CHK - Earnings call transcript Q4 2021 | Expand Energy Corporation

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Operator

Good day, and welcome to the Chesapeake Energy 2021 Fourth Quarter and Full Year Results Teleconference. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Brad Sylvester. Please go ahead.

Brad Sylvester

Thank you, Sarah. thank fourth joining and quarter and to call operating everyone, Chesapeake's discuss and morning, you our for today results. Good XXXX financial release presentation had the our you a to our Hopefully, chance website yesterday. updated we that press investor posted to review and

that recognize call, factors information, our and across statements by discussed to in underlying including forecasts, required our goals, with our be this statements reliance some consist non-GAAP cause identified morning's forward-looking projections, no and which reference applicable note facilitate to that may number Please actual a press that law, the measures, expectations, statements. performance, statements. and we in assumptions help not will regarding such refer to we should and During confirmed on statements, and except filings. and making comparisons forward-looking peers. that such from by be materially update periods any statements, We are of which results undertake cannot as existing the forward-looking yesterday including undue Please place duty differ factors future you release to beliefs, statements, other there of financial SEC also will

will are Q&A. we today any the teleconference a Nick found GAAP brief measure Dell'Osso, open on then up to Singh For can give measure we use, call results, the and Mohit non-GAAP Josh be on overview me our reconciliation a nearest to Nick Viets. the will corresponding of website. our and With

Nick. turn now I to thank over So you with that, and teleconference will again, the

Nick Dell'Osso

your however; highlight few morning. I doing you We're before Thank for call want morning. joining to eager to items. this address questions, Good quickly a so, our

welcome to team. I'd members First, management a couple our new executive of of like

who's here Chesapeake. deep proven strengthen Singh, strong and skill team joined Conoco. who's from with Mohit Josh us at leaders and that an They're BPX joined already both from Viets, with diverse have We sets

bring valuable I met they I our that joined. with to weeks. likely to the an that we found the you Additionally, leading recognize already, you forward look have rest most able you, from being them for XXXX outlook. they organizations in as them of immediately time spend coming you're and external interested to perspective Many of discuss

However, attractive Chesapeake how I returns to what think it's highlight clarify several we come. strategy important for years shareholders will believe the to drive for of we and

we sheet. strengthened protecting done inventory First, and portfolio return have of while our drilling significant so with balance strong very great locations around assets high our

with significant established capital annually. the program of Second, shareholders implicit return we've discipline allocation a to

Finally, we events in prioritized the Being ESG our commitment a more crucial affordable this through than security morning to in in to continued on industry our Eastern a The solutions as and the lower so the as ever. energy play market our energy unfolding Europe of focus globe. deliver highlight with role the reliable, carbon position can to low important is footprint do carbon can we programs.

continue early The a common programs. of most from in to we consisting 'XX. closed executed We'll variable to most share base as of $X We of million of industry common us XXXX well cash stock are as A return $X.XXXX full billion year-end couple of share, the per strategy per from announced common our repurchase deliver be of dividend We this dividend Our we set transactions will XXXX program, integration paying the to continues We and cash $X.XX program. which are that $XXX delivered generated expect sale transactions our quite we in operational year and and per on We buyback results close Basin -- Vine first over and pursued by year out position periods. in later and strength the Powder a this the our of program. on us X billion through compelling $X.XX the a and River our CapEx the March. believe on focus up to highlights share quarter. has evidence results capital future Chief over to aggressive in is, be frameworks free the remain adjusted begun sustainable what acquisition. $X.X flow on in dividend the go in acquisition hallmark on well. target great of Chesapeake. significant These shareholders established, XXXX, We to success to excellence the

sustainable focused $X.X must on We're will what transactions XXXX. billion and company assets, million XXXX, The not share we us X to $X.X progress material repurchase. shareholders. on increase generated we cash free we we the additionally, bigger. the $X.X billion billion to ahead, acquisition cash maintain our by to $XXX projected to return XX% cash in between allocation year non-negotiables. mean differential total flow, expect of generating as pay Turning capabilities is just in And our illustrates to which approach dividends. year-over-year. continuing significant demonstrate In flow our make We're our across our high-return We'll and better, anticipate $X authorized to This squarely cash capital disciplined to cash generate efficiently returning of the billion shareholders. a cash

combined in to executing half I on now is forward time company. our We're our advantage questions. about we our this shareholders over our program return business consistently year, execute of encouraged for firmly and reach sit your we ahead. welcome magnitude critical competitive year of where we look with I and the the a our to assume believe today, to repurchase for dividends yield would program XX%. you cash If repurchases

Operator

question Josh comes from with Wolfe Instructions] Our first [Operator Research. Silverstein

Josh Silverstein

Yes.

flexible maybe you program question, any advantage can the you you dividends dislocations Just the wanted additional ask on help to the commodity there price? if great. So some How be stock take a to buyback are -- Nick, that yield talked versus to about. of on relative would

Nick Dell'Osso

Sure.

XX% with place. If to billion. pleased $X market in neighborhood in of our have find transaction, authorization It's year this So we currently XX% it's that the of we buyback than cash but still framework be at large to I forma that pretty stick there's cap. going probably variable we're of ourselves of our dividend, mean with going are Pro the cash Chief would for the to we'd cash that flow expecting, really think available. more more

contemplate after more is our to going we've term, if is, the than got in with if the we and ourselves plenty answer question we're find we sure. So near increasing execute anticipate, cash we the on to would buyback it. go get But

Josh Silverstein

are there's a there? lot focus U.S., on infrastructure LNG in guys pipelines if the concerns you the exposure Can potentially quarter, recently up know just more agreements in international in Whether I address to there? winding export get then going on down some opportunity Louisiana. on of fourth up what's was And to from differentials to going And been it. what's and some Got But with marketing you Appalachia. to the there's sign with now the able pricing? growing go there

Mohit Singh

the Maybe of Thank the are question. about Mohit. X you parts your is this that question. X LNG. second first take for I'll There Josh,

some take on pretty ability the are to and We water. about our get of the excited molecules them

pleased with which make counterparties companies on different several dialogue counterparties. potentially water we active think pricing, where LNG can in are different an are you'll we is But and be get dialogue linked to that such the know international gas that our get is pricing. stage in to to I quite we ready Nothing announcement. we a active that So to with are

to more on come So that.

the On also the first question yes, part in in similar widening And say Haynesville to in Haynesville around peers of what our your the basis, of December. basis see did I that's witnessed. would the we

in yes, pipeline basis and and and sense. are maintenance last it, is what that. to I at. as the we And your CGT perspective, pipeline on, From back has we you came would backup to actively thank doing seen weren't that lock question. that thing in some is going in the basis repair were opportunities we hedges, had that have say we December, on a The move But then some opportunistically that which normalized. as for we monitor So to Josh. since But volumes the able unique but debottleneck led some

Operator

comes next Zach question JPMorgan. from Parham with Our

Zach Parham

on buyback. the first, guess I

Can start the buying to the got authorization talk just allocate billion how buyback back how plan near clearly You've there. a in capital out you shares you'll the little $X you and bit soon about to term?

Nick Dell'Osso

Yes, absolutely.

as buyback might we announced in So December. imagine, this program you

yet. haven't see that You any bought shares we

possession the happened as than related much we the pretty found January. ourselves a so soon transactions in there we announced non-public faster possession of we information anticipated. of program, buyback MMPI material in as announced And to probably little The we

year-end. on so didn't get start we to that before And

time transactions, are those announced -- and have those close of approaching quarter transactions. of approaching we we're have as now completed, So a we we the

the be related out transactions we clear soon public in to to will act We that be a those have we can the information in so need markets. to, all position to

we've eager navigate be as rules we'll ready have to that as just do, to So the go. got we're all started. done. we but get soon And to We to here, get

in have you as authorized. slides to We've around in As morning this some I mean allocation we billion if it, my both $X and comments half need given half reason far capital of get assumptions, why goes our in or be There's year, be done this to no what half it would to calendar this year. were to means limited it our would yield. it to

We will market be cognizant conditions. of

liquidity. be of will We cognizant trading

going And trades imagine, we we market publicly position ahead that approach us. we're what be will need sure terribly appropriate doesn't be to with of make the you that as efficient. try to doing do. We to manner prescriptive might won't We against also the

think, And so approach it, we'll eagerly. but appropriately, I

Zach Parham

Basis. color. That's X Maybe helpful on

market you for the bit in basis delay Appalachia? the about there's your talk been fears Basis pipeline. of think just blowing outlook some with I the recent Can Appalachia especially in a on out, little

Mohit Singh

Mohit. to Zach, that. address I'll this is Yes, try

about something actively we -- that coming January, as The said we the which it better synergies, monitor. if pricing when I are basin volume of announced recall, before, we of It talked markets. increasing Chief getting we So know, the is market. all it basin in from had amount deal you gets some of in overall, constrained get our such to and of out as out the that that's

the as the even is we that good monitor us very, actively What of net pivot netbacks asset at and prices something is so maybe to that I'll are around of we just the quality hope have, well. some to that's won't gives realizing get in and just some place the very try we So kind that attractive we physical the to extent is too constrained. basis, the it can much, to we to keep it's asset. But economics. protect And Obviously, hedges we ourselves. monitoring financial plan it. run The the growing and because be most

Zach Parham

X quick follow-up. Just

they'll that do that production allowing night One last slightly you this about their think Northeast fall be there? year. Appalachia of capacity in of How your peers Appalachia guided to filling gap

Nick Dell'Osso

Yes. this is Nick. Zach,

We portfolio. that return have highest the great in is out this assets, consistently and we asset asset our point

volumes when joint be assets across the to gathering that able And Chief expect out, continue to to we that there's the you've would base thing. us what we been last given over so been of transaction combined do pressure of Should willing out about of and it. manage to that the the able will We seen as we years way be fill more announced Chesapeake, Chief we've market capacity, is, do to same system. couple the look the talked play to we deliver

market. we market welcome more think if filled just that So are basin, any by supply access having volumes volumes others, there before the be generally Marcellus the stack. about to other you if in the should We declining believe

if own continue And it. to that. so of an a And we'll there's to we so, opportunity do do lot

there opportunity we can those eager would accelerate do grow able CapEx But we I in future that be if might do so. just volumes. have place in we an with probably incremental think to the think it be to volumes program in how and we the to basin, about became

Operator

Our next question comes from America. Bank Doug of Leggate with

Doug Leggate

in inventory finite Chief, we're a business We the depth portfolio? is for with know Post the a depleting inventory. what

you that after do the that looks closed? strategy cleaned ex-growth, up it what deal like think guess, when is I sustainable stands is Your everything as inventory today,

Nick Dell'Osso

so of the rigs it's But our a many attractive. pretty run. depth Doug, to into Marcellus yes, long decade return, tremendous super inventory a and In and lot bit at inventory. the rates robust, current in out model, Haynesville, inventory little of very we quite pretty that going a is really acreage, Obviously, is how and the on a quite far longer. be pace, certainly the dependent range you have

X believe as Valley of we area. doing term quite Brazos well. in was Eagle of capital proving enhance long was a things and out in the positions, XX we also the that broad inventory about inventory we've South On near that Valley an years is as as Austin Texas our Ford, to Eagle talked Ford some Brazos such should allocating that about time, approach Chalk are and the that that number across There's as over think our what the is But spacing that going what the as well. inventory position,

length And flow feel we in a long think have about we time the added and period sustainable inventory of a both quite putting that of portfolio. We've really good the generating capabilities a inventory of So our obviously the the model we're bit here have we that very transactions. Chief cash for just out. with around Vine

Doug Leggate

Okay.

should thinking is how plus about it? decade basically So we a be

Nick Dell'Osso

correct. That's

Doug Leggate

Okay.

got now, It's you've inventory. having billion out in to way about easiest the X of talking Why paid that? from are Nick. you So years now, X you're X years destroy value, dividends. from doing And $X years

Nick Dell'Osso

they flow now, inventory commodity a with Doug, that capital prices did about have And shown profile think, should with with quite like invest. of cash particularly more flows we times do can you cash We to a where structure. We mostly non-negotiables well that pretty lot in into that above have, I pretty manner company, a We've that shareholders, we've bit. right think efficient We to our willingness our do where did the cash. equity. another a you we've in our X talked of shown has robust this sense, that plenty believe and they continuing meet room you X cash these program, to that a believe, important we've when So to things for like after make is the as when we and generating digested return transactions. we portfolio, are consolidate dividend

a our So time. in a don't sustainable I of that over think that runs results counter to business approach dividend a strategy period long

Doug Leggate

wasn't recognizes equity Nick. referring you a to believe money get you to you a take new Yesterday, realize How want stock dislocation $X I would consider XX% very the you announcement. up stock. of your of in does not your holders. pivoting in whether was a not pay strategy pivot? -- how if Resources or variable holders buyback your pays to Range believe on long was lot your Because It M&A what I I a sponsors terms opportunities, is really in will to that cheap, billion undervalued said stock. short-term stock, really it if terms long back But cash of is about, distribution buy the will in market the have it talking take of returns, looking could heck bankruptcy an you much some but there's a past, back. exploit you

Nick Dell'Osso

Yes.

made I future. would Doug. question, approach in benefited fair we of here are pivot from we've And what then all sense. a that in it's above think believed the mean shareholders we doing, the not we're all said I along if

said when announced around have does the a and like cap. last appetite the accounts we the forma Just have approach. pro real we that, yet. to out. a had about of that it shareholders to see mean authorized lot believe above we I do call, We'd see dividend is We for all the conversations like XX% this, transaction market we to discussed that hasn't variable And the it cash again, help hit dividends. our play first Chief is today. on of buyback there We've topic, this just a of with people's

role the through if buybacks program pretty not the would here. buybacks, are certainly And the agree in have today. we combination we play Sure, have we through a strategy with dividends of weighting changing we a we consider feel maximized or returns the being really important committed So But course. you of future? and that to

then and change. change, that down go to going we're things So need to path if they'll

Operator

Kumar Our Fargo. Nitin Wells next comes with from question

Nitin Kumar

The the strategy. X is around first hedging

bit you do Mohit, how oil your see Nick a both that maybe longer-term plans? about hedging little noticed you or and added talk You some for hedges gas. in

Nick Dell'Osso

this Nick. is Nitin,

described So the underpinning as about I've yes, important think as before, we hedging, program. to capital

talk we large midpoint of this. our The have about, business in billion. for pretty guidance capital like a a As program $X.XX we XXXX capital-intensive CapEx is

you that it's online you have expect program return There's we a through But can don't a time. that volatility. so robust you well-being putting until that profile allow during plan volatility, to pretty of We hedges to a only downside big a be a capital great benefit we And money the you that the program. well the to of that return always And on a there's set some decide with you're We capital when our hedge lot and of know drill able budgets for that revenue. -- to out. underpin a generating lag that actually view the set through on strip. protection see to happen lag know

so each those program. capital we return decisions absolutely how the think And hedging derisking our about profile of of is

seen way, around been One sheet do the collars lot of SKU a of year balance you've the more the collars. us strength has pretty a over that And our things evidence think used last attractive. is is positive really in we

we floor side you see upside the the well. to added exposure nice on And we've that certainly and some protection so think as have plenty of with hedges primarily been provide collars, the

Nitin Kumar

can think just you cost We reopening? things is or a noticed That's year. around Haynesville inflation. about changes and saw what the Ford current is a talk more costs flat, by driven compared inflation raise you're bit Eagle a items question. little service second some And in X-part the you pretty to where the -- very to permanent little did other structure a question not little And actually. you it's if down then helpful. bit seeing the those if whether cost maybe are we last Appalachia costs bit on? My the well in were part specifically, And the economic One,

So what's going on there? out

Josh Viets

Josh. This Yes. is

good to would sand we were contracts. existing pumping itself our across have like inflation, general, in we XXXX. strategy, from and roughly where protection and this at think large, in to in is board the we're if Most lock XXXX sand see a do by into look pressure We capital cost, I within I able our of about feel then cost inflation seeing year-over-year we XX% tied contracting XX% logistics. some we of majority, say

so And be some there we as will we feel protection do like through pricing the year. work

of Now reserve Most a our as and in in we've in anticipation baked with you've that into inflation. captured as seen, some current we bit more see little inflation a budgets. that we little well our is bit have estimates, left

question Specifically, is fact, we labor in of what and Marcellus, going think about designs. from there to some have that inflation is we in that Marcellus. come OCTG, the that the also the that trucking. of And to affords your best I think is us is out To one the things important acreage do, to point rightsize completion

So a really, that couple things of play there. there's

inflation. about last with just lateral a that's cost on helping is manage have right our average to pumping with our contract which the metric. the like also up First providing be point foot opportunity is maybe XXX long-term of an balance the with And some of feel to us then the And offsetting per length to going feet again by again year-over-year, then again afford is which I cost. is going we is, little think to us completions, size we the bit a provider,

Operator

next Research. Nicholas Our comes from with Seaport question Pope

Nicholas Pope

the kind And Eagle to little better. to and expand guys maybe terms you Chalk at to Ford. you Ford? about -- going Brazos things, are understand that I hoping be -- what Austin for bit you're and could you're of the kind hoping you what to you I Eagle kind bit is and where presenting be going still markers to of response the of of and mile we I could a be are looking in was talk mentioned of the drilling? try a the guess kind you part the should it how little think in looking you're a in And Texas, going Can South combine was is what I little a what about there? be XXXX? Doug, talk of focus to maybe looking

Josh Viets

for Yes. This again. question. Thanks Josh the is

of to why just program. maybe we talk overall is provide on the a to within year like balance with Ford, on me XXX% XX what Eagle targeting that of you that bit well assess us really Let the that's this or is to right we're targeting that's around what have we those South us achieve. drill optimal. about as Texas in the very is Right much the Austin of see targeted well definitely XX Eagle to rate we our I And in get hoping Ford, is now, hoping plans returns at as going into And then Austin to plans And be look development of that's the to And we're that year. going play allows designs. some as there. the asset the for maybe we really, start color a little wells well as XX in we spacing of a remaining achieve the completion we there. next Lower there. are to Chalk, what addition that, understand, return do economics go mix to the full-scale the positions with Chalk. two, be tests And And there over

little story. Now as just Brazos, move different you into up the maybe a bit

in is that of enhance we're that a bit competitive spacing. portfolio. the want to targeting are be over the lower Eagle XX% want that. rest us to going that to The we of We to returns little is be within And drill wider playing what with them, Really, game leading Ford. that's We that have area. XX to wells XX we'll majority the

competitiveness Again, that feet at enhance drilling we be only X,XXX of portfolio. we'll So about going that's spacing. the think the within inter-well to wells

within Chalk within Brazos part with couple last also year. up partner-operated We planned some starting a little see Austin the We actually we bit the pretty have in the that that play. interesting of to participated play wells the a wells northeastern area of the in mature Valley

us points give and development. more will potentially some we data our Valley that even expand the Brazos think as So about inventory future

Nicholas Pope

That's And actually also I look consolidation? the as Ford I in the at slower helpful. curious, of assets guess mean, have X operational the of what months of simplifying very structure, opportunity big got like it's now, I'm Eagle X rest Eagle you year. potential or you set M&A. in last -- last basins the all kind in Ford? M&A curious does X for had I'm what set the potential kind the a you -- what how like -- It U.S. view opportunity big look bit seems that been little for than acquisitions

Nick Dell'Osso

Sure.

all just what's There's bigger, in fair So develop. better, basin across that about being basin big us meets amount would the the disparity, basins. in as not talked of say, really think And maturity what about could make what there's as matters non-negotiables. left our a to we a that are there in I

and really we our over to shareholders improve able consolidation to ability as portfolio be You for have where our could returns to create about time. something improve think

just to we the There Eagle in pay continue Ford. the So anything to I for that pay attention that, attention will and be. in could Marcellus we'll don't the us like And Haynesville. know there's immediate

that on consolidation done. also an say we trend X to will said and this acquisitions moment, in continue digesting the we've is We important the We've that continue. we're think at focused industry

be today. in some it to our Ford a come to together. still is may take potential our I there's there well. could, of little where that's the So Eagle consolidation there And but could need But bit attention as stuff meet out would that for It think non-negotiables. time probably

Operator

Our Charles Johnson Rice. next with question from comes Meade

Charles Meade

mentioned cheap I call that on I to mode. you're pushing Leggate's your table dropped were your thread like strategy. wanted and the going of be you the side that for you remember part But off. on question, longer-term back is deal. to of that, saying On pick response that from up sounds it you other still the just M&A to you M&A Doug in that that your

get how long are And going you're your would conditions you back when M&A be looking table? pushed to thinking So market? are you front are back you that at foot what that on the that the from

Nick Dell'Osso

it's Well, weeks X said Sure. only we been since that.

So we a whole going it we well. we a made integration. on to integration of that The think little progress about Vine And long But wanted takes. haven't short be of said how exactly weeks. hard of on Charles. some And we to to it's X focused really lot that's mean, I is in take period how predict time, going extremely

X, process Our We took operationally. teams are great. went over engaged around a day of that in operations and what now we bit have both a

can take back-office the you very time. for integration want resources, right, business of of long to run if them impact working quickly you devotion Those because make time a your efficiently. are sure a you We and get you and they how things lot and don't,

and soon great, ready going the all it's the integration we're work ahead of hit planning to ground so as closing that Chief, of on of running And it doing business the closes. as

So devoted the and will integration some we've moment, creating pretty yield us we to what consolidation. through lot integration at that expectations about got the to of big a way value of that have resources in

bar but think you transactions. high higher. the future they that real guess probably at it in our in is I middle create to how that's bar, So you're moment. others, and when of And where way would X are a to The non-negotiables the is matter about say integrating moves attention even that they

We long integration. in possible that really again, then we of we and function transactions. deal. value if that, no on pursued the a would takes continue that becomes never to so future do communicate far. we've for continue how is is be it of circumstances need it sit the move. non-negotiables deal. And There's consolidation what it And doesn't, if that that very along that becomes us path meet So to another it a that those may will we'll another true and where to don't execute we'll of to do lot what take true. available seen And be to foreclose not want All we've we have. may specific But we then

Charles Meade

to for buyback from elaboration, approach, that Nick. And your different -- angle. the about like but I'd Thanks a question about a then maybe ask

the that there going debt have balance big net target of an in With that working -- of out you embark before up I you get door initiation closure, billion -- a you go $X the guess, a consideration. some the part really program? Is down debt before want buyback step to to that on you're Chief to as of or

Mohit Singh

Charles, that. Mohit. take I'll this is

X then debt-to-EBITDAX how cash, boundary pretty of stressed the right the and is think So the felt at the it. cash stay Powder even at should different non-negotiables because of you're we we helps that's amount look way the looked our had coming a Overall, consideration. should pretty we pretty price Chief of the of condition. debt sheet is that financials liquidity we X it. the and of for you door, is deal, But which at and that out And That's is our we we comfortable pay because net X going net it debt-to-EBITDAX the on how about think that's when the condition. said metrics. some below our billion part decks situation cash we turn And from target, balance cash the $X that firm turn. that's monitor boundary publicly I target And divestment, obviously, the it. firm paying And there's in did

Nick Dell'Osso

at -- below, But we the basis, forma to can a start closing, program on we're Charles, clear, be pro buyback away. well we're so right

Operator

This concludes over our closing Nick session. to turn the would like conference any question-and-answer I to Dell'Osso for comments. back

Nick Dell'Osso

of a over their Analyst thanks to technical drive call the we'll and Sarah, We of XXXX you, into Chesapeake answers demonstrate believe joining generate plan a cash Thank To be our where demands ability Day we long must look of what successful time. and to company excellence. it each in of to call this today's ESG and an deeper matters, to to to with that scale X free morning. period and an for forward shareholders, details on things: portfolio today. return ability a assets consistently our assets dive Great. market, the returns the commitment go market and flow E&P for high-return and sustainable have a I

team, have update to I to progress. the forward We and and look in good the our value morning. continuing years on ahead, you a Have portfolio deliver differential strategy to

Operator

you presentation. Thank today's concluded. The conference has for attending now

disconnect. You may now

Expand Energy (EXE) 24 Feb 222021 Q4 Earnings call transcript