Chord Energy NASDAQ: CHRD reported second-quarter 2026 adjusted free cash flow of $414 million, with oil production at the high end of its guidance range and adjusted capital spending modestly below the midpoint of guidance, President and CEO Danny Brown said during the company’s earnings call.
The company returned $220 million to shareholders during the quarter through its base dividend and share repurchases, representing 54% of adjusted free cash flow. Brown said Chord’s balance sheet had grown to $612 million and normalized leverage had declined below one-half turn at quarter-end.
As a result, Chord expects to return at least 75% of adjusted free cash flow to shareholders beginning in the third quarter. Brown said the company expects that payout level to continue through the third and fourth quarters, subject to changes in leverage.
Production and Capital Outlook
Chord maintained its full-year 2026 oil-production outlook of 161,000 barrels per day, which is 2,000 barrels per day above its original outlook. Brown attributed the increase largely to investments in low-cost, short-cycle opportunities within the company’s base production.
The company’s overall capital outlook was “essentially unchanged,” though spending is expected to decline materially in the third quarter after Chord dropped its second frac crew in July. Brown said spending is expected to decrease again in the fourth quarter.
Chord raised its full-year lease operating expense outlook to $10.30 per barrel of oil equivalent. The increase reflects expanded production-enhancement initiatives, higher workover costs than initially expected and somewhat higher non-operated lease operating expense.
Brown said the company is willing to incur incremental operating costs where it sees opportunities to generate strong risk-adjusted future cash flow. Those efforts include workovers, efforts to reduce downtime, chemical treatments, surface de-bottlenecking and artificial-lift optimization.
Base Production Optimization Efforts
Chord has expanded testing of chemical treatments across a larger population of wells after seeing encouraging initial results, according to Brown. The company is testing multiple treatment types and is currently assuming only limited volume upside from the initiative while it evaluates effectiveness, economics and the potential for broader deployment.
Brown said Chord needs more production history before incorporating a larger contribution from the chemical program into its outlook. The company is using selection criteria to identify wells that may be the best candidates for particular treatments, while monitoring results to determine whether performance can be replicated.
Chief Operating Officer Darrin Henke said some of the work includes lowering pumps and has resulted in improved productivity. He added that the company has arrested production declines across a meaningful portion of its wells through several optimization initiatives.
Brown also highlighted Chord’s use of artificial intelligence to optimize rod-pump operations across much of its field. The technology is intended to improve pump loading, reduce equipment wear and support production. Chord is also using computer-based scheduling to allocate workover rigs across its more than 5,000 wells in the basin, considering factors such as production volumes, repair costs, parts availability and the proximity of wells.
Longer Laterals and Completion Efficiency
Chord continued to advance its longer-lateral drilling program, turning in line four additional four-mile pads since its May update. The company has now executed 26 four-mile wells in total and remains on track to scale the program through the second half of 2026 and into 2027.
Brown said early execution and performance from the four-mile wells were in line with expectations, though the company needs more time to assess the full contribution from the fourth mile of lateral length. The company is using tracers on four-mile wells and has observed tracer returns from toe stages at the surface, Henke said, indicating that those stages are contributing.
Chord also completed what Henke described as the Bakken basin’s first trimulfrac. The company is evaluating trimulfrac and remote-fracking opportunities for 2027, with Henke estimating that trimulfrac could represent roughly 20% to 50% of next year’s program, depending on operational conditions.
The company said faster frac cycle times accelerated some activity into the first half of the year, increasing first-half production while reducing expected second-half volumes relative to its initial outlook. Chord also cited reduced facilities-related capital from equipment reuse and scalable facility design.
Commodity Differentials and Hedging
Chord updated its differential and realization outlook to reflect market conditions. Bakken crude traded at premiums to West Texas Intermediate during the second quarter, which management attributed to unusual market conditions, including a sharp oil-price increase and backwardation in the commodity curve.
Michael Lou, Chord’s chief strategy officer and chief commercial officer, said Bakken crude has historically traded in a range from about $2 per barrel below WTI to $2 per barrel above it. Chord expects its net premium to fade through the remainder of 2026 and is guiding to pricing slightly below WTI, which Lou characterized as still strong basin differentials.
Chord also added hedges for the next several years. The company has approximately 38% of its second-half 2026 oil volumes hedged and about 18% of 2027 oil volumes hedged.
Brown said the company remains focused on disciplined capital allocation and continuous operational improvement amid uncertainty around oil prices and commodity-market volatility.
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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