Chord Energy Corporation

results. We are 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 may make reference to non-GAAP measures and reconciliations to the applicable GAAP measures can be found in our earnings releases and on our website. You may also reference our current investor presentation, which you can find also 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. I know this is a very busy morning, and in that vein, I plan to briefly recap our third quarter performance and touch on some of our key organizational initiatives before passing the call on to Michael Liu. He'll give a little more detail on the financials, some additional color on a few other topics, and a small preview of our thoughts for 2024. We'll then open it up to Q&A. So with that, yesterday evening, CORD reported third quarter 2023 results and raised our full year production outlook. I'm pleased to announce that third quarter volume significantly exceeded original expectations driven by both schedule acceleration and continued strong well performance. The entire CORD team worked together to bring 45 wells online in the third quarter, which was ahead of our original expectations and higher than the 37 wells brought online in the entire first half of the year. This accomplishment is even more impressive when evaluated on a two-mile equivalent basis, which amounts to a 42% increase in well delivery in half the time. So to our team, I'd like to say thank you, and I'm very proud of all the hard work that went into executing the program. Underpinned by this strong production, CORD's quarterly financial performance supported robust free cash flow and high shareholder returns. We generated $207 million of adjusted free cash flow during the quarter, and in accordance with our return of capital framework, we returned 75% of this free cash flow to shareholders. To that end, given our base dividend of $1.25 per share and our share repurchases of $52 million as part of our recurring return of capital program, we declared a variable dividend of $1.25 per share. As a reminder, The variable dividend is designed to make up any difference between our targeted free cash flow payout and the amount distributed through base dividends and share repurchases. Finally, with respect to share repurchases, you may note that the aggregate value of share repurchases associated with our return of capital program is up nearly 70% as compared to the second quarter. In addition, we saw incremental repurchases occurring in the quarter sourced from proceeds received through warrant exercises, and I've asked Michael to discuss that topic more in a few moments. As I've said before, we believe our capital return program is peer-leading and demonstrates our commitment to both capital discipline and shareholder returns and to the investment opportunity that CORD represents. Accordingly, we have announced a new $750 million share repurchase authorization, which replaces the old $300 million program and gives CORD additional flexibility to take advantage of our discount to peers and to intrinsic value. Rotating from the quarter to the full year, we've increased production guidance, reflecting the strong third quarter volume performance and modest schedule acceleration I previously discussed. Full year capital is expected to be at the high end of our $850 million to $880 million guidance range, reflecting the acceleration of activity and also higher working interest we're seeing from some of the wells in our program. Operationally, we continue to be encouraged by the progress we're making on three-mile laterals. Over half the wells we brought online in the third quarter were three-milers. In total, we've executed about 50 to date, and the performance is meeting our expectations. You can clearly see contribution from the furthest portions of the lateral, and we're observing an uplift over time versus two-mile analog wells in each development area. You can find additional details on Slides 9 and 10 of our updated investor presentation, where we've provided performance data on core wells in Fort Berthold and Foreman Butte. In both of these areas, you can see a meaningful uplift in three-mile cumulative production versus the two-mile analogs. In Foreman Butte specifically, early-time production from three-mile wells was affected by the tracer study we discuss on slide 10. Once the tow portion of the lateral was cleaned out in the three-mile wells, they began to outperform the two-mile wells, and we expected that degree of outperformance to increase as the wells continued to produce. CORD also continues to make good progress with respect to our operational performance, drilling, completing, and cleaning out these wells. As slide 9 of our presentation shows, we have materially reduced drilling times for three-mile wells over the past year to approximately 11 days per well, representing an improvement of over 35% in drilling times as compared to the third quarter of 2022. On the clean-out side, we've also made steady improvement and have generally been able to stimulate and accessed the vast majority of the third mile in our most recent wells. During the third quarter, we achieved full TD on substantially all of the three-mile wells we brought online. As a reminder, for three-mile wells, we are assuming a 40% EUR uplift for 50% longer lateral and about 20% more drilling and completion cost. Said another way, we're assuming the third mile is only 80% as productive as the first two miles. However, with effective completion and cleanup practices, We believe the volume response could be nearly proportional to the percentage of the third mile that's cleaned out. And finally, CORD published its first full sustainability report as a combined company in September, which reflects our commitment to delivering affordable and reliable energy in a sustainable and responsible manner. Thank you to the team for putting this together, as it does a great job providing transparency onto our business and highlighting our efforts on emissions reduction, workforce health and safety, and corporate governance, among other things. We welcome feedback from our stakeholders on our progress and look forward to building upon our ESG efforts to shape an even stronger future for CORD and the communities we serve. To sum things up, we executed well in the third quarter, which sets us up nicely to deliver strong free cash flow and high shareholder returns for the remainder of the year. Our asset base is meeting or exceeding expectations, and we will work to drive further improvements going forward. I'll now turn the call over to Michael.

Thanks, Danny. I'll highlight a handful of key operating and financial items for the third quarter and discuss our updated 2023 guidance. As Danny mentioned, oil volumes were strong in the third quarter, about 4.5% over midpoint guidance. Total volumes were about 3.8% above midpoint guidance. Our fourth quarter midpoint oil guidance of 103.5 thousand barrels per day is in line with our August expectations And on a full year basis, we increased oil production guidance by over 1,000 barrels per day. I want to echo Danny's comments on the extraordinary achievement by the core team in the third quarter. This was an exceptional amount of effort, and I'm really proud of everyone involved. Oil realizations remained strong at a modest premium to WTI and were slightly better than our midpoint guidance. Looking to the fourth quarter, we expect Bakken oil pricing to weaken slightly due to higher basin production. and an unexpected refinery turnaround. The pricing is still expected to remain a slight premium to WTI. NGL realizations as a percent of WTI were in line with our midpoint guidance, while residue gas pricing as a percent of Henry Hub was a touch below midpoint. We expect pricing for both NGLs and residue gas to improve modestly in the fourth quarter. Turning to operating costs. LOE was $10.94 per BOE in the third quarter, and GPT was $3.16 per BOE. Both were within our guidance expectations, but LOE trended towards the high end, mostly due to higher workover expense. We view workover expense as an important investment to reduce downtime and enhance revenue. We've seen a meaningful improvement in that downtime over the course of 2023, and we remain focused on lowering the cost side to improve the efficiency of the program. Production tax as a percent of revenue was 8.6% in the third quarter, and we expect a similar rate in the fourth quarter. Cord cash G&A expense was 13.7 million in the third quarter, and we lowered our full year guidance slightly to reflect our latest forecasts. At this point, the merger integration is substantially complete, and we don't expect significant merger-related costs going forward. DD&A averaged $9.90 per BOE in the third quarter, an increase of almost a dollar sequentially. The increase to DD&A reflects the July 1st closing of the XTO bolt-on acquisition, as well as mid-year reserve changes, mostly due to lower SEC pricing. Court paid no cash taxes during the third quarter, and in the fourth quarter, court expects cash taxes to be approximately 0% to 10% of the fourth quarter EBITDA at oil prices between $70 and $90 per barrel. Danny mentioned that we expect capital to be towards the high end of the full year guidance of $850 million to $880 million, given a couple items. First, improved cycle times have led to incremental lateral feet drilled during the year versus original expectations. Second, working interest is slightly above expectations. and these working interest increases accounts for approximately $10 million of incremental capital. Danny discussed our return of capital for the quarter and wanted to give you a few more details on our share repurchases. During the third quarter, Cord repurchased $112 million of stock, including $52 million related to third quarter return of capital, with the remainder funded by cash proceeds from warrant exercises. We received approximately $73 million of cash from warrant exercises in the third quarter, and we're able to use roughly $60 million of this for incremental third quarter repurchases. And with the remaining $13 million of repurchases that were at the beginning of the fourth quarter. This $60 million and $13 million in the third and fourth quarters respectively are not included in the calculations for return of capital. Going forward in a similar fashion, we generally expect to use cash received from warrants to offset delusion. Turning to liquidity, CORD recently completed its fall borrowing base redetermination. The borrowing base and elected commitment remains unchanged at $2.5 billion and $1 billion, respectively. As of September 30th, there was nothing drawn, and cash was approximately $265 million. Finally, turning our attention briefly to 2024. Given a strong growth in oil production in the second half of 2023, as we look into 2024, our corporate annual decline rate increases slightly. As we start to see the benefits of the shallower declines associated with our growing proportion of producing three-mile wells, we expect this increase in decline to reverse towards the end of 2024 and into 2025. Overall, for 2024, we're expecting a maintenance capital program with full year volumes flat to 2023. On a pro forma basis, this is around 99,000 barrels of oil per day with expected capital a little over $900 million. Additionally, activity is expected to remain concentrated in the spring and summer months next year. This means that tills will be focused towards the second half of the year and that 2024 volumes should follow a similar pattern to 2023 with the second half of the year higher than the first half. In closing, the core team continues to drive to strong performance with a focus on returns. This directly leads to sustainable free cash flow profile and our peer-leading return of capital program. With that, I'll hand the call back over to Laura for questions.