Chord Swings to Profit as Oil Prices Climb
Oil production reached 165.4 MBopd, the high end of Chord Energy’s guidance.
Chord Energy (CHRD), an oil and gas producer, swung to a second-quarter profit as higher crude prices and production lifted earnings. Net income was $525.2 million, or $9.28 a diluted share, compared with a loss of $389.9 million, or $6.77 a share, a year earlier.
The quarter marked a sharp acceleration from the start of the year, when Chord earned $108.6 million, or $1.90 a diluted share. Adjusted diluted earnings rose to $6.44 a share from $4.56 in the first quarter and $1.79 a year earlier.
Oil, natural-gas liquids and natural-gas revenue climbed 57% from a year earlier to $1.494 billion and rose 30% sequentially. A $418.7 million increase in oil revenue from the first quarter more than offset an $81.4 million decline in natural-gas revenue. Realized crude prices before derivatives rose 34% sequentially to $93.99 a barrel, while the differential shifted to a $1.27 premium to West Texas Intermediate.
Production also strengthened. Oil volumes rose 4.7% from the first quarter and 5.6% from a year earlier, while total production increased 3.9% sequentially to 286.4 MBoepd. Crude accounted for 57.8% of output, up from 57.3% in the prior quarter, helping counter natural-gas prices that fell to $0.94 per Mcf from $3.14.
Chord turned 66 gross operated wells to production, up from 37 in the first quarter, as it accelerated completions and added four more 4-mile pads. The heavier activity lifted capital spending to $416.7 million, though that remained modestly below the midpoint of company guidance. Lease operating expense increased to $10.28 per Boe.
Adjusted free cash flow rose 29% sequentially to $413.4 million, and Chord returned 54% of it to shareholders. The company repurchased $147.4 million of stock, more than twice the first-quarter amount, and reduced shares outstanding to 55.2 million. It expects to raise its payout to 75% of adjusted free cash flow in the third quarter after leverage fell below 0.5 times.
Chord kept its full-year oil-production guidance at a midpoint of 161 MBopd and capital spending at a midpoint of $1.4 billion. Activity is set to ease as the company drops its second frac crew, with quarterly capital spending expected to fall to a $375 million midpoint in the third quarter and $267 million in the fourth.
The company expects oil production to decline from a third-quarter midpoint of 163.0 MBopd to 157.5 MBopd in the fourth quarter as fewer wells come online after the earlier acceleration of completions. Chord also raised its full-year lease operating expense outlook to a midpoint of $10.30 per Boe, citing production-enhancement work, higher workover costs and increased non-operated expenses.