Chord Energy Corporation

Good morning, ladies and gentlemen, and welcome to the Core2Energy fourth quarter 2024 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, February 26, 2025. I would now like to turn the conference over to Bob Bakunaskis. Please go ahead.

Thanks, Andrew. Good morning, everyone. This is Bob Bakunaskis, and today we're reporting fourth quarter 2024 financial and operational results. We are delighted to have you on the call. I am joined today by Danny Brown, our CEO, Michael Liu, our chief strategy and commercial officer, Darren Hanke, our COO, Richard Roebuck, our CFO, as well as 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. And with that, I'll turn the call over to our CEO, Danny Brown.

Thanks, Bob. Good morning, everyone, and thanks for joining our call. Over the next few minutes, I plan to reflect on CORD's 2024 accomplishments, provide a brief overview on fourth quarter performance and resulting return of capital, and then turn the discussion to our 2025 outlook. From there, I'll turn it to Darren, who will comment on CORD's operations. Darren will then pass it to Richard for more details on our financial results before we open it up for Q&A. So, starting with 2024, last year was a transformational year for our organization. as we solidified our leading position in the Williston Basin by entering into a combination with another leader in the basin, Interplus. The combination closed in May of last year, and we successfully extracted significant value from the integration by focusing on incorporating best practices from both organizations, which allowed us to capture substantial operational and corporate synergies. And notably, we executed this transaction while maintaining our commitment to balance sheet strength, capital discipline, and peer-leading return of capital. My sincere thank you to all the employees who, through their commitment and dedication, have placed us in a great position to succeed. And to that point, I believe this is the best position the company has been in since I arrived four years ago. Cord has become a basin leader, and our improved scale has driven a highly efficient program capable of generating flat to slight volume growth with low maintenance capital, resulting in high amounts of sustainable free cash flow. We have enhanced our economics by adopting leading-edge practices such as long laterals and conservative spacing, which have lowered our break-evens and extended inventory life. As we look to the future, Cord's substantial low-cost inventory generates attractive economics and allows for continued low reinvestment rates, robust free cash flow, and attractive return of capital. In short, we've demonstrated consistent delivery for shareholders and have additional catalysts for future upside. Our capital-efficient development and solid operational performance resulted in strong free cash generation last year, and a significant portion of this was returned to shareholders. In 2024, on a pro forma basis, Cord returned $944 million to shareholders, and in recent quarters, you've likely noted that we've leaned harder into share repurchases to take advantage of what we view as a value disconnect in our share price. Since closing the Interplus transaction, Cord has repurchased greater than 5% of its shares outstanding, and we expect a continued focus on share repurchases in the current environment, which should yield per share growth across all key metrics. One example of this can be seen on slide six of our presentation, where we show that Cord has grown oil production per share at a 12% compounded annual growth rate over the last three years. And importantly, we did this while simultaneously preserving our balance sheet and paying out approximately $2 billion in dividends. Given our strong inventory and low reinvestment rate, and what we see as a compelling valuation on both an absolute and relative basis, which we highlight on slide four, we see no reason why strong per share growth won't continue. Turning to fourth quarter results, CORD delivered another great quarter with solid operating results yielding free cash flow above expectations, which supported robust shareholder returns. Specifically, fourth quarter oil volumes were above the midpoint of guidance, reflecting strong execution and well performance, while capital was below expectations, largely reflecting fluctuations in program timing. Operating expenses also came in below expectations as the team continues to focus on improving cash margins. My thanks to our field, development, and execution teams for delivering favorable results across the board in the fourth quarter, and really all of 2024. Fantastic job by all. This strong performance led to adjusted free cash flow for the fourth quarter of approximately $282 million, and Cord stepped up shareholder returns to 100% of free cash flow to take advantage of the discount we see in our shares. Share repurchases comprise all of our return of capital for the quarter after accounting for the base dividend, which was increased by 4% to $1.30 per share. Turning our attention to 2025. As you'll recall, this past November, CORD released its first multi-year outlook, and our 2025 guidance released last night demonstrates we're off to a strong start. Despite some stretches of brutally cold weather, the asset is performing well, and our latest projections, including the impacts of this weather, are reflected in our first quarter guidance. As for the details surrounding our 2025 plan, This year, we intend to run a maintenance capital program and are currently running five rigs, which we expect to decrease to four by mid-year. Additionally, we are currently running one full-time frack crew and one spot crew. We expect to turn in line between 130 to 150 gross operated wells in 2025, including 22 to 32 in the first quarter. The remainder of 2025 tills are expected to be spread out across the year. Average working interest in 2025 is expected to be approximately 80%, and a little over 40% of the 2025 turn-in lines are expected to be three-mile laterals, which should increase to over 50% in 2026 and 2027. In addition to the operated program, we expect to invest between $205 and $225 million on non-operated opportunities, with approximately 80% of that in the Williston, with a balance in Marcellus. The 2025 program is expected to deliver production similar to pro forma 2024, or between 152 to 153,000 barrels of oil per day, with $1.4 billion of capital investment. This is approximately $90 million less than last year on a same-same basis, and does include around $10 million which slipped from the fourth quarter of last year into the first quarter of this year. At benchmark prices of $70 per barrel of oil and $3.50 per MMBTU of natural gas, We expect to generate approximately $860 million of free cash flow in 2025, with a reinvestment rate of around 60% for the year. As we progress through the year, Cord will continue to have a laser focus on improving our already strong capital efficiency and delivering strong investment returns. In slide 7 of our investor presentation, you can find a third-party research firm's assessment of Cord's capital efficiency versus peers in 2024 and 2025, where you'll see that we're on the better end of capital productivity and one of the few companies improving efficiency year on year. This reflects improving productivity partially driven by our pivot towards longer laterals, which Darren will discuss a bit more. And speaking of turning this over to Darren, the last thing I wanted to cover before doing so is our commitment to sustainability. Cord is proud of our work providing reliable and affordable sources of energy so critical to every aspect of modern living. and we do this while maintaining a commitment to operating in a sustainable and responsible manner. On this front, CORD continues to make progress on our already strong sustainability initiatives with a focus on putting safety first, minimizing our environmental impact, and being a good partner in our communities. So, to summarize, CORD had a great 2024, we're off to a strong start in 2025, and we believe we offer a unique value proposition to investors with a compelling opportunity to invest in quality assets with proven execution, strong investment returns, and substantial return of capital to shareholders. And with that, I'll turn it over to Darren.