Chord Energy (NASDAQ:CHRD) reported approximately $442 million in adjusted free cash flow for the third quarter of 2026 and said it returned the majority to shareholders, as stronger base production and operating efficiencies supported a higher production outlook.
On his first earnings call as chief executive, Michael Lou said the company raised its oil volume guidance twice this year and expects fourth-quarter volumes to exceed both its August expectations and consensus estimates. Chord also increased its capital outlook to account for more operated and non-operated activity and an additional $20 million in midstream investments.
Lou said Chord is confident it can sustain strong production in 2027, with details of next year’s program expected in February. He added that the company has good visibility into holding its improved production level flat, although it will weigh spending against share repurchases if market conditions change.
Shareholder returns and spending
Beyond its $1.30-per-share base dividend, Chord returned capital during the quarter through share repurchases. Since announcing its combination with Enerplus in 2024, the company has reduced fully diluted shares outstanding by approximately 10.8 million, or 17%, Lou said.
Lou said Chord’s leverage is back below half a turn on its internal measure, putting it in a position to return 75% or more of free cash flow to shareholders. He said the expected sale of non-core Marcellus assets later this year would further strengthen the company’s position through the commodity cycle.
The higher capital outlook reflects a few additional operated wells being turned in line as drilling and completion efficiencies improve, along with increased participation in projects operated by other companies. Lou said the basin’s rig count rose about 30% in the second half of the year as other operators increased activity.
Chord also plans to spend more on midstream projects that support its current program. Lou said the company can invest in some infrastructure itself when third-party rates are less attractive, while remaining open to outside providers.
Cost savings and well performance
Chord expects its latest efforts to simplify and optimize oil, gas and water contracts to generate $35 million to $55 million in annual savings. Lou said those savings are incremental to initiatives announced a year ago, bringing total annual savings to approximately $85 million.
Chief Financial Officer Richard Robuck said much of the newly announced benefit will be realized this year and early next year, while roughly a quarter is expected in late 2027 and 2028. The savings will appear across several financial line items, including costs and realized prices, he said.
Chord has turned 47 four-mile wells in line as of quarter-end. Chief Operating Officer Darrin Henke said their production is meeting expectations and drilling costs for the wells have fallen about 9% since the first quarter.
Henke cautioned that it may take another year to establish the full production contribution of the fourth mile. So far, tracers indicate recovery to the toe of the wells, and all of the four-mile wells have been cleaned out to total depth, he said.
The company has seen low- to mid-single-digit cost inflation this year but has offset it with efficiency gains, Henke said. Fracturing efficiency, measured in feet per day, has risen more than 20% year to date, he added.
2027 production and acquisition strategy
While Chord expects to sustain its improved production level, Robuck said output is likely to dip in the first quarter before climbing in the second and third quarters. The company has dropped its second frac crew and expects to restart it, but the timing depends on service-provider availability, Henke said.
Chord is also testing chemical treatments to improve production from existing wells. Henke said the company has performed hundreds of production-side treatments and is evaluating their returns. It is testing chemicals for use during completions in a laboratory and could begin using them in completion jobs in 2027.
On acquisitions, Lou said Chord remains focused on opportunities in the Williston Basin, where he described the company as a natural consolidator. Chord will continue to look outside the basin, he said, but its five acquisitions over the past five years have all been in the Williston.
About Chord Energy (NASDAQ:CHRD)
Chord Energy Corporation is an independent exploration and production company focused on the development and operation of oil and natural gas properties in the United States. Its portfolio is concentrated in the Williston Basin, which spans parts of North Dakota and Montana. The company’s production mix includes crude oil, natural gas and natural gas liquids.
Chord’s operations include acquiring, developing and producing hydrocarbons from operated and non-operated wells, with an emphasis on drilling and completion activities in the Bakken and Three Forks formations.
