Chord Energy's (CHRD) upcoming Q3 report is expected to include a positive operations update on its 4-mile lateral drilling program in the Williston Basin, UBS Securities said, adding that the initiative is a key catalyst for efficiency gains expected in 2026 and beyond.

The firm projects Q3 adjusted earnings before interest, taxes, depreciation, amortization, and exploration expense of about $572 million, compared with the Street's $582 million estimate. The firm modeled oil production at 156.7 mbopd, total output at 283 mboepd, and capital expenditure near $330 million, broadly in line with consensus.

The brokerage highlighted Chord's 4-mile lateral program as its biggest operational driver, noting that the Rystedt 2B well outperformed its type curve by about 30% in its first six months online.

UBS said in a Sunday note that it expects seven 4-mile wells to be turned in line by year-end and looks for commentary on execution across the broader program.

The brokerage said investor attention also remains on a potential sale of Chord's non-core Marcellus assets, though such a move appears unlikely in the Q3 update. The firm expects more details on the pending acquisition of ExxonMobil's (XOM) Williston assets, which is expected to close in Q4 and strengthen scale and capital efficiency.

On capital allocation, the brokerage noted that Chord repurchased about $83 million of shares in the quarter and plans to reduce shareholder returns from 75% to 50% of adjusted free cash flow following the ExxonMobil acquisition. The company also completed a $750 million offering of 6% senior notes due 2030 to fund the purchase and repay revolver borrowings.

UBS maintained a buy rating on the stock with a price target of $130.

Shares of the company were up 2% in recent trading.

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