Coterra Energy Inc. · NYSE:CTRA
Coterra Energy — Cabot Oil & Gas — Merger or Acquisition (May 2021)
18 slides from Coterra Energy's merger presentation, May 24, 2021
Slide 1: Creating a Premier, Free Cash Flow Focused Energy Company
Creating a Premier, Free Cash Flow Focused Energy Company May 24, 2021 MERGER OF EQUALS
Slide 2: Disclaimers: Cautionary Statement Regarding Forward-Looking Information
Disclaimers 2 Cautionary Statement Regarding Forward - Looking Information This presentation contains certain “forward - looking statements” within the meaning of federal securities laws. Words such as “an ticipates,” “believes,” “expects,” “intends,” “plans,” “outlook,” “will,” “should,” “may” and
Slide 3: Disclaimers: No Offer or Solicitation
Disclaimers 3 No Offer or Solicitation This presentation is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in whic
Slide 4: Merger of Equals Creates a Premier Energy Company
4 Merger of Equals Creates a Premier Energy Company Free Cash Flow Focused, Diversified Energy Company HIGH - QUALITY, DIVERSIFIED OPERATING PLATFORM ~600 MBoepd 1Q21 production ACCELERATING CAPITAL RETURNS Target to deliver 50%+ of FCF to shareholders FINANCIAL STRENGTH Maintain <1x net debt - to -
Slide 5: Transaction structure
5 Transaction structure Merger of Equals Overview • Stock - for - stock merger of equals with a total combined enterprise value of ~$17bn • Exchange ratio: 4.0146 shares of Cabot for each share of Cimarex • Pro forma equity ownership: 49.5% Cabot & 50.5% Cimarex on a fully diluted basis Financials &
Slide 6: Strategic Rationale: A Stronger & More Resilient Energy Company
Premier Multi - Basin Exposure Consolidating top - tier teams & assets to create a diversified portfolio with scale & capital optionality Low - cost, capital - efficient inventory underpins robust FCF outlook 6 Strategic Rationale A Stronger & More Resilient Energy Company Sustainable Free Cash Flow
Slide 7: Combined Business Will Have Robust, Highly Economic Inventory
Premier Multi - Basin Exposure 7 Premier Multi - Basin Exposure Combined Business Will Have Robust, Highly Economic Inventory Strong Balance Sheet Commitment to ESG & Sustainability Sustainable Free Cash Flow Accelerating Capital Returns Commodity & asset diversification are competitive advantages R
Slide 8: Sustainable Free Cash Flow: Disciplined Capital Allocation Strategy
8 Sustainable Free Cash Flow FCF Generation Driven by Disciplined Capital Allocation Strategy Capital allocation framework Key priorities 1 Return cash to shareholders Sustainable base dividend Supplemental/variable dividends & share repurchases Invest in our business Disciplined capital expenditure
Slide 9: Sustainable Free Cash Flow: Robust Outlook for FCF
$3.00 HH $40 WTI $50 WTI $60 WTI 9 Sustainable Free Cash Flow Robust Outlook for FCF Responsive capital allocation Supports through - cycle cash generation & prioritizes capital efficiency Commodity Price Environment High Low ~50 - 60% ~40 - 50% ~30 - 40% REINVESTMENT RATE (% CFO) 3 - year outlook f
Slide 10: Accelerating Capital Returns
VARIABLE DIVIDEND 10 Accelerating Capital Returns Dividend Framework to Return Cash Through the Cycle Track Record of Returning Capital to Shareholders Cabot & Cimarex have returned a combined $2.3bn to shareholders since 2016 through dividends & share repurchases SUSTAINABLE BASE DIVIDEND › Anticip
Slide 11: Strong Balance Sheet: Resilient Financial Position
(1.0x) (0.5x) 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x - $5 $10 $15 $20 $25 YE 2021e Net Debt / 2021e EBITDA Enterprise Value ($ Bn ) 11 Strong Balance Sheet Resilient Financial Position Low leverage + scale Provides significant capital optionality Pro forma liquidity & debt maturity profile Sca
Slide 12: Commitment to ESG & Sustainability
12 Commitment to ESG & Sustainability Shared Commitments to Environmental Stewardship, Sustainability & Strong Corporate Governance Environment, social & safety performance Governance Sustainability reporting › Continue to embed ESG in compensation structure › Maintain board - level oversight of ESG
Slide 13: A Premier Energy Company
Premier Multi - Basin Exposure 13 A Premier Energy Company Free Cash Flow Focused, Diversified Energy Company Sustainable Free Cash Flow Accelerating Capital Returns Strong Balance Sheet Commitment to ESG & Sustainability 2022 - 2024 cumulative FCF is a preliminary estimate based on $55/ Bbl WTI oil
Slide 14: Appendix
Senos + BZ Appendix
Slide 15: An Attractive Investment Thesis
An Attractive Investment Thesis 15 Scale, Robust Free Cash Flow, Expanding Capital Returns & Financial Strength Source: Public Filings & FactSet Note: Peers include U.S. onshore focused independent upstream companies >$10bn market cap: CLR, COP, DVN, EOG, FANG, HES, PXD 1 Based on select Wall Street
Slide 16: Top-Tier Resource Depth
16 Top - Tier Resource Depth Combined Portfolio Represents >20 Years of Inventory High - quality, multi - decade drilling inventory Years of inventory with present value/investment >1.5x 2 1 Oil & natural gas play breakeven analysis assumes 25% BTAX IRRs & strip pricing as of 3/3/2021; sourced from
Slide 17: Variable Dividend Formula
17 Variable Dividend Formula Variable cash dividend Target return of cash to shareholders 50%+ CALCULATED ON A QUARTERLY BASIS Discretionary Cash Flow Capital Expenditures Free Cash Flow Target 50%+ Payout Quarterly Return to Shareholders Quarterly Base Dividend ($0.125 per share) Variable Cash Divi
Slide 18: Free Cash Flow (non-GAAP)
18 Free Cash Flow (non - GAAP) This presentation provides free cash flow, or FCF, which is a non - GAAP financial measure. Free cash flow is discretionary cash flow in excess of oil and gas capital expenditures and other capital expenditures. Cabot and Cimarex believe that free cash flow is useful t