Chord Energy Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2026

Key Takeaways

  • Positive Sentiment: Chord delivered a strong Q1 with $324 million of adjusted free cash flow, returned $145 million to shareholders via base dividend and buybacks, and sent $175 million to the balance sheet after lease acquisitions.
  • Positive Sentiment: The company raised its 2026 outlook by ~2,000 bpd of oil and now expects roughly $1.4 billion of free cash flow (assuming $80/bbl), with capital unchanged and an incremental >$40 million FCF benefit versus February guidance.
  • Neutral Sentiment: Management remains cautious on the macro outlook, maintaining a "maintenance-plus" program and flat-to-slight growth volume plan amid market volatility and backwardation, with flexibility to allow modest upside if efficiencies and prices persist.
  • Positive Sentiment: Operational execution on longer laterals is advancing—Chord reported successful results from the first full 4-mile pad, a 37% reduction in D&C cost per foot over four years, and plans for ~40% of TILs and ~60% of spuds to be 4-mile laterals in 2026.
  • Positive Sentiment: The company is accelerating base-production optimization (workovers, AI-optimized artificial lift, chemical jobs and surface debottlenecking), reporting arrested declines and short-cycle volume gains from its ~5,000 operated wells.
AI Generated. May Contain Errors.
Earnings Conference Call
Chord Energy Q1 2026
00:00 / 00:00

There are 14 speakers on the call.

Speaker 11

Good morning, ladies and gentlemen. Welcome to the Chord Energy First Quarter 2026 earnings call. This call is being recorded on Wednesday, May 6, 2026. I would now like to turn the conference over to Bob Bakanauskas, Vice President of Finance. Please go ahead.

Operator

Thanks, Natasha, and good morning, everyone. This is Bob Bakanauskas, and today we are reporting our first quarter 2026 financial and operational results. We are delighted to have you on the call. I am joined today by Daniel Brown, our CEO, Michael Lou, our Chief Strategy Officer and Chief Commercial Officer, Darrin Henke, our COO, Richard Robuck, our CFO, as well as 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 on conference calls.

Operator

Those risks include, among others, matters that we have described in our earnings releases, as well as in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. We disclaim any obligation to update these forward-looking statements. During this conference call, we will make reference 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, Daniel Brown.

Speaker 1

Thanks, Bob. Good morning, everyone, and thanks for joining our call. Last night, we issued our 1st quarter results and our updated investor presentation. These materials outline key strategic, operational, and financial details along with our updated 2026 outlook. I plan on highlighting a few key points and then we'll open it up for Q&A. To start, looking at the 1st quarter briefly, Chord Energy delivered another consecutive quarter of solid operating performance. The team did an excellent job executing through adverse weather conditions and some midstream constraints to deliver oil volumes above the high end of guidance. Additionally, we maintained solid cost control. Adjusted free cash flow for the 1st quarter was $324 million, substantially exceeding expectations, and we returned $145 million of this amount to shareholders through a combination of our base dividend and share repurchases.

Speaker 1

After accounting for lease acquisitions occurring in the quarter, we were also able to send $175 million to the balance sheet. Second, as we assess the macro environment, there is clearly an unprecedented amount of volatility and uncertainty in commodity markets. Chord Energy has been running a maintenance plus program for more than five years, with the goal of maximizing free cash generation for our stakeholders. One of the key factors influencing this strategy has been the high levels of excess low-cost oil capacity, which has weighed on global oil markets and contributed to persistent backwardation. For now, given the uncertainty of how much and how quickly oil volumes will find their way into the market, we are comfortable staying the course with a flat to slight growth volume outlook.

Speaker 1

Given this, drilling and completions capital is expected to stay consistent with our February outlook. However, we are seeing improvements in cycle times, which accelerates some activity into the second quarter. Although twenty twenty-six capital spending expectations remain unchanged, we do have some flexibility within our program. Over the past two years, we have consistently outperformed initial expectations and have generally prioritized capital reduction over incremental volume growth. In the current environment, if efficiencies continue to improve and oil prices remain high, we are inclined to allow modest volume upside rather than focusing solely on reducing capital. For clarity, this does not bias our CapEx higher, but simply means we are not focused on reducing CapEx in this environment and will let incremental volumes roll through should we continue to outperform.

Speaker 1

Additionally, Chord is pursuing various initiatives to optimize our production base with efforts centered around maximizing very short cycle volumes through high return projects across our roughly 5,000 operated wells. These activities include accelerating workovers, reducing cycle times for down wells, various chemical jobs, debottlenecking surface constraints, optimizing artificial lift through the utilization of artificial intelligence, and a host of other projects. Accordingly, last night, we updated our 2026 outlook to reflect a 2,000 barrel per day increase in oil volumes with a slight increase in LOE and capital remaining unchanged. Assuming $80 oil, the net impact is over $40 million in incremental free cash flow versus our February expectations.

Speaker 1

From an activity standpoint, we are currently running 5 rigs, 1 full-time frack crew, and 1 spot crew, with the spot crew scheduled to drop around mid-year, which, because of faster cycle times, is a little earlier than our February expectations. We continue to expect approximately 80% of TILs will be longer laterals, split fairly evenly between three and four milers. We've also updated our 2026 guidance to reflect improving oil realizations. Currently, Chord Energy is realizing modest premiums to WTI, and we expect that to persist through most of 2026, given the structure of the futures curve and linkage to waterborne crudes. Assuming benchmark prices of $80 per barrel of oil and $3.25 per MMBtu of natural gas for the balance of 2026. We expect to generate approximately $1.4 billion of free cash flow this year.

Speaker 1

With high levels of free cash flow anticipated, we expect shareholder distributions to remain robust in 2026, with a continued focus on a healthy and sustainable base dividend supplemented by share repurchases. In the current environment, share repurchases continue to look attractive. In the interest of avoiding procyclical buybacks, Chord may choose to taper repurchases if and when we see higher oil prices more fully reflected in our share price. We currently don't envision resuming variable dividends and plan to let excess free cash flow go to the balance sheet. This will reduce net debt and allow us to create per share value opportunistically in the future. Turning to our updated hedge position, you can see Chord added significant hedged volumes in 2026 and moderate amounts in outer years as well.

Speaker 1

As a reminder, our hedge program is designed to systematically hedge more when prices are above historical levels, and conversely, hedge less when the strip is below historical pricing. In any prompt quarter, we have the ability to lock in up to 55% of our volumes if pricing surpasses certain thresholds, and the program deliberately moves at a slower pace further out on the curve. Currently, we have approximately one-third of our 2026 oil volumes hedged and less than 15% of 2027. Turning to the long lateral front, I am happy to report Chord Energy successfully executed and turned in line its first full 4-mile DSU development, the Tuohy pad. The pad consisted of 5 wells, including 1 alternate shape, and Chord Energy was able to clean out to total depth on all wells. Both execution and early performance are in line with expectations.

Speaker 1

Slide 11 in our investor presentation highlights the Tuohy success, as well as Chord's progress on 4-mile laterals in development across the perimeter of the basin. A significant reduction in drilling and completion costs per foot underpins the strong economics of these wells. Slide 10 on the upper right illustrates a 37% reduction in Chord's DNC cost per foot over the past 4 years. These benefits can be seen in Chord's improving program-level capital efficiency year-over-year. If you look at volumes delivered relative to capital spent, essentially the inverse of an F&D calculation, you can see the 2026 program is more efficient than 2025. Chord's future F&D costs on a company level have trended 25% or 22% lower over the past few years, clearly demonstrating sustained efficiency gains. Overall, we are very pleased with execution and early results from the 4-mile program.

Speaker 1

As a reminder, Chord Energy is scaling its 4-mile program in 2026, with approximately 40% of TILs and 60% of spuds expected to be 4-mile laterals. In closing, Chord Energy remains committed to delivering affordable and reliable energy in a sustainable and responsible manner. We continue to improve the business, growing production while simultaneously improving the depth and quality of our inventory, driving operational efficiencies, and enhancing free cash flow. With that, I'll hand the call over to Natasha for questions.

Speaker 11

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the 1 on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any key. One moment please for your first question. Your first question comes from John Abbott with Wolfe Research. Please go ahead.

Speaker 4

Hey, thank you very much for taking our questions. Danny, I mean, appreciate the opening comments on the macro front. I mean, there's a lot of uncertainty there. My understanding from our previous virtual event is that you do have the ability to grow at some point when there's fundamentals to support the long-term commodity price being higher. How do you think about that appropriate long-term price? The other second part, the second question is really on inventory. If you do grow, commodity price is higher, how does that change the depth of your inventory as commodity prices sort of go higher? Those are our two questions.

Speaker 1

Thanks, John. I think they're both great questions. You know, from an oil price perspective, I think you're exactly right in our philosophy in that it's not necessarily a specific price, but also what is the durability in the macro setup that supports that price over a long term. That's really been fundamentally why we have been focused on, I call it more of a maintenance program as opposed to a growth program, because we have seen just significant behind choke volumes out in the global market that really could come to market at any time that could undermine our price expectations.

Speaker 1

We would invest a lot of capital and not get the returns off of that investment that we, you know, may have expected in the when we undertook the capital investment in the first place. We don't wanna be exposed to that. As I look at the amount of volume not flowing currently within the global market, I think it's analogous to that.

Speaker 1

We just don't know how much and how quickly this volume will return to the market, which means the durability of any price signal is just somewhat circumspect on it. But if we did see that more constructive macro setup from a supply-demand balance where we thought the durability of sort of, let's say, above mid-cycle pricing would be durable for some period of time, I think we are in a great position in that we do have a deep bench of low-cost inventory that we could accelerate into, and we could deliver some, you know, modest growth into the system and think of it sort of, you know, probably mid-single digits is something that we would be comfortable with if the structural setup was conducive to that.

Speaker 1

From an inventory standpoint, you know, I think if we saw that set up and we're at, let's say, call it above mid-cycle pricing, and we thought that would stay for some period of time, clearly that's a tailwind for our inventory. Because we would look at new development opportunities. Probably some incremental evaluation on our spacing would be appropriate at that point. Certainly some areas on the periphery of the basin would come into the fold. I think it would be a tailwind to inventory. You know, we've been able to maintain 10 years of inventory for the last 5 years.

Speaker 1

I would expect in a higher commodity price environment, if we did push some growth in the system, that would also mean our inventory was marching up as well.

Speaker 4

Appreciate the color. Thank you, Daniel Brown.

Speaker 1

Thanks, John.

Speaker 11

Your next question comes from Oliver Huang with TPH. Please go ahead.

Speaker 10

Good morning, Daniel and team, and thanks for taking our questions. I wanted to start on the base production enhancement program. There were a number of call-outs in the release, AI-optimized artificial workover intense programs, less downtime, amongst some other stuff. Just wanted to dive in a bit deeper. Are you all viewing this as something that's more structural, driving lower based declines for the portfolio across multiple years? Is this more of a one-time addition on the set of wells the program is targeting? Just trying to understand the sustainability of that uplift better and just what sort of upside running room there might be beyond what's baked into this year's guide.

Speaker 1

I think it's a great question, Oliver, and I think maybe the answer is it's a bit of both. And the reality is we've had efforts underway as an organization to optimize the production from our base, from our base wells. We've seen some early success there. In a, in a pricing-- in a world where the market's been telling us it needs oil, very short cycle oil, we've had opportunities to do that, so we've leaned in. I'm gonna ask Darrin maybe to talk us, talk us through a little bit more, some of the specifics going on there and, you know, some of the early results we're seeing.

Speaker 2

Oliver Huang, we've seen a dramatic increase in our productivity on our older wells by we've lowered some pumps, some rod pump lower into the wells. We've adjusted our artificial lift to focus on maximizing productivity out of our older rod pump wells. Really seeing, as you see on slide 12, on the lower right-hand side, you can really see a dramatic impact, positive impact to base production and really arresting decline on this group of wells. We have the teams consistently generating new ideas. As Daniel Brown said, it's gonna take time to figure out how sustainable these changes are to the wells that are already improved on production. We'll see how it goes over time. The team's doing a great job there.

Speaker 2

We picked up 2 additional workover rigs. We're focusing on some longer-term shut-in wells that have some challenging downhole problems. We're finding that we're able to get those wells back online and get those producing as well. There's a number of wells in that category that we're working on. While we see these higher prices, we're definitely trying to take advantage of maximizing our base production.

Speaker 10

Awesome. Thanks for that color. Maybe just for my second question, just on the 4-mile laterals. You all have talked about verifying the toe contribution with tracers on these 4-mile laterals. Just as you all get more data and a greater sample set, is there a point in time or some sort of quantitative benchmark that we should be aware of where you all would kind of revisit and start to assume maybe a greater than the 80% contribution on the last mile of the well's lateral if the data were to be supportive of it?

Speaker 1

I think the answer to that, Oliver, is yes. Just like with the 3-mile laterals, you know, after we got enough production history, we came out and said we were no longer underwriting that last mile at 80. We were moving that up to a 100% because we were seeing that through the production data. I think it would be sort of a similar case from a 4-mile lateral standpoint. A little too early for us to say that right now, but we're continuing to monitor our production. Given, you know, if we continue to see things look positively, hopefully we'll come out with an update at some point in the future, indicating that we're getting more from that last mile than we're currently underwriting.

Speaker 10

Makes sense. Thanks for the time.

Speaker 1

Thanks, Oliver.

Speaker 11

Your next question comes from Phillip Jungwirth with BMO Capital Markets. Please go ahead.

Speaker 3

Hi, this is Jack Kindering on for Phil. just hoping you could touch on crude differentials a little bit. I think I have a decent understanding of the near-term premium to WTI, but can you help us understand what the second half might look like and why you could still price barrels above WTI at that point?

Speaker 1

Yeah, Jack, good question. Obviously, over the end of the first quarter and into the second quarter, you're seeing stronger differentials in the basin. Some of that is, as you think about Brent TI differentials, they've widened. A lot of our barrels get to the coastal markets. You're seeing very strong differentials in basin. A lot of that's gonna depend on kinda how the broader global markets act. We think that it certainly will last through the second quarter and maybe beyond into the second half of it.

Speaker 3

Understood. Thank you. You touched on your, you know, capital plans for the balance of the year a little bit, but just, you know, seeing the oil uplift in one Q and the better two Q and three Q guide is trying to get into the sense of the four Q dip, and just understanding if there's a case for running higher activity there, filling in completion white space, just to maintain operational momentum, even if it leads to some CapEx creep.

Speaker 1

Yeah, Phillip, I think at this point, we're pretty happy with our activity levels. You know, we've got the spot crew we'll release later this year. You know, we run that crew continuously until we drop it. It's not really like we need to manage white space on a, on a, sort of in between an existing program. It's just we'll drop that. I don't think there's a lot of efficiency improvement we'd pick up by pushing incremental activity through the system. I think we're happy with our activity levels where they are right now. We'll continue to monitor, you know, like, the macro situation, but too early for us to pivot off that. We're very comfortable with where we're at now.

Speaker 3

Great. Thank you for the time.

Speaker 11

Your next question comes from Scott Hanold with RBC Capital Markets. Please go ahead.

Speaker 13

Yeah, thanks. I was wondering if you could pivot to shareholder returns. You know, you all have had a pretty good appetite to, you know, be pretty aggressive with buybacks getting close to 100% in past quarters. It sounds like you wanna be a little bit reserved, just not to be pro-cyclical. Like, when you look at your stock price today, you know, if in, you know, with oil kind of still near $100 a barrel, is this an opportunity for you to continue to be pretty assertive with buybacks and, you know, push it a little bit harder? Would you rather just wait for, you know, a much more counter-cyclical time to get, you know, that robust with buybacks?

Speaker 1

Scott, I'd kinda frame it this way. Clearly, if you look at the prompt, if you look at the headline oil price, our stock is not underwriting anywhere near that level, in our opinions. So we really like where our stock's at right now, and I think their buybacks will command a, you know, are very attractive at the current levels. At some point, it may be that, you know, we see our stock price underwriting a significantly higher oil price. We're not seeing that today, but we may see that at some point. At that point, we would consider tapering back on those buybacks to avoid being pro-cyclical. I like where our shares are right now.

Speaker 13

Okay. Understood. You know, I guess looking at the Tuohy pad, could you just talk about, like, the learnings from, you know, that, you know, have you seen, you know, cost reductions, you know, with that pad consistent or better than what you expected? What does that mean for, like, four-mile pad development moving forward?

Speaker 1

Yeah, I'll let Darrin address this. I'd say generally speaking, Scott, we're really happy with what we saw at the Tuohy pad. Anytime you get to pad-level development, you're just gonna pick up efficiencies as opposed to doing one-offs. You know, getting to pads is a pretty big, you know, cost improvement for us organizationally, but I'll let Darrin maybe expand.

Speaker 2

We have 12 4-mile laterals now producing, 5 of them were on the Tuohy pad. We have drilled 33 4-mile laterals. There's tons of learnings, not only on the Tuohy pad, but where we've drilled other wells on other pads, 4-mile wells, and we're consistently getting those wells drilled with 1 BHA. We recently just drilled our first hairpin with 1 BHA, pretty neat accomplishment there. The Tuohy was just able to put it all together on 1 pad, definitely saw efficiencies across the entire pad that we'll take into the future for future pads. Learnings come in all those wells that we've done.

Speaker 2

As far as you asked about the, you know, costs and performance. The costs were in line with what we thought we would do on that pad. The well productivity is in line with what we thought. We're very pleased with what we're seeing with our 4-mile program at this time.

Speaker 13

Appreciate that. Thank you.

Speaker 11

You now have a question from Neal Dingmann with William Blair. Please go ahead.

Speaker 9

Morning, guys. My first question, you know, Dan, a little bit maybe more on capital allocation than, you know, what you mentioned in the prepared remarks. Specifically, you know, I know, I've seen a couple of guys now talk about dialing down buyback perhaps in the current upcycle. Just wondering what's your thoughts on incremental buybacks versus debt repayment for remainder of this year if prices stay here?

Speaker 1

Yeah, I think, Neal, in the current environment, we think, you know, our return of capital framework provides a great framework for us to think about capital, think about capital allocation. We listen to investors, and based on a lot of investor feedback, we're not really focused on variable dividends at this point. I think our return of capital program is really gonna be made up of what we think is a pretty strong base dividend plus share repurchases. We really like the shares, with where we're at right now.

Speaker 1

We do recognize that if, you know, if we see elevated oil prices, some of that elevated oil price may cause us to think a little bit about, is it the right time for us to be buying back aggressively shares? We've said for a long time we're not fans of procyclical buybacks. That's not something we've been focused on historically. I don't think with where we're at currently, that's what we're doing. We think the shares are very attractive, and they're currently commanding a significant focus of our from a capital allocation perspective.

Speaker 9

Makes sense. Thank you. Second question, maybe around slide 15, a little bit more than what you've said on inventory. Specifically, you all suggest, you know, and I agree, 10 plus years of low break-even inventory. Can you speak to, you know, how maybe have the assumptions changed at all when you include, maybe what level of price, you know, kind of your price deck you're assuming here, you know, maybe cost around that then, you know, maybe other things that dictate how you view the break-evens and the corresponding inventory?

Speaker 1

Yeah. The inventory that we put out there is really low, sub-60 WTI inventory. That's really what's determining that count. If our pricing assumptions from a commodity perspective were higher than that, you'd see more inventory on that from a count perspective. That's what we're assuming on that, Neal. I think if structurally, again, we get to a situation where structurally we see a longer term, higher oil price, then perhaps we would think a little differently about what our inventory position is and you'd see more inventory flow in. We're looking at it from a sub-60 standpoint.

Speaker 9

Great. Thank you, Daniel Brown.

Speaker 1

Thanks, Neil.

Speaker 11

Your next question comes from Michael Scialla with Pickering Energy Partners. Please go ahead.

Speaker 8

Good morning. Thanks for taking our questions. Daniel, wanna follow up on that last statement. You mentioned how higher oil prices would unlock some inventory that might not have been economical a few months prior. Would that change your capital allocation priorities, or would you still plan on targeting your highest return wells first?

Speaker 1

I think we would continue to focus on our highest return wells.

Speaker 8

Got it. That makes sense. Okay, as a follow-up, you know, clearly some volatility this morning. It sounds like the message is clear that activity levels are unlikely to change, given the current market dynamics. What other levers can the company pull to capitalize on higher prices?

Speaker 1

Yeah, I think, you know, we say activity. Our drilling and completion activity, we don't anticipate changing, but we have flexed up on some of the very, very near-term, you know, more OpEx-related opportunities. The workovers and some of the chemical jobs and these things that really are opportunities across our 5,000 existing wells, we are looking at that because that can deliver very, very short cycle volumes at incredibly high IRRs and profitability. We're looking at those types of opportunities. You've seen us deliver some incremental volumes in the first quarter as a result of that. We're looking at that. The other thing I'd say, Michael, is we continue to focus on improvement across all aspects of our business.

Speaker 1

That is a, you know, that's a lever that we continue to pull and have the entire organization focused on is how do we do better, how do we do better tomorrow? We've got, you know, around 800 people who wake up every morning and come into the office trying to make tomorrow better than today, from our cost structure perspective, from our productivity perspective. That focus, we focused on that for a long time, and that, you know, that focus continues. Because we can't control what oil price is, but we can control what our cost structure looks like. We can control how we develop the field, and so we're focused on that quite intensely.

Speaker 1

We'll flex into, to those opportunities that deliver very robust and attractive, you know, short cycle, and by that I mean sort of more OpEx, things that can deliver some oil next week or next month. You've seen us do that, and then we'll focus on just improving the business across the board.

Speaker 8

That's great color. Thanks for your time.

Speaker 1

Thank you.

Speaker 11

You have a question from John Annas with Texas Capital. Please go ahead.

Speaker 5

Hey, good morning, y'all, and thanks for taking my questions. For my first one, and building off of what you just mentioned, I wanted to ask if you could provide some color on the organizational changes you've made, whether it be standing up new teams or shifting allocation of resources that have been driving the improvement in base production optimization initiatives.

Speaker 1

It's a great, it's a great question, John. I think one of the maybe one of the most significant organizational changes we've made recently is we've in our production engineering team, we've actually sort of bifurcated that team into those that are looking at our wells that are on ESPs, and I'd call it our high rate wells, and having a separate team looking at the balance of our wells, which is, you know, measured in the thousands, that aren't on ESPs and delivering a high rate. As would be natural, you can imagine a team that's responsible for looking after all of that.

Speaker 1

The natural focus and the appropriate focus is gonna be the focus on those high rate wells, those ESP wells, because they have the biggest impact on your organization. Unfortunately, the reality is that sometimes you don't focus as much on the other wells, which still could provide meaningful value, but on a relative basis, they just don't command as much as your attention. We sort of recognize that dynamic going on in the organization, and we've now bifurcated that team. We have a group that's dedicated just to looking at these lower producing wells, but there's a lot of them, and in aggregate, they can have a big impact into what we deliver and what our overall cost structure looks like.

Speaker 1

We've seen success with that, and I'm really pleased with the results and the focus of that team, of both of those teams, because they're delivering great record.

Speaker 5

Terrific. For my follow-up, you're guiding around 40% of 2026 TILs and 60% of spuds being 4-mile laterals. Could you provide some color on how the 4-mile spud tilt this year potentially impacts the 2027 production profile? Is there a ceiling on the 4-mile development mix given 50% of your inventory are 4-mile locations and DSU geometry constraints?

Speaker 1

Yeah. Well, to your point, we think about 50% of our inventory is 4 miles. I think any year you'll see us sort of, I'll call it an error bar around that 50%. Maybe some years we'll be slightly ahead, and some years we'll be slightly underneath. Generally speaking, you know, I think our development programs will probably, you know, largely mirror our inventory makeup. That's kind of how I would characterize it. Now, because we're spudding, you know, 60% 4 miles this year, obviously that's going to roll into 2027 from a production perspective. You know, we've started that ramp this year, and we'll just sort of continue that into 2027.

Speaker 5

Thanks. I'll turn it back.

Speaker 11

Your next question comes from Phillips Johnston with Capital One. Please go ahead.

Speaker 12

Hey, thanks for the time. Wanted to ask about the XTO assets. I recall you guys are in the process of re-permitting, I think, most of those wells for longer laterals. Just wanted to see where we are in that process and when we might see some of those wells come into the fray.

Speaker 1

Yeah. I think, you know, as we've worked through clearly, as we moved into 4-mile laterals and looking at our spacing opportunities in the lateral links, we wanted to make sure we maximize the contribution from that from that asset. We've taken our time in doing that. As we look toward developing in that area, you know, I think that's probably more of a late 2027 type phenomenon. You know, we might get some contribution from it in 2027, but more likely coming into going into 2028.

Speaker 12

Okay. Sounds good. I'm sure you can't comment too much on this one, but what's the latest messaging regarding long-term plans for the Marcellus acreage?

Speaker 1

I think the messaging around Marcellus really kinda remains consistent. We continue to see that as a non-core asset and have been very, you know, front foot and consistent in saying that we're looking to maximize value for our shareholders. That would include divesting that asset. I'd say we're not in a rush. You know, but certainly it's non-core, and we just wanna maximize value from it. In the meantime, I'd say it's got very low friction cost to us holding, and you can see from our first quarter results the significant value that asset contributed. Non-core, we wanna maximize value from it.

Speaker 1

We are absolutely open to divesting it, but we wanna make sure we do that in a fashion that maximizes value for shareholders.

Speaker 12

Sounds good. Thank you, Daniel.

Speaker 1

Thanks, Phillips.

Speaker 11

Your next question comes from John Edelman with Jefferies. Please go ahead.

Speaker 6

Hey, Daniel and team. Appreciate you getting me on. Just a quick one from me. Heard from NOG earlier this week, or last week, I guess, about a large Bakken package that was coming for sale. Just wanted to get your thoughts on M&A in the current elevated price environment and sort of what type of leverage are you guys kinda on an upside scenario able to kinda stretch to for the right type of inventory mix? Thanks.

Speaker 1

I'll make some opening comments, then I'll pass it over to Michael. You know, I think from a positioning perspective, we clearly, our footprint in the Bakken really stretching across the entirety of the basin means that any package that comes to market there, we think we could be, you know, quite competitive on. We can bring synergies to bear, I think, really like no one else can. We've got great supply chains in place. We know the subsurface quite well. We're believers in consolidation, and so I think we'll, we can compete well in any process.

Speaker 1

We will also be very disciplined in what we do. You'll see us, you know, you haven't seen us win every deal in the Bakken. Oftentimes that's been because, you know, the market clearing price wasn't something that we think made us a better company at the end of the day. With those as maybe opening comments, I'll ask Michael to fill in with some more color.

Speaker 7

Yeah, John. I would say that usually when prices are moving very rapidly, there's a bit of a lull in terms of M&A opportunities that are out there. As you've seen, elevated pricing for, you know, called, you know, 2 months now. I think that because of that, you're gonna see some assets come to market. The big question is whether or not you're gonna be able to close the gap between buyers and sellers in terms of valuations and see how that goes. As Daniel mentioned, we think we're in great shape to be consolidated in Bakken, but we're gonna be disciplined in the way we look at that marketplace.

Speaker 11

This looks like all the questions for now. I will turn the call over to Daniel Brown, CEO, for closing remarks. Please continue.

Speaker 1

Okay. Thanks, Natasha. Well, to close out, I just wanna extend my sincere thank you to all of our employees, who through their hard work, have positioned us for continued success. Chord has consistently delivered results that have exceeded expectations while improving the quality and depth of our inventory and enhancing profit margins. Chord has created what we believe is a valuable and increasingly rare asset. Chord has a substantial low decline, high oil cut production base, paired with a deep inventory of highly economic, conservatively spaced, oil-weighted locations. We feel great about our competitive position and have a lot of confidence in our ability to deliver going forward. With that, I appreciate everyone's interest, and thank you for joining our call.

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