Coterra Energy Inc. · NYSE:CTRA
Coterra Energy — Q1 2023 Earnings Presentation
24 slides from Coterra Energy's earnings presentation, May 5, 2023
Slide 1: 1Q23 Earnings Presentation
1Q23 Earnings Presentation May 4, 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 CFFO of $5.5 billion & FCF of $3.9 & financial
Slide 5: 2023 Investment Driving 3-Yr Outlook
2023 Investment Driving 3-Yr Outlook 2023e midpoint capex of $2.1 billion +20% YoY, increased activity in 2023 driving multi-year production outlook driven by both inflation & activity oil mbod natural gas bcfd ~5% CAGR 0-5% YoY activity increase $180mm 2023e inflation 2.8 2.8 CAGR 90.0 incorporates
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 significant $14 FCF at strip maintain consistent operational activity $12 across basins & across various price scenarios provides zero-to-modest growth resilient in excess FCF $10 low prices retu
Slide 7: 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 4/20/23 HH per forecast Northeast Permian Haynesville $ +21 b
Slide 8: 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 9: Committed to Returning Value
Committed to Returning Value $ billions | percentages shown are shareholder returns as percentage of FCF 2022 FCF $3.9bn 2023e FCF $1.6bn at recent strip prices, see appendix for commodity price assumptions targeted 50%+ cash cash return of FCF, - $0.2 through dividends 14% base continue to target r
Slide 10: 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 $3,000 0.0 6.0x $2,500 0.0 $2,000 $2,473 4.4% $8.00 $1,500 0.0 5.0x $80 3.9% $75 $76 $7.00 $1,000 3.7% 3.8% $6.00 0.0 $60 $61 $500 $25
Slide 11: Diversified Marketing Portfolio
Diversified Marketing Portfolio 2023 estimated natural gas sales markets 2023 estimated oil sales markets NYMEX premium (Zone 6 Non New York & Power) in-basin Houston ship channel Marcellus 33% 23% 23% Permian 10% 5% ~10% ~90% Anadarko 5% Cushing Midland ‒ about one third of our natural gas is expec
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 - $980mm 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 +25% +6% +28% +37% boe 80 boe 70 boe boe gas 61 64 boe 52 boe boe gas 58 59 56 19 gas boe gas gas gas 50 gas 15 25 34 33 35 gas oil 23 oil 51 41 oil 32 oil oil oil oil 28
Slide 14: 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 15: 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 Upper 700 Marcellus Marcellus Lower Marcellus Dobrosielski 600 Well count 178 wells 7 wells 2021-23 vintage 2022 vintage 500 Continue to expect Upper Ma
Slide 16: 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 17: Recent Anadarko Projects Outperforming Legacy Offsets, Driving Capital Efficiency & Higher Returns
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 18: Managing Emissions
Managing Emissions Executive compensation tied to emissions reduction metrics; 15% of total short-term incentive potential greenhouse gas emissions intensity upstream segment greenhouse gas emissions GHG emissions (MT CO2e) / gross production (MBoe) intensity (EPA onshore production segment) GHG emi
Slide 19: Managing Emissions
Managing Emissions Executive compensation tied to emissions reduction metrics; 15% of total short-term incentive potential methane emissions intensity flare intensity methane emissions (MT CH4) / gross methane produced (MT CH4) flared natural gas (Mcf) / gross natural gas production (Mcf) 0.168% 0.4
Slide 20: appendix
© COTERRA appendix
Slide 21: Annual Guidance
Annual Guidance 2023e guidance 2023e expense guidance prior 2023e guid. 2023e change $ per boe, unless noted Operations Total Production (mboed) 610 - 650 610 - 650 - Gas (mmcfd) 2,700 - 2,850 2,700 - 2,850 - prior 2023e 2023e Change Oil (mbod) 86.0 - 92.0 87.0 - 93.0 1.0 - 1.0 LOE + WO $1.75 - $2.0
Slide 22: Quarterly Key Results & Guidance
Quarterly Key Results & Guidance $mm, unless noted 4Q22 1Q23 1Q23 Guidance 1Q23 vs. mid 2Q23e Operations Total Production (mboed) 632 635 610 - 625 3% 620 - 650 Gas (mmcfd) 2,780 2,757 2,650 - 2,750 2% 2,750 - 2,850 Oil (mbod) 90.7 92.2 88.5 - 91.5 2% 88.5 - 91.5 Net wells online 41 48 36 - 44 8 36
Slide 23: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Supplemental Non-GAAP Financial Measures (Unaudited): We report our financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, we believe certain non-GAAP performance measures may provide financial statem
Slide 24: Non-GAAP Reconciliations & Definitions
Non-GAAP Reconciliations & Definitions Twelve Months Ended: December 31 ($ in millions) 2022 2021 2020 2019 2018 2017 EBITDAX Net income $ 4,065 $ 1,158 $ 201 $ 681 $ 557 $ 100 Plus (less): EBITDAX is defined as net income plus interest expense, other expense, income tax Interest expense, net 70 62