Chord Energy Corporation

Good morning, ladies and gentlemen, and welcome to the Cord Energy Second Quarter 2025 Earnings Conference 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 Thursday, August 7, 2025. I would now like to turn the conference over to Bob Bakanowskis. Please go ahead.

Thanks, Anis, and good morning, everyone. This is Bob Bakanowskis, and today we're reporting our second quarter 2025 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 Officer and Chief 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 the 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 provide a brief overview of our second quarter performance and resulting return of capital, and then briefly touch upon some of our current initiatives before passing it to Darren, will provide more color on our operations. Darren will then hand it over to Richard for more details on our financial results before we open it up for Q&A. So, turning to the second quarter results, CORD delivered great performance with solid operating results yielding free cash flow above expectations, which supported robust shareholder returns. Typically, second quarter oil volumes were above the top end of guidance, reflecting strong execution, well performance, and less downtime. While capital was favorable to guidance, largely reflecting improved program efficiencies. My thanks to our entire organization for delivering favorable results once again, and in particular, to our folks in North Dakota, who did a great job navigating unusually high rain in May, positioning us to surpass expectations. This strong performance led to adjusted free cash flow for the second quarter of approximately $141 million, and we returned 92% of this free cash flow to shareholders. Notably, after our base dividend of $1.30 per share, all incremental capital return was utilized for share repurchases. Since closing the Interplus transaction, Cord has reduced its share count by approximately 10% through early August. Given our view on the intrinsic value of our shares relative to how they currently trade in the market, we expect a continued focus on share repurchases in the current environment. Cord has been successful in driving strong per-share growth while paying out significant dividends to shareholders and keeping the balance sheet in good shape. Turning to operations, the core team has demonstrated exceptional performance across all areas of the business. Cycle times have been reduced, weld performance continues to be robust, and downtime levels are better than anticipated. These improvements to the business gave us additional operational flexibility and allowed us to reduce full-year capital by $50 million versus the original budget, while exceeding expectations on the production side. Consistent with our initial 2025 plan, and given current commodity prices, Cord intends to redeploy a second frac crew in the fourth quarter. This should give us an early start on the 2026 program, and we would expect volumes to trough in the fourth quarter of 2025 and grow off of those levels in early 2026. We'll give some preliminary thoughts on the 2026 program in November, but I'm very pleased with the progress we've made since announcing our three-year plan and our ability to deliver volumes more efficiently, resulting in higher free cash flow. And while I'm pleased with our current performance, I'm even more pleased that we have the opportunity and several ongoing initiatives to further improve the business. On the four-mile lateral front, given encouraging early results, we've expedited the program and now anticipate having seven wells online by year end. Currently, we have four wells drilled, and costs have consistently been below our original expectations. We also have one well, the Riestead, which has been producing since February. Performance from this well continues to be strong, and it recently began natural decline after more than four months of flat or increasing production. Darren will get into a little more detail on the program, but suffice it to say we like what we're seeing and are preserving the flexibility to lean into the four-mile program in 2026. Next, I'd like to provide a brief update on some of our continuous improvement initiatives aimed at increasing free cash flow. Slide 11 outlines the approximately $3 billion of controllable cost across the business between operated D&C capital, lease operating expenses, marketing expenses, and G&A. So far in 2025, we've made progress reducing all of these areas and are on track to exceed original production guidance with less capital and better margins. Slide 6 outlines the improvement we made for 2025 free cash flow relative to February guidance, normalizing for price levels. The free cash flow outlook has improved 20% since February, and when including the effect of share repurchases, slide 7 highlights that our expectations for free cash flow per share has grown 25% since February. Going back slightly further to when we announced the Interplus transaction, pro forma free cash flow per share is up more than 35%, again, all on normalized pricing. That's impressive performance, maybe even more impressive when considering we preserved the balance sheet along the way. And my sincere thanks to the Cord team for driving this level of improvement. A key component of Cord's ongoing continuous improvement focus is the use of data analytics, machine learning, and artificial intelligence in various areas of the business. And I'd like to highlight just a few of the projects we've been working on. On the production side, Cord is working to optimize ESP to rod lift conversion decisions by using AI and machine learning to generate production profiles, forecast ESP run life, and calibrate economic decisions for our wells. Similarly, CORD is enhancing gas lift efficiency by employing an algorithm to model optimization curves and inform economic decision making. On the reservoir side, CORD is implementing a machine learning model to identify geologic contributions of production in EUR across various parts of the basin, while from a planning perspective, we're using new optimization tools to more efficiently run our work over fleet and plan for frack protect to avoid unnecessary expense and downtime. The company is also rolling out dynamic and interactive dashboards, which will give our teams, including our lease operators, real-time business performance insights. The pace of innovation and adoption has been swift, and these tools support improved value of delivery to our shareholders by harnessing the power of technology to increase efficiency and insight and to improve our capital allocation decision-making, with not just better data, but also with better models that are easier to use. We are in the early innings of what's possible, but we're already seeing an impact and are excited about what the future holds. Lastly, a few words on sustainability before handing it to Darren. At Cord, we believe oil and natural gas will remain essential to meet the world's energy needs for the foreseeable future. Cord is proud of our work providing reliable and affordable sources of energy while maintaining a commitment to operating in a sustainable and responsible manner. 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. I should mention that Cord's safety and gas capture performance are off to a great start this year. We plan to publish an updated sustainability report in the fall, which will reflect the full integration of Cord and Interplus. So, to summarize, Cord is performing and offers a unique value proposition to investors. I couldn't be more pleased with the state of the business as we are in a fabulous position to generate substantial value now and in the coming years. And with that, I'll turn it to Darren.

Thanks, Danny. The core team is consistently improving the organization and enhancing performance. I would like to take this opportunity to discuss the notable progress being made across all operations. In 2024, the pro forma capital budget to deliver similar production levels was approximately $1.5 billion. Currently, our 2025 capex guidance stands at $1.35 billion, a dramatic improvement in efficiency year over year. Port has driven strong efficiency gains through the rollout of longer laterals, wider spacing, alternative well designs, and cost-saving strategies, resulting in better economics and higher production. On the drilling side, we've seen notable efficiency improvements with spud-rig release times down about a day year-over-year. I should also note that year-to-date, we've drilled seven alternate-shape wells, coming in below budget, both from a cost and cycle time perspective. Turning to completions, thermal frac operations continue to drive faster cycle times. Pumping hours per day have increased 20% versus last year. and the savings per well is around $300,000 versus zipper operations. Clean-out times have improved as well for both standard and long lateral wells. Looking at our facilities, based on a recent third-party study, CORD has best-in-class facility costs, and we continue to explore additional technologies to drive further efficiencies. Turning to LOE and WorkOver, CORD continues to focus on lowering its failure rates and reducing cycle times to restore lost production. Failure rates are improving as CORD optimizes artificial lift across its producing well base. When CORD fracks its wells, we tail in with resin-coated sand, and then we manage the initial production rate, all to limit sand flow back. This typically results in one less ESP run over the life of the well. We've also upgraded our rod pump equipment, which has resulted in a longer life leading to less downtime. Additionally, our enhanced scale has allowed Cord to more efficiently service a larger production base, and we continue to make progress on optimizing logistics. We're prioritizing high-impact targets, shortening the length of time to get wells back on production, and reducing the cost of work over repairs. Now to give you an update on Cord's four-mile program. As Danny mentioned, we have expedited the program and now expect seven four-mile wells turned in line by the end of the year. The Riestead well, our first four-miler, has been online since February. Slide 9 shows the actual production results versus type curve. Volume and pressure indications are encouraging, and our tracer study indicates every stage of the lateral is contributing to production. The well just recently went into decline, so we'll continue to study the volume profile, but it's looking really strong so far. Relative to a two-mile well, four-mile wells are expected to recover 90% to 100% more EUR or only 40% to 60% more capex. On a break-even basis, this translates to an $8 to $12 per barrel cost-of-supply reduction, yielding up to 30% lower F&D costs. relative to two-mile wells. If CORD continues to exceed expectations on the execution of four-mile wells, we're likely to implement many more in 2026 and beyond. I plan to talk more about our progress and implications for the 26th plan on our November call. To sum it up, CORD has an impressive track record of consistent execution and strong returns. We look forward to delivering on our long-term outlook. I'll now turn it over to Richard.

Thanks, Darren. I'll round out our conversation with some final thoughts that expand on comments made earlier or in our press release. Danny covered our volume performance, which was above expectations. Looking at pricing, oil differentials in the second quarter averaged $2.15 below WTI, which improved slightly from our prior quarter and were within our guidance range. For the full year, oil diffs guidance improves, reflecting the tightening in the second half. Turning to gas and NGLs, as expected, pricing was lower sequentially reflecting normal seasonality. NGL realizations were 9% of WTI in the second quarter, while natural gas realizations were 32% of Henry Hub. Our full year guidance was adjusted to reflect our current outlook. As a reminder, certain marketing fixed fees are deducted from our NGL and natural gas prices. This drives higher operating leverage, which hurts realizations for both NGLs and natural gas in times of weaker prices and benefits realizations in times of higher prices. Lease operating expenses, or LOE, were $10.02 per BOE, which was at the higher end of the guidance range that we set in May. Primarily due to increased workover costs, as a team did a great job restoring production volumes after significant first quarter weather disruptions. Cordette achieved notable improvements in reducing cycle times for high-capacity wells, which led to some higher costs but also had some positive impacts on volumes. Cordette's full-year LOE per BOE guidance remains unchanged. Production taxes averaged 7.3% of commodity sales in the second quarter, which was below our expectations. This primarily reflects the impact of non-recurring refund for stripper wells received during the quarter. Our oil revenue from these low-producing wells is taxed at a reduced rate. We expect these refunds to have a lower impact in future quarters. We have adjusted our full-year production tax guidance to reflect our first-half performance and our go-forward expectations. Cash G&A expenses were $22 million below our guidance. For the full year, we have reduced cash G&A guidance by $7 million as a team exceeded synergy expectations, and drives our continued improvement initiatives, including efficiencies gained through the use of various data analytics, machine learning, and artificial intelligence tools that Danny mentioned earlier. Second quarter cash taxes were approximately $32 million, or 5.9% of EBITDA, which was within our guidance range. We have lowered the full-year cash tax range to 3.5% to 6.5% of EBITDA, at WTI prices in the second half of the year, ranging between $60 and $80 per barrel. The reduction reflects our latest forecasts, which include the impacts of recent tax legislation. Ford continues to have peer-leading leverage and liquidity. Net debt levels increased from the first quarter, largely reflecting a non-recurring working capital swing. As of July 31st, net debt was approximately $810 million, a decline of almost $80 million from June 30. Net leverage was approximately 0.3 times on a trailing 12-month basis. As of June 30, Gord had $180 million drawn on its $2.75 billion credit facility with $2 billion of elected commitments. Liquidity as of June 30 was approximately $1.8 billion, including $40 million of cash and $1.3 seven nine billion available under the credit facility net of letters of credit we also later layered in additional hedges during the second quarter and in july our derivative position can be found in our latest investor deck in closing cords execution and delivery remains best in class i am looking forward to the additional progress as our team relentlessly pursues continuous improvements and innovative solutions with that i'll hand the call Back over to Anas for questions.

Thank you. Ladies and gentlemen, we now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You'll hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you're using a speakerphone, please lift the hands up before pressing any keys. One moment, please, for your first question. Your first question comes from Scott Hannell with RBC Capital Markets. Please go ahead.

Yeah, thanks. Good morning. You all talked a couple times about seeing some good stuff from the four-mile wells and integrating more of that into 2026 potentially. Could you provide us some context on what level of investment in these four-mile wells from a risk-reward perspective makes sense and what needs to be done on the permitting front in order to make that a bigger part. Do you need to start re-permitting stuff? I assume you're already underway at that, but just some color there.

Yeah, the permitting activity, Scott, is well underway for next year and beyond relative to four miles. So we're really preparing ourselves to go either way. We're setting ourselves up with the optionality for four miles, but also three miles or two miles, whatever the case may be for the original plan. So we're set up either way from a permitting standpoint.

Yeah, I will say that, you know, we are really encouraged with the early results here. And you can actually withstand some, you know, fairly reasonable degradation of performance from the fourth mile and still have this be the right economic decision from an IRR perspective. And so, you know, we're really encouraged with the early results. It looks like we're already over 97% of what two two-miles would deliver. And so we're getting, you know, kind of getting close with this first well at least to 100% contributions. short order from the four-mile well relative to two miles. But, yeah, the economics of these four miles is going to be really strong. And so you can withstand some degradation in that last mile and still have that be the right decision, even though we're seeing, you know, performance that's above our original expectations here.

Right, right. So it sounds like you guys are prepared to potentially move pretty quick on this if you can. Okay. And then, again, Okay, sorry about that. My follow-up is just on the Marcellus. You know, obviously, it's obviously a non-core position that's, you know, I didn't hear much of an update on it today, but can you give us your most recent thoughts on, you know, where that fits into the stack of initiatives with regards to monetization?

Yep. Scott, appreciate the question and the interest in that. I'd say Marcellus is – we've been pretty transparent that we think Marcellus is a great asset. It's in the core of that basin, but it's not core to our portfolio. And so we're going to be very focused on making sure that we deliver maximum value from that asset.

Fair enough. Thanks. Thanks, Scott.

Thank you. Your next question comes from Oliver Huang with TPH. Please go ahead.

Good morning, Danny and team, and thanks for taking your questions. Wanted to start out on the Rodstead well, get a bit more detail than what you already highlighted in the prepared remarks. Just any main takeaways or observations from the drilling of the well, the completion of the well, the flow back, the productivity in the first six months. I understand it'll probably get better and faster with the subsequent wells, as things look pretty encouraging here, but do you have but do have to ask is there anything that you all might look to potentially change up or tweak with respect to any of these items as we think about prosecuting on the remaining four dollars that are scheduled this year yeah the uh execution on the rice that went really almost flawlessly um we were able to drill the well with one bottom hole assembly

You know, we were concerned that it would take rotary stirruples to be able to directionally control the well, maybe in that last mile, and we just haven't seen that on any of the wells that we've drilled. So, overall, the drilling performance has gone better than expected. We've only completed one well so far, the Reistad, and, of course, it's outperformed its type curve by 30%. As Danny said, it's almost cumed in a little over 150 days. what two two-mile wells would have been expected to cube in this area. So very quickly performing very similar to two two-mile wells. So we're just really excited about what we're seeing. We're excited with how the team has been able to execute on these wells. But we do need to complete some more, and we're going to before the end of the year. We'll have seven online. So we have six more to complete and bring online before the end of the year, and we'll be a lot more intelligent after we get a number of those under our belt.

Awesome. Makes sense. And maybe just for a follow-up question, I know it's still super early in the process, but as you all have done the work looking at how your acreage footprint sits today on how to optimize the development program, if you all were to kind of go ahead with a more material shift towards four-mile laterals, is there a general view in terms of how much incremental net lateral footage expansion we would be talking about that would move into the economic bucket that otherwise wouldn't have?

Yeah, I'd say I can't quantify that for you, Oliver, but what I'll tell you is with the break-even reductions that Darren mentioned earlier, clearly some of the areas on the periphery of the basin are going to start to come in and compete for capital in the way that they did previously, and the existing wells that we moved to four miles are going to look just better. And so, yeah, clearly, you know, we need to get some more of these over our belt. We're working through, as Darren mentioned, a the permitting and platting to make sure that we can prosecute a more aggressive four-mile program with the existing, with sort of our existing contemplation. It looks like four miles could be up to around 50% of our sort of development plans on a go-forward basis. And as we go through that work, we'll be, of course, going back and looking at the basin and reevaluating. And there's no doubt that some of the acreage on the peripheries will start to peep more attractively for capital.

Makes sense. Thanks for the time, Danny. Thanks, Eleanor. Thank you.

Your next question comes from Derek Whitfield with Texas Capital. Please go ahead.

Good morning, all, and congrats on a strong 2Q update. Thanks, Derek. Setting aside the somewhat perplexing stock response this morning, as you guys have one of the better rate of change stories in the sector at present, I wanted to ask your thoughts on how low you could drive your corporate-level break-evens, given the breakthroughs you're experiencing with four-mile laterals and the cost initiatives you've outlined on slide 11?

As we think about the – I appreciate the question, Derek, and we think we had a great quarter, too. So, as we think about the overall break-even of the program, again, if you can think of sort of 50% of our inventory moving over to a four-mile lateral perspective, and that yielding, call it between an 8% and 12%, so let's just take 10 as the midpoint. You know, if that's half of our inventory, just sort of with simple linear math, you'd say maybe that's a $5 improvement across the organization. And so that's the kind of, you know, positive uplift we're talking about in moving towards this. But that's not – that's I think should also be taken in combination with other initiatives we have within the organization. So we're really trying to improve all aspects of our business to deliver incremental free cash flow. So the four miles are exciting, but we're trying to make progress on LOE and all of our other elements of expense as well. So yeah, I think lots of opportunity for organizational improvement as we move forward.

That's great, Denny. And I honestly want to lean in with where you just ended there. When you think about the AI and machine learning advances you're seeing, how material could the cost gains be relative to what you've accomplished to date? And what are some of the biggest needle movers for you?

You know, I'd say, Derek, it's just so early and so nascent in this process. But what I can tell you is I... Just a little bit of insight. I sat in a meeting yesterday afternoon internally, and we went through 31 different projects that were underway organically working through the organization to drive improvements across every aspect of our business you could think of. And these were folks, again, all organically driven. And so this is, I would call innovation and data analytics at Cord as being sort of, you know, decentralized in concept, but centralized in influence and oversight. And so we've really empowered our folks to lean into getting very familiar with data, how to use data sets. We've got folks across the organization now programming in SQL and Python and just doing things in a manner that is so much more efficient than we used to do things. And so where that leads it's going to lead to lower cost structure. To quantify that at this point, I think it's pretty tough, but I can tell you it's permeating every aspect of our business. It's exciting, and it seems to me that the pace that this is moving is pretty quick, and it's building steam.

Great color.

I'll leave it there.

Thank you. Thank you. Your next question comes from Jen Abbott with Wolfie Research. Please go ahead.

Appreciate it. Thank you for taking our question. So maybe I'll just sort of tag along on the AI question here. So, Danny, you just talked about these opportunities are being driven organically. So when you think about this and when you think about AI, what is the cost of actually implementing these initiatives? And what are the advantages of looking at these solutions internally versus externally? Maybe you could speak to that. In other words, using a vendor versus developing internally.

Yeah. So I think it's a reasonable question, John. I'll make a few comments, then maybe ask Michael to make a few as well. I'll tell you, from my view, the cost of implementation is actually quite small. When you think about the data sets, you know, first it all starts with having clean, organized data. And so we've spent a lot of time over the last few years, and candidly, we're probably – helped with the mergers and acquisitions that we've done over time because we had these big data sets come in that we needed to get put into the corporate architecture. And I think that was a strong catalyst for us to make sure that all our data was well-organized, clean, and accessible. And so because we had that as a backdrop, we could really lean into having this sort of clean data set that could then be leveraged. And so we've We've got some training courses we put through the organization. We've had hundreds of participants across the organization on what we call data camps and teaching people how to use, how to code. And it's really taken off across the organization, and we're just seeing this excitement around it, and we're seeing tangible results from putting that in. So that's all very low cost. There is some upskilling that's happening along the way, and I think people are excited about it because they're able to sort of take ownership over their workflows and making their workflows more efficient, which I think is a good thing. So you could hire a third party to come in and do some of that, but I don't think that builds the organizational excitement and momentum like what I see going on inside our organization now. And I'll turn it over to Michael for incremental comments.

Yeah, thanks, Danny. Yeah, John, the only things I'd add to that are – You know, super proud of our teams in their embracing of kind of change. And as Danny mentioned, I think some of the mergers that we've done in the past has helped us continue to look for how do we kind of root out repetitive work. And that's happening at every team at every level across the organization. And people are really embracing the desire for change and desire just getting better every day. So we're trying to provide, as Danny mentioned, kind of the tools for everybody to do that and the training to do that. We're also working with outside vendors in terms of their products continuing to get better through AI and machine learning. And there's a number of folks that are doing that within their own software programs. We're looking at how that improves our people's work and kind of their time efficiency, etc., And then we've got a team that's really trying to look outside of our industry as well. As we know, the oil and gas business is making some changes, but there are other industries that have also done massive changes across their businesses. And we're trying to look at what they're doing and figure out how to implement some of what they're doing into our business as well. So it's kind of coming in multiple different types of that we're looking at the business.

Appreciate that, Culler. And then for the follow-up questions could be on 2026. You'll give us more thoughts exactly in November. And there's been already plenty of questions on four-mile laterals. But when you look at 2026 and, I mean, what are the factors that you're looking at in terms of what is the right amount of activity and what you're going to do? And then how do you see the cost savings from this year translating to next year as you sort of think about items such as tariffs? And somebody had mentioned this weakness in the stock today. I think the 4Q oil guy may have been a little bit low towards street expectations. How do you provide confidence as you sort of think about oil growth into the following year?

Yeah, I appreciate that, John. So maybe I'll... I'll take those, maybe not quite in the order they're asked, but if I miss something, just let's make sure we address all those topics before we move on to the next person in the queue. So from a 4Q oil production perspective, you know, I'd say as we have – We've been pretty focused and deliberate in our comments that what we're focused on as an organization is really making strong capital allocation decisions and for the purpose of generating strong free cash flow per share growth. And so that's what we're focused on, not absolute production growth, but strong free cash flow per share growth. And we've got some of that shown in our slide deck. And so as we came across, as we've worked through 25, the plan's been working exceptionally well. We're delivering more. We've seen stronger performance, really, from just about every aspect of the business. And so what we didn't want to do is sort of push production growth through the system at the expense of incremental capital when we had a different decision we could make, which was to peel back on capital a bit, which will naturally have a resulting impact. decrease in production, but generate more free cash flow, which is great because we've been, you know, we think, candidly, we think our shares are pretty attractive here, and as we generate incremental free cash flow, it means incremental share repurchases for us. So we like that setup. Because we, you know, we went to zero frat crews at one point during the year, and we brought a frat crew back, you know, our till cadence is now you know, there's some cyclicality in our till cadence. And so we're going to have the lowest number of tills in the fourth quarter. And because we're bringing that track crew back in the fourth quarter, we'll see that till count increase materially as we get into the first quarter of next year. And so, you know, the fourth quarter of this year will be our trough from a production standpoint, but we're going to grow up that trough. And I feel supremely confident about the plan we've put out, the three-year plan we put out in November of last year. was really with a static view of the world, including our own internal capabilities. And I can tell you our capabilities are much better now than they were then. And so I feel really, really confident about the plan, about the delivery in 26, and look forward to talking about it in November.

Thank you very much. Thanks, John. Thank you.

Your next question comes from Kevin McCurdy with Pickering Energy Partners. Please go ahead.

Hey, good morning. Moving back to the four-mile laterals for a minute, how much CapEx are you saving by doubling the four-mile lateral program this year? And do you have any thoughts on the range of annual CapEx savings you could capture if you move to 50% of your program to the four-mile laterals like you highlighted in your deck?

Yeah, so for this year, the amount of capital saved by increasing the plan is probably de minimis. Honestly, it's such a, it's a relatively small part of the overall program. And so I just think that that's, you know, maybe some modest levels of capital savings, but, you know, going to be pretty small. As we move, as we move more towards a, you know, much more substantial four-mile program, I think you have to compare that, you know, we'd already moved a bit to a three-mile program. And so to say that's going to be incremental savings, you know, There's incremental savings from a three mile to a four mile, but it's not as dramatic as from a two mile to a four mile. So it depends a little bit on what the makeup is as we move forward. So clearly it's going to have downward pressure on capital to deliver the same volumes. I think it should be, I think folks recognize that we bring these wells on typically a little slower than we bring in the shorter laterals. because we're trying to manage sand flow back into the ESPs. And so as a result of that, generally the early time production on these wells will be slightly lower on a per foot basis than the shorter laterals. But again, that's really because we're trying to manage the flow back and ensure that we don't put too much sand through the system, which gums up our ESPs and ends up requiring incremental expense for us. And so you'll see that early time production be a little more sort of a little more modest from a per-foot standpoint, but it catches up pretty quickly. And you could see that in the graph of the rice dead that here after about, you know, 150 days, we're already at 97%. So from a run rate capital perspective, it's going to get pushed down, but it's going to really be an issue of what is the mix of four versus threes versus two. And I think as we come out in November and start talking a little bit more about the future, we'll probably have some more specifics on that.

Great. And I wanted to follow up on the 4Q guide question. And, you know, we noticed that you reduced your turn in line count a little bit this year. I'm just wondering if that has any impact on your fourth quarter production or your fourth quarter capex. Thanks.

Well, I think as the turn in lines come down, that does have an impact on production because you just bring less wells into the system. Again, we're not trying to manage to an absolute production volume. It's more about sort of generating strong free cash flow per share. And so we'll, there's a little bit of a, you know, having fewer tills just isn't necessarily going to mean you've got less production flowing through the system. Those tills will come online. We've got some that come online late in the year that will, you know, the early 26 will benefit from. And then we've got a bunch that come online early in 26. And so the overall capital program isn't actually that different year on year, if you think about it from a drilling and completion perspective. I mean, from guidance to what our expectations are now. The till count's more materially different because we've got some tills that were originally anticipated in late 25 slipping into early 26, but the frack operations are still really taking place this year. So, you know, it's always tough when you look at till counts because they, you know, moving them by a day may make it from one quarter to another or one year to another. So some modest movements in till counts can make annual movements or quarterly movements seem more material.

Appreciate the nuance there. Thank you.

Thanks, Kevin. Thank you. Your next question comes from Paul Diamond with CD. Please go ahead.

Good morning. Thanks for taking the call. Just wanted to click one, sticking on the four-mile plan. How should we think about the lower capex level? You guys highlighted 40% to 60% lower versus two-milers. I guess just trying to get an understanding of this, if you're seeing any further incremental improvement there, or will anything that affects two or three flow to four? Just kind of how to think of the relationship there.

Yeah, so I think generally it's just all about every incremental foot you drill is the most efficient foot generally. At least that's what we've seen up to the lengths we've gotten to currently. And so we'll see – We'll see improved capital efficiency associated with this program to the degree that we are, but that's just from the increased geometry. So as we get better, and we know we're going to get better with repetition, I would expect you could have incremental things accrue to our benefit there. So as we get smarter in how we complete these wells, as we get smarter about bit selection, as we get smarter about casing design, as we get smarter about all these things, and we will with repetition, we could see incremental benefits flow through and incremental capital reductions. And so the reductions we're talking about aren't sort of any improvement in our execution baked into that. It's really just sort of the geometry advantage that going from four miles gives us.

Got it. Makes perfect sense.

And then just sticking on the – there's one further longer question, which might be too early for – Now, the three-mile plan, you know, didn't include any of the, you know, operational improvements for the three- or four-mile laterals. And now that we're seeing that, I think the incorporation of those increased pretty massively. You know, the current guide for this year is probably already at the top end of the range for that three-mile or three-year program. I guess is there any, I mean, safe to assume that there's upward pressure there over time, and we'll get an update later. I guess kind of how you think about that.

When you say upward pressure, are you talking about from a production perspective?

Yeah, on the three-year plan.

Yeah. And so, again, I think what we're looking to do is trying to generate strong free cash flow per share and so not necessarily drive production through the system. And so if we can have equivalent production for lower capital, that may accomplish sort of the same thing that we're trying to accomplish here. But I'll tell you, the efficiency is gained this year through our operational improvements when combined with what we think is likely to be a movement more towards a four-mile program, which again has a geometry advantage and a capital efficiency advantage. You know, none of that was contemplated when we put the three-year plan out. And so we've seen lots of things that should be benefiting the three-year plan as we move forward. And again, look forward to talking about that more in November. But, you know, that was a static plan and our capabilities have improved since we put that plan out.

Got it. Understood. Appreciate the clarity. I'll end it there.

Thank you. Your next question comes from Jeff Jay with Daniel Energy Partners. Please go ahead. Hey, guys.

Just one more question and just one for me on the four miles. I guess I'm just curious, what milestones are you kind of waiting for or watching for to kind of get to the 50% of your program? And I guess what are the gating factors?

I think the big thing, Jeff, is mechanically, can we get this, can we repeatedly mechanically get to the bottom, get all the way drilled out to, or get all the way out to the toe, successfully put our fracks away, get the wells cleaned out all the way to the toe, and then see contribution across the full lateral. So the first well went great, but we've got one under our belt from a full lateral. drill complete turn-in-line perspective. So we've got several more that we've drilled. They've drilled well. We've generally been favorable to our expectations. Maybe not generally, maybe completely. Maybe everything has been favorable to our expectations from that standpoint, from a drilling standpoint. But we've only completed one, and so we need to get a few more reps under our belt, just make sure that mechanically we can get this done. If mechanically we can get it done and that's repeatable, which we have expectations it will be, but we need to make sure that's the case, then I think you'll see us move pretty swiftly into a more sort of full-scale four-mile development.

Makes sense to me. Thanks. Thanks, Jeff. Thank you. Your next question comes from Noah Hanis with Bank of America.

Please go ahead.

Morning, Tim. For my first question here, I was hoping to go back to the TILs. The 15 tills that kind of have been shifted a little bit, is it fair to think that most of that capital will be spent in 25 with the production impact than being a bit of a tailwind in the 26?

I think that's, you know, a good portion of it's being spent in 25. And I say that happens a bit every year. You're drilling complete wells at the end of the year, and then you get the benefit from them in 26. And so I don't know how much more acute it is this year than any other previous years, but no doubt we've got completion activities happening in the fourth quarter as a result of bringing that completion crew back, which 26 will benefit from.

Great. That's helpful. And then on the marketing and transportation front, it seems like in the midstream world there's been a lot of movement there. on potentially adding egress out of basin. And just given Ural's size in the basin as the largest operator there, how are you guys positioned to potentially take advantage of that? And I guess, could you help us kind of try to quantify what that opportunity means for corn?

Yeah, no, we're obviously talking to everybody. We feel like we've got good egress as it is. And so we're We feel good on that front, but like you said, there are some new plans coming into place. We'd certainly love to see more options out of the basin, and to the extent that we can be supportive in getting some of those in place, we're going to do that.

More options are always better.

Gotcha. And do you think there's any potential for that to flow through onto a lower GP&T cost or increased realizations?

Yeah, I think with more options in the basin and more egress, you're going to see better differentials over a long period of time as well as better full GPT costs. I don't know how to quantify that just yet. We're going to have to see if these things get built and what it looks like as that happens.

No, that's helpful, Collier. Thanks, guys. Thanks.

Thank you. There are no further questions from our phone lines, and I would like to turn the call back over to Danny Brown for some closing remarks.

Thanks, Anas. In closing, I extend my sincere appreciation to all of our employees and contractors for their continued dedication and diligence. The company is well positioned for success and to deliver significant value for our shareholders. Through our strategic initiatives and the strength of our team, we have created what we believe is an increasingly rare and valuable asset. Cord has a substantial production base with low decline rates and a high oil cut, which is complemented by a deep portfolio of economically attractive, low-risk, conservatively spaced, oil-rich inventory. And we've been getting better. We are proud of the progress we've made as a company and in our ability to deliver in the future. And with that, I appreciate everyone's interest. Thanks for joining our call.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect your lines. Have a great day.