Coterra Energy Inc. Q1 FY2025 earnings call

• First quarter saw oil and gas production exceed guidance, CapEx near low end, and strong financial results. • Completed acquisitions of Franklin Mountain and Avant, integrating them with operational efficiencies and improved emissions performance. • Adjusted CapEx due to oil market concerns, reducing Permian activity by $150 million and increasing Marcellus activity by $50 million, totaling a $100 million reduction in 2025 CapEx. • Windham Row Harkey wells had water production issues due to cementing, leading to pausing Harkey development and pivoting to Upper Wolfcamp for increased capital efficiency. • Shane Young and Blake Sirgo provided details on financial results, guidance, and operational updates, including rig count adjustments and capital efficiency improvements in various assets.

Coterra had an excellent first quarter with oil production near the high end of guidance and natural gas production exceeding the high end. CapEx was near the low end. Financial results were strong, with $2 billion in free hedge revenues, net income of $516 million, and adjusted net income of $608 million. The recently acquired assets from Franklin Mountain and Avant contributed in line to better than expected. Second quarter 2025 total production is expected to average 710-760 MBoe per day, with oil at 147-157 MBoe per day and natural gas at 2.7-2.85 Bcf per day. For full year 2025, oil production midpoint is maintained, and CapEx range is lowered by $100 million to $2-2.3 billion, with adjustments in Permian and Marcellus activity.

• Second quarter 2025 total production expected 710-760 MBoe per day, with oil 147-157 MBoe per day and natural gas 2.7-2.85 Bcf per day. CapEx for second quarter expected $575-650 million. • Full year 2025 maintains oil production midpoint, lowers CapEx range to $2-2.3 billion, optimizes investment allocation, keeps second rig in Marcellus into second half with potential for additional $50 million, and reduces Permian activity by $150 million.

• Harkey wells had water production issues due to cementing, requiring remediation and pausing development in affected areas. • Commodity market volatility with uncertainty in oil and gas prices, tariffs, and recession fears impacting business decisions. • Operational challenges with mechanical issues in wellbores affecting Harkey well performance, needing remediation efforts.

Q: Doug Leggate on Harkey shale issue and 3-year plan A: Tom Jorden and Blake Sirgo stated the Harkey issue is a temporary cementing issue, solvable, and the 3-year plan remains intact.

Q: Betty Jiang on Harkey impact and production guide A: Tom Jorden and Blake Sirgo discussed Harkey development paused for remediation, focus on Upper Wolfcamp, and production guide adjusted but midpoint maintained.

Q: Nitin Kumar on oil market weakness and cash returns A: Tom Jorden and Shane Young discussed prolonged weak oil market, prioritization of debt reduction, and flexibility in capital allocation.

Q: Arun Jayaram on Barba Row and Harkey wells A: Michael Deshazer and Tom Jorden mentioned Harkey wells in Barba Row paused, focus on Wolfcamp completions, to be reintroduced when issues resolved.

Q: Neil Mehta on Marcellus plan and gas M&A A: Tom Jorden discussed Marcellus program efficiency, flexibility, and opportunistic M&A approach.

Q: David Deckelbaum on CapEx reallocation and 3-year plan A: Tom Jorden and Shane Young explained CapEx reallocation to adjust to oil market concerns, 3-year plan within outlined parameters.

Q: Scott Gruber on Harkey remediation timeline A: Tom Jorden stated Harkey remediation will take months due to nature of workovers.

Q: Josh Silverstein on Marcellus pipeline capacity and power pricing A: Tom Jorden and Blake Sirgo discussed pipeline capacity concerns and interest in power pricing opportunities in Marcellus.

Q: Kalei Akamine on Harkey productivity and future program A: Tom Jorden and Shane Young mentioned Harkey wells have sufficient productivity, program a template for future development with growth potential.

Q: Matt Portillo on maintenance capital and Anadarko returns A: Michael Deshazer and Tom Jorden discussed maintenance capital needs and Anadarko returns based on oil-gas ratios.

Q: Derrick Whitfield on Delaware development and price tipping point A: Tom Jorden stated Delaware development competitive across areas, tipping point for activity below $50 oil.

Q: Kevin MacCurdy on DUC backlog and free cash flow uses A: Michael Deshazer and Tom Jorden discussed DUC inventory management and ability to do debt repayment and share buybacks concurrently.