Coterra Energy Inc. · NYSE:CTRA
Coterra Energy — Q3 2023 Earnings Presentation
31 slides from Coterra Energy's earnings presentation, Nov 7, 2023
Slide 1: 3Q23 Earnings Presentation
3Q23 Earnings Presentation November 6, 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: Quarterly & Annual Guidance Key Messages
Quarterly & Annual Guidance Key Messages 3Q23 2023e raising 2023 production oil mbod guidance guidance 88.0 - 91.0 prior guid. 91.0 94.0 +3% / +1% / +3% on oil / gas / BOE at the mid-point actual 91.9 updated 94.5 95.5 faster cycle times and strong well productivity drove 3Q23 production beat and 20
Slide 4: Operational Efficiencies Driving Timing Beats
Operational Efficiencies Driving Timing Beats Permian & Marcellus average pump hours per day 2023 guidance revisions for Permian + Marcellus net wells online revised 2023 guidance +10 net wells 17.0 throughout the year as completions 16.7 timing continued to beat expectations 170 15.7 165 165 160 15
Slide 5: Differentiated by Operational Excellence & Capital Discipline
Differentiated by Operational Excellence & Capital Discipline advantaged assets & operations Multi-basin portfolio provides commodity diversification and capital allocation optionality Top-tier acreage positions with deep inventory, estimated at 15+ years1 Low-cost operator with corporate break-even
Slide 6: High-Quality, Long-Life, Diversified Asset Portfolio
High-Quality, Long-Life, Diversified Asset Portfolio multi-basin portfolio provides commodity diversification and capital allocation optionality 3Q23 commodity splits top-tier acreage positions with deep inventory, estimated at 15+ years1 natural gas oil NGL low-cost operator with corporate break-ev
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: Consistent, Profitable Growth
Consistent, Profitable Growth 2023e midpoint flexibility remains for $2.0- multi-year production outlook capex of $2.1 billion $2.1 billion estimated spend oil mbod natural gas bcfd >5% in 2024 & 2025 CAGR 0-5% potential to reduce Marcellus capex 95.0 2.9 CAGR by >$200mm, while still delivering 87.5
Slide 9: 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 $12 operational activity resilient in across basins & across various price scenarios $10 excess FCF low prices aiming for consistent, profitable gr
Slide 10: Committed to Returning Value
Committed to Returning Value $ billions | percentages shown are shareholder returns as percentage of FCF 2022 FCF $3.9bn 2023e FCF $1.3bn at recent strip prices, see appendix for commodity price assumptions targeted 50%+ cash cash return of FCF, $0.2 continue to target through dividends minimum 50%
Slide 11: 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 00 $8.00 $2,000 $2,347 0.04 90 $91 4.4% $7.00 $1,500 80 $80 0.04 3.9% $75 $6.00 $1,000 3.8% 70 3.7% 0.03 $61 $5.00 $500 $2
Slide 12: Diversified Marketing Portfolio
Diversified Marketing Portfolio 2023 estimated natural gas sales markets 2023 estimated oil sales markets NYMEX fixed price premium (Zone 6 Non New York & Power) in-basin Houston ship channel Marcellus 33% 22% 22% Permian 10% 5% ~10% ~90% Anadarko 5% Cushing Midland ‒ ~1/3 of our natural gas is expe
Slide 13: Cost Relief Potential
Cost Relief Potential Currently seeing potential for ~5% cost savings in 2024 % of 2023 well leading-edge cost indicators implied 2024 costs vs. 2023 cost, 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% o
Slide 14: Top-Tier Producer
Top-Tier Producer Delaware productivity cumulative oil per lateral foot 50 45 Productivity will differ from year to year, depending on project selection & other 40 operational decisions 35 Oily Lea County projects bolstered 2020 & 2022 Generally, our Permian program will be ~2/3 Texas and ~1/3 New 3
Slide 15: Top-Tier Producer
Top-Tier Producer Marcellus productivity cumulative mcfe per lateral foot 1,200 Peer-leading productivity driven by premier acreage position, in Northeast 1,000 90% Lower & Pennsylvania 10% Upper1 Productivity expected to trend downward 60% Lower & slightly with introduction of Upper 800 40% Upper1
Slide 16: 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 mobilization $880mm - $980mm D&C capex time for drilling & completion services 9,600'
Slide 17: Row Developments Increasing Efficiencies
Row Developments Increasing Efficiencies Windham Row is a 51-well project across 6 drilling spacing units with 7-10 wells per section Upper Wolfcamp services occurring simultaneously down the row drilling completing drill-out production (“mowing the lawn”): online simul-ops (simultaneous operations)
Slide 18: CTRA Long-Lateral Wolfcamp Wells are Outperforming
CTRA Long-Lateral Wolfcamp Wells are Outperforming On both gas and oil 36-month cumulative oil production (bbl) per foot 36-month cumulative gas production (mcf) per foot +32% 7% gas outperformance in Eddy +27% >20% BOE outperformance in Culberson 70 >35% BOE outperformance in Lea & Reeves 407 +28%
Slide 19: 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 20: 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 21: 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 22: Managing Emissions
Managing Emissions 22 Link to 2023 Sustainability Report: ESG - Coterra Energy
Slide 23: Managing Emissions
Managing Emissions Executive compensation tied to emissions reduction metrics; 15% of total short-term incentive potential 23 Link to 2023 Sustainability Report: ESG - Coterra Energy
Slide 24: Emissions Reductions Efforts
Emissions Reductions Efforts greenhouse Electrifying compressors, fracs, & drilling rigs typically reduces net Scope 1 + Scope 2 emissions from those sources by 25-45%, depending on the gas technology being electrified emissions Expect to exit 2023 with 16 midstream electric compressors (up from 4 i
Slide 25: Appendix
© COTERRA appendix
Slide 26: Cash Balance Provides Flexibility Through Cycles
Cash Balance Provides Flexibility Through Cycles $ millions cash and equivalents % of Free Cash Flow returned to shareholders 600 counter-cyclical 200 buyback activity 183% facilitated by strong 400 $1,447 cash position 200 000 $1,059 $973 106% 800 $841 $847 100 $778 84% 81% $673 600 74% 76% 70% 400
Slide 27: Annual Guidance
Annual Guidance 2023e guidance 2023e expense guidance prior 2023e guid. 2023e change $ per boe, unless noted Operations Total Production (mboed) 630 - 655 655 - 665 25 - 10 2023e Change from prior guid. Gas (mmcfd) 2,750 - 2,900 2,840 - 2,870 90 - (30) Lease operating expense + workovers $1.75 - $2.
Slide 28: Quarterly Key Results & Guidance
Quarterly Key Results & Guidance $mm, unless noted 1Q23 2Q23 3Q23 Guidance 3Q23 3Q23 vs. mid 4Q23 Guidance Operations Total Production (mboed) 635 665 625 - 655 670 5% 645 - 680 Gas (mmcfd) 2,757 2,904 2,775 - 2,875 2,903 3% 2,780 - 2,900 Oil (mbod) 92.2 95.8 88.0 - 91.0 91.9 3% 98.0 - 102.0 Net wel
Slide 29: 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 11/3/23 HH per forecast Northeast Permian Haynesville $12 +21
Slide 30: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Supplemental Non-GAAP Financial Measures (Unaudited): We report our financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, we believe certain non-GAAP performance measures may provide financial statem
Slide 31: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Twelve Months Ended: ($ in millions) Sept 30 2023 2022 2021 December 31 2020 2019 2018 2017 EBITDAX Net income $ 2,241 $ 4,065 $ 1,158 $ 201 $ 681 $ 557 $ 100 EBITDAX is defined as net income plus interest expense, other expense, income tax expense and benefit,