Chord Energy Corporation

Good morning, ladies and gentlemen, and welcome to the Cord Energy fourth quarter 2025 earnings call conference call. At this time, all lines are in a 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, February 26, 2026. I would now like to turn the conference over to Bob Bakanowskis, Vice President of Investor Relations. Please go ahead.

Thanks, Josh, and good morning, everyone. This is Bob Bakanowskis, and today we're reporting fourth quarter 2025 financial and operational results, and 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 the 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. Last night, we issued our fourth quarter and year-end results in our updated investor presentation. The materials cover key strategic, operational, and financial details along with our 2026 outlook. I plan on highlighting a few key points and then we'll open it up for Q&A. So, looking back at 2025, in summary, it was an exceptional year for Cord. We continued to improve the business, evolving our development program, driving efficiencies, and enhancing free cash flow. Cord consistently delivered results that exceeded expectations while improving the quality and depth of our inventory and enhancing profit margins. My sincere thank you to all of our employees who, through their commitment and dedication, have positioned us for continued success. Through these efforts, the team was able to deliver significant incremental free cash flow. Looking specifically at volumes and capital, 2025 oil volumes exceeded original guidance by more than 1,000 barrels per day, while capital came in approximately $60 million lower. Since combining with Interplus in 2024, Cord has lowered its capital spending nearly $100 million while delivering 6,000 barrels per day more oil production in 2026. And our focus on continuing to improve the business has been strong. Slide 8 shows Cord drove $160 million of free cash flow improvement in 2025 from controllable items including higher production, less capital, lower LOE, lower G&A, lower production taxes, and improved marketing costs. Importantly, the $160 million of run rate improvements represent 23% of our estimated free cash flow in 2026, and we anticipate making meaningful further progress. Since the pandemic, CORD has been laser-focused on disciplined capital allocation and delivering strong return on capital. We believe making good investments, whether in organic well activity, lease acquisition, or large-scale M&A is foundational to building a strong and resilient organization and in delivering robust return of capital. And this shows in our results. Slide six shows that since 2021, Cord has returned $6.7 billion of capital to shareholders, which is particularly impressive given it is higher than our current market cap. Importantly, we accomplished all of this while significantly growing the business on both an absolute and per share basis. and while keeping our leverage well below that of our peers. Stated differently, CORD has firmly positioned itself as a leader in the Williston Basin, leveraging its scale and operational capability to grow volumes in a capitally efficient way, leading to strong, sustainable free cash flow generation and substantial shareholder returns. Turning to the fourth quarter briefly, CORD delivered another consecutive quarter of solid operating performance. Loyal volumes were at the high end of guidance, Capital was below the low end of guidance, and both were accomplished with strong cost control. Accordingly, adjusted free cash flow for the fourth quarter was $175 million, substantially exceeding expectations, and we returned approximately 50% of this amount to shareholders. After our base dividend of $1.30 per share, all incremental capital return was utilized for share repurchases. As we look forward to 2026, Cord's plan builds upon last year's success and remains focused on optimizing capital allocation, generating strong returns, and improving continuously. Last year, Cord set a goal of converting 80% of its inventory to long laterals. I'm happy to report that we achieved that goal by year-end 2025, which was earlier than expected, and is a testament to the hard work and dedication of our team. Cord's operational improvements and move to longer laterals have significantly lowered our cost of supply. July 15 highlights CORD's inventory improvement in 2025. As you can see, we had tremendous success replacing our low break-even inventory, mostly through improvement of the organic portfolio, but also through select M&A. In addition, last year, CORD lowered the weighted average break-even of its inventory by more than 10% through several efforts, including conversion to four-mile laterals, while also driving capital and operating costs lower. Currently, Cord has 10-plus years of low break-even inventory. Diving a bit deeper into longer laterals, I'm happy to report that execution and performance continue to trend at, or favorable to, our expectations, and we've attempted to highlight the benefit of a shift to longer laterals on slide 10 of our investor presentation. Through long laterals and improved execution, Cord has driven per-foot drilling and completion cost to a very attractive level. And this is demonstrated with program-level capital efficiency improving year over year. If you look at volumes delivered relative to capital spent, essentially the inverse of an F&D calculation, you can see the 2026 program is more efficient than 2025. Additionally, Cord's future F&D costs on a company level have trended 22% lower over the past few years, clearly demonstrating that things are going in a positive direction. And speaking of 2026, CORE's 2026 plan is in line with the preliminary outlook we issued in November. As a reminder, we intend to run a low-to-no oil growth program yielding average volumes of 157,000 to 161,000 barrels of oil per day, with capital of $1.4 billion. Our estimates are unchanged from our thoughts last fall, despite some severe weather we've seen in North Dakota to begin the year. From an activity standpoint, we are currently running five rigs, one full-time frack crew, and one spot crew, with the spot crew scheduled to drop around the end of the summer. We expect approximately 80% of tills will be longer laterals, split fairly evenly between three- and four-mile wells. At benchmark prices of $64 per barrel of oil and $3.75 per MMBTU of natural gas, we expect to generate approximately $700 million of free cash flow in 2026. So, in closing, Cord remains committed to delivering affordable and reliable energy in a sustainable and responsible manner, and we have a compelling history of disciplined capital allocation, consistent execution, and high shareholder returns. We are proud of what we've built, a scaled and resilient organization with low decline, significant low-cost inventory, and very attractive exposure to the next crude upcycle while generating strong free cash flow and shareholder returns in the current commodity price environment. And with that, I'll hand the call over to the operator for questions.