executed about 80 to date.

Speaker 3

While it's still early days, on average, performance is meeting or exceeding our expectations and one can clearly observe contribution from the furthest portions the lateral. We're also seeing an uplift compared to the 2 mile analog wells in each prospect area, which is increasing over time. You can find additional details on Slide 9 of our updated investor presentation where we've provided performance data on 3 mile wells and painted woods that were tilled in the Q3 of last year. Additionally, we provided incremental details on the anticipated 3 mile production forecast over time and also the expected 40% uplift. It's important to understand that all else equal, production per lateral foot from 3 mile wells will initially be below the 2 mile analogs.

Speaker 3

This mostly reflects facility constraints and managed flowback, which generally keep volumes in a certain band for the initial productivity period. However, over time, the 3 mile well production per lateral foot catches up with the 2 mile wells given shallower declines, which ultimately leads to higher recovery. We expect 3 mile wells to deliver approximately 40% more EUR for about 20% more capital. This capital efficiency primarily comes from leveraging the vertical section of the wellbore as well as locations, roads and infrastructure while using similar sized facilities. Ford has made significant progress in drilling, completing and cleaning out our 3 mile wells.

Speaker 3

Drilling times declined by roughly 25% over 2023 and is now taking about 10 to 11 days on average to drill a 3 mile well. I should note in the Q1, Core drilled a 3 mile well in 8.7 days spud to rig release, which set a new basin record. On the clean out side, we have made strong progress and are essentially reaching TD in all our 3 mile wells at this point. We frequently get asked if there could be upside to our implied 80% productivity assumption for the 3rd mile. We believe this is a likely possibility, especially in light of Cord's progress on cleanouts over the past year.

Speaker 3

However, given that our 2023 3 mile tills were back in weighted, it will take until later this year to get sufficient production history to effectively analyze the declines and determine whether we can increase our EUR uplift assumptions. As I said, we are essentially reaching TD on all our cleanouts and we like what we see for production performance and well pressures. I give credit to the core team for embracing our culture of continuous improvement, which has significantly advanced our execution on the 3 mile laterals. So to sum things up, the Bakken is a world class resource with strong economics and as the premier operator in the basin, we see additional running room to drive further efficiencies and lower breakeven pricing. The combination with Enerplus provides additional levers to advance our capabilities and will allow both Cord and Enerplus to create more value than either company could as a standalone.

Speaker 3

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

Speaker 1

Thanks, Darrin. A quick heads up, my comments regarding guidance will not include pro form a impacts of Enerplus as we'll be incorporating a combined look post close. In the Q1, Core generated adjusted free cash flow of $204,000,000 Looking at the puts and takes, strong volumes and lower operating costs largely offset capital costs that were at the high end of the range, while natural gas realizations were below our February forecast projections. Our volumes were strong in the Q1, up 2.6% of our midpoint guidance, while total volumes were about 1% above midpoint guidance. 1st quarter adjusted CapEx of $254,000,000 excluded $4,000,000 of CapEx, which will be reimbursed in conjunction with sales of non operated assets.

Speaker 1

As Danny mentioned, our program has accelerated a bit from what we expected in February, which is reflected in our Q1 results and Q2 guidance. On a full year basis, there were no changes to oil volumes and capital spending guidance that we outlined in February. Oil realizations in the Q1 averaged 1 $0.71 below WTI, slightly favorable in midpoint guidance. As we look to the balance of 2024, the Q1 oil differential is expected to be wider than the rest of the year with Bakken pricing expected to improve as the TMX pipeline begins operating. For the full year, we expect crude realizations to reflect a modest discount to WTI.

Speaker 1

NGL realizations as a percent of WTI were in line with midpoint guidance, while gas realizations fell below our guidance range. As a reminder, certain marketing fixed fees are deducted from our realized gas and NGL prices. This drives higher operating leverage, which hurts realizations for both NGLs and gas at times of weaker prices. With gas prices trading at low levels, the fees deducted from our price resulted in lower realizations as a percent of the benchmark price. However, realizations should improve quickly in environments where gas prices rise.

Speaker 1

We've incorporated the current market conditions into our updated 2024 guidance. Turning to costs. LOE was $10.39 per BOE in the Q1, which was better than our original expectations given strong volumes and lower workover costs. GPT was $3.30 per BOE, which was towards the higher end of the range. We slightly adjusted our full year LOE and GPT guidance to account for the Q1 performance and our latest forecast.

Speaker 1

Cash G and A, excluding transaction costs, was $14,500,000 in the Q1 and was better than original expectations due to timing of spending. Full year guidance remains unchanged. Production taxes averaged 8.5% of commodity sales in the Q1 and we reiterated our full year guidance. Cord made no cash tax payments in the Q1. For the Q2, we expect to pay 1% to 8% of EBITDA, which increases to 8% to 14% of EBITDA in the second half of the year.

Speaker 1

For the full year 2024, we expect to pay 4% to 9% of EBITDA at WTI pricing ranging from $70 to $90 a barrel, which is in line with our initial expectations. In 2024 and 2025, we generally expect cash taxes to be higher in the back half of the year relative to the front half due to timing of deductions and other factors. In closing, I'd like to thank our team for their hard work and dedication to the company. Your contribution shows up in our strong returns, sustainable free cash flow and pure leading return of capital. With that, I'll hand the call back over to Ina for questions.

Speaker 1

Thank

Operator

Your first question comes from the line of Dylan Dingmann from Chuba Securities. Please go ahead.

Speaker 4

Good morning guys. Nice quarter. Danny, my first question is maybe on your post Enerplus D and C plans. I know maybe just what you can talk around this. Specifically, I believe Cord has been running around 2 to 3 rigs in Enerplus 2.

Speaker 4

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 given or you didn't want to raise guidance yet given your commitment to stay in 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 Darren's team are continuing to see if you're able to continue to do that?

Speaker 2

I think that's thanks for the question, Neil. Yes, I think that's fair. What we we've got we're doing really well as an organization. The efficiencies are coming through, cycle times are improving down. And what we're not interested we're not interested in chasing production higher and higher.

Speaker 2

We think sort of a flat plus program that we've talked about many times is kind of the right way to run the organization. And that's our thoughts on that hasn't changed. And so as we see these efficiencies move through as we're able to pull more capital out of the system, instead of plowing that into more activity, we'll probably keep our activity about sort of similar what it would have been otherwise and just let more free cash flow flow through the system.

Speaker 4

Love to see that. Okay. And then just secondly on future LOE specifically, I'm just wondering, you recently cut some workover rigs, but you've done a nice job just on that workover program. And I'm just wondering, outside of weather or what I would call something normal, what do you all envision is sort of a typical workover plan, maybe I don't care, with or without Enverus or Enerplus? What do you assume on a kind of work over plan?

Speaker 4

I'm trying to get an idea if the plan will be about where it is today. Would you ramp it back up or how should we think about that work over or rework plan going forward? Thank you.

Speaker 2

Yes. I'll ask Darren to provide some commentary here in a moment, but maybe just give my thoughts first. I think what you should expect, Neal, is we've got a significant workover rig program. There's probably some seasonality in it, some quarters it may be a little higher than others. We've been working really, really hard to try and optimize our cost in this.

Speaker 2

We recognize it's a big portion of our LOE and that as we can get more efficiencies through the system and do that work better, we should be the beneficiaries of sort of lower cost in that structure. So that's certainly a focus for us that could include reducing the number of rigs, moving to more tower rigs for more efficient operations and lots of different things. But from an Enerplus perspective, they have I'd say their workover program is sort of comparable to ours on a flowing barrel on a well basis. And so I don't anticipate a huge amount of changes other than our focus on continuous improvement, but I'll ask Darren to maybe provide his thoughts on it.

Speaker 3

Yes, Neal. We've since Q3 of last year, we've been able to reduce our workover costs on our rod repair jobs by about 15%, just really focusing on how we conduct our operations and being the most efficient operator possible. We've also been able to improve our run times so that we actually don't need as many rigs as maybe we did historically. So when you look at Enerplus relative to Cord, the run times at Cord are slightly longer than what Enerplus has been experiencing. And so I think when we put the 2 companies together, we'll be able to glean some additional efficiencies, increase in run times as well as a decrease in the overall workover program.

Speaker 4

Very helpful. Thanks guys.

Speaker 2

Thank you.

Operator

Thank you. And your next question comes from the line of David Decoguang from TD Cowen. Please go ahead.

Speaker 5

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 Q2. I know that there's obviously pretty even till throughout the first half and the back half of the year.

Speaker 5

But if we think about the summer seasonality and that uptick there, it would seem that you guys should have increased production in the back half of the year unless I'm thinking about that incorrectly. I know that you guys talked about managing the program to production side that would otherwise keep those volumes flat?

Speaker 2

Yes. Thanks for the question, David. I think we'll actually 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 we anticipate will fall as we move into the Q3. And so as a result of that, that tilt balance is going to be slightly tilted toward the front half of the year, not the back half of the year.

Speaker 2

And so what that's going to do is provide instead of sort of a more cyclical production profile, it should provide a more stable production profile quarter on quarter. And I think that's the impact you're going to see. So as we see as we continue to see strong performance, again, we're not really looking to chase activity higher as we go faster. We'll just slow the activity down a little bit and let more free cash flow flow through.

Speaker 5

I appreciate that. And maybe you can revisit some of the commentary around potentially doing better on some of the synergies with Enerplus. I know it's probably too early to talk about some of those, but I know a lot of us are intrigued about the potential to kind of re permit some of their locations in the 3 mile laterals on a go forward basis and you've obviously had some increased success on your own program. Has the timeline, how you guys think about achieving that changed as you look at integrating some of these assets? Or is that something that's still likely not impactful until 2026?

Speaker 2

Well, I think from a development program standpoint, so for new wells that we're doing, we're probably we're likely to see really the impact of that in 2025, not in 2026. And so we've been working as separate organizations as is appropriate until close. We won't really get a full new integrated development plan put together until post close. And so internally we've been we use the phrase coiling the spring. So we're coiling the spring here and getting ready to sort of jump on this as soon as we close.

Speaker 2

We've done as much integration planning as we can up till that point. Once we close, we'll put full integrated development plans together, which I anticipate will go largely into effect in 2025. So I think you'll see really those benefits at least from a practice standpoint move through in 2025. So a lot of those synergy captures in 2025. Now with respect to re permitting and re plating that process obviously takes a little longer.

Speaker 2

And so we'll need to put the acreage together, play the geometry games of replanting out. And so maybe the impact of moving from currently planned 2 mile laterals to future planned 3 mile laterals maybe a little later in the process. But from an activity standpoint, we should see that synergy savings roll through in, I'd say, early 2025 and maybe the opportunity for replatting into 3 mile laterals and moving some of that development plan over maybe later in the year.

Speaker 5

Thanks, Danny.

Operator

Thank you. And your next question comes from the line of John Ioannes from Stifel. Please go ahead.

Speaker 2

Hey, good

Speaker 6

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

Speaker 3

Sure thing. Happy to do that. So you're exactly right. Enerplus has done a great job implementing simul fracs 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.

Speaker 3

And so the savings when you combine the recycling the water along with simul fracking is probably going to work out plus or minus $100,000 per well in savings. Some other things that Interplus has done really well is they use more vapor recovery units and as far as capturing gas off of their facilities and that's something that you'll see Cord implement as well to help with our gas capture going forward.

Speaker 6

Makes sense. And a quick clarification, are those savings already included in the $150,000,000 synergy target?

Speaker 3

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

Speaker 6

Makes sense. For my follow-up, with the 4 mile laterals planned for later this year, can you offer any preliminary expectations regarding potential cost savings and ultimate EUR either from the subsurface work you have done or analogs across the basin?

Speaker 2

So I think from a 4 mile lateral standpoint, obviously it's sort of early days for us in that. We would anticipate that similar to as we underwrite a 4 mile lateral program, we'll obviously be looking at some incremental degradation on the 4th mile delivery just like we've looked at incremental degradation of a 3 mile delivery as opposed to 2 mile. And so, I think we're encouraged that maybe we've been a little too conservative on that from a 2 to 3 mile standpoint. Again, we'll provide some more clarity on that as we get a little more data in as we get toward the end of the year. But as we increase our learnings through that 3 mile process, we'll plow that into 4 mile.

Speaker 2

I'd say that the from a drilling perspective, we're very confident that 4 miles shouldn't provide too much of a technical challenge for us from a proppant placement standpoint. We feel confident we can place our proppant appropriately out to Fourmile. I think the clean out is probably the technical challenge that we have most just with existing coils. Certainly, coiled tubing clean out will be a big challenge for us in a lateral that's long and probably will require some stick pipe. But we do anticipate sort of similar to move from 2 and 3 miles.

Speaker 2

You can think about there's still huge advantages in leveraging the vertical section of the well, the facilities that you've got, the roads that bring you to the pad, etcetera. And so if you can imagine going from a 2 mile development program to 1 4 mile development program, it provides a real opportunity. And so I'm not sure how much we're envisioning 4 miles replacing 3 miles, but where we've got geometry that doesn't lend itself to 3 mile development, but really is lending itself to 2 mile development, Certainly, a 4 mile well instead of a 2 mile well could be a big uplift for us. And so that's what we're that's really what we're excited about.

Speaker 7

And John, just to add to that a little bit. The 3 mile on a core standalone, we've been talking about 60% of our inventory is in that 3 mile category, which means that 40% is open to being able to continue to extend. On a combined basis, we're about 40% in the 3 mile identified category. So the 4 mile lateral will just give us more opportunities as Danny mentioned to have more shapes if you will to get a larger portion of that inventory into either 3 or 4 mile thus increasing the capital efficiency across the program. So there's a lot of opportunity left in the program and we think the 4 Mile will just add to that.

Speaker 6

Great color. Thanks again for taking my questions.

Speaker 2

Thanks, John.

Operator

Thank you. And your next question comes from the line of Sean Mitchell from Daniel Energy Partners. Please go ahead.

Speaker 8

Good morning, guys. Thanks for taking my question. You guys had impressive improvements on drill times sorry about that 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, etcetera?

Speaker 3

Yes. It'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 wellbores really quickly, but also keep the laterals clean while we're doing that.

Speaker 3

And of course, having good laterals that we can get the pipe to bottom with no problem and cement it in place. So it's not really any one individual area. It's just it's Cord's commitment to continuous improvement. We're never going to rest with what we've done historically. We have set the record for the fastest 3 mile well in the basin, but that doesn't mean we're going to sit back and be comfortable with those results.

Speaker 3

We'll continue to focus and look for additional wins to drive down those cycle times.

Speaker 8

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

Speaker 2

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

Speaker 2

So we've already got wells shut in, in the area. We've already got wells frac protected in the area. Those areas, doing refrac at that moment is it would be difficult for the refrac itself to justify going

Speaker 5

back into areas like that to shut wells in to

Speaker 2

frac protect them. But standalone program for us. We are observing others. We're standalone program for us. We are observing others.

Speaker 2

We're learning from our own practices and we'll move forward. One of the reasons you go in and do a refrac program is really the original wells were maybe under stimulated at least relative to modern expectations in the first place. And we've got a few areas in the field that are like that. But generally speaking, I think the legacy organizations have did a pretty good job upfront. And so maybe there's not as much meat on the bone as there may be for some others, but that's still an interesting program that we're looking at.

Speaker 2

Yes. Okay. Thanks for taking my questions. Thanks, Sean.

Operator

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

Speaker 2

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. We pride ourselves on being strong capital allocators and doing the right thing for shareholders. We remain more excited than ever about the merits of the combination with Enerplus, which will accelerate Chord's beneficial rate of change as it relates to improving returns and value creation and look forward to updating the market on our progress as we move through that process.

Speaker 2

And with that, thanks to everyone for joining our call.

Operator

This concludes today's call. Thank you for participating. You may all disconnect.

Powered by Quartr

Key Takeaways

  • Q1 2024 results delivered $204 million of adjusted free cash flow and oil volumes above expectations, supported by strong well performance and rapid recovery from extreme January weather.
  • Under the company’s return‐of‐capital framework, Cord will distribute 75% of discrete cash flow via its $1.25 base dividend, a $1.69 variable dividend and $30 million in share repurchases.
  • Standalone Q2 oil volumes and capital spending are now expected to be slightly higher than February forecasts, while full‐year oil and capex guidance remain unchanged and are managed to peak in Q2 before tapering in H2 to maximize sustainable free cash flow.
  • The pending May 31 closure of the Enerplus combination is expected to be accretive across per-share metrics, deliver at least $150 million of synergies (with upside potential) and unlock top-tier basin inventory and best‐practice integration benefits.
  • Cord continues to advance operational excellence, drilling a record 3-mile lateral in 8.7 days, achieving ~25% faster cycle times and targeting ~40% EUR uplift on 3-mile wells through continuous improvement initiatives.
AI Generated. May Contain Errors.
Earnings Conference Call
Chord Energy Q1 2024
00:00 / 00:00