Chord Energy Reports Strong Third Quarter 2024 Financial and Operating Results, $146MM of Share Repurchases and Issues 2025 - 2027 Outlook
HOUSTON, Nov. 6, 2024 /PRNewswire/ -- Chord Energy Corporation (NASDAQ:CHRD) ("Chord", "Chord Energy" or the "Company") today reported financial and operating results for the third quarter 2024. The results for the three and nine months ended September 30, 2024 include the results of Enerplus Corporation ("Enerplus") for the period subsequent to May 31, 2024, unless otherwise noted.
Key Takeaways and Updates:
Cash Flow from Operations and Adjusted Free Cash Flow exceeded expectations in 3Q24, supported by oil volumes near the high-end of guidance and capital below the low-end of guidance;
Lowering FY24 capital guidance, while raising FY24 oil volumes guidance;
Share repurchases increased to $146MM in 3Q24 or over 1.5% of shares outstanding;
Third-mile productivity factor increased to 100%, reflecting full contribution from last mile; and
Issued three-year outlook (2025, 2027), spending $1.4B of capital annually to hold oil volumes flat.
3Q24 Operational and Financial Highlights:
Oil volumes of 158.8 MBopd were near the high-end of guidance, reflecting strong well performance and lower downtime;
Total volumes of 280.8 MBoepd were above the high-end of guidance;
E&P and other CapEx of $329.2MM was below the low-end of guidance reflecting lower spending and program timing;
Lease Operating Expense ("LOE") of $9.56 per Boe was favorable to expectations as a result of lower maintenance and improved downtime;
Net cash provided by operating activities was $663.2MM and net income was $225.3MM;
Adjusted EBITDA(1) was $674.5MM and Adjusted Free Cash Flow(1) was $312.5MM; and
Released 2023 Sustainability Report on September 30, 2024, highlighting Chord's commitment to sustainable business operations and continuous improvement.
3Q24 Shareholder Return Highlights:
Return of capital set at $234MM, or 75% of Adjusted Free Cash Flow(1);
Repurchased $146MM of common stock, representing more than 90% of capital returned to shareholders after the base dividend;
Declared a base-plus-variable cash dividend of $1.44 per share of common stock; and
Authorized new share repurchase program totaling $750MM, replacing the existing program.
(1) Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under United States generally accepted accounting principles ("GAAP").
"Chord's outstanding third quarter performance reflects solid execution and strong well performance," said Danny Brown, Chord Energy's President and Chief Executive Officer. "Production was near the top-end of guidance, while capital was below the low-end of guidance. This strong performance supported the continued execution of Chord's shareholder return strategy, which included a meaningful increase to share repurchases in the third quarter. Chord's valuation is compelling, and we expect share repurchases to comprise a significant portion of future shareholder returns, especially at current prices. In addition, three-mile lateral development continues to be a key factor driving a positive rate of change through our business, and we are seeing recoveries proportional to the increased lateral length. As a result, we are updating the productivity factor of the third mile to 100%. Congratulations to the Chord team for continuing to challenge themselves to raise the bar. Your hard work is evident in our company's success."
Mr. Brown continued, "Since closing, the Chord team has been working diligently to integrate the Enerplus assets, drive synergy capture and enhance efficiency. I'm pleased to announce a new three-year outlook, which results in holding oil volumes flat with pro forma 2024 levels from 2025 through 2027 and annual capital expenditures of $1.4 billion per year. This outcome is a material improvement in capital efficiency and illustrates the quality and depth of our inventory. Chord is a premier Williston Basin operator with enhanced scale, significant low-cost inventory, financial strength and peer-leading shareholder returns. Chord's durable free cash flow generation is evident in our improving capital efficiency and compelling long-term financial outlook. We remain focused on optimizing capital allocation while operating in a safe and sustainable manner."
3Q24 Operational and Financial Update:
The following table presents select 3Q24 operational and financial data compared to guidance released on August 7, 2024:
Metric
Actual
Guidance
Oil Volumes (MBopd)
158.8
154.5, 159.5
NGL Volumes (MBblpd)
51.7
47.3, 48.8
Natural Gas Volumes (MMcfpd)
421.8
418.5, 431.5
Total Volumes (MBoepd)
280.8
271.5, 280.2
E&P & Other CapEx ($MM)
$329.2
$335, $365
Oil Discount to WTI ($/Bbl)
$(1.51)
$(2.25), $(0.25)
NGL Realization (% of WTI)
8 %
8%, 18%
Natural Gas Realization (% of Henry Hub)
20 %
35%, 45%
LOE ($/Boe)
$9.56
$9.35, $10.35
Cash GPT ($/Boe)(1)
$2.91
$2.65, $3.25
Cash G&A ($MM)(1)
$27.9
$29.0, $31.0
Production Taxes (% of Oil, NGL and Natural Gas Sales)
9.0 %
8.3%, 8.7%
Cash Interest ($MM)(1)
$19.8
$16.0, $18.0
Cash Tax (% of Adjusted EBITDA)(2)
2 %
6%, 12%
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(1)
Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP.
(2)
Guidance range based on NYMEX WTI between $70/Bbl, $90/Bbl.
Chord had 46 gross (36.0 net) operated turn-in-line ("TIL") wells in 3Q24.
During the three months ended September 30, 2024, net cash provided by operating activities was $663.2MM and net income was $225.3MM ($3.59/diluted share). Adjusted EBITDA was $674.5MM, Adjusted Free Cash Flow was $312.5MM and Adjusted Net Income was $212.8MM ($3.40/diluted share). Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Net Income are non-GAAP financial measures. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP.
Return of Capital:
Chord declared a base-plus-variable cash dividend of $1.44 per share of common stock, including a base dividend of $1.25 per share of common stock and a variable dividend of $0.19 per share of common stock. The dividends will be payable on December 12, 2024 to shareholders of record as of November 27, 2024. Details regarding the calculation of the variable dividend can be found in the Company's most recent investor presentation located on its website at https://ir.chordenergy.com/presentations.During 3Q24, the Company repurchased 951,417 shares of common stock at a weighted average price of $153.50 per share totaling $146.0MM. Share repurchases represented more than 90% of shareholder returns after the base dividend in 3Q24. Chord's Board of Directors has authorized a new share repurchase program totaling $750MM, which replaces the existing program which had approximately $445MM remaining at September 30, 2024.
Acquisition and Divestiture:
During 3Q24, Chord entered into a definitive agreement to divest its entire position in the DJ Basin. On October 25, 2024, Chord completed the sale of the DJ Basin assets and received net proceeds (after customary purchase price adjustments) of $36.1MM. Chord expects to use the net proceeds from the DJ Basin divestiture to fund recent acquisitions and repurchase shares of common stock in 4Q24.
Additionally, during 3Q24, Chord entered into agreements to acquire additional working interests in operated assets in the Williston Basin for total cash consideration of $7.0MM, which was funded with cash on hand. The net volume impact of these portfolio changes is expected to reduce 4Q24 oil volumes by approximately 0.4 MBopd.
2025, 2027 Outlook:
Chord expects to spend $1.4B of capital per year for each of the next three years (2025, 2027) to maintain flat pro forma FY24 oil volumes of 152 MBopd, 153 MBopd. Chord's three-year outlook reflects the improving capital efficiency of its program, supported by high-quality inventory, enhanced operational efficiencies and over $200MM of synergies from the combination with Enerplus.
Updated 2024 Outlook:
Chord is updating its FY24 guidance to reflect 3Q24 results and its 4Q24 outlook. Chord expects to generate approximately $2.7B of Adjusted EBITDA and $1.1B of Adjusted Free Cash Flow on a pro forma basis in FY24, with a reinvestment rate less than 60%. Chord's updated outlook reflects actual pricing for 1Q24, 3Q24 and $70/Bbl WTI and $2.50/MMBtu Henry Hub for 4Q24.
Full year oil volumes updated to account for strong 3Q24 performance and the latest 4Q24 outlook, which includes the impact of October wildfires and recent A&D activity. Pro forma FY24 midpoint oil volumes of 152.7 MBopd increased 0.6 MBopd from August guidance (including the impact of A&D), representing the second increase in oil guidance this year;
FY24 pro forma capital guidance reduced $10MM to $1.48B, reflecting program efficiencies and lower spending. 4Q24 capital reflects program timing and some deferred spending from 3Q24;
Full year natural gas and NGL volumes adjusted to reflect latest estimates on volume mix and activity deferrals in the Marcellus shale;
Lowering 4Q24 oil differentials to reflect continued pricing improvement in the Williston Basin. Adjusting 4Q24 natural gas and NGL realizations to reflect current market conditions;
Lowering FY24 LOE to reflect better than expected 3Q24 performance and improved 4Q24 outlook;
Increasing production tax estimate to account for higher oil sales and lower gas prices; and
Lowering cash tax guidance to reflect the acceleration of certain deferred tax benefits.
In early October, wildfires spread in select areas of North Dakota. There were no injuries to Chord staff; however, the broader community suffered two fatalities and various homes and infrastructure were damaged. During the fires, Chord coordinated with authorities to proactively shut in certain sites and facilities. The impact of these curtailments reduced 4Q24 oil volumes by approximately 0.9 MBopd and is reflected in Chord's 4Q24 guidance below.
The following table presents select operational and financial guidance for 4Q24 and FY24:
Metric
4Q24 Guidance
FY24 Guidance(1)
Oil Volumes (MBopd)
149.5, 154.5
152.0, 153.3
NGL Volumes (MBblpd)
46.1, 47.6
47.7, 48.1
Natural Gas Volumes (MMcfpd)
395.5, 408.5
407.6, 410.9
Total Volumes (MBoepd)
261.5, 270.1
267.6, 269.8
E&P & Other CapEx ($MM)
$315, $355
$1,460, $1,500
Oil Discount to WTI ($/Bbl)
$(2.00), $0.00
$(1.75), $(1.25)
NGL Realization (% of WTI)
5%, 15%
9%, 11%
Natural Gas Realization (% of Henry Hub)
25%, 35%
34%, 36%
LOE ($/Boe)
$9.25, $10.25
$9.38, $9.63
Cash GPT ($/Boe)(2)
$2.60, $3.20
$3.11, $3.25
Cash G&A ($MM)(2)
$29.0, $31.0
$116.2, $118.2
Production Taxes (% of Oil, NGL and Natural Gas Sales)
8.7%, 9.1%
8.8%, 8.9%
Cash Interest ($MM)(2)
$18.0, $20.0
$62.7, $64.7
Cash Tax (% of Adjusted EBITDA)(3)
0%, 5%
2%, 4%
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(1)
Includes the results of Enerplus for the full-year.
(2)
Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measure under GAAP.
(3)
4Q24 cash tax guidance reflects WTI prices between $60/Bbl, $80/Bbl. FY24 cash tax guidance range reflects actual prices for 1Q24, 3Q24 and $60/Bbl, $80/Bbl in 4Q24.
Select Operational and Financial Data:
The following table presents select operational and financial data for the periods presented:
3Q24
2Q24
3Q23
Production data:
Crude oil (MBopd)
158.8
118.1
101.4
NGLs (MBblpd)
51.7
40.5
36.0
Natural gas (MMcfpd)
421.8
291.5
231.7
Total production (MBoepd)
280.8
207.2
176.0
Percent crude oil
56.6 %
57.0 %
57.6 %
Average sales prices:
Crude oil, without realized derivatives ($/Bbl)
$ 73.51
$ 78.89
$ 83.22
Differential to NYMEX WTI ($/Bbl)
(1.51)
(1.71)
0.69
Crude oil, with realized derivatives ($/Bbl)
73.58
78.53
76.45
Crude oil realized derivatives ($MM)
(1.0)
(3.9)
(63.1)
NGL, without realized derivatives ($/Bbl)
6.31
9.99
12.38
NGL, with realized derivatives ($/Bbl)
6.31
9.99
12.38
Natural gas, without realized derivatives ($/Mcf)
0.44
0.67
1.11
Natural gas, with realized derivatives ($/Mcf)
0.44
0.67
1.11
Selected financial data ($MM):
Revenues:
Crude oil revenues
$ 1,073.9
$ 848.1
$ 776.0
NGL revenues
30.0
36.8
41.0
Natural gas revenues
17.1
17.8
23.6
Total oil, NGL and natural gas revenues
$ 1,121.0
$ 902.7
$ 840.6
Cash flows:
Net cash provided by operating activities:
$ 663.2
$ 460.9
$ 399.5
Non-GAAP financial measures(1):
Adjusted EBITDA
$ 674.5
$ 567.9
$ 469.1
Adjusted Free Cash Flow(2)
312.5
216.1
207.4
Adjusted Net Income
212.8
234.9
220.2
Select operating expenses:
LOE
$ 247.1
$ 176.6
$ 177.1
Gathering, processing and transportation expenses ("GPT")
77.4
63.1
52.3
Production taxes
101.0
79.5
72.5
Depreciation, depletion and amortization
360.2
227.9
160.3
Total select operating expenses
$ 785.7
$ 547.1
$ 462.2
Earnings per share:
Basic earnings per share
$ 3.63
$ 4.36
$ 5.01
Diluted earnings per share
3.59
4.25
4.77
Adjusted diluted earnings per share (Non-GAAP)(1)
3.40
4.69
5.04
___________________
(1)
Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most directly comparable financial measures under GAAP.
(2)
2Q24 Adjusted Free Cash Flow includes $16.1MM of capital incurred related to divested non-operated assets that was reimbursed.
For the three months ended September 30, 2024, Marcellus natural gas volumes and realized natural gas prices were 114.2 MMcfpd and $1.32/Mcf, respectively. For the nine months ended September 30, 2024 (including a full-year of Enerplus), Marcellus natural gas volumes and realized natural gas prices were 116.1 MMcfpd and $1.69/Mcf, respectively.
Capital Expenditures:
The following table presents the Company's total capital expenditures ("CapEx") by category for the periods presented:
1Q24
2Q24
3Q24
YTD24
CapEx ($MM):
E&P
$ 257.7
$ 312.9
$ 328.4
$ 899.0
Other
—
1.4
0.8
2.2
Total E&P and other CapEx(1)
257.7
314.3
329.2
901.2
Capitalized interest
0.7
1.2
1.8
3.7
Acquisitions
—
6.6
7.0
13.6
Total CapEx
$ 258.4
$ 322.1
$ 338.0
$ 918.5
___________________
(1) YTD24 includes $20.0MM of capital incurred related to divested non-operated assets that was reimbursed.
Balance Sheet and Liquidity:
The following table presents key balance sheet data and liquidity metrics as of September 30, 2024 (in millions):
September 30, 2024
Revolving credit facility(1)
$ 1,500.0
Revolver borrowings
$ 470.0
Senior notes
400.0
Total debt
$ 870.0
Cash and cash equivalents
$ 52.1
Letters of credit
30.7
Liquidity
1,051.4
___________________
(1) $3.0B borrowing base and $1.5B of elected commitments.
Contact:
Chord Energy Corporation Bob Bakanauskas, Vice President, Investor Relations(281)
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