Coterra Energy Inc. · NYSE:CTRA
Coterra Energy — Q2 2023 Earnings Presentation
26 slides from Coterra Energy's earnings presentation, Aug 8, 2023
Slide 1: 2Q23 Earnings Presentation
2Q23 Earnings Presentation August 7, 2023
Slide 2: Disclaimers
Disclaimers Cautionary Statement Regarding Forward-Looking Information This presentation contains certain forward-looking statements within the meaning of federal securities laws. Forward-looking statements are not statements of historical fact and reflect Coterra's current views about future events
Slide 3: Operational Excellence & Capital Discipline
Operational Excellence & Capital Discipline advantaged assets & operations high-quality, long-life, diversified asset portfolio Multi-basin portfolio provides commodity diversification and capital allocation optionality Marcellus Shale 2H23: 2 rigs & 1 crew Top-tier acreage positions with deep inven
Slide 4: Quarterly & Annual Guidance Key Messages
Quarterly & Annual Guidance Key Messages 2Q23 2023e raising 2023 production oil mbod guidance guidance 88.5 – 91.5 prior guid. 87.0 93.0 +3% / +2% / +2% on oil / gas / BOE at the mid-point actual 95.8 updated 91.0 94.0 strong operational performance driven primarily by productivity beats; secondaril
Slide 5: 2023 Investment Driving 3-Year Outlook
2023 Investment Driving 3-Year Outlook 2023e midpoint flexibility remains for $2.0- increased activity in 2023 driving multi-year production outlook capex of $2.1 billion $2.1 billion estimated spend oil mbod >5% natural gas bcfd in 2024 & 2025 CAGR 0-5% potential to reduce Marcellus 2.8 CAGR 92.5 2
Slide 6: 3-Year Snapshot: Committed to Capital Discipline
3-Year Snapshot: Committed to Capital Discipline 2023e-2025e sum of expected uses of CFFO, $ in billions $14 significant maintain consistent operational activity FCF at strip $12 across basins & across various price scenarios aiming for consistent, profitable growth resilient in $10 excess FCF low p
Slide 7: Long Runway of High-Quality Inventory
Long Runway of High-Quality Inventory net economic locations at $75/bbl & $3.50/mcf implied inventory duration1 net locations avg lateral length ranges can fluctuate based on assumptions around well spacing, cost levels, commodity prices, & activity cadence >90% of locations hurdle 1.5x PVI10 10 yrs
Slide 8: Committed to Returning Value
Committed to Returning Value $ billions | percentages shown are shareholder returns as percentage of FCF 2022 FCF $3.9bn 2023e FCF $1.2bn at recent strip prices, see appendix for commodity price assumptions targeted 50%+ cash cash return of FCF, - $0.2 through dividends 14% base continue to target 2
Slide 9: Prioritizing Financial Flexibility
Prioritizing Financial Flexibility history of conservative Net Leverage liquidity & debt maturity profile $mm and weighted average rates $2,500 0.05 Cimarex Cabot Coterra WTI HH 6.0x $2,341 $2,000 0.04 4.4% $90 $8.00 $1,500 0.04 $80 5.0x $80 $7.00 $1,000 3.9% $75 3.7% 3.8% $70 $71 $6.00 0.03 $60 $60
Slide 10: Diversified Marketing Portfolio
Diversified Marketing Portfolio 2023 estimated natural gas sales markets 2023 estimated oil sales markets NYMEX premium (Zone 6 Non New York & Power) in-basin Houston ship channel Marcellus 33% 24% 21% Permian 10% 5% ~10% ~90% Anadarko 4% Cushing Midland ‒ about one third of our natural gas is expec
Slide 11: Constructive on Long-Term Natural Gas Fundamentals
Constructive on Long-Term Natural Gas Fundamentals production in bcfd & prices in $ per mmbtu exports & industrial demand expected to drive …requiring supply growth from major U.S. gas basins U.S. natural gas demand growth… 45 NYMEX as of 7/26/23 HH per forecast Northeast Permian Haynesville $12 +21
Slide 12: Cost Relief Potential
Cost Relief Potential Currently seeing potential for ~5% cost savings in 2024 % of well cost, leading-edge cost indicators implied 2024 costs vs. 2023 on average seeing cost relief in recent recent cost indicators imply drilling rig 5% -10% well costs on some big-ticket 4.5% potential for ~5% overal
Slide 13: Permian Asset Overview
Permian Asset Overview targeting prolific Wolfcamp & Bone Spring notable Permian projects 2023 operational outlook Larger-scale projects are driving capital efficiency by - Focusing on concentrated areas & reducing $880mm - $980mm D&C capex mobilization time for drilling & completion services 9,700'
Slide 14: CTRA Long-lateral Wolfcamp Wells are Outperforming
CTRA Long-lateral Wolfcamp Wells are Outperforming Wolfcamp, >8,500’ lateral, 2016+ 24-month cumulative production per foot, boe +28% +6% +27% +37% boe boe 80 71 boe gas boe gas 61 64 boe 51 boe boe 58 57 56 21 boe gas gas gas 50 gas gas 25 34 33 35 15 gas oil 23 oil 50 40 oil 32 oil oil oil oil 27
Slide 15: Marcellus Asset Overview
Marcellus Asset Overview Susquehanna County acreage significant Upper Marcellus leverages highly productive formation delineation in 2023 2023 operational outlook Positive 2022 results expected to continue in 2023, complementing highly productive Lower $790mm - $880mm D&C capex Marcellus 9,100 ft av
Slide 16: New Upper Marcellus Development Performing Favorably
New Upper Marcellus Development Performing Favorably Alongside Premier Lower Marcellus productivity cumulative mcf per lateral foot economics 700 Lower Marcellus Lower Upper Marcellus Marcellus 600 Well count 187 wells 13 wells Continue to expect 2021-23 vintage 2022 vintage Upper Marcellus well 500
Slide 17: Anadarko Asset Overview
Anadarko Asset Overview increasingly important basin located near industrial & LNG export demand, strong returns expected expected to dominate natural gas demand growth across recent projects 2023 operational outlook Carel Elder Project | Woodford lonerock $160mm - $170mm D&C capex 4.9 net (5 gross)
Slide 18: Recent Anadarko Projects Outperforming Legacy Offsets
Recent Anadarko Projects Outperforming Legacy Offsets, Driving Capital Efficiency & Higher Returns days online vs cumulative boe per lateral foot lonerock (mixed gas & oil) downdip (gas & NGL weighted) updip (oil weighted) Carel/Elder legacy offset wells Miller Trust legacy offset wells Leota/Clark
Slide 19: Managing Emissions
Managing Emissions Executive compensation tied to emissions reduction metrics; 15% of total short-term incentive potential greenhouse gas emissions intensity upstream segment greenhouse gas emissions GHG emissions (MT CO2e) / gross production (MBoe) intensity (EPA onshore production segment) GHG emi
Slide 20: Managing Emissions
Managing Emissions Executive compensation tied to emissions reduction metrics; 15% of total short-term incentive potential methane emissions intensity flare intensity methane emissions (MT CH4) / gross methane produced (MT CH4) flared natural gas (Mcf) / gross natural gas production (Mcf) 0.168% 0.4
Slide 21: Appendix
© COTERRA appendix
Slide 22: Cash Balance Provides Flexibility Through Cycles
Cash Balance Provides Flexibility Through Cycles $ millions 1,600 200% Cash and equivalents % of Free Cash Flow returned to shareholders 184% 180% 1,400 $1,447 160% 1,200 counter-cyclical buyback activity 140% 1,000 $1,059 facilitated by strong 120% $973 cash position 106% 800 $841 100% $778 81% $67
Slide 23: Annual Guidance
Annual Guidance 2023e guidance 2023e expense guidance prior 2023e guid. 2023e change $ per boe, unless noted Operations Total Production (mboed) 610 - 650 630 - 655 20 - 5 Gas (mmcfd) 2,700 - 2,850 2,750 - 2,900 50 - 50 Oil (mbod) 87.0 - 93.0 91.0 - 94.0 4.0 - 1.0 2023e Change from prior guid. Lease
Slide 24: Quarterly Key Results & Guidance
Quarterly Key Results & Guidance $mm, unless noted 1Q23 2Q23 2Q23 Guidance 2Q23 vs. mid 3Q23e Operations Total Production (mboed) 635 665 620 - 650 5% 625 - 655 Gas (mmcfd) 2,757 2,904 2,750 - 2,850 4% 2,775 - 2,875 Oil (mbod) 92.2 95.8 88.5 - 91.5 6% 88.0 - 91.0 Net wells online 48 39 36 - 45 -2 31
Slide 25: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Supplemental Non-GAAP Financial Measures (Unaudited): We report our financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, we believe certain non-GAAP performance measures may provide financial statem
Slide 26: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Twelve Months Ended: June 30 December 31 ($ in millions) 2023 2022 2021 2020 2019 2018 2017 EBITDAX Net income $ 3,114 $ 4,065 $ 1,158 $ 201 $ 681 $ 557 $ 100 Plus (less): EBITDAX is defined as net income plus interest expense, other expense, income tax Interes