CHRD: Anticipation -- May 7, 2024

Locator: 47084CHRD.

Reminder: I am inappropriately exuberant about the US economy and the US market, I am also inappropriately exuberant about all things Apple.

See disclaimer. This is not an investment site.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them. Reminder: I am inappropriately exuberant about the US economy and the US market, I am also inappropriately exuberant about all things Apple.

Reports after market closes this afternoon.

CHRD: merger of Oasis and Whiting. Now in process of acquiring Enerplus. Probably three of the best operators in the Bakken. Chord is an investor-friendly company.

Dividend history:

Ticker history:

One year ago, link here: 

Investing:

• on the blog I follow a lot of sectors, but that doesn't mean I invest in them;
• I won't invest in anything "that keeps me up at night [worrying]"
  
• example: I won't touch streaming -- DIS, for example -- but very, very interesting to follow
• example: I won't touch third tier (or worse) oil; majors and second tier independents only; I stay away from pure-play Bakken plays; one exception, small position in CHRD;

But I wasn't paying attention. 

By the way, an aside. I often don't check the market. I've discussed that often. I haven't looked at CHRD in a long time. I started accumulating a small position when the merger was announced and occasionally buy a few more shares, but I don't pay attention to the price -- simply buy according to my plan.

Okay, enough. 

 I wasn't paying attention. It appears no one else is either. Not one reader sent me a note regarding CHRD.

Friday, March 3, 2023:

• at the close, up $5.47; up almost 4%; closed at $143.97;
• after-hours, up another $5.01; up 3.5%; trading at $149;

CLR did the right thing going private but on days like Friday (above), some folks may wonder.

Earnings call for CHRD: link here. Archived. 

Highlights.

Three-mile laterals:

Taking our best view, which does incorporate significant year-on-year inflation that we've experienced, we expect to invest approximately $825 million to $865 million of capital in 2023, which is in line with consensus once accounting for the roughly $20 million of capital pushed from the fourth quarter of last year, which I discussed previously. Importantly, Chord's program focuses on operational efficiency and consistency, which we believe not only supports cost-effective operations, but also support safer operations.

This operational efficiency is also supported by synergies derived from the merger and our development strategy. 3-mile laterals are a big part of the 2023 story as we're expecting 3 milers to comprise approximately 50% of TILs in 2023. We brought online our first 3-mile laterals in the second half of last year in Indian Hills, and they are performing nicely. Slide 9 illustrates what we are seeing with remodel performance and colonnades in an economic uplift of about 25 points when going from 2 miles to 3 miles. In total, Chord's 2023 program is expected to result in a reinvestment rate of around 50% at $75 WTI.

Free cash flow:

In closing, Chord is generating strong returns, which supports our sustainable free cash flow profile and feeds our robust return of capital program. We demonstrated this with approximately $1.3 billion of free cash flow in 2022 and over $1.2 billion return to shareholders. Our operations team continues to improve the asset base demonstrably through spacing and longer laterals, which drives a longer, more predictable and more economic inventory life.

Buyback philosophy:

So I'd say, just broadly speaking, we tried to learn some from the lessons of the past and one of those clearly is to avoid procyclical buybacks. And so that certainly goes into our thinking. We've got a pretty disciplined view on how we think about share repurchases. As you noted, I think, importantly, we view them opportunistically, not really programmatically.

And I'd say we would define that opportunity as a combination of when our shares are trading under what we think our intrinsic value is at conservative pricing and when we're trading at a discount to our peers. And so we're really looking at dislocations on both of those -- on both of those items, not just a single item.

And so when we see that, depending upon the magnitude of those dislocations, I think you'll see us be pretty aggressive. Certainly, there was an example of that last summer. But really, it's not just -- it's not just our dis -- the discount to our intrinsic basin value, but also how we're trading relative to our to peers.

Dividend history: