Williston Basin Operations Will Thrive Amid Secular Global Energy Demand

Key Takeaways

• Expanding advanced drilling and AI-driven efficiencies could lower costs and boost margins, supporting strong free cash flow and future earnings growth.
  
• Strategic positioning in Williston Basin, focus on ESG, and disciplined capital allocation provide a durable advantage for long-term value creation.
  
• Heavy geographic concentration, dependency on oil demand, operational exposure, and energy transition pressures threaten long-term revenue stability, margins, and capital access.

Catalysts

Operates as an independent exploration and production company in the United States.

• Analyst consensus expects 4-mile laterals to boost capital efficiency and returns, but early results suggest Chord Energy can deploy a much larger percentage of these wells across its acreage, which could drive breakeven costs even lower and unlock previously uneconomic inventory, resulting in outsized future cash flow and margin expansion.
  
• While analysts broadly agree that technology and efficiency initiatives are reducing lease operating expenses, Chord is in the early stages of AI and data-driven operational transformation, with over 30 projects underway and rapid organizational adoption, indicating a step-change in cost structure reduction that could sustainably elevate net margins well beyond current expectations.
  
• Chord is uniquely positioned to benefit from structurally higher oil prices, as global underinvestment in supply coincides with robust, long-term global oil demand from emerging markets, securing both volume growth opportunities and supporting premium realized pricing, which should drive revenue and free cash flow outperformance.
  
• Chord's large contiguous, low-breakeven Williston Basin footprint and track record of best-in-class execution provide a competitive moat-enabling aggressive share repurchases and disciplined capital allocation to compound earnings-per-share and accelerate intrinsic value growth, especially as industry consolidation and energy security themes intensify.
  
• The company stands to benefit from new basin egress infrastructure and its proactive approach to emissions and ESG standards, which should lower transportation costs, improve market differentials, and enhance long-term access to capital and premium markets, all supporting further gains in net income and asset valuation.

Chord Energy Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Chord Energy compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Chord Energy's revenue will grow by 5.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 5.3% today to 19.2% in 3 years time.
• The bullish analysts expect earnings to reach $1.1 billion (and earnings per share of $21.38) by about August 2028, up from $262.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 8.1x on those 2028 earnings, down from 21.7x today. This future PE is lower than the current PE for the US Oil and Gas industry at 13.3x.
• Analysts expect the number of shares outstanding to decline by 6.84% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.96%, as per the Simply Wall St company report.

Chord Energy Future Earnings Per Share Growth

Risks

• Chord Energy's significant concentration in the Williston Basin exposes the company to major localized regulatory, geological, and operational risks, which could lead to revenue instability and margin compression if disruptions or region-specific issues arise over time.
  
• The accelerating global shift toward renewable energy and regulatory moves to decarbonize energy systems presents a structural risk of eroding long-term oil and gas demand, which in turn threatens sustained production volumes and challenges the ability to maintain or grow revenues.
  
• Chord's ongoing capital returns and efficiency gains rely heavily on the continued productivity and resource quality of their core acreage; as wells age and resource depletion sets in, rising capital intensity per barrel and potential decline in well productivity could constrain future free cash flow and net margins.
  
• Chord is highly exposed to commodity price fluctuations since there is no mention of substantial downstream integration or robust hedging strategies, making its operating earnings and cash flow vulnerable to cyclical downturns in oil and gas prices.
  
• Increased regulatory, investor, and societal pressure-including higher carbon taxes, rigorous emissions standards, climate-related disclosure mandates, and fossil fuel divestment trends-could translate into higher costs, tighter access to capital, and persistent headwinds for earnings as the energy transition continues to gather momentum.

Valuation

• The assumed bullish price target for Chord Energy is $164.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Chord Energy's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $164.0, and the most bearish reporting a price target of just $105.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $5.9 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 8.1x, assuming you use a discount rate of 7.0%.
  
• Given the current share price of $99.53, the bullish analyst price target of $164.0 is 39.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.