Chord Energy (CHRD) Q3 2026 earnings review
Chord Energy raises its oil plan, but field costs climb
Chord Energy pumped more oil than it planned while agreeing to sell its non-core Pennsylvania gas wells. Oil production rose 6% from a year ago to 165,500 barrels per day as chemical treatments on older wells and 24 new four-mile wells offset a summer pause in completion crews. New chief executive Michael Lou raised the full-year oil target and lifted the free cash flow forecast, excluding one-offs, by $300 million to $1.6 billion.
| Oil, NGL and gas revenue | $1,408M +46% from a year ago |
|---|---|
| Oil production | 165.5 MBopd +6.3% from a year ago; beat 161.5โ164.5 plan |
| Free cash flow, excluding one-offs | $431.5M +97% from a year ago ($442M before reimbursable CapEx) |
| Full-year oil and capital outlook | Both raised Oil +1% to 162.5 MBopd; CapEx +$60M to $1.46B |
โ๏ธ Verdict: ๐ข Bullish
The story got better because existing-well improvements, new pipeline contracts, and the $550 million Marcellus sale all moved from talk into the forward numbers. The company raised its fourth-quarter oil volume and price targets even with fewer new wells coming online. One caution: the higher output is costing more, as Chord raised its full-year capital budget by $60 million and lifted its per-barrel field cost outlook for a third straight quarter.
The question now is whether the $225 million in annual cost savings will lower the 2027 spending budget or get eaten up by higher field maintenance and water infrastructure costs. One view is that four-mile wells will cut the capital needed to hold oil flat; the other is that chemical workovers and midstream projects permanently raise the cost floor. The 2027 budget in February will settle it.
๐ Bull Case
Existing Wells and Longer Laterals Lift the Oil Plan
Chord Energy, an oil and gas producer in North Dakota's Williston Basin, is getting more crude out of its older wells while drilling four-mile horizontal wells instead of shorter ones. "Third quarter volumes were above the top-end of guidance and Chord raised FY26 oil volume guidance for the second time this year," new chief executive Michael Lou said.
The company connected 29 gross operated wells in the third quarter, down from 66 in the second quarter after it dropped a second completion crew in July. Even with fewer new wells, oil production held steady at 165,500 barrels per day because work on existing wells โ "logistics, mechanical optimization, returning shut-in wells to production, and various chemical treatments" โ slowed natural declines.
- Third-quarter oil production: 165,500 barrels per day, up 6.3% from a year ago
- Four-mile wells connected: 24 in the quarter across five pads, bringing the total to 47
- Annual run-rate cost and cash savings: raised to $225 million, more than double the initial 2025 target
- Fourth-quarter oil plan: 161,000 barrels per day at the middle of the range, up from 157,500 in the August plan
This matters because existing-well improvements are now lifting the forward plan rather than just beating a single quarter. Management raised the fourth-quarter oil target by 3,500 barrels per day even though it expects to connect only 17 to 23 gross wells in the fourth quarter, by our math.
What to watch: the 2027 oil production and capital budget on the fourth-quarter call in February. A plan that holds oil flat or higher without raising capital would show the four-mile wells and chemical treatments permanently lowered the cost to maintain production.
Marcellus Sale Brings In $550 Million for Non-Core Gas
For over a year, Chord held non-operated natural gas wells in the Marcellus basin in Pennsylvania that did not fit its main North Dakota oil business. This quarter the company agreed to sell those assets for $550 million in gross proceeds, collecting a $55 million deposit in the third quarter with closing set for the middle of the fourth quarter.
The Marcellus wells produced 118.6 million cubic feet of gas per day in the third quarter at an average price of $2.03 per thousand cubic feet, or about $22 million of quarterly revenue by our math. Selling them removes a non-core asset at a clear cash price and leaves Chord focused on the Williston Basin.
What to watch: how management allocates the remaining $495 million of gross sale proceeds after the deal closes in the fourth quarter. Putting the cash toward share buybacks or debt reduction would directly increase cash flow per share in 2027.
New Pipeline Deals Lift Oil Prices and Cut Transport Costs
North Dakota producers often sell their crude at a discount to the benchmark West Texas Intermediate (WTI) oil price to cover shipping to market, a gap that both drives revenue and carries pipeline risk. Earlier this year management expected its second-half oil price to fall back to a discount after a temporary second-quarter premium.
Instead, Chord signed several contracts this year for "crude oil, natural gas and water marketing and midstream services" that it expects to save $35 million to $55 million in annual free cash flow over time. Third-quarter oil sold for $0.11 per barrel above WTI, beating the middle of the plan by $0.31, and the company raised its fourth-quarter price outlook to a premium of $0.50 to $1.50 per barrel.
What to watch: fourth-quarter cash gathering, processing and transportation (Cash GPT) costs per barrel of oil equivalent. Holding near the $2.60 middle of the fourth-quarter plan would show how much of the $35 million to $55 million annual target is already flowing through the income statement.
๐ป Bear Case
Capital Spending and Field Costs Climb Together
Lou said that "increased annual run-rate savings to $225 million" are making the business more efficient across every area. However, both the full-year capital budget and the per-barrel cost of running the wells moved higher in the same announcement.
After holding its 2026 capital plan at $1.40 billion for three quarters, Chord raised the middle of the range by $60 million to $1.46 billion. The fourth-quarter capital plan jumped from $267 million to $330 million on "higher midstream spending and higher operated and non-operated activity", including $20 million more for water pipelines and disposal wells.
- Third-quarter lease operating expenses (LOE, the field cost of pumping and maintaining wells): $10.56 per barrel of oil equivalent, up 9.8% from a year ago
- Full-year LOE plan: raised for a third straight quarter to $10.31โ$10.55 per barrel, up from $9.30โ$10.30 at the start of the year
- Fourth-quarter LOE plan: $10.50โ$11.50 per barrel, up $0.50 from the prior fourth-quarter plan
- Third-quarter cash general and administrative overhead: $25.5 million, up 54.4% from $16.5 million a year ago
Part of the fourth-quarter per-barrel LOE increase comes from selling the lower-cost Marcellus gas wells, which shrinks the barrel count in the denominator. Even so, Chord is spending more on chemical treatments, field maintenance and water infrastructure to get the extra oil, so unit operating costs are rising rather than falling.
What to watch: full-year 2027 capital spending and LOE per barrel when the 2027 budget arrives in February. If capital stays near $1.46 billion after the company brings back its second completion crew in late 2026 or early 2027, the $225 million savings are being reinvested just to hold production steady.
Commodity Price Swings Still Drive the Cash Plan
As an oil and gas producer, Chord's cash generation moves directly with crude prices. In the third quarter, its unhedged oil price fell to $85.80 per barrel from $93.99 in the second quarter, and oil price hedges cost the company $58.6 million in cash settlements ($81.95 per barrel after hedges).
The company raised its 2026 free cash flow outlook, excluding one-offs, by $300 million to $1.6 billion. That increase rests heavily on raising its fourth-quarter WTI oil price assumption to $90 per barrel from $75 in the August plan, while $176.9 million of derivative liabilities sit on the balance sheet at quarter-end.
What to watch: realized oil prices and hedge losses in the fourth quarter against the $90 per barrel assumption. A drop in crude prices back toward $75 would erase most of the $300 million free cash flow outlook increase.
Risks this quarter didn't answer
Three standing questions from prior quarters were not answered in the earnings release, and one capital-return target fell short of the prior quarter's floor.
- Shareholder payout share: buybacks of $205 million and the $1.30 per share base dividend equaled about 62% of the $442 million clean free cash flow by our math, below the 75% floor management set in August; the investor presentation and call will show how the company calculated the payout.
- Fourth-mile well contribution: the release says cleanouts reached total depth on the 47 four-mile wells, but does not state how many have six months of history or whether the fourth mile is delivering the assumed 80% production rate.
- Related-party chemical purchases: the release notes new chemical workover tests, but any dollar figures for purchases from the partly owned chemical supplier await the quarterly 10-Q filing.
- Depletion rate on reserves: depreciation, depletion and amortization was $14.61 per barrel ($390.7 million), down from $15.70 in the second quarter; the full-year reserve replacement reading arrives in the annual 10-K.
๐ Other Themes
Michael Lou Steps In as Chief Executive
Former chief strategy officer Michael Lou took over as president and chief executive in October, succeeding Danny Brown. "As I step into the CEO role, I'm honored to lead Chord through our next chapter," Lou said. The company kept its operating strategy, base dividend of $1.30 per share, and four-mile drilling plan unchanged under the new leader.
๐ฒ Other KPIs
Up 45.7% from a year ago on higher oil prices and a 3.5% rise in total production, but down 5.7% from the second quarter as oil prices cooled from $93.99 to $85.80 per barrel. Total reported revenue of $1,705.9 million includes $297.5 million of purchased oil and gas resold at a $1.3 million margin.
Cut nearly in half since the start of the year, down $615.2 million from $1,310.5 million at the end of 2025 by our math. Cash on hand climbed to $804.7 million (including the $55 million Marcellus deposit) against $1,500.0 million of senior notes and an undrawn $2.0 billion credit line.
Average diluted shares fell 4.2% from 57.2 million a year ago and 3.3% from 56.6 million in the second quarter. The energy group bought back 1.51 million shares for $205.0 million ($135.74 per share) in the third quarter and another $78 million ($146.84 per share) through October 30.
๐ฎ Guidance
Raised. The middle of the full-year oil plan moved up by 1,500 barrels per day (about 1%) to 162,500 barrels per day, or 5.0% growth from 2025 by our math. It is the second raise in three quarters (+2,000 barrels per day in Q1, unchanged in Q2, +1,500 in Q3), driven by base-well optimization.
Raised. The middle of the fourth-quarter target increased by 3,500 barrels per day to 161,000 barrels per day, up 5.2% from a year ago by our math. It steps down 2.7% from the third quarter's 165,500 barrels per day because the producer dropped its second completion crew in July.
Raised for the full year; cut for the fourth quarter. The full-year middle of the range rose by 1,800 barrels of oil equivalent per day on the third-quarter beat, while the fourth-quarter middle dropped by 2,350 barrels per day because the Marcellus gas sale is set to close mid-quarter.
Raised. The middle of the range moved up by 1,950 barrels per day for the year and by 4,000 barrels per day for the fourth quarter, carrying forward the third-quarter volume beat.
Cut. The fourth-quarter middle of the range fell by 59 million cubic feet per day (14.3%) to remove half a quarter of Marcellus gas production (~119 million cubic feet per day in Q3) upon the mid-quarter sale close.
Raised. Full-year capital spending moved up $60 million at the middle of the range to $1,460 million (+7.5% from 2025 by our math) after sitting at $1,400 million for three straight quarters. The increase reflects $20 million of new water-handling projects and higher fourth-quarter drilling activity ($330 million midpoint vs $267 million prior); it excludes ~$18.2 million of reimbursable spending.
Raised. The full-year cash profit plan rose by $400 million and the free cash flow plan rose by $300 million ($200 million vs the preliminary October update). By our math, subtracting nine-month results leaves ~$892 million of Adjusted EBITDA and ~$434 million of Adjusted Free Cash Flow for the fourth quarter, assuming $90 WTI oil and $3.00 Henry Hub gas.
Raised. The middle of the full-year well-connection plan moved up from 150 to 152 gross wells (~75% working interest). With 132 gross wells connected in the first nine months, the outlook leaves 17 to 23 gross wells for the fourth quarter by our math.
Raised. The full-year cost middle of the range rose $0.13 to $10.43 per barrel of oil equivalent, its third raise in three quarters (+$0.15, +$0.35, +$0.13). Fourth-quarter LOE moved up $0.50 at the middle of the range to $11.00 per barrel as lower-cost Marcellus gas barrels leave the mix.
Cut (favorable cost reduction). Pipeline and processing costs dropped $0.15 per barrel for the year and $0.40 per barrel for the fourth quarter at the middle of the range, driven by new Williston marketing contracts and the Marcellus sale.
Raised. The fourth-quarter crude differential flipped from a $0.50 per barrel discount at the middle of the range to a $1.00 per barrel premium over WTI, lifting the full-year middle of the range by $0.44 per barrel.
Raised for NGLs; mixed for natural gas. The fourth-quarter NGL realization jumped from 9% to 20% of WTI at the middle of the range, while fourth-quarter natural gas realization dropped from 40% to 35% of Henry Hub because Marcellus gas fetched higher prices than Williston gas.
Essentially unchanged. Full-year Cash G&A nudged up $0.5 million at the middle of the range to $101 million ($27 million in Q4), Cash Interest held at $104 million ($26 million in Q4), production taxes edged up 0.05 points to 8.15% (8.2% in Q4), and cash taxes narrowed to 5.5% of Adjusted EBITDA (8% in Q4).
โ Key Questions
Why did third-quarter shareholder payouts lag the 75% target?
Last quarter management said payouts would rise to at least 75% of free cash flow once debt fell below 0.5 times profit. Third-quarter buybacks and the base dividend totaled about $275 million, or 62% of the $442 million clean free cash flow by our math.
How much are the related-party chemical purchases costing?
Chord bought an 8.5% stake in a private chemical supplier in the second quarter and put an employee on its board while expanding chemical well treatments. The release did not disclose how much Chord paid that supplier during the third quarter.
Is the fourth mile of the long wells producing 80%?
With 47 four-mile wells now connected, a growing share of theๆฉๆ pads has six months of production history. Investors need to see whether the final mile is delivering the 80% contribution compared to earlier miles that underpins the drilling economics.
What will the $50 million midstream budget cost in 2027?
Chord raised its 2026 midstream capital budget from $30 million to $50 million for water gathering and disposal projects. Management has not said whether this water buildout finishes in 2026 or carries higher capital spending into 2027.