Chord Energy Corporation

Good morning, ladies and gentlemen, and welcome to the Cord Energy First Quarter 2026 Earnings Call. At this time, all lines are in the small name 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, May 6, 2026. I would now like to turn the conference over to Bob Bakanasakis, Vice President of Finance. Please go ahead.

Thanks, Natasha, and good morning, everyone. This is Bob Bakanasakis, and today we are reporting our first quarter of 2026 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 on 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. Last night, we issued our first quarter results and our updated investor presentation. These materials outline key strategic, operational, and financial details, along with our updated 2026 outlook. I plan on highlighting a few key points, and then we'll open it up for Q&A. To start, looking at the first quarter briefly, CORE delivered another consecutive quarter of solid operating performance. The team did an excellent job executing through adverse weather conditions and some midstream constraints to deliver oil volumes above the high-end guidance. Additionally, we maintained solid cost control. Adjusted free cash flow for the first quarter was $324 million, substantially exceeding expectations, and we returned $145 million of this amount to shareholders through a combination of our base dividend and share repurchases. After accounting for lease acquisitions occurring in the quarter, we were also able to send $175 million to the balance sheet. Second, as we assess the macro environment, there is clearly an unprecedented amount of volatility and uncertainty in commodity markets. CORD has been running a Maintenance Plus program for more than five years with the goal of maximizing free cash generation for our stakeholders. One of the key factors influencing this strategy has been the high levels of excess low-cost oil capacity which has weighed on global oil markets and contributed to persistent backwardation. We will continue to monitor global supply-demand balances, and for now, given the uncertainty of how much and how quickly oil volumes will find their way into the market, we are comfortable staying the course with a flat to slight growth volume outlook. Given this, drilling and completions capital is expected to stay consistent with our February outlook. However, we are seeing improvements in cycle times, which accelerates some activity into the second quarter. Although 2026 capital spending expectations remain unchanged, we do have some flexibility within our program. Over the past two years, we have consistently outperformed initial expectations and have generally prioritized capital reduction over incremental volume growth. In the current environment, if efficiencies continue to improve and oil prices remain high, we are inclined to allow modest volume upside rather than focusing solely on reducing capital. For clarity, this does not bias our capex higher, but simply means we are not focused on reducing capex in this environment and will let incremental volumes roll through should we continue to outperform. Additionally, CORD is pursuing various initiatives to optimize our production base with efforts centered around maximizing very short cycle volumes through high-return projects across our roughly 5,000 operated wells. These activities include accelerating workovers, reducing cycle times for downed wells, various chemical jobs, debottle-necking surface constraints, optimizing artificial lip through the utilization of artificial intelligence, and a host of other projects. Accordingly, last night we updated our 2026 outlook to reflect a 2,000-barrel-per-day increase in oil volumes with a slight increase in LOE, and capital remaining unchanged. Assuming $80 oil, the net impact is over $40 million in incremental free cash flow versus our February expectations. From an activity standpoint, we are currently running five rigs, one full-time frat crew, and one spot crew, with the spot crew scheduled to drop around mid-year, which, because of faster cycle times, is a little earlier than our February expectations. We continue to expect approximately 80% of tills will be longer laterals, split fairly evenly between three and four milers. We've also updated our 2026 guidance to reflect improving oil realizations. Currently, CORD is realizing modest premiums to WTI, and we expect that to persist through most of 2026, given the structure of the futures curve and linkage to waterborne crudes. Assuming benchmark prices of $80 per barrel of oil and $3.25 per MMBTU of natural gas for the balance of 2026, we expect to generate approximately $1.4 billion of free cash flow this year. With high levels of free cash flow anticipated, we expect shareholder distributions to remain robust in 2026 with a continued focus on a healthy and sustainable base dividend supplemented by share repurchases. In the current environment, share repurchases continue to look attractive. However, in the interest of avoiding pro-cyclical buybacks, Cord may choose to taper repurchases if and when we see higher oil prices more fully reflected in our share price. In addition, we currently don't envision resuming variable dividends and plan to let excess free cash flow go to the balance sheet. This will reduce net debt and allow us to create per share value opportunistically in the future. Turning to our updated hedge position, you can see Cord added significant hedge volumes in 2026 and moderate amount and outer years as well. As a reminder, our hedge program is designed to systematically hedge more when prices are above historical levels, and conversely hedge less when the strip is below historical pricing. In any prompt quarter, we have the ability to lock in up to 55% of our volumes if pricing surpasses certain thresholds, and the program deliberately moves at a slower pace further out on the curve. Currently, we have approximately one-third of our 2026 oil volumes hedged and less than 15% of 2027. Turning to the long lateral front, I am happy to report CORD successfully executed and turned in line its first full four-mile BSU development, the Tuney Pad. The pad consisted of five wells, including one alternate shape, and CORD was able to clean out to total depth on all wells. Both execution and early performance are in line with expectations. Slide 11 in our investor presentation highlights the tuning success, as well as CORD's progress on four-mile laterals in development across the perimeter of the basin. A significant reduction in drilling and completion costs per foot underpins the strong economics of these wells. Slide 10 on the upper right illustrates a 37% reduction in CORD's DNC cost per foot over the past four years. These benefits can be seen in CORD's improving program-level capital efficiency 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 sustained efficiency gains. Overall, we are very pleased with execution and early results from the four-mile program. As a reminder, Cord is scaling its four-mile program in 2026 with approximately 40% of tills and 60% of spuds expected to be four-mile laterals. So, in closing, Cord remains committed to delivering affordable and reliable energy in a sustainable and responsible manner. We continue to improve the business, growing production while simultaneously improving the depth and quality of our inventory, driving operational efficiencies, and enhancing free cash flow. With that, I'll hand the call over to Natasha for questions.