CHRD Q3 2026 earnings call transcript, November 5, 2026

Good morning, ladies and gentlemen, and welcome to the Chord Energy Third Quarter 2026 Earnings Conference Call. At this time, all lines in a listen-only mode.

The presentation will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the opening. This call is being recorded on Thursday, November 5, 2026. I will now turn the conference over to Bob Bakanuska, Vice President Finance. Please go ahead.

Thanks, Julie.

Thanks, Bob.

Good morning, everyone.

Thank you for joining us.

Last night, we issued our third quarter. and presentation with details on our strategy, operations, and financial performance. As this is my first earnings call CEO, I'll start with a few thoughts on towards progress over the past several years and our priorities going forward. I'll then review our quarterly results and outlook before we open the call up for questions. For more than five years, I've had the pleasure of working closely with Danny Brown to build a strong foundation for CORD. Danny's an incredible leader and a good friend and I wish him all the best in his next adventure. Over the past five years, through volatile energy markets, the CORD team has strengthened our competitive position and delivered value for our shareholders. Today, CORD is a more resilient company positioned to withstand downturns and create value through the cycle. Continuous improvement has been central to that progress. Our talented team is committed to getting better every day and our results reflect that commitment. As shown on slide nine in our presentation, we have grown free cash flow per share by roughly 35% over the past two years on a price neutral basis. Through disciplined capital allocation and driving operational excellence. Over a five-year period, CORE has driven 11% annual growth in oil production per share. This growth has been delivered while we have built a large, resilient production base with low declines, which translates to a low reinvestment rate and higher free cash flow generation.

We have also preserved... ...the deep, low-cost inventory and improved its quality through cycle times and disciplined acquisitions. Over the past five years, we've completed... ...five acquisitions in the Williston Basin, becoming the largest acreage holder and producer in the Bakken. These transactions varied in size and scope, but we successfully... ...integrated the assets and captured substantial efficiencies. We also streamlined our portfolio by divesting non-core assets at attractive valuations and reinvesting the proceeds... ...in areas of competitive strength. Together, these efforts have generated strong, sustainable free cash flow, which alongside sizable reach share... ...purchases significantly increase production per share. We achieve this growth while returning substantial cash to shareholders through dividends and maintaining a strong balance sheet. Looking ahead... Our priorities remain consistent. We will apply the same capital discipline to organic investments and acquisitions. We will continue to improve performance across the business and evaluate every investment through the lens of shareholder return. A strong balance sheet will underpin this approach, providing downside protection and the flexibility to pursue opportunities counter-cyclically. Moving to the third quarter, we delivered solid operating performance, generated free cash flow above expectations, and returned substantial capital to shareholders.

We also advanced strategic initiatives that we believe will strengthen the business and enhance long-term free cash flow generation. Adjusted free cash flow was approximately $400,000. $42 million, the majority of which we returned to shareholders. Beyond our base dividend of $1.30 per share, all capital returned was through share repurchases. Since announcing the Enterplus combination in 2020, we have reduced fully diluted shares outstanding by approximately 10.8 million shares, or 17%. Said another way, we have repurchased over half of the equity issued for that transaction in a little over two years. Throughout 2026, the core team has driven wins across the organization. This leads us to a fourth quarter volume guidance that is well above both our August expectations and consensus estimates. We've also been seeing more favorable pricing, reflecting external factors. and lower marketing fees. We updated our capital outlook to reflect increased operated and non-operated activity and an additional 20-month.

The operated activity is up a bit due to drilling and completion deficiencies which are leading to a couple more tills on the year. And the non-operated activity has picked up over the last few months as well. Turning to continuous improvement initiatives, the court has made further progress in reducing the and reducing our marketing costs as the team continues to simplify and optimize contracts across oil, gas, and water. Our latest efforts are expected to deliver 30% of the $25 million to $55 million in annual savings. These savings are incremental to those announced a year ago, bringing the total annual savings to approximately $85 million. On the production side, CORD continues to have success with a wide variety of projects aimed at optimizing its large PDP base. The team has done an amazing job. Getting more out of the base, and that production continues to outperform. One of the things the team has been focused on and continues to test are various chemical treatments across a broad population. of wells, and we expect to determine which treatments to incorporate into our 2027 program by early next year. Our drilling and completions team continues to improve. Execution and set new records. We're making progress drilling more of our four-mile wells in a single run, while frack productivity is improved. Improving and cleanouts continue to reach total depth. As of quarter end, the company has tilled 47 total four-mile wells. Execution and production results continue.

to be in line with expectations. Slide six in our presentation shows the progress of all the continuous improvement projects across the company. The core team has delivered $225 million of incremental free cash flow generation over the past two years from controllable items, including higher production, better capital efficiency, and improved. Marketing costs.

Thank you to each person on the core team. This is an incredible team effort that has driven a ton of shareholder value. So far in 2026, we have raised oil. Volume guidance twice, supported by strong execution and base production optimization. Looking ahead, we are confident in our ability to sustain strong production levels in 2027. And plan to provide detail of our next year's program in February. Finally, we recently published CHRD's 2025 Sustainability Report. As part of our commitment to transparency, I want to thank the team for its work on the report, which highlights our efforts in emissions reduction, workforce health and safety, corporate governance, philanthropy, and other areas. We remain committed to producing affordable, reliable energy in a responsible and sustainable manner. With that, I'll hand the call over to Julie for her questions.

Thank you, ladies and gentlemen.

Good morning, guys.

Nice update on the operational front here. You know, with the better base performance, longer laterals, the faster cycle times, you know, and going to more and more toward the four-mile laterals now, can you talk about, you know, maybe what's going on? The company's maintenance CapEx requirements look like. You know, it seems like it's structurally coming a bit lower, especially with some of the other cost savings. Yeah, Josh, thanks for the question. Clearly, the team's done an incredible job. This year, you'll notice that we've increased guidance a couple times this year on the oil side on production, starting at 159, going to 162.5. A lot of that's kind of productivity and efficiencies kind of throughout the program. The base business has done a great job of outperforming on just everyone. Well, that we currently have in the ground. On top of that, the four mile laterals has driven efficiencies. We've certainly seen a small amount. Of inflation this year that we've been able to counteract with continued efficiencies this year. So all that's all that's been really positive. You know that our capital program is kind of. On a on a blended basis now 146. So it's up a little bit because of the additional capital that we're spending a little bit on midstream with some of those opportunities coming around. Our efficiency is on the DNC side that allows us to do a few more tills on the operating side and a little bit more non-op. We've had about 30 percent.

An increase in rate count in the basin over the last, the second half of this year. So we're certainly seeing some other operators picking up activity. And we're participating in a little bit more on the non-op side. So all that leads to capital now kind of at that one, four, six level. It's a little bit higher than where we were at the beginning of the year, but our production. is up as well. So that's a good kind of level for this year. Got it. And then just wanted to think about how you're balancing, you know, the free cash flow allocation, obviously a very, very strong year for oil pricing. You know, you highlighted the continuation of the buyback into the fourth quarter as well. Just given where the balance sheet is, you know, should we still think about maybe a, you know, 75 percent of free cash flow going to shareholder returns? Do you want to build up some cash, you know, just, you know, in case oil prices continue to come lower? How are you thinking about that rate of return? Thanks. Yeah, good question on the capital allocation side. Obviously, we've been, I think we've had a strong focus on that over the last five years, and we'll continue to have that going forward. As you mentioned, we've got a lot of different levers that we can think about, whether it's this year, certainly since the early part of this year with oil prices up. One of the things is thinking about, are there short cycle kind of projects that we can bring forward volumes? You're seeing a lot of that in a lot of the base work that our team's done.

We've been able to do some good acquisitions. In that timeframe though, we've been bringing our, even after the most recent acquisition late last year, brought our balance. Chief back in under half a turn of leverage. So now we're back into that 75 plus percent of return going back to shareholders. So we'll continue to lean into that side. And then with with a good sales of non-core assets in the Marcellus that should close later this year, we'll be in a great position no matter what the cycle brings. Obviously, we're seeing some volatility in oil prices. over the last short while here. But we think that we're going to continue to be in a constructive environment and we're in great shape on that front.

Okay.

Your next question comes from Scott Hainold from RBC. Please go ahead.

Your next question comes from Gabe.

Your next question comes from Kevin McCarty from Peckling Energy Partners. Please go ahead.

Your next question comes from Bert Gomes from William Blair. Please go ahead.

Your next question comes from Noah Ungnes from Wells Fargo.

Your next question comes from Oliver Ulang from TPH. Please go ahead.

Your next question.

Hey, good morning, and thank you for taking our questions. A couple of quick ones for us. I want to go back to the non-op here. So, you know, you talked about the person. I mean, if you look at your overall production that you have currently, how much of that is non-op? Approximately.

Yeah, it's probably in the, you know, 10-15% neighborhood. All right, that's helpful. Then the second question is going to be on chemicals. You'll give us the update in February about what you may proceed with. What treatments are you doing right now? That seem to hold the most promise as you sort of look out there. And why now? What are you waiting for in terms of data? You've been doing this for a little bit of time. How much data do you actually need to sort of make the decision to go forward?

Yeah, so we've pumped a number of chemical treatments. We talk about it on page 7 in our deck. Acid jobs and solvents, surfactants, combination treatments, and on the production side, we've done hundreds of these type of jobs. And we're evaluating the productivity of those and evaluating which one will give us the best ultimate returns on the dollars invested on the completion. On the Houston side, while we haven't pumped any chemicals as part of our completion jobs to date, we have been testing several chemicals in a lab situation. And likely will result in pumping chemical jobs on completion in 2027. We're still evaluating that. But anyways, testing it in the lab. And of course, we're always studying what our competitors are doing, not only in the Bakken, but in the Permian, the Eagleford, et cetera, as well. So we'll definitely be early. Early adopters as we continue to evaluate it on the completion side and having great results on the production side.

Thank you very much for taking our questions.

Thanks John.

Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.