Q2 2025 Chord Energy Corp Earnings Call
Good morning, ladies and gentlemen, and welcome to the Chord Energy Q2 2025 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press *0 for the operator. This call is being recorded on Thursday, August 7, 2025.
I would like to conference over to Bob back and ask us. Please go ahead.
Thanks Anderson. Good morning everyone. This is Bob back and Asus and today we're reporting our second quarter, 2025 financial and operational results. We are delighted to have you on the call.
I am joined today by Danny Brown, our CEO; Michael Lou, our Chief Strategy Officer and Chief Commercial Officer; Darrin Henke, our Co; Richard Robuck, our CFO; as well as other members of the team.
Please be advised that our remarks, including the answers to your questions, include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act.
These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently disclosed in our earnings releases and conference calls.
Those risks include among others matters that we have described on our earnings releases as well as in our filings with the Securities and Exchange Commission.
Including our annual report on form 10K and our quarterly reports on form 10 Q.
We disclaim any obligation to update, these forward-looking statements during this conference call, we will make reference to non-gaap measures and reconciliations to the applicable. Gap measures can be found in our earnings releases and on our website.
We may also reference the current investor presentation, which you can find on our website. With that, I'll turn the call over to our CEO, Daniel Brown.
Thanks, Bob. Good morning, everyone, and thanks for joining our call.
Over the next few minutes, I plan to provide a brief overview of our second quarter performance and resulting return of capital and then briefly touch upon some of our current initiatives. Before passing it to Darren, we'll provide more color on our operations. Darren will then hand it over to Richard for more details on our financial results before we open it up for Q&A.
So, turning to the second quarter results, core delivered, great performance with solid operating results, yielding, free cash flow above expectations, which supported robust shareholder returns.
Specifically, second quarter, oil volumes were above the top end of guidance reflecting strong execution. Well, performance and less downtime while Capital was favorable to guidance. Largely reflecting improved program efficiencies my thanks to our entire organization for delivering, favorable results. Once again and in particular to our folks in North Dakota who did a great job, navigating unusually high rain in May positioning us to surpass expectations,
This strong performance led to adjusted free cash flow for the second quarter of approximately 141 million. And we returned 92% of this free cash flow to shareholders notably after our base dividend of $1.30 per share. All incremental. Capital returned was utilized for share repurchases.
Since closing, the End plus transaction cord has reduced. Its share count by approximately 10% through early August
Given our view on the intrinsic value of our shares relative to how they currently trade in the market. We expect a continued focus on share repurchases in the current environment.
Court has been successful in driving strong per share growth, while paying out significant dividends to shareholders and keeping the balance sheet in good shape.
Turning to operations. The core team has demonstrated exceptional performance of all areas of the business cycle times have been reduced. Well, performance continues to be robust and downtime levels are better than anticipated. These improvements to the business, gave us additional operational flexibility, and allowed us to reduce full-year Capital by $50 million versus the original.
Budget while exceeding expectations on the production side.
Consistent with our 20, with our initial 2025 plan.
And given current commodity prices Court intends to redeploy. A second Frac crew in the fourth quarter.
And while I'm pleased with our current performance, I'm even more pleased that we have the opportunity in several ongoing initiatives. To further, improve the business.
On the 4 MI lateral front. Given encouraging early results.
Original expectations.
We also have 1. Well, the rice dead, which has been producing since February performance from this, well continues to be strong and it recently, it recently began natural decline after more than 4 months of flat or increasing production,
Darren will get into a little more detail on the program. But suffice it to say we like what we're seeing and are preserving the flexibility to lean into the 4 Mile program in 2026.
Next, I'd like to provide a brief update on some of our continuous Improvement, initiatives aimed at increasing free cash flow.
Slide 11 outlines the approximately 3 billion dollars of controllable cost across the business between operated DNC, Capital lease, operating expenses, marketing, expenses and GNA.
So far in 2025, we've made progress reducing all of these areas and are on track to exceed original production Guidance with less capital and better margins.
Slide 6, outlines the Improvement we made for 2025 free cash flow relative to February guidance normalizing for Price levels.
To free cash flow Outlook has improved 20% since February. And when including the effect of share repurchases, slide 7 highlights that our expectations for free cash flow per share has grown 25% since February.
Going back, slightly further to when we announced the inner plus transaction. Pro-forma 3 cash flow per share is up more than 35%
Again, all on normalized pricing. That's impressive performance. Maybe even more impressive, when considering we preserve the balance sheet along the way, and my sincere thanks to the core team for driving this level of improvement.
A key component of chords ongoing continuous Improvement. Focus is the use of data analytics, machine learning and artificial intelligence in various areas of the business. And I'd like to highlight just a few of the projects we've been working on.
On the production side cord is working to optimize ESP to Rod lift conversion Decisions by using Ai and machine learning to generate production profiles forecast, ESP run life and calibrate economic decisions for our wells.
Similarly cord is enhancing gas lift deficiency by employing an algorithm to model, optimization curves and inform economic decision-making.
On the reservoir side cord is implementing a machine learning model to identify geological contributions of production and EU are across various parts of the Basin while from a planning perspective. We're we're using new optimization tools to more efficiently. Run our work over Fleet and plan for crack. Protect to avoid unnecessary expense in downtime.
the company is also rolling out Dynamic and interactive dashboards which will give our teams including our lease operators real-time business performance insights
The pace of innovation and adoption has been Swift and these tools. Support improved value delivery to our shareholders by harnessing, the power of technology to increase efficiency and insight into improve. Our Capital allocation decision-making with not just better data but also with better models that are easier to use.
We are in the early Innings of what's possible, but we're already seeing an impact in our excited about what the future holds.
lastly, a few
before handing it to Darren.
At chord, We Believe oil and natural gas will remain essential to meet the world's energy needs for the foreseeable future.
Quarters proud of our work providing reliable and affordable sources of energy. While maintaining a commitment to operating in a sustainable and responsible manner.
Court continues to make progress on our already strong sustainability initiatives with a focus on putting Safety First minimizing, our environmental impact and being a good partner in our communities, I should mention that these chords safety and gas capture performance are off to a great start this year.
We plan to publish an updated sustainability report in the fall, which will reflect the full integration of cord and interplus.
So to summarize cord is performing and offers a unique value proposition to investors. I couldn't be more pleased with the state of the business as we are in a fabulous position to generate substantial value now. And in the coming years and with that, I'll turn it to Darren.
Thanks Danny. The core team is consistently improving the organization and enhancing performance. I would like to take this opportunity to discuss the notable progress being made across all operations.
In 2024 the proforma capital budget to deliver similar production levels was approximately 1.5 billion dollars.
Currently our 2025 capex guidance stands at 1.35 billion, a dramatic Improvement in efficiency year-over-year.
CPI gains through the roll out of longer. Laterals wider spacing alternative well-designed and cost-saving strategies resulting in better economics and higher production.
With Spud rig release times down about a day year-over-year.
We drilled 7 alternate sha Wells. Coming in below budget. Both from a cost and cycle time perspective.
Turning to completions, final frac operations continue to drive faster cycle times.
Pumping hours per day, have increased 20% versus last year and the savings per well, is around. 300,000 versus zipper operations.
Clean out times have improved as well for both standard and long lateral Wells.
Looking at our facilities based on a recent third-party study, Chord has best-in-class facility costs, and we continue to explore additional technologies to drive further efficiencies.
Turning to LOE and workover Court continues to focus on lowering, its failure rates and reducing cycle times to restore lost production.
Failure rates are improving as Court. Optimizes artificial lift across its producing well base
When cord fracks, its Wells, we tell in, with resided coated sand and then we manage the initial production rate, all to limit sand flow back.
This typically results in 1 less ESP, run over the life of the well.
We've also upgraded our Rod pump equipment which has resulted in a longer life leading to less downtime.
Additionally, our enhanced scale has allowed cord to more efficiently service, a larger production base and we continue to make progress on optimizing Logistics.
We're prioritizing high impact targets, shortening the length of time to get Wells back on production and reducing the cost of work over repairs.
now, to give you an update on cord's fourmile program,
As Danny mentioned, we have expedited the program and now expect 7, 4 MI Wells turned in line by the end of the year.
The rice is dead. Well, our first 4-mile has been online since February.
Slide 9 shows the actual production Revolt results versus type curve.
Volume and pressure indications are encouraging.
There are Tracer, study indicates every stage of the lateral is contributing to production.
The well just recently went into decline. So we'll continue to study the volume profile, but it's looking really strong so far.
Relative to a 2-mile. Well 4-mile. Wells are expected to recover, 90 to 100% more. EU are only 40 to 60% more capex.
On a break, even basis. This translates to an 8 to 12 per barrel cost of Supply reduction.
Yielding up to 30% lower fnd costs relative to 2 mi Wells.
If Chord continues to exceed expectations on the execution of 4-Mile Wells, we are likely to implement many more in 2026 and beyond.
We plan to talk more about our progress and implications for the 26 plan on our November call.
To sum it up. Court has an impressive track record of consistent execution and strong returns. We look forward to delivering on our long-term Outlook
I'll now turn it over to Richard.
Thanks, Darren. I'll round out our conversation with some final thoughts that expand on comments made earlier or in our press release to any covered. Our volume performance was above expectations.
Looking at pricing oil differentials in the second quarter, average 2.15 cents below, WTI, which improves slightly from our prior quarter. And we're within our guidance range for the full year oil, discs guidance, improves reflecting the Titan, the tightening in the second half.
Turning to gas and ngls as expected pricing was lower sequentially. Reflecting normal seasonality, NGL realizations, were 9% of WTI in the second quarter while natural gas realizations, were 32% of Henry hub,
our full year, guidance was adjusted to reflect our current Outlook
As a reminder, certain marketing fixed fees are deducted from our NGL and natural gas prices. This drives higher operating leverage, which hurts realizations for both ends and natural gas in times of weaker prices, and benefits realizations in times of higher prices.
Lease operating expenses or LOE?
Where $102 per Boe, which was at the higher end of the guidance range that we set in May primarily due to increase. Work over costs as a team did a great job restoring production volumes after significant first quarter, weather disruptions
Coordinated, a cheese notable improvements in reducing cycle times for a high capacity, Wells.
On volumes.
Court's full year LOE for Boe guidance remains unchanged.
Production taxes average, 7.3% of commodity sales in the second quarter, which was below our expectations. This primarily reflects the impact of non-recurring, refund for stripper Wells received during the quarter. Our oil revenue from these low producing Wells is taxed at a reduced rate.
We expect these refunds to have a lower impact in future quarters.
We have adjusted our full-year production tax guidance to reflect our first-half performance and our forward expectations.
Cash GNA expense.
Expenses were $22 million below our guidance. For the full year, we have reduced cash G&A guidance by $7 million as a team.
Succeeded Synergy, expectations and drives are continued Improvement in init Improvement initiatives including efficiencies gained through the use of various data analytics machine learning and artificial intelligence tools that Danny mentioned earlier.
Second quarter cash taxes were approximately 32 million or 5.9% of Evita which was within our guidance range. We have lowered the full year. Cash tax range to 3.5 to 6.5% of Evita at WTI prices in the second half of the Year ranging between 60 and 80 dollars per barrel.
The reduction reflects our latest forecasts, which include the impacts of recent tax legislation.
Cord continues to have peer-leading leverage and liquidity. Net debt levels, increase from the first quarter, largely reflecting a non-recurring working, capital swing.
As of July 31st, net debt was approximately 810 million a decline of almost 800 million from June 30.
Net debt.
Or net leverage was approximately 0.3 times on a trailing 12-month basis.
As of June 30th, had $180 million drawn on its 2.75. Billion credit facility with 2 billion of elected commitments liquidity. As of June 30th was approximately 1.8 billion, including 4 million, 40 million, of cash and 1.79 billion available under the credit facility, net of letters of credit.
We also later layered in additional Hedges during the second quarter and in July, our derivative of position can be found at our latest investor deck. In closing chords, execution and delivery remains Best in Class.
I'm looking forward to the additional progress as our team relentlessly pursues continuous improvements and innovative solutions the
D, I'll hand the call back over to Annis for questions.
Thank you, ladies and Gentlemen. We Now begin the question and answer session. Should you have a question please? Press star followed by the 1 on your headstone phone?
You'll hear a prompt that your hand has been raised. Should you wish to decline from the polling process? Please press star followed by the 2 if you're using a speaker-phone, please leave the handset before pressing any keys.
1 moment, please for your first question. Your first question comes from Scott, Hannah with LBC Capital markets. Please go ahead.
Yeah, thanks. Good morning. Um, you all talked to a couple times about, uh, seeing some good stuff from the 4 MI Wells and and integrating more of that in the 2026 potentially, um, could could you provide us some context on? Um, you know what, level of investment in these 4 Mile, Wells, from our risk reward perspective, you know, make sense and and you know what's, um, what needs to be done on the permitting front. Um, in order to make that a bigger part, do you need to, you know, start re permitting stuff. I, I assume you're already underway at that but just some call it there.
Yeah, the permitting activity Scott is well underway for uh, for next year and Beyond relative to 4 miles. So we're really preparing ourselves to go either way we're setting ourselves up with the optionality for 4 miles, but, uh, but also 3 miles or 2 miles, whatever the case may be for the original plan. So, we're we're set up.
Away from a permitting standpoint.
That's above our original expectations here.
Right, right? So it sounds like you guys are prepared to potentially move pretty quick on this, if if you can
Um, okay. And then
Okay, sorry about that. Um, my follow-up is just on the Marcellus. You know, obviously it's a non-core position. That's, um,
you know, I didn't hear much of an update on it to today, but can you give us your, your most recent thoughts on on, you know, where that fits into the stack of initiatives, um, with regards to to monetization
Yep uh Scott appreciate the question and the interest in that I'd say is Marcellus is we've been pretty transparent that we think Marcellus is a great is a great asset. It's in the core of the of that Basin, but it's not core to our portfolio. And so we're going to be uh, very focused on making sure that we deliver maximum value from that asset.
Fair enough. Thanks.
Thanks Scott.
Thank you. Your next question comes from Oliver Wang with TPH. Please go ahead.
Good morning, Danny and team and thanks for taking our questions.
Wanted to start out on the rode dead. Well uh, get a bit more detail than what you already highlighted in the prepared. Remarks. Just any main takeaways or observations from the drilling of the? Well, the completion of the, well the flow back the productivity uh in the first 6 months, I understand. Oh, probably get better and faster with the subsequent Wells as things. Look pretty encouraging here, but do you have but do have to ask, is there anything that you all might look to potentially change up or tweak with respect to any of these items as we think about Prosecuting on the remaining 4 dollars that are scheduled this year?
Yeah, the execution On The Rise dead went really almost flawlessly. Um, we we were able to drill the well with 1 bottom hole assembly. You know, we were, we were concerned that it would take rotary steerable to be able to directionally control the well, maybe in that last Mile. And we just haven't seen that on any of the wells that we drilled. So, um, overall the the drilling performance has gone better than expected. We've only completed 1. Well, so for the right side and of course it's outperformed. Its type curve by 30% as Danny said it's almost uh cumed in a in a little over 150 days. What 2 2 mi Wells would have been expected to qmee in this area. So very quickly performing very similar to to to 2 2.
To before the end of the year, we'll have 7 online. So we have 6 more to complete and bring online before the end of the year. And we'll, we'll be a lot more intelligent after we get a number of those under our belt,
Awesome, makes sense. And maybe just for a follow-up question. I know it's still super early in the process, but as you all have done the work, looking at how your acreage footprint sits today on how to optimize the development program, if you all were to kind of go ahead with a more material shift towards four-mile laterals, is there a general view in terms of how much incremental net lateral footage expansion we would be talking about? That would move into the economic bucket that otherwise wouldn't have.
Yeah, I say, uh, I can't quantify that for you Oliver, but what I'll tell you is with the break even reductions that uh, that uh, Darren mentioned earlier, clearly some of the areas on the periphery of the base and they're going to start to come in and compete for capital in ways that they didn't previously and the existing Wells that we moved to for a while to to 4 miles are going to look just better. Uh, and so, yeah, clearly, you know, we need to get some more of these over our belt. We're working through is Darren mentioned uh, the permitting and planning to make sure that we can prosecute a more aggressive 4-mile program with the existing uh with sort of our existing uh uh contemplation it. It looks like 4 MI could be up to around 50% of our sort of development plans on it go for basis and as we as we go through that work will be, of course, going back and looking at the Basin uh and and re-evaluating and there's no doubt that some
Of the um some of the acreage on the peripheries will start to compete more attractively for for uh, for for Capital.
Makes sense. Thanks for the time, Jamie.
Thanks Alan.
Thank you. Your next question comes from Derek, with filled with Texas Capitol. Please go ahead.
Um, good morning, Allan. Congrats on a strong Q2 update.
If you've outlined on slide 11.
As we think about the appreciate the question, uh, Derek and and we think we had a great quarter too. Uh, so as we think about it, the overall Break Even of the program. Again, if you can think of sort of 50% of the, uh, 50% of our inventory, moving over to, uh, 4, Mile lateral perspective, and that yielding call of between an 8 and 12%. So, let's just take 10 as the midpoint, you know, if that's half of our inventory, just sort of with simple linear math. You'd say maybe that's a 5 Dollar Improvement across the across the organization. And so that's the kind of, you know, positive uplift. We're talking about in moving moving towards this, but that's not, that's
I think should also be taken in combination with other initiatives we have within the organization. And so we're really trying to improve all aspects of our business to deliver incremental free cash flow. So the 4 miles are exciting. But we're, you know, trying to make progress on on looe and and uh, and all of our other elements of expenses well. So, uh, yeah, lots of, uh, I think lots of opportunity for organizational Improvement as we move forward.
That's great. Danny and I honestly want to lean in with where you just ended there. When you think about the AI and machine learning advances, you're seeing how material could the cost gains be relative to what you've accomplished to date and what are some of the biggest needle movers for you.
You know, I I'd say Derek. It's just so early and so nent in this, in this process. But what I can tell you is I uh, just a little bit of insight. I sat in I sat in a meeting yesterday afternoon and internally and we went through 31 different projects that were uh underway. Uh organically working through the organization to drive improvements across every aspect of our business. You can think of and these were folks uh again all organically driven and so this is I would I would call Innovation and data analytics at uh at cord as being sort of, you know, uh
Decentralized in in, in, in in concept, but centralized, you know, but centralized in, uh, influence and oversight. And so we've, we've really empowered our folks to lean into, uh, to getting very familiar with data how to use data sets. We've got folks across the organization now, programming and SQL, and python, uh, and just doing things in a, in a manner, that is so much more efficient than we used to do things. And so where that leads uh, it's going to lead to lower cost structure uh to quantify that at this point. I think it's pretty tough but I can tell you it's uh it's permeating every aspect of our business. It's exciting. And it seems to me that it's, you know, we're we the the pace that this is moving is pretty quick and it's building Steam.
It's a great color. I'll leave it there.
Thank you. Your next question comes from Jen Abbott with Wolfie Research. Please go ahead.
Appreciate it. Thank you for taking our questions. So maybe I'll just sort of tag along on the AI question here.
So then you just talked about these are these opportunities are being driven organically.
so when you think about this and when you think about AI, what is the cost of actually implementing these initiatives and what are the advantages of looking at it, these Solutions or
Internally versus externally, if you could speak to that.
In other words, using a vendor versus developing internally.
Yeah, so I think it's, it's a, it's a reasonable question, John, I'll make a few comments and then maybe ask Michael to, uh, to make a few as well. I'll tell you, the, from my view, the cost of the cost of implementation is actually quite small. Uh, when you think about the, the data sets, uh, you know, first it all starts with having clean organized, uh, uh, uh, data. And so, we spent a lot of time over the last few years, and, and candidly. We're probably, uh, helped with the mergers and Acquisitions that we've done over time because we had these big data sets, come in that we needed to get put into the corporate architecture and I think that was a strong Catalyst for us to make sure that all our data was well organized clean uh and accessible. And so, because we had that as a backdrop, we could really lean into
Over their workflows and making their workflows more efficient, which I think is is a good thing. So you can hire a third party to come in and do some of that. But I don't think that builds the organizational excitement and momentum. Uh, like what I see going on inside our organization now and I'll, I'll turn it over to Michael for incremental comments. Yeah, thanks Danny. Um, yeah. John, the only thing that I add to that are, um, you know, super proud of of our teams um, in their embracing of kind of change. And, uh, as Danny mentioned, I think some of the, uh, the mergers that we've done and the past has helped us, uh, continue to look for, how do we kind of root out repetitive work and, and that's happening at every team at every level in across the organization and people are really embracing the desire for Change and desire. Just getting better every day. Um so we're trying to provide uh a Danny mentioned kind of the the tools for everybody to do that uh in the training to do that. Uh we're also working with uh outside vendors in terms of um their
Products continuing to get better through Ai and machine learning, uh, and there's a number of folks that are doing that within their own software programs that we're looking, uh, at how that improves our people's work and, uh, kind of their time efficiency, Etc. Uh, and then we're, uh, we've got a team that's, that's really trying to look outside of our industry as well. Uh, as as we know the oil and gas business is, is making some changes but uh there are other industries that have also done massive changes uh across their
Their businesses. And we're trying to look at what they're doing and and figure out how to implement some of, uh, what they're doing into our business as well. So it's kind of coming in multiple, uh, kind of multiple different types of, uh, ways that we're looking at the business.
Appreciate that color and then for the follow-up, follow questions could be on 2026.
You'll give us more thoughts. Exactly in November.
And there's been already plenty of questions on 4 Mile laterals. But when you look at 2026,
And I mean, what are the factors that you're looking at in terms of what is the right amount of activity and what you're going to do? And then how do you see the cost savings from this year translating to next year, as you sort of, think about items such as tariffs, and somebody had mentioned this weakness in the stock today. I think the 4q oil guy may have been a little bit low towards speed expectations. How do you provide confidence as sort of you sort of think about oil growth into the following year?
Yeah, I appreciate that John. So maybe I'll uh
I'll take those maybe not quite in the order to ask, but if I miss something just, uh, uh, uh, just, let's make sure we address all those topics before, uh, before we move on to the next. Uh, uh, the next person in the queue. So from a, from a 4q, oil production perspective, you know, I'd say as we've as we have uh we've been pretty focused in deliberate in our comments that what we're focused on is an organization is really making strong, Capital, allocation decisions. And
And and for the purpose of generating, strong free cash flow per share growth. Uh, and so that's what that's what we're focused on. Not absolute production growth, but strong free cash flow per share growth and we've got some of that, uh, shown in our slide deck. And so, as we came across, uh, as we walked through 25, the plan's been working exceptionally. Well, uh, we're delivering, uh, we're delivering more we've uh, we've seen stronger performance really from just about every aspect of the business. And so what we didn't want to do is sort of push, push production growth through the system at the expense of incremental Capital. When we had a different decision, we could make, which was to to peel back on Capital a bit and let uh, uh, which will actually, which will naturally have a, a resulting decrease in production. Uh, and and uh, but generate more free cash flow, uh, which is great because we've been, you know, we think candidly, we think our Shares are pretty attractive here, and as we generate incremental free cash flow. It means incremental share repurchases for us. So, uh, we, we, we've liked that setup, uh, because we
You know, we went to zero Frack Crews at 1 Point uh during the year and and we brought a Frac crew back. You know our till Cadence is now um uh you know, there's some cyclicality in our till Cadence. And so we're going to have the lowest number of tills in the fourth quarter and because we're bringing that track crew back in the fourth quarter, we'll see that till count increased materially as we get into uh the first quarter of next year. And so you know 20 uh the fourth quarter of this year will be our trough from a production standpoint but
We're going to grow off that trough. And I feel supremely confident about the plan. We've put out the 3-year plan, we put out, uh, in November of last year, was really, with a static view of the world, including our own internal capabilities, and I can tell you our capabilities are much better now than they were then. And so I feel really, really confident about about the plan about the delivery in 26 and look forward to talking about it in November.
Thank you very much.
Thanks John.
Thank you. Your next question comes from Kevin McCarty, with brine Energy Partners. Please go ahead.
Hey, good morning. Uh, moving back to the floor model, laterals for a minute. Uh, how much capex are you saving by doubling the 4 Mile lateral program this year? And do you have any thoughts on the range of annual, Capac savings? You could you, could you could, uh,
Capture, if you move to 50% of your program, the formal models like you highlighted in your deck.
Yeah. So for this year, the
by increasing the plan is is probably Dominus. Uh, honestly, it's such a, it's a relatively small part of the overall program. And so I just think that, that's, you know, maybe some modest levels of Capital Saving savings but, uh, uh, you know, going to be pretty small as we move.
As we move more towards uh, you know, much more substantial 4, Mile program, I think you have to compare that, you know, we'd already moved a bit to a 3-mile program. And so to say that's going to be incremental savings. Um, there's incremental savings from a 3-mile to a 4-mile, but it's not as dramatic as from a 2-mile to a 4-mile. So it depends a little bit on how what the makeup is, as we move forward. So clearly it's going to have downward pressure on Capital to deliver the same volumes. Um, I think it should be, uh, I think folks recognize that we bring these Wells on typically a little slower than we bring in the shorter laterals because we're trying to manage
Sand flow back into the ESP. And so as a result of that generally the early time production on these wells will be slightly lower uh on a per foot basis than the shorter, laterals. But again that's really because we're trying to manage the flow back and ensure that we don't put too much sand through the system which gums up our esps and and ends up cost, you know, uh requiring incremental expense for us. And so you'll see that early time production be a little more uh sort of a little more modest from a perpet standpoint but it catches up pretty quickly. And you could see that in the graph of rice dead that here after about, you know, 150 days we're already at 97%. So, um, from a, from a, from a run rate, Capital perspective, it's going to it's going to get pushed down, but it's going to really be a, uh, an issue of what is the mix of 4 versus 3 is versus 2. And I think as we come out in November and start talking a little bit more about the future, we'll probably have some more specifics on that.
Great. And I wanted to follow up on the the 4 q. Um, guide question and you know, we we noticed that you reduced your turn line, count a little bit this year and just wondering if that has any impact on your fourth quarter production, or your fourth quarter capex, thanks
Well, I think as the turn-in lines uh the turn-in lines come down that does have an impact on production because you just bring more less Wells into the system. Again, we're not trying to manage to an absolute production volume. It's more about sort of generating strong free cash flow for share. Uh, and so we'll there's a little bit of a you know, having fewer. Tills just is necessarily going to mean you've got less production flowing through the system. Those tills will come online. We've got some that come online late in the year. Uh, that will, you know, the early 26 will benefit from and then we've got a bunch that come online early in 2016. And so the overall Capital program isn't actually that different year on year if you think about it from a Drilling and completion perspective. I mean, uh, from guidance to what, what our expectations are now the till Count's more materially different because we've got some tills that were originally anticipated in late, 2500 into early 26, but the Frac operations are still really taking place this year. So, you know, it's always uh, uh tough. When you look at pill counts because they, you know, moving them by a day, may make a from 1 quarter to another or 1
1 year to another. So some modest movements in in tail counts can make uh, uh, can make annual movements or quarterly movements seem more material.
I appreciate the Nuance there. Thank you.
Yeah, thanks. Kevin.
Thank you. Your next question comes from Paul. Diamond with CD, please go ahead.
Uh, good morning, thanks for taking the call. Just wanted to quick ones sticking on the full mile plan. Um, how should we think about the lower capex though? Do you guys highlight, you know, 40 to 60% lower versus 2 miles and I guess just trying to get an understanding of this. If you're seeing any further incremental Improvement there or will anything that affects 2 or 3 floors 4 is kind of how to think of the relationship there.
Yes. So I think
Generally, it's just all about.
We're going to get better with repetition. I would expect you could have incremental things acred to our benefit there. So as we get smarter in how we complete these Wells, as we get smarter about bit selection as we get smarter about casing design as we get smarter about all these things. And we will with repetition uh we could see incremental benefits flow through and incremental Capital reductions. And so the reductions we're talking about aren't sort of any uh any improvement in our execution. Uh, baked into that. It's really just the sort of the geometry advantage that going from 4 MI gives us
Got, it makes perfect sense and then just sticking on the um I just want to further along the question which might be too early for the 3-mile plan. You know, that you all talked about how that didn't make food any of the, you know, operational improvements for the 3 or 4 MI laterals. And now that we're seeing that
If the incorporation of those increased, pretty massively, um, you know, the current guide for this year is probably already at the top end of the range for that 3 Mile or 3 year program.
I guess. Is there any, I mean, take to assume that there's upward pressure there over time, and we'll get an update later? Or just kind of how you think about that?
When you say upward pressure, you're talking about from a production perspective.
Yeah, on a 3-year plan.
Yeah, and so I again I think what we're looking to do is trying to generate strong uh, free cash flow per share, and so not necessarily Drive production through the system. And so if we can have equivalent production for lower Capital, that may accomplish sort of the same thing that we're trying to accomplish here. Uh, but I'll tell you the, uh, the efficiency the efficiencies gained this year, uh, through our operational improvements. When combined with, you know, what we think is likely to be a movement more towards for a 4 Mile program. Which again, has a, a geometry Advantage, uh, and a capital efficiency Advantage. Uh, you know, none of that was contemplated when we put the 3-year plan out. And so we've seen lots of things that should be benefiting the 3 year plan as we move forward. And again, look forward to talking about that more in in November. But, uh, you know, that was a static plan and our, our capabilities have improved since we put that plan out,
Got it, understood. Appreciate their...
thanks Paul.
Thank you. Your next question comes from Jeff. J. With Daniel, Andy Partners, please. Go ahead.
Hey guys, um just 1 more question on and just 1 for me on the 4 miles, I guess I'm just curious. What Milestones are you kind of waiting for or watching for to kind of get to the 50% of your program? And I guess, what are the dating factors?
I think the big thing Jeff is mechanically, can we get this? Can we repeatedly mechanically get to the bottom. Get all, get all the way drilled out to, uh, or get all the way out to the toe. Uh, successfully. Put our fracks away, get the wells cleaned out all the way to the toe and then see contribution across the full lateral. So, the first well went great, um, the but we've got 1, uh, under our belt from a, from a full, uh, drill complete turn in line perspective. So we've got several more that we've drilled, they've drilled well, uh, that we've generally been favorable to our expectations, uh and maybe not generally maybe completely maybe everything has been favorable to our expectations from that standpoint uh, from a drilling standpoint. But uh, but we we will only completed 1. Uh, and so we need to get a few more reps under our belt. Just make sure that mechanically we can get this done if mechanically we can get it done. Uh, and, and that's repeatable, uh, which we have expectations, that will be, but we need to, uh, we need to make sure that's the case, then. I think you'll see us move. Uh, pretty swiftly into
into a more sort of full-scale formal development.
Makes sense to me. Thanks.
Thanks Jeff.
Thank you. Your next question comes from Noah Honey East with Bank of America. Please go ahead.
Morning Tim. Uh, I for my first question here, I was hoping to go back to the uh, to the tills. Um, the 15 pills that kind of have been shifted a little bit. Is it, is it fair to think that most of that Capital will be spent in 25 with the production impact than being a bit of a Tailwind in the 26?
I, I think that's
Uh, you know, a good portion of it being spent in Q4, and I say that happens a bit every year. You're drilling complete wells at the end of the year, and then you get the benefit from them in Q1 of the following year. So, I don't know how much more acute it is this year than in any other previous years. Uh, but no doubt, we've got, uh, completion activities happening in the fourth quarter as a result of bringing that uh, completion crew back, which Q1 will benefit from.
Stream World, there's been a lot of movement there on potentially adding egress out of the basin and just giving your size in the basin. As you know, you are the largest operator there. How are you guys positioned to potentially take advantage of that? And I guess, could you help us kind of try to quantify what that opportunity means for Chord?
Yeah, no. Uh, we're obviously talking to uh, everybody. We we feel like we've got good aggressive as it is. Um, and so, um, we're we feel good on that front, but like you said, there are some new plans, uh, coming into place. We'd certainly love to see uh more options uh out of the Basin into the extent that we can be uh supportive and and getting some of those in place. Uh uh we're going to we're going to do that.
More options are always better.
Got you, and do you think there's any potential for uh that to follow flow through uh, on to a lower gpn cost or increase realizations?
Yeah, I think I think with more options in in the Basin and more egress, you're going to see better differentials over a long period of time as well as better. Uh, full full GPT costs. I don't know how to quantify that just yet. We're going to have to see if these things get built in um and and what it looks like as it happens.
No, that, that's helpful, caller. Thanks, guys.
Thanks.
Thank you. There are no further questions from our phone lines, I would now like to turn the call back over to Danny Brown for some closing remarks.
Thanks Annis in closing. I extend my sincere appreciation to all of our employees and contractors for their continued dedication and diligence. The company is well positioned for success and to deliver significant value for our shareholders, through our strategic initiatives and the strength of our team, we have created. What we believe is an increasingly rare and valuable asset court, has a substantial production base with low, decline rates, and high, and a high oil cut which is complemented by a deep portfolio of economically, attractive, low-risk, conservatively spaced, oil-rich inventory.
And we've been getting better. We are proud of the progress we've made as a company and in our ability to deliver, uh, in the future. And with that, I appreciate everyone's interest. Thanks for joining our call.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines. Have a great day.