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Michael Lou’s first quarter running Houston’s Chord Energy

ByMarcus Tolliver

The downtown Houston skyline. Photo: David Daniel Turner, CC BY 4.0, via Wikimedia Commons.

Michael Lou spent most of his career as the numbers person at the oil companies that became Chord Energy. Three weeks after taking over as chief executive, he got his first chance to tell investors where he wants to take the Houston company.

Chord named Lou president and CEO effective Oct. 19, and put him on its board, after Danny Brown left to run Expand Energy, Oil & Gas Journal reported. That move kept the job inside Houston’s energy corridor in both directions. Expand, the country’s biggest natural gas producer, has made its Spring-area campus its headquarters this year, the Houston Business Journal noted, and went to its Houston neighbor for its new chief.

From banker to CFO to CEO

Lou has more than 25 years in oil and gas, 17 of them at Chord and the companies that merged to form it. He started in investment banking, spending about a decade at several global banks covering energy. He then joined Oasis Petroleum, where he became chief financial officer and also ran Oasis Midstream Partners as president of its general partner.

When Oasis and Whiting Petroleum combined in 2022 to create Chord, Lou stayed on as CFO. In March 2024 he moved over to chief strategy officer and chief commercial officer, the job that put him in charge of the deals and contracts that shape a producer’s margins. He held that post until his promotion.

That background shows in how he talks about the company. On his first earnings call as CEO, most of what Lou highlighted was cash, costs and contracts, not big new drilling plans.

The first quarter on his watch

Chord reported about $442 million in adjusted free cash flow for the third quarter and returned most of it to shareholders, according to a summary of the call. Oil output averaged 165.5 thousand barrels a day, above guidance, and the company raised its full-year oil target for the second time this year, to 162.5 thousand barrels a day.

Lou said Chord expects to hold that higher production level flat through 2027, with details of next year’s program coming in February. He also said the company will weigh spending against share buybacks if prices move.

Some of the numbers he pointed to:

  • The company pays a $1.30-per-share base dividend and has bought back enough stock to cut its share count by about 10.8 million shares, or 17%, since announcing its deal for Enerplus in 2024.
  • Leverage is back below half a turn on Chord’s internal measure, which Lou said puts it in a position to return 75% or more of free cash flow to shareholders.
  • New work on oil, gas and water contracts should save $35 million to $55 million a year, bringing total annual savings from the last two rounds to about $85 million.
  • Chord expects to sell non-core Marcellus Shale assets later this year.

Four-mile wells and the Bakken

Chord’s business is almost entirely in the Williston Basin of North Dakota and Montana, the Bakken and Three Forks formations. Its signature move there has been drilling four-mile laterals, horizontal wells that run about twice as far underground as the industry’s old standard.

The company had 47 four-mile wells online at the end of September. Chief Operating Officer Darrin Henke said they’re producing as expected and that drilling costs for them have fallen about 9% since the first quarter. He said it may take another year to know exactly how much the fourth mile adds.

Lou called Chord a natural consolidator in the Williston. All five of its acquisitions in the past five years have been in the basin, and while it will keep looking elsewhere, the Williston remains the focus. He also noted that the basin’s rig count rose about 30% in the second half of the year as other operators picked up activity.

Why Houston keeps the jobs

Chord’s wells are more than 1,000 miles away, but its headquarters, finance team and the people making these calls are in Houston. That’s true of a lot of the city’s oil and gas business: production happens in North Dakota, West Texas or Appalachia, and the decisions, deals and paychecks run through downtown and the Energy Corridor.

The Brown and Lou moves are a small example of how that talent circulates. One big producer hired another’s CEO, the other promoted from within, and nobody had to leave the metro area. For Chord’s shareholders, the first report card was good. The next test comes in February, when Lou lays out his first full-year plan.

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