Chord Energy (CHRD) Q4 FY25 earnings call: guidance and Q&A

Given commodity price volatility, what would cause Chord to diverge from its consistent long-term plan, and how is the company continuing to decrease breakeven costs despite the Bakken's fixed cost structure?

The company's resilient structure allows it to weather commodity cycles, making its activity program less volatile. A significant drop in oil prices could prompt a re-evaluation. Breakeven reduction is an organization-wide effort, focusing on capital efficiency, operating expense, and marketing/midstream improvements, with longer laterals dramatically improving F&D costs and run-rate free cash flow improvements expected to continue.

“If we saw really significantly lower oil prices, clearly, we would go back and look at the plan to say, does this make the most sense from a capital allocation decision-making standpoint. And so you could see a movement in the program.”

asked by Neal Dingmann · answered by Daniel Brown

Where are the organic inventory adds coming from, and how much running room remains? Also, what drives the improved oil cut in the 2026 outlook, and what are the GOR trends through 2030?

Organic inventory improvements are basin-wide, driven by a lowered cost structure and refined development geometry, making previously uneconomic areas viable. The improved oil cut in 2026 is due to a slight weighting towards the western portfolio, which has lower GORs. GORs in the core basin are expected to increase on a declining base, while new production will have lower GORs, leading to minimal overall oil cut increases.

“As we move more out of the historic core of the well of the basin, we do see a lowering GOR. And so -- and that's a little bit reflected in what you saw for us in Q4 this past year and our expectations through 2026.”

asked by Hsu-Lei Huang · answered by Daniel Brown

Beyond Slide 8, where are the greatest levers for further business improvement on D&C and base production? How is Chord thinking about surfactants for new well completions and workovers?

Opportunities exist across all buckets on Slide 8, including production operations, workovers, and continued cost reduction as more longer laterals are implemented. The company has already pumped 19 chemical and surfactant treatments, evaluating results for production enhancement and studying their use in completions, aiming to be early adopters of successful technologies.

“So we've pumped 19 chemical and surfactant treatments already. And so we're evaluating those results. And as we get additional results throughout the year, we'll, of course, report back on those.”

asked by Derrick Whitfield · answered by Darrin Henke

Can you elaborate on the $30 million to $50 million annual run-rate savings from marketing and midstream, and how should we think about the breakdown of 2025's 300-odd inventory additions for future years?

Savings come from renegotiating maturing long-term contracts across oil, gas, and water infrastructure, securing lower cost points. This opportunity is expected to continue. Future inventory additions will depend on M&A discipline and ongoing organic replacement efforts, with the percentage breakdown varying year-over-year based on identified opportunities.

“Contracts are -- have been long-term contracts, but the basin has been around for a while. So a lot of those contracts are coming up -- have come up or are coming up. And so as those contracts near their term, we're able to get in new contracts that are at lower cost points, which is fantastic.”

asked by Paul Diamond · answered by Michael Lou

Given the carryover effect of longer laterals, what is the order of magnitude for capital efficiency in 2027? What optionality does Chord have in other formations beyond its current inventory?

While not guiding for 2027, the company anticipates nice tailwinds from the 2026 development program, expecting capital efficiency to improve further. Chord has a deep, repeatable Middle Bakken inventory. It monitors other formations and operators' activities in the full column, but currently has no need to pursue them given its robust existing inventory, though it represents potential future upside.

“But I will say that -- what we're seeing with our development program is we've got some nice tailwinds to 2027. And so from a capital efficiency perspective, the sort of roll in of the TILs from the capital deployed in 2026, all of which we think will be helpful to a 2027 program.”

asked by Carlos Andres E. Escalante · answered by Daniel Brown