Coterra Energy Inc. · NYSE:CTRA
Coterra Energy — Q3 2022 Earnings Presentation
19 slides from Coterra Energy's earnings presentation, Nov 4, 2022
Slide 1: 3Q22 Earnings Presentation
3Q22 Earnings Presentation November 3, 2022
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: ~177,000 Top-tier acreage positions with deep invento
Slide 4: 3Q22 Key Results & Updated Guidance
3Q22 Key Results & Updated Guidance $mm, unless noted 1Q22a 2Q22a 3Q22a 4Q22e Operations Total Production (mboed) 630 632 641 615 – 635 Gas (mmcfd) 2,850 2,790 2,807 2,725 – 2,775 strong operational execution and performance Oil (mbod) 83.1 88.2 87.9 86 – 89 BOE and natural gas production exceeded h
Slide 5: Disciplined Capital Allocation
Disciplined Capital Allocation 2022e sources & uses of cash DCF & FCF at recent strip capital allocation $5.6 billion $1.7 billion priorities grow modestly and invest in high-returning projects Projects require 50% hurdle rate in today’s higher price environment $3.9 billion Executed debt Committed
Slide 6: Total Return of $2.7 billion over LTM represents 11% of Market Cap
Total Return of $2.7 billion over LTM represents 11% of Market Cap $ millions | percentages shown are shareholder returns as percentage of FCF FCF FCF $1,064 $1,019 FCF $961 81% 74% Returning incremental value with FCF $758 70% buybacks $303 buybacks share repurchases $253 $510mm remaining1 on $1.25
Slide 7: Prioritizing Financial Flexibility
Prioritizing Financial Flexibility history of conservative Net Leverage liquidity & debt maturity1 profile $mm and weighted average rates Cimarex Cabot Coterra WTI HH .0x $2,500 $2,278 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 $4
Slide 8: 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 CTRA 9.0% Coterra’s 0.2x Net Leverage is Real Estate 4.4% 6th highest 400 lower than 82% of the S&P500 Energy 3.8% dividend yield in the Utilities 3.3%
Slide 9: 2022 Capital Budget & Activity
2022 Capital Budget & Activity 2022e capex estimates $ millions SWD & Infra $75 Consider longer-term service contracts for base Other $75 level activity Anadarko D&C $100 But also consider services market may re-rate lower so maintaining some market exposure can be beneficial Marcellus D&C $725 Cons
Slide 10: Permian Asset Overview
Permian Asset Overview targeting prolific maintaining steady production levels Oil (mbbld) NGL (mboed) Gas (mmcfd) 4Q21 1Q22 2Q22 3Q22 Wolfcamp & Bonespring 100 81 82 83 77 80 449 416 427 411 60 65 61 56 54 40 20 02022 operational program net wells drilled net wells completed net wells online 2022 g
Slide 11: Optimized Permian Operations Driving Capital Efficiency
Optimized Permian Operations Driving Capital Efficiency Reducing costs with larger projects, longer laterals, & electrification Improved Permian capital efficiency, gross wells per development average lateral length (frac end) % of drilled/completed Permian partially offset by inflation impacts well
Slide 12: Marcellus Asset Overview
Marcellus Asset Overview Susquehanna County production declining slightly as operational activity 2H22-weighted gas mmcfd 4Q21 1Q22 2Q22 3Q22 acreage leverages highly 2,494 productive formation 2,266 2,196 2,214 0 2022 operational program net wells drilled net wells completed net wells online 2022 g
Slide 13: New Upper Marcellus Development Performing Favorably Alongside Premier Lower Marcellus
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 450 Marcellus Dobrosielski 400 Well count 140 wells 7 wells 2021-22 vintage 2022 vintage 35
Slide 14: Anadarko Asset Overview
Anadarko Asset Overview increasingly important basin located maintaining steady production levels Oil (mbbld) NGL (mboed) Gas (mmcfd) near industrial & LNG export demand, 35 4Q21 1Q22 2Q22 3Q22 expected to dominate natural gas demand growth 179 166 165 179 25 21 21 18 17 15 8 6 6 5 5 (5) downdip gas
Slide 15: Managing Emissions
Managing Emissions Executive compensation now tied to emissions reduction metrics; 15% of total current short-term incentive potential methane emissions intensity greenhouse gas emissions intensity1 flare intensity methane emissions (MT CH4) / gross methane produced (MT CH4) GHG emissions (MT CO2e)
Slide 16: Appendix
© COTERRA y Appendix a
Slide 17: 2022 Outlook
2022 Outlook As of November 3, 2022 4Q22 Changes to Previous Previous Marcellus Natural Gas Price Exposure by Index Guidance 2022 Guidance 2022 Guidance Index, $/mcf 4Q22e 2022e Production November August NYMEX less $0.39 37% Total production (MBoepd) 615 - 635 625 - 640 615 - 635 NYMEX less $0.20 4
Slide 18: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Supplemental Non-GAAP Financial Measures (Unaudited): We report our financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, we believe certain non-GAAP performance measures may provide financial statem
Slide 19: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Twelve Months Ended: ($ in millions) Sept 30 2022 June 30 March 30 2022 2022 2021 2020 December 31 2019 2018 2017 EBITDAX Net income $ 3,972 $ 2,839 $ 1,640 $ 1,158 $ 201 $ 681 $ 557 $ 100 EBITDAX is defined as net income plus interest expense, other expense, i