RBC Capital analysts provided their key takeaways from Investor Meetings with Chord Energy Corporation (NASDAQ:CHRD) CFO Michael Lou. According to the analysts, the focus shift to maximizing returns and free cash flow (FCF) from total oil-in-place recovery provides more visibility to FCF sustainability. There is high confidence in maintaining this output for several years with the improvements seen in its good performance. The analysts said the company has the land position to continue extending lateral lengths and replenish its drilling inventory.
At strip commodity prices, the analysts estimate 2023 FCF at $600 million or a 12% FCF yield. The leverage ratio (net debt-to-EBITDA) remains at sub-zero and should stay well below the 0.5x threshold where the company’s FCF payout is at least 75%.
Management has utilized a fixed dividend (4+%) in addition to buybacks and special dividends. According to the analysts, the robust fixed dividend shows management’s confidence in its outlook and there is more room to increase that moving forward. The analysts believe the plan is to be balanced with dividends and buybacks over time.