Chord Energy Q1 Earnings Call Highlights

Key Points

• Chord generated strong cash in Q1 with adjusted free cash flow of $324 million, returned $145 million to shareholders and added $175 million to the balance sheet; it raised 2026 oil guidance by 2,000 bpd, kept capital flat and said at $80/bbl expects roughly $1.4 billion of free cash flow (over $40 million incremental vs February).
• Operationally the company is prioritizing base production optimization—adding two workover rigs, bifurcating engineering teams and using AI to boost short‑cycle volumes—and is scaling four‑mile laterals after the Tuohy pad success, with 12 four‑mile wells producing and 33 drilled, and about 40% of TILs and 60% of spuds expected to be four‑mile in 2026.
• On capital allocation Chord will maintain a "healthy and sustainable" base dividend supplemented by buybacks (while avoiding procyclical repurchases), has hedged about one‑third of 2026 oil volumes and less than 15% of 2027, and views Marcellus as a non‑core asset potentially for divestiture while remaining disciplined on Bakken M&A.

Chord Energy NASDAQ: CHRD reported first-quarter 2026 results Wednesday, highlighting oil volumes that exceeded guidance despite weather disruptions and midstream constraints, while also updating its full-year outlook to reflect higher expected oil production and improved realizations.

First-quarter performance and cash returns

In prepared remarks, CEO Danny Brown said the company delivered “another consecutive quarter of solid operating performance,” noting that oil volumes came in above the high end of guidance even as the team worked through adverse weather and some midstream limitations. Brown added that the company “maintained solid cost control.”

Adjusted free cash flow for the quarter was $324 million, which Brown said “substantially exceed[ed] expectations.” Chord returned $145 million to shareholders through its base dividend and share repurchases, and after lease acquisitions, it also directed $175 million to the balance sheet.

2026 outlook: modest volume increase, capital unchanged

Brown framed the updated guidance against what he called “an unprecedented amount of volatility and uncertainty in commodity markets.” He said Chord has operated a “maintenance plus program” for more than five years, designed to maximize free cash generation, and that the company remains comfortable maintaining “a flat to slight growth volume outlook” given uncertainty around how quickly additional global oil supply could return to the market.

Chord updated its 2026 outlook to reflect a 2,000 barrel-per-day increase in oil volumes, alongside “a slight increase in LOE,” while keeping its capital outlook unchanged. Brown said that at $80 oil, the net impact of the revised outlook is “over $40 million in incremental free cash flow versus our February expectations.”

From an activity standpoint, Brown said the company is currently running five rigs, one full-time frac crew, and one spot crew, with the spot crew scheduled to drop around mid-year—earlier than previously expected due to faster cycle times. He added that the company continues to expect about 80% of turns-in-line (TILs) to be longer laterals, split “fairly evenly” between three- and four-mile wells.

Looking at cash generation, Brown said that assuming benchmark prices of $80 per barrel oil and $3.25 per MMBtu natural gas for the balance of 2026, Chord expects to generate approximately $1.4 billion of free cash flow this year.

Operational focus: base production optimization and short-cycle projects

Management also discussed efforts aimed at boosting “very short cycle volumes” across the company’s roughly 5,000 operated wells. Brown listed initiatives including workovers, reducing cycle times for down wells, chemical jobs, debottlenecking surface constraints, and using artificial intelligence to optimize artificial lift.

On the call, COO Darrin Henke provided additional details, describing efforts to improve older wells by adjusting artificial lift and lowering rod pumps “to focus on maximizing productivity out of our older rod pump wells.” Henke said the company is seeing a “dramatic impact” on base production and is “really arresting decline on this group of wells,” while noting it will take time to determine how sustainable the improvements are.

Henke also said Chord added two additional workover rigs and is focusing on longer-term shut-in wells with downhole challenges, adding that teams are bringing wells back online and that there are “a number of wells in that category” being worked.

Brown said the company has also made organizational changes to support the base optimization push. In response to a question from Texas Capital’s John Annis, Brown said Chord bifurcated its production engineering team so one group focuses on high-rate ESP wells and another dedicated group focuses on thousands of lower-producing wells, which Brown said can have “a big impact” in aggregate.

Long laterals, differentials, and capital allocation approach

Chord highlighted progress in four-mile laterals. Brown said the company successfully executed and turned in line its first full four-mile DSU development, the Tuohy pad, consisting of five wells (including one alternate shape), and was able to clean out to total depth on all wells. “Both execution and early performance are in line with expectations,” he said.

Henke said Chord has 12 four-mile laterals producing and has drilled 33 four-mile laterals. He noted drilling improvements, including consistently drilling wells with one BHA and recently drilling the company’s “first hairpin with 1 BHA.” Henke said Tuohy pad costs and productivity were “in line with what we thought,” and the company is “very pleased” with results so far.

Brown said Chord is scaling its four-mile program in 2026, with about 40% of TILs and 60% of spuds expected to be four-mile laterals. He also said about 50% of the company’s inventory is four-mile locations, and that annual development mix will “largely mirror” inventory makeup, with some variation. Brown added that the heavier four-mile spud mix this year would “roll into 2027” from a production perspective.

On oil realizations and differentials, Brown said Chord is currently realizing “modest premiums to WTI” and expects that to persist through most of 2026 due to the structure of the futures curve and its linkage to waterborne crudes. Responding to a question from BMO, Brown said stronger basin differentials into late first quarter and second quarter have been supported by wider Brent-WTI differentials and access to coastal markets, and that the company expects strength to last through the second quarter and “maybe beyond into the second half.”

On shareholder returns, Brown said Chord expects distributions to remain robust, with emphasis on a “healthy and sustainable base dividend” supplemented by share repurchases. He said the company does not “envision resuming variable dividends” and expects excess free cash flow to go to the balance sheet, reducing net debt and creating flexibility to build per-share value “opportunistically” later. In response to questions from RBC and William Blair, Brown said buybacks remain attractive at current share levels, but the company may consider tapering repurchases if the share price begins to reflect higher oil prices more fully, to avoid “procyclical buybacks.”

Brown also reviewed hedging, saying Chord added “significant hedged volumes” in 2026 and moderate amounts in outer years as part of a systematic approach to hedge more when prices are above historical levels. He said the company has approximately one-third of 2026 oil volumes hedged and less than 15% of 2027.

Portfolio positioning: Marcellus viewed as non-core; Bakken M&A discipline

During Q&A, Brown said Chord continues to view its Marcellus acreage as “a non-core asset” and is looking to maximize shareholder value, including through a potential divestiture. He said the company is “not in a rush,” adding that holding the asset has “very low friction cost,” and said the first-quarter results showed “the significant value that asset contributed.”

Brown also addressed questions about M&A in the Bakken, saying Chord’s basin-wide footprint positions it to be “quite competitive” and bring synergies “like no one else can,” but emphasized the company will be disciplined and has not pursued deals where the “market clearing price” would not improve the company. Chief Strategy Officer and Chief Commercial Officer Michael Lou added that rapidly moving prices can create a lull in M&A activity, but elevated pricing could bring assets to market, with the key question being whether buyers and sellers can close valuation gaps.

In closing remarks, Brown thanked employees and said Chord has a “substantial low decline, high oil cut production base,” paired with “a deep inventory of highly economic, conservatively spaced, oil-weighted locations,” adding that management feels confident in the company’s competitive position going forward.

About Chord Energy NASDAQ: CHRD

Chord Energy Corporation NASDAQ: CHRD, formerly known as Oasis Petroleum Inc, is an independent exploration and production company focused on the acquisition, development and production of crude oil, natural gas and natural gas liquids. Headquartered in Houston, Texas, Chord Energy emerged from financial restructuring in early 2021 and rebranded in October 2022 to reflect its renewed strategic vision.

The company’s core operations are concentrated in two prolific U.S. resource plays: the Williston Basin across North Dakota and Montana, and the Delaware Basin spanning parts of West Texas and southeastern New Mexico.

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