Chord Energy Corporation

Good morning and welcome to the Cord Energy first quarter 2023 earnings results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Michael Liu, Chief Financial Officer. Please go ahead.

Thank you, Danielle. Good morning, everyone. Today we are reporting our first quarter 2023 financial and operational results. We're delighted to have you on our call. I'm joined today by Danny Brown, Chip Reimer, Richard Roebuck, and other members of the team. Please be advised that our remarks, including the answers to your questions, include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently disclosed in our earnings releases and conference calls. Those risks include, among others, matters that we have described in our earnings releases as well as in our filings with the Securities and Exchange Commission including our annual report on Form 10-K and our quarterly reports on Form 10-Q. We disclaim any obligation to update these forward-looking statements. During this conference call, we will make reference to non-GAAP measures, and reconciliations to the applicable GAAP measures can be found in our earnings releases and on our website. We may also reference our current investor presentation, which you can find on our website. With that, I'll turn the call over to our CEO, Danny Brown.

Thanks, Michael. Good morning, everyone, and thanks for joining our call. Last evening, CORD reported our first quarter 2023 results and updated full year outlook. As you know, last year was a pivotal year for the organization as we announced a merger of equals transactions between Whiting and Oasis Petroleum, laid the groundwork for the integration, and established how we would operate as a new organization. In 2023, we are focused on operational execution and driving the synergies from the merger, and as you read in our press release last night, we had a strong start to the year. In the first quarter, oil volumes were significantly above expectations due to continued strong well performance and a modest acceleration of activity. As we discussed last call, January performance was negatively impacted by severe weather in late December. However, the team did a fantastic job restoring production and ramping up our drilling and completions activity quickly. We turned in line 15 wells in the quarter, which was at the upper end of our 11 to 15 range, with about half of those wells being three-mile laterals. With the additional activity, capital was towards the high end of our range, but overall free cash generation exceeded expectations. Turning to return of capital, for the quarter, we declared a variable dividend of $1.97 per share with a base dividend which remains unchanged at $1.25 per share. The aggregate variable payment of approximately $82 million is the difference between 75% of the $199 million of adjusted free cash flow generated in the first quarter minus the base dividend of about $52 million minus $15 million of share repurchases. As a reminder, the variable dividend is intended to make up any difference between our targeted free cash flow payout and the amount distributed through base dividends and share repurchases. Our capital return program is peer leading and demonstrates our commitment to capital discipline and shareholder returns. Since we closed the merger last year and underpinned through strong operational performance, Cord has returned a significant amount of capital to shareholders through a mix of dividends and share repurchases. However, as with all aspects of our business, we are constantly seeking to improve. As we reflect on our shareholder return over the past two quarters, we recognize that the amount of share repurchases is lighter than we might desire, particularly considering our view on the intrinsic value of our equity when compared to market value. Accordingly, as we look forward, we will continue to be opportunistic with share repurchases but intend to be more balanced between dividends and buybacks in the future. Now, turning to operations. We continue to be pleased with our underlying well performance, and as can be seen on slide 10 of our updated investor presentation, our development program continues to deliver above expectations. This is partially attributed to our practice of wider well spacing, which we believe improves per-well recoveries and reduces variability of performance across the asset, and to our move to more three-mile laterals. CORE began to bring on its first three-mile laterals toward the end of 2022, and these are expected to comprise about 50% of the 2023 program. Three-mile laterals will be a key part of the go-forward program and are expected to deliver 40% to 50% more EUR for about 20% more D&C costs. Just a quick note on the production profile of these wells. Part of the capital savings reflects similarly-sized facilities versus a standard two-mile pad. The result is three-mile wells typically have similar IPs to two miles, but stay flat longer with shallower declines. Said another way, as three mile laterals become a larger share of wedge wells, very early time well production per lateral foot becomes less relevant and longer dated cumulative production versus capital cost is a more appropriate performance metric. After the first quarter, court announced the sale of certain non-core properties outside the Williston Basin from the Legacy Widing Trust assets for proceeds of approximately $35 million. The specific divested assets consisted of multiple packages in various parts of the U.S. with total volumes of approximately 1,100 barrels of oil equivalent per day and oil volumes of roughly 900 barrels per day. We expect all divestitures to close during the second quarter, and our guidance has been updated to reflect the sales. The divestitures decrease oil volumes by about 600 barrels of oil per day for the full year, but court expects to replace all 600 barrels of oil per day given strong oil performance and a modest acceleration of activity in the first quarter. Said another way, CORD is keeping its February full-year oil guidance unchanged at 96.5 thousand barrels of oil per day despite selling these non-core volumes. Gas and NGL volumes and realizations were also adjusted to reflect higher levels of ethane rejection in recent benchmark pricing. Finally, an update on ESG. CORD is still on track to resume publishing a full sustainability report in 2023 which will include robust disclosure on performance through 2022. Cord continues to work towards improving disclosure and performance for its ESG initiatives. To sum things up, we're off to a very strong start, and most material integration projects are complete. We've created a better company with a strong financial outlook capable of supporting high levels of sustainable free cash flow at prices much lower than current market benchmarks. With that, I'll turn it over to Michael for some additional updates.