Chord Energy Playing Bakken for Stable Production, Investment Growth

In their first earnings call following the merger of two significant Bakken Shale businesses, Chord Energy Corp. executives stated that the company's core assets exceeded production targets in the second quarter of 2022 and set the way for the new business.

Chord was formed by the merger of independents Whiting Petroleum Corp. and Oasis Petroleum Inc., which officially closed at the beginning of July. The new entity now holds the mostly oil-producing assets of both firms in the Bakken and Williston Basin. Its footprint consists of operational control or working interest in around 972,000 acres in Montana and North Dakota.

CEO Danny Brown, former CEO of Oasis, told investors that Chord’s primary focus for the near term would look a lot like the strategies of its predecessors: hone in on its core assets in the Bakken and turn cost-savings into investor returns. However, he said, that doesn’t mean the firm would be a carbon copy of either Whiting or Oasis.

Brown told investors the firm expected impacts from severe weather in North Dakota during the beginning of the quarter would hinder production. However, he said, performance “was stronger than originally expected.” Costs also came in lower than anticipated, but Brown said expenditures could catch back up since some of its activities were pushed later in the year.

The firm fetched a realized price for its natural gas of $9.57/Mcf during the second quarter, compared to $4.53 in the year-prior period. Its realized crude oil price for 2Q2022 was $111.79/bbl compared with $65.52 in 1Q2022.

Chord completed and placed into production 16 wells (12 net wells) during 2Q2022. Seven of those wells (5.3 net) came from legacy Oasis assets.

During the quarter, the firm also brought online what Brown called “the Bakken’s first” dual-fuel frac fleet that Chord plans to use in order to lower its emissions profile. The firm anticipated running three rigs and one-and-a half crews in five of its near-term focus areas.

While Chord’s lease operating expense increased slightly compared to that of Oasis alone, Brown said the new firm’s expanded team was already proving effective at beating back inflationary pressures with its larger scale.

“The increased scale of the company will allow us to level load our program, including keeping a pressure pumping crew working full-time, which should lead to greater operational efficiency and therefore lower cost than we would experience otherwise,” Brown said.

Both Oasis and Whiting emerged from Chapter 11 bankruptcy in 2020 after corporate restructurings.