Coterra Energy Inc. · NYSE:CTRA
Coterra Energy — Q3 2024 Earnings Presentation
40 slides from Coterra Energy's earnings presentation, Nov 1, 2024
Slide 1: 3Q24 Earnings Presentation
3Q24 Earnings Presentation October 31, 2024
Slide 2: Disclaimer
Disclaimer 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: Differentiated by Operational Excellence & Capital Discipline
Differentiated by Operational Excellence & Capital Discipline Advantaged Assets Operate Responsibly Disciplined Investment Return Value and Operations • Published Sustainability Report • Expect to reinvest 50-70% of • Committed to sustainably in August 2024 cash flow at mid-cycle prices growing base
Slide 4: High-Quality, Long-Life, Diversified Asset Portfolio
High-Quality, Long-Life, Diversified Asset Portfolio 3Q24 Commodity Splits natural gas oil NGL Multi-Basin Portfolio provides commodity diversification and capital 16% ANADARKO allocation optionality ~182,000 net acres 3Q24 Production: 73 MBoe/d, 50% Liquids MARCELLUS 17% Production 6:1 FY24 D&C Cap
Slide 5: Diversifying Gas Portfolio with New LNG Contracts
Diversifying Gas Portfolio with New LNG Contracts Reducing in-basin price exposure & diversifying toward European and Asian markets with expanding LNG portfolio Contracted Production Pricing LNG Volumes From Index 50 mmcfd Marcellus TTF TTF (NETHERLANDS) NBP (U.K.) 2028 – 2038 LNG terminal in Louisi
Slide 6: Long Runway of High-Quality Inventory
Long Runway of High-Quality Inventory Benchmark price assumptions of $75/bbl and $3.75/mmbtu ~$27 billion of Economic Capex Opportunities Implied Inventory Duration1 estimated capex by PVI10 bucket: estimated capex by formation – Total Inventory: Ranges can fluctuate based on assumptions around well
Slide 7: Executing on our Strategy
Executing on our Strategy Beat & Raise 3Q24 oil +1% | gas +2% | BOE +3% 2024 oil guidance +0.5% Beat vs high-end of 3Q24 guidance Raised 2024 oil production guidance +0.5% at the midpoint vs August guidance and +5% at the midpoint vs initial February guidance Expect 2024 oil +12% Capex Down & $1.75-
Slide 8: 3-Year Outlook: Optionality Across Diversified Portfolio
3-Year Outlook: Optionality Across Diversified Portfolio Expect 0-5% annual growth on total equivalent production and 5%+ annual growth on oil production Oil production Gas production Total equivalent production mbbld bcfd mboed 140 3,500 900 120 3,000 800 $1.75-1.95 2,884 700 billion 2,735- 107-108
Slide 9: Committed to Capital Discipline & Free Cash Flow Generation
Committed to Capital Discipline & Free Cash Flow Generation Expect to reinvest ~50-70% of cash flow at mid-cycle prices $ billions on y-axis | benchmark prices on x-axis capex as % of DCF $6 70% 65% 61% 60% $5 Maintained capital discipline & 58% generated substantial FCF beyond the base dividend, pr
Slide 10: Committed to Returning Value
Committed to Returning Value $ billions | Percentages shown are shareholder returns as percentage of FCF 2023 FCF $1.3bn 2024e FCF $1.1bn see appendix for commodity price assumptions 9% • Uncommitted excess FCF uncommitted 23% excess FCF available for buybacks and cash build $0.1 cash build $0.3 • R
Slide 11: Prioritizing Financial Flexibility
Prioritizing Financial Flexibility 6.0x History of Conservative Net Leverage Liquidity & Debt Maturity Profile WTI HH $mm and average rates 3000 0.07 5.0x $100 $8.00 $94 $90 $7.00 $80 $6.64 $78 $78 0.06 $6.00 2500 $70 $68 $65 5.6% $60 4.0x $5.00 $57 $50 $3.91 $4.00 0.05 $40 $3.12 $39 $3.00 2000 $2.6
Slide 12: Permian Asset Overview – 2024 Operational Outlook
Permian Asset Overview – 2024 Operational Outlook $1,050 million Mid-point D&C CapEx -12% from 2023 guidance of $1,200/ft 9,600' $1,050 80-90 Avg. Lateral Avg. Well Cost Net Wells Length1 per Foot1 Online 1) Of operated wells expected to come online within the year. Average lateral length * average
Slide 13: Permian Asset Overview
Permian Asset Overview Targeting Prolific Wolfcamp & Bone Spring Notable Row Projects in Culberson County Coterra Acreage Wolfcamp Bone Spring Windham Row Phase 1 51 gross Upper Wolfcamp wells 6 gross Harkey wells, co-developed 50% working interest 1Q25 final wells expected online Windham Row Phase
Slide 14: Top-Tier Delaware Producer with Competitive D&C Well Costs
Top-Tier Delaware Producer with Competitive D&C Well Costs Delaware Productivity1 2024e Delaware D&C Well Costs per Foot2 Cumulative Oil per Lateral Foot major peer operator 2021-2024 CTRA 2021-2023 CTRA 2024e-2026e Facilities & post-completion Assumed drilling & completion cost, unless otherwise no
Slide 15: CTRA Fully-Burdened Leading Edge Delaware Well Cost Estimates
CTRA Fully-Burdened Leading Edge Delaware Well Cost Estimates $ per foot Drilling & completion $ / ft Facilities $ / ft Post-completion $ / ft Expect future $/ft down -5% to -10% vs 2024 due to program efficiencies, project selection, $1,150 and realized deflation $1,060 $1,070 $950-1,000 $860 $910
Slide 16: Encouraging Bone Spring Results in Lea County
Encouraging Bone Spring Results in Lea County Promising Inventory Runway for Bone Spring Oil Productivity on 2024 Dos Equis Project Cumulative Oil per Lateral Foot 16 Brought 16.7 net Bone Spring wells1 online in Lea County this year 1st Sand (2 wells) 2nd Sand (4 wells) Wolfcamp A (4 wells) 14 Succ
Slide 17: Ops Efficiencies in Lea County Bone Spring
Ops Efficiencies in Lea County Bone Spring Drilling Feet per Day1 Pump Hours per Day +54% +112% Improvement on rig & frac vs. 2018 vs. 2018 efficiency driven by 1,340 20.4 ‒ Increased number of wells per pad ‒ Longer laterals ‒ Transition time reduction effort 17.1 16.6 15.8 1,071 1,072 1,062 14.1 9
Slide 18: Windham Row Project
Windham Row Project 57-well project across 6 drilling spacing units with 7-10 wells per section in Upper Wolfcamp & 3-4 wells per section in Harkey Harkey1 Upper Wolfcamp1 Current status of Completing Production Online simul-ops2 Row projects allow for concentrated activity & simultaneous operations
Slide 19: Expect 5-15% Cost Savings on Windham Row
Expect 5-15% Cost Savings on Windham Row Average Culberson Well Cost Centralized pad operations $ per foot • Reduces mobilization time for rigs & frac crews • Maximizes pump hours per day with faster transition time between wells • Minimizes infrastructure needed from well to facility $19 $43 $25 Re
Slide 20: Marcellus Asset Overview – 2024 Operational Outlook
Marcellus Asset Overview – 2024 Operational Outlook 2024e Net Wells Online 12 $300 million 10 Mid-point D&C CapEx 8 , ’ 6 $980 Avg. Lateral Avg. Well 4 Length for Upper1 Cost per Foot1 40 2 9, 6 ’ Net Wells $1,040 Online 0 Avg. Lateral Avg. Well Upper Lower Upper Lower Upper Lower Upper Lower Length
Slide 21: Marcellus Asset Overview
Marcellus Asset Overview Susquehanna County acreage leverages highly productive Lower 2024 activity YoY Marcellus Coterra Acreage • In response to weak near-term natural gas macro, lowered 2024e Marcellus D&C capex by ~65% year-over-year • Still have flexibility to increase capital and gas volumes o
Slide 22: Top-Tier Marcellus Producer
Top-Tier Marcellus Producer Marcellus Productivity Cumulative mcfe per Lateral Foot 1,000 90% Lower & 900 10% Upper1 Peer-leading productivity driven by premier acreage 55% Lower & 800 45% Upper1 position, in Northeast Pennsylvania 700 Productivity expected to trend downward slightly with introducti
Slide 23: Anadarko Asset Overview – 2024 Operational Outlook
Anadarko Asset Overview – 2024 Operational Outlook 2024e Net Wells Online Downdip Lonerock Updip non-op $300 million 16 14 Mid-point D&C CapEx 12 10 -4% vs 2Q24 guidance 8 of $1,300/ft 6 9,760' $1,250 21-27 4 Avg. Lateral Avg. Well Cost Net Wells Length1 per Foot1 Online 2 - 1Q24 2Q24 3Q24 4Q24 1) O
Slide 24: Anadarko Asset Overview
Anadarko Asset Overview Increasingly important basin located near Major 2024 Anadarko projects industrial & LNG export demand Nearly doubled D&C spend year-over-year, driven by competitive returns Coterra Acreage Woodford Meramec on recent projects Project Estimated 60-month production Online Well c
Slide 25: Recent Anadarko Projects are Outperforming Legacy Offsets
Recent Anadarko Projects are Outperforming Legacy Offsets Wider spacing driving improved productivity & higher returns Days Online vs Cumulative boe per Lateral Foot Lonerock (mixed gas & oil) Downdip (gas & NGL weighted) Carel/Elder Gatz/Williams legacy offset wells Marilyn legacy offset wells 90 6
Slide 26: Recent Anadarko Projects are Outperforming Legacy Offsets
Recent Anadarko Projects are Outperforming Legacy Offsets Wider spacing driving improved productivity & higher returns Days Online vs Cumulative boe per Lateral Foot Updip (oil weighted) Operational improvements made over time Leota/Clark legacy offset wells 2014-2018 vintage Current estimates 80 We
Slide 27: Executive Compensation Tied to Emissions Reduction Metrics
Executive Compensation Tied to Emissions Reduction Metrics 20% of total short-term incentive potential Climate Targets Greenhouse Gas Emissions Intensity In 2024, four climate metrics were included in Coterra’s executive short-term incentive targets. MT CO2e / Gross Mboe Produced These four targets
Slide 28: Emissions Reductions Efforts
Emissions Reductions Efforts • Electrifying compressors, fracs, & drilling rigs • Utilizing Vapor Recovery Units to maximize Greenhouse typically reduces net Scope 1 + Scope 2 emissions Flared revenue and minimize flaring Gas from those sources by 25-45%, depending on the Emissions • Centralizing fl
Slide 29: Upstream Greenhouse Gas Intensity vs. Peers & Industry
Upstream Greenhouse Gas Intensity vs. Peers & Industry GHG Intensity (MT CO2e / Gross Mboe) We analyze our upstream emissions on a standalone basis to compare our performance against our peers1, as our peer group has varying levels of operations within the upstream and midstream segments. The follow
Slide 30: Appendix
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Slide 31: Diversified Gas Marketing Portfolio
Diversified Gas Marketing Portfolio 2024 Estimated Natural Gas Sales Markets 2021-2023 Natural Gas Price Realization Range1 % of Henry Hub1 NYMEX pricing mitigates NYMEX 26% 2021-2023 range for total company 2024 total company 2024 Marcellus regional price exposure 95% 95% Gas price realizations dif
Slide 32: Oil Sales Primarily at Midland
Oil Sales Primarily at Midland 2024 Estimated Oil Sales Markets Strong Oil Price Realizations % of WTI1 Midland Cushing 98% 100% 98% ~10% 98% Almost all of our oil volumes are sold at Midland pricing, which has traded closely against WTI in recent years due to Permian’s sufficient oil takeaway & pro
Slide 33: Remaining 2024 Hedge Position
Remaining 2024 Hedge Position Remaining 2024e gas volumes ~30% hedged Remaining 2024e oil volumes ~40% hedged $2.75/MMBtu & $4.46/MMBtu ~$65/bbl & ~$87/bbl weighted average floor & ceiling price weighted average floor & ceiling price financial hedges 15% hedged physical 40% 2,595 mmcfd hedges 108 mb
Slide 34: Guidance & Actuals
Guidance & Actuals 2023 Guidance 2023 Actual 2024 Guidance (August) Updated 2024 Guidance 3Q24 Guidance 3Q24 Actual 4Q24 Guidance Low Mid High Low Mid High Low Mid High Low Mid High Total Production (mboed) 655 - 665 667 645 - 660 - 675 660 - 668 - 675 620 - 635 - 650 669 630 - 645 - 660 Gas (mmcfd)
Slide 35: Expected 2024 Operational Cadence
Expected 2024 Operational Cadence Subject to change Rig Activity spot work / not full-time in the quarter Crew Activity spot work / not full-time in the quarter 1Q24 2Q24 3Q24 4Q24 1Q24 2Q24 3Q24 4Q24 Permian 8 full-year rigs Permian 2 full-year crews Anadarko 1 partial-year crew Marcellus 1 partial
Slide 36: Production Profile
Production Profile 105 600 2,400 Permian 100 500 Marcellus 2,300 95 90 400 2,200 85 300 2,100 80 75 200 2,000 70 100 1,900 65 60 - 1,800 3Q23A 4Q23A 1Q24A 2Q24A 3Q24A Oil mbbld 87 97 97 100 103 1,700 NGL mboed 75 77 70 78 83 3Q23A 4Q23A 1Q24A 2Q24A 3Q24A Gas mmcfd (right axis) 446 482 487 484 531 Ga
Slide 37: Expense Guidance & Actuals
Expense Guidance & Actuals 2023 Actual 2024 Guidance 1Q24 Actual 2Q24 Actual 3Q24 Actual $ per boe, unless noted: Lease operating expense + workovers + region office $2.31 $2.15 - $2.50 - $2.85 $2.50 $2.62 $2.69 Gathering, processing, & transportation $4.00 $3.50 $4.00 - $4.50 $4.00 $3.99 $3.97 Taxe
Slide 38: Expect 2024 Permian Program to be ~50% Texas & ~50% New Mexico
Expect 2024 Permian Program to be ~50% Texas & ~50% New Mexico 2024e net wells online Wolfcamp Bone Spring Harkey 12 10 8 6 4 2 0 Culberson Reeves Lea Eddy Culberson Reeves Lea Eddy Culberson Reeves Lea Eddy Culberson Reeves Lea Eddy 1Q24 2Q24 3Q24 4Q24 38
Slide 39: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Supplemental Non-GAAP Financial Measures (Unaudited): We report our financial results in accordance with Three Months Ended: 30-Sep Twelve Months Ended: Dec 31 Dec 31 accounting principles generally accepted in the United States (GAAP). However, we believe cert
Slide 40: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Twelve Months Ended: September 30 December 31 EBITDAX ($ in millions) 2024 2023 2022 2021 2020 2019 2018 EBITDAX is defined as net income plus interest expense, other expense, income tax expense and benefit, Coterra Combined Cabot + Cimarex depreciation, deplet