Workflow
Chord Energy (CHRD) - 2023 Q3 - Earnings Call Transcript
CHRDChord Energy (CHRD)2023-11-02 15:10
Filings

Financial Data and Key Metrics Changes - In Q3 2023, the company reported strong oil volumes, approximately 4.5% above midpoint guidance, and total volumes were about 3.8% above midpoint guidance [1] - The company generated 207millionofadjustedfreecashflowduringthequarterandplanstoreturn75207 million of adjusted free cash flow during the quarter and plans to return 75% of this to shareholders [9] - The company declared a variable dividend of 1.25 per share, in addition to a base dividend of 1.25pershare[10]−OperatingcostsincludedLOEat1.25 per share [10] - Operating costs included LOE at 10.94 per BOE and GPT at 3.16perBOE,bothwithinguidanceexpectations[19]BusinessLineDataandKeyMetricsChanges−Thecompanybrought45wellsonlineinQ3,exceedingoriginalexpectationsandsignificantlyhigherthanthe37wellsbroughtonlineinthefirsthalfoftheyear[26]−Incrementalrepurchasesduringthequarterweresourcedfromproceedsreceivedthroughwarrantexercises[11]−Thecompanyexecutedabout50three−milewellstodate,withperformancemeetingexpectations[30]MarketDataandKeyMetricsChanges−OilrealizationsremainedstrongatamodestpremiumtoWTI,slightlybetterthanmidpointguidance[18]−NGLrealizationsasapercentofWTIwereinlinewithmidpointguidance,whileresiduegaspricingwasslightlybelowmidpoint[53]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedonin−basinconsolidationopportunities,recognizinghigherrisksassociatedwithout−of−basinconsolidation[2]−Thecompanyplanstoparticipateinconsolidation,whetherasaconsolidatororconsolidatee,emphasizingtheimportanceofbeingpartofalargerequitystory[51][74]−Thecompanypublisheditsfirstfullsustainabilityreport,reflectingitscommitmenttodeliveringenergysustainably[34]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedgrowingconfidenceinproductionperformanceandthepotentialforimprovedcontributionsfromthree−milewells[46][64]−Thecompanyexpectscapitalexpenditurestobeatthehighendofthe3.16 per BOE, both within guidance expectations [19] Business Line Data and Key Metrics Changes - The company brought 45 wells online in Q3, exceeding original expectations and significantly higher than the 37 wells brought online in the first half of the year [26] - Incremental repurchases during the quarter were sourced from proceeds received through warrant exercises [11] - The company executed about 50 three-mile wells to date, with performance meeting expectations [30] Market Data and Key Metrics Changes - Oil realizations remained strong at a modest premium to WTI, slightly better than midpoint guidance [18] - NGL realizations as a percent of WTI were in line with midpoint guidance, while residue gas pricing was slightly below midpoint [53] Company Strategy and Development Direction - The company is focused on in-basin consolidation opportunities, recognizing higher risks associated with out-of-basin consolidation [2] - The company plans to participate in consolidation, whether as a consolidator or consolidatee, emphasizing the importance of being part of a larger equity story [51][74] - The company published its first full sustainability report, reflecting its commitment to delivering energy sustainably [34] Management's Comments on Operating Environment and Future Outlook - Management expressed growing confidence in production performance and the potential for improved contributions from three-mile wells [46][64] - The company expects capital expenditures to be at the high end of the 850 million to 880millionguidancerangefortheyear[20]−For2024,thecompanyanticipatesamaintenancecapitalprogramwithfull−yearvolumesflatto2023,projectingaround99,000barrelsofoilperday[60]OtherImportantInformation−Thecompanycompleteditsfallborrowingbaseredetermination,maintainingaborrowingbaseof880 million guidance range for the year [20] - For 2024, the company anticipates a maintenance capital program with full-year volumes flat to 2023, projecting around 99,000 barrels of oil per day [60] Other Important Information - The company completed its fall borrowing base redetermination, maintaining a borrowing base of 2.5 billion and an elected commitment of 1billion[41]−Thecompanyreceivedapproximately1 billion [41] - The company received approximately 73 million from warrant exercises in Q3, using $60 million for incremental repurchases [40] Q&A Session Summary Question: What is the confidence level regarding the performance of the last mile on three-mile wells? - Management indicated growing confidence in production performance, with expectations for contributions to improve as more data is collected [62][64] Question: How does M&A fit into the company's strategy? - Management emphasized a belief in consolidation and the importance of in-basin consolidation, given their significant acreage position [73][74] Question: What are the implications of the underlying decline rate for 2024 and 2025 CapEx? - Management suggested that with a lower decline rate, capital efficiency should improve, potentially leading to lower CapEx requirements [85][94]