Old Rope Research flags undervaluation in Chord Energy’s Bakken assets
With a trailing P/E of 201.57 and shares trading at $137.86, Chord Energy is positioned as a leveraged play on structurally higher crude prices, according to a new analysis from Old Rope Research.
Old Rope Research has published a bullish investment thesis on Chord Energy Corporation (CHRD), arguing that the market is materially undervaluing the company’s assets in the Bakken formation. The analysis, released via the firm’s Substack, positions Chord Energy as a direct beneficiary of geopolitical instability and a structurally higher oil price environment.
The research highlights Chord’s significant operating leverage, noting a breakeven oil price of approximately $45 per barrel. The firm estimates that under a $65 oil price scenario, Chord’s PV-10 stands at roughly $9 billion, aligning closely with its $8.5 billion enterprise value. However, the thesis suggests that if crude prices rise toward $100 per barrel, the company’s PV-10 could expand to $17 billion, implying substantial upside from current valuation levels.
Operational efficiencies following the Whiting merger are cited as a key driver for improved margins. The analysis points to the implementation of longer 4-mile laterals, which lower lifting costs and enhance recovery efficiency. Consequently, margins per barrel could widen from roughly $20 to $55 in a $100 oil scenario, making proved undeveloped reserves and mature wells significantly more valuable.
Chord Energy maintains only 20% of its production hedged, preserving considerable exposure to upside price movements. The Williston Basin, where Chord’s primary assets are located, has historically traded at a discount to the Permian Basin due to infrastructure constraints and transportation costs. However, the current geopolitical backdrop has shifted economics in favour of short-cycle U.S. producers capable of rapidly bringing production online.
Market data from Yahoo Finance shows Chord Energy shares trading at $137.86 as of May 26, with a trailing price-to-earnings ratio of 201.57. Hedge fund interest remains modest but stable, with 46 portfolios holding the stock at the end of the first quarter, an increase from 45 in the prior period. The stock is not currently listed among the 40 most popular stocks among hedge funds.
