Coterra Energy Inc. · NYSE:CTRA
Coterra Energy — Q4 2022 Earnings Presentation
24 slides from Coterra Energy's earnings presentation, Feb 23, 2023
Slide 1: 4Q22 Earnings Presentation
4Q22 Earnings Presentation February 22, 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 Net acres: ~183,000 Top-tier acreage positions with deep invento
Slide 4: Executing on our Strategy
Executing on our Strategy Operational excellence and capital discipline 2022: Delivered on Capital Discipline While 2023 Outlook: Investing Through Price Cycles to Commodity Prices Provided Outsized Returns Sustain Zero-to-Modest Growth Solid execution $2.0-2.2 billion capex to drive relatively $5.5
Slide 5: 2023 Program: Increased Budget Driven by Inflation and Incremental Activity
2023 Program: Increased Budget Driven by Inflation and Incremental Activity Supporting 3-Yr Outlook 2023e midpoint capex of $2.1 billion +20% YoY, increased activity driving multi-year production outlook driven by both inflation & activity oil mbod natural gas bcfd 97.1 2.9 2.8 2.8 YoY activity incr
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 FCF at strip maintain consistent operational activity $12 across basins & across various price scenarios provides zero-to-modest growth resilient in $10 excess FCF low prices retu
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 $1.9bn at recent strip prices targeted 50%+ cash cash - $0.2 return of FCF1, through dividends continue to target 13% 22% base dividend minimum 50% return returned 82% o
Slide 9: Prioritizing Financial Flexibility
Prioritizing Financial Flexibility history of conservative Net Leverage liquidity & debt maturity profile $mm and weighted average rates Cimarex Cabot Coterra WTI HH .0x $2,500 $2,173 4.4% 0.0 $2,000 0.0 0 $80 $8.00 0.0 $75 $1,500 3.9% 0 .0x $7.00 0.0 $6.40 3.8% 0 $60 $61 $6.00 $1,000 3.7% 0.0 0 $48
Slide 10: High-Yielding Investment Opportunity with Advantaged Capital Structure
High-Yielding Investment Opportunity with Advantaged Capital Structure dividend yield last quarter annualized1 market-leading Net Leverage position2 base variable CTRA 3.3% 6.1% Coterra’s 0.2x Net Leverage is 400 lower than 82% of the S&P500 Real Estate 3.7% 5th highest Energy 3.6% dividend Communic
Slide 11: Diversified Marketing Portfolio
Diversified Marketing Portfolio 2023 estimated natural gas sales markets 2023 estimated oil sales markets NYMEX Houston ship channel premium (Zone 6 Non New York & Power) in-basin Marcellus 36% 26% 24% Permian 4% 6% ~10% ~90% Anadarko 4% Cushing Midland ‒ about one third of our natural gas is expect
Slide 12: 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 - $970mm D&C capex mobilization time for drilling & completion services 9,900'
Slide 13: 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 +23% +10% +27% +34% boe 80 boe 70 boe boe gas 63 63 51 boe gas boe boe 59 57 57 19 gas boe gas gas gas gas 50 16 24 35 33 35 oil gas 22 oil 51 41 oil 34 oil oil oil oil 28
Slide 14: Promising New Development: Harkey Shale
Promising New Development: Harkey Shale Harkey & Upper Wolfcamp development of a full-section in Culberson County productivity cumulative boe per lateral foot economics Harkey Wolfcamp Wolfcamp Harkey 30 1 section Well count 8 wells 4 wells 2022 vintage 2022 vintage Harkey 25 Well spacing ~700 foot
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 (14 wells) expected to continue in 2023, complementing highly $800mm - $890mm D&C capex productive Lower Marcellus
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 Lower Marcellus Upper Marcellus Dobrosielski Lower Upper Marcellus Marcellus Dobrosielski 600 Well count 158 wells 7 wells 500 2021-22 vintage 2022 vintage We
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 $150mm - $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 methane emissions intensity greenhouse gas emissions intensity flare intensity methane emissions (MT CH4) / gross methane produced (MT CH4) GHG emissions (MT CO2e) / gross produ
Slide 20: Appendix
© coTERRA appendix
Slide 21: Quarterly Key Results & Guidance
Results & Guidance Quarterly Key Results & Guidance Full-Year 2023e Expense & Capex & Gas $mm, unless noted 4Q22 Guidance 4Q22 vs. midpoint 1Q23e Price Detail $ per boe, unless noted Total Production (mboed) 615 - 635 632 1% 610 - 625 Operations 2023e Gas (mmcfd) 2,725 - 2,775 2,780 1% 2,650 - 2,750
Slide 22: 2022 Key Results & 2023 Guidance
2022 Key Results & 2023 Guidance Feb 2022 2022 v. mid-2023e $bn, unless noted Guidance 2022 midpoint 2023e v. 2022 Total Production (mboed) 600 - 635 634 3% 610 - 650 -1% Operations Gas (mmcfd) 2,680 - 2,850 2,806 1% 2,700 - 2,850 -1% Oil (mbod) 81.0 - 86.0 87.5 5% 86.0 - 92.0 2% Net wells online 13
Slide 23: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Supplemental Non-GAAP Financial Measures (Unaudited): We report our financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, we believe certain non-GAAP performance measures may provide financial statem
Slide 24: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Twelve Months Ended: Sept 30 June 30 March 31 December 31 ($ in millions) 2022 2022 2022 2022 2021 2020 2019 2018 2017 EBITDAX Net income $ 3,972 $ 2,839 $ 1,640 $ 4,065 $ 1,158 $ 201 $ 681 $ 557 $ 100 EBITDAX is defined as net income plus interest expense, oth