Coterra Energy Inc. Q3 FY2024 earnings call

• Tom Jorden highlighted an excellent third quarter with volumes above guidance and capital below. Raised production guidance and lowered capital guidance for full year. Emphasized Windham Row project in Culberson County as well calibrated. Mentioned no drilling/completion activity in Marcellus due to low natural gas prices and entered LNG sales agreements.
• Shane Young summarized financial highlights: net income of $252 million, adjusted net income of $233 million. Q4 production expected 630-660 MBoepd. Full year 2024 production and capital guidance adjusted. Continued share repurchases and announced a $0.21 per share base dividend for the third quarter.
• Blake Sirgo discussed LNG sales agreements, Permian activity (8 rigs and 2 frac crews), cost updates (Permian well cost per foot expected to be $10.50 in 2024, down 12% year-over-year), Marcellus curtailment, and Anadarko operational consistency with 5 wells completed in Q3.

In the third quarter, Coterra Energy's total production averaged 669 MBoepd. Oil averaged 112.3 MBo per day, contributing 75% of pre-hedge revenues of approximately $1.3 billion. Natural gas averaged 2.68 Bcf per day. Capital expenditures in the third quarter were $418 million below the guidance range. For the full year 2024, oil production guidance was raised, and capital guidance was lowered to $1.75 billion to $1.85 billion, a 14% decrease from 2023.

• Lowered full-year 2024 capital guidance to $1.75 billion to $1.85 billion, a 14% midpoint decrease from 2023.
• Raised 2024 oil production guidance range to 107-108 MBoepd.
• Q4 2024 production expected to average 630-660 MBoepd, with oil between 106-110 MBo per day and natural gas between 2.53-2.66 Bcf per day.
• Announced a $0.21 per share base dividend for the third quarter, annualizing to $0.84 per share.

• Regulatory risks in New Mexico related to potential setback rules, though not expected to be materially implemented.
• Market risks associated with natural gas pricing affecting Marcellus activity, with continued curtailment until better prices are seen.

Q: Doug Leggate asked about why not continuing simul-frac in 2025.

A: Tom Jorden said they have a portfolio and are watching oil markets, maintaining flexibility in case of gas market recovery.

Q: Arun Jayaram asked about returns from Harkey Shale vs upper Wolfcamp.

A: Tom Jorden said Harkey is outstanding but slightly less than upper Wolfcamp, with nice results in Lea County sections.

Q: Nitin Kumar asked about drivers of capital efficiency and its sustainability.

A: Blake Sirgo said about two-thirds of beats in 2024 from timing and one-third from productivity, with teams constantly improving.