Chord Energy (CHRD) Bearish Signals: Time for Puts?

Chord Energy Corporation is an independent E&P company focused on the acquisition, exploration, development, and production of crude oil, NGL, and natural gas, primarily in the Williston Basin. The company targets the Middle Bakken and Three Forks formations. Chord's business strategy emphasizes rigorous capital discipline to generate sustainable free cash flow. This includes efficiently executing development programs, optimizing capital allocation, and balancing stockholder returns with reinvestment. They maximize returns through conservative capital allocation and a focus on returning capital to stockholders. A key element of their strategy is maintaining operational control over a majority of their portfolio to optimize capital allocation, control the pace of development, and proactively manage their cost structure. They also strive for financial strength by preserving a strong balance sheet and managing risk, including a hedging program to minimize downside risk. Another key is to be 'responsible stewards' of the environment.

The news regarding Chord Energy (CHRD) is limited. One article focuses on a retrospective investment performance over the past five years, which is backward-looking and has minimal impact on short-term trading. The other article is an earnings outlook, but lacks specific details. Without concrete earnings projections or surprises, its impact is muted. Given the absence of significant company-specific news or macro events, the expected directional impact on CHRD over the next 1-2 weeks is neutral. The energy sector's performance and broader market sentiment will likely have a more significant influence than the available news. A slight upward bias is assigned, acknowledging the earnings outlook article, with the assumption that investors are generally optimistic before earnings reports, however, this optimism is tempered by the lack of concrete information. Traders should monitor broader energy sector trends and any further news releases related to Chord Energy for a clearer directional signal.

CHRD's technical outlook is decidedly bearish. The stock is currently trading at $88.975, well below its 50-day SMA of $99.185 and 200-day SMA (when available). The EMA_21 is at $92.88, further indicating a downtrend. Momentum indicators paint a similarly grim picture; the MACD is negative and diverging further from its signal line, implying increasing bearish momentum. The RSI of 41.29 is below 50, indicating continued selling pressure. The Stochastic Oscillator, while showing a recent uptick to 45.92, remains below the overbought threshold and the %R Rank confirms this. Furthermore, the ADX at 23.97 suggests the downtrend has strength. Recent price action confirms this bearish bias, with the price consistently making lower highs and lower lows. The ROC_20 is deeply negative at -8.79, underscoring the significant price decline over the past 20 days. The BBP is at 0.420, suggesting the price is closer to the lower Bollinger Band, signaling potential oversold conditions, but not enough to offset the overwhelmingly bearish signals. The recent price history shows a consistent downtrend, punctuated by brief, unsuccessful rallies. Given these factors, a continued decline over the next 1-3 months appears likely.

Chord Energy's MD&A presents a mixed picture. For the three months ended June 30, 2025, total `Revenues` decreased slightly to $1,180.6 million compared to $1,215.0 million for the three months ended March 31, 2025. For the six months ended June 30, 2025, `Net cash provided by operating activities` was $1,076.7 million. However, a significant non-cash impairment charge of $539.3 million was recognized due to decreased crude oil and natural gas prices impacting the company's stock price. The company's `Net income (loss)` was $(389.9) million in the second quarter of 2025. Average crude oil sales prices, without derivative settlements, decreased by $11.95 per barrel period over period to an average of $65.31 per barrel for the six months ended June 30, 2025. Management acknowledges that 'prices for crude oil, NGLs and natural gas have experienced significant fluctuations in recent years' and that 'the potential for continued volatility in our markets, economic uncertainty and unfavorable oil and gas market dynamics...may have an adverse impact on our future business operations, financial condition and liquidity'. The company declared a base cash dividend of $1.30 per share and authorized a new $1.0 billion share repurchase program, signaling confidence despite current challenges.

Chord Energy's Q2 2025 earnings call projects a moderately bullish outlook, driven by strong operational performance and shareholder returns. CEO Danny Brown highlighted that Q2 'oil volumes were above the top end of guidance' due to strong execution and less downtime, leading to adjusted free cash flow of approximately $141 million, with 92% returned to shareholders. A key driver is the reduction of full-year capital expenditure by $50 million while exceeding production expectations. The company is also encouraged by early results from its 4-mile lateral program, expediting its rollout to seven wells online by year-end. Darrin Henke noted that 4-mile wells are expected to recover '90% to 100% more EUR for only 40% to 60% more CapEx.' Furthermore, Chord is leveraging data analytics and AI to optimize various aspects of the business, from production to reservoir management. While no specific guidance revisions were explicitly stated, the overall tone suggests confidence in future performance and value delivery, with Brown stating, 'Chord is performing and offers a unique value proposition to investors.'

CHRD's financial performance presents a mixed but overall bearish picture. While revenue has fluctuated, it shows a general upward trajectory from $964.7M in Q4 2023 to $1.18B in Q2 2025. However, profitability is a major concern, with the gross profit ratio plummeting from 0.385 in Q4 2023 to a negative -0.314 in Q2 2025, indicating significant challenges in managing costs relative to revenue. Despite a strong operating cash flow of $419.8M in the latest quarter, this follows inconsistent performance in prior periods. Furthermore, CHRD's solvency appears strained, as total debt has more than doubled from $426M in Q1 2024 to $956.5M in Q2 2025. The substantial increase in debt, coupled with the negative gross profit ratio, raises concerns about the company's ability to sustain its operations and meet its financial obligations in the near term, despite the top-line growth.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.