According to the company’s website press release on May 4, 2023, Coterra Energy Inc. (NYSE: CTRA) (“Coterra” or the “Company”) reported first-quarter 2023 financial and operating results. Thomas E. Jorden, Chairman, Chief Executive Officer and President, commented, “Coterra delivered strong first quarter results, driven by solid execution, and is well positioned to meet or exceed 2023 guidance. Our operating teams continue to generate competitive returns across each of our three regions. Coterra’s portfolio, with its equal weighting to both liquids and natural gas, provides numerous benefits to our Company and shareholders by delivering a more consistent cash flow profile through commodity price cycles. As we look ahead, Coterra will remain disciplined and focused on value creation through consistent, profitable growth.”
First-Quarter 2023 Highlights
- Net Income (GAAP) totaled $677 million, or $0.88 per share. Adjusted Net Income (non-GAAP) was $661 million, or $0.87 per share.
- Cash Flow From Operating Activities (GAAP) totaled $1,494 million. Discretionary Cash Flow (non-GAAP) totaled $1,039 million.
- Cash capital expenditures for drilling, completion and other fixed asset additions (GAAP) totaled $483 million. Accrued capital expenditures totaled $569 million, in line with our 1H23-weighted capital program.
- Free Cash Flow (non-GAAP) equaled $556 million.
- Total equivalent production of 635 MBoepd (thousand barrels of oil equivalent per day), exceeded the high-end of guidance, driven by strong well performance and improved cycle times. Oil production averaged 92.2 MBopd (thousand barrels of oil per day), exceeding the high-end of guidance. Natural gas production averaged 2,757 MMcfpd (million cubic feet per day), exceeding the high-end of guidance.
- Realized average prices:
- Oil: $74.03 per barrel (Bbl), excluding the effect of commodity derivatives, and $74.09 per Bbl of oil, including the effect of commodity derivatives
- Natural Gas: $3.31 per thousand cubic feet (Mcf), excluding the effect of commodity derivatives, and $3.72 per Mcf of natural gas, including the effect of commodity derivatives
- Natural Gas Liquids (NGLs): $23.66 per barrel of natural gas liquids
First-Quarter 2023 Shareholder Return Highlights
Jorden noted, “Based on first quarter results, Coterra will return $420 million to shareholders, which equals 76% of the company’s Free Cash Flow. The return will include $152 million from our recently increased base dividend ($0.20 per quarter, $0.80 annum) and $268 million via share buybacks. We reiterate our commitment to return 50%+ of Free Cash Flow to shareholders, with an emphasis on the base dividend and buybacks, in the near-term.”
- On May 3, 2023, Coterra's Board of Directors (the "Board") approved a quarterly base dividend of $0.20 per share, which will be paid on June 9, 2023 to holders of record on May 26, 2023.
- During the quarter, the Company repurchased 11 million shares for $268 million, averaging $24.36 per share and leaving $1,732 million remaining on the $2.0 billion share repurchase authorization as of March 31, 2023.
Guidance Update and Activity Outlook:
2023 cash flow guidance updates include:
- Estimate full-year 2023 Discretionary Cash Flow of approximately $3.6 billion, at recent strip prices
- 2023 capital budget remains unchanged at $2.0-2.2 billion (accrued); see potential for 2H23 deflation
- Estimate 2023 Free Cash Flow of approximately $1.6 billion at recent strip prices
- 2023 oil production range increasing by 1.0 MBopd, to 87.0-93.0 MBopd
2023 cash unit cost mid-point remains unchanged at $7.35-$9.55/Boe, with a few updates listed below:
- LOE updated to $1.75-$2.25/Boe, with the high-end of the range up by $0.25/Boe, driven primarily by a reclassification of expenses from G&A to LOE
- Production tax expense updated to $1.20-$1.50/Boe, with both ends of the range shifting downward by $0.10/Boe
- Exploration expense updated to $0.05-$0.15/Boe, with the low-end of the range down by $0.05/Boe
Second-quarter 2023 production and capital guidance:
- Production volumes are expected to average between 620 and 650 MBoepd, with oil estimated between 88.5 and 91.5 MBopd and natural gas volumes estimated between 2,750 and 2,850 MMcfpd.
- Expect capital expenditures (accrued) during 2Q23 between $510 – $570 million.
Coterra is currently running six rigs and two completion crews in the Permian Basin, two rigs in the Anadarko Basin, and three rigs and two completion crew in the Marcellus. The Company plans to drop to 2 rigs and 1 crew in the Marcellus during 2Q23, as expected in our original plan.
See “Supplemental non-GAAP Financial Measures” below for descriptions of the above non-GAAP measures as well as reconciliations of these measures to the associated GAAP measures.
Strong Financial Position
Coterra maintains a strong financial position with an investment-grade credit rating and approximately $2.5 billion of liquidity. As of March 31, 2023, Coterra had total long-term debt of $2.2 billion with a principal amount of $2.1 billion. The Company exited the quarter with a cash balance of $973 million, no debt outstanding under its new $1.5 billion five-year revolving credit facility, and no near-term debt maturities. Coterra's net debt to Adjusted EBITDAX ratio (non-GAAP) at March 31, 2023 was 0.2x.
Committed to Sustainability and ESG Leadership
Coterra is committed to environmental stewardship, sustainable practices, and strong corporate governance. The Company's sustainability report can be found under "A Sustainable Future" on www.coterra.com. Coterra plans to publish its 2023 Sustainability Report in the fourth-quarter of 2023.
First-Quarter 2023 Conference Call
Coterra will host a conference call Friday, May 5, 2023, at 9:00 AM CT (10:00 AM ET), to discuss first-quarter 2023 financial and operating results.
Conference Call Information
Date: May 5, 2023
Time: 10:00 AM ET / 9:00 AM CT
Dial-in (for callers in the U.S. and Canada): (888) 550-5424
International dial-in: (646) 960-0819
Conference ID: 3813676
The live audio webcast and related earnings presentation can be accessed on the "Events & Presentations" page under the "Investors" section of the Company's website at www.coterra.com. The webcast will be archived and available at the same location after the conclusion of the live event.
About Coterra Energy
Coterra is a premier exploration and production company based in Houston, Texas with focused operations in the Permian Basin, Marcellus Shale, and Anadarko Basin. We strive to be a leading energy producer, delivering sustainable returns through the efficient and responsible development of our diversified asset base. Learn more about us at www.coterra.com.
Cautionary Statement Regarding Forward-Looking Information
This press release 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. Such forward-looking statements include, but are not limited to, statements about returns to shareholders, enhanced shareholder value, reserves estimates, future financial and operating performance and goals and commitment to sustainability and ESG leadership, strategic pursuits and goals, including with respect to the publication of Coterra's first Sustainability Report, and other statements that are not historical facts contained in this press release. The words "expect," "project," "estimate," "believe," "anticipate," "intend," "budget," "plan," "predict," "potential," "possible," "may," "should," "could," "would," "will," "strategy," "outlook" and similar expressions are also intended to identify forward-looking statements. We can provide no assurance that the forward-looking statements contained in this press release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, without limitation, the risk that the combined businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the Merger may not be fully realized or may take longer to realize than expected; the volatility in commodity prices for crude oil and natural gas; cost increases; supply chain disruptions; the effect of future regulatory or legislative actions, including the risk of new restrictions with respect to well spacing, hydraulic fracturing, natural gas flaring, seismicity, produced water disposal, or other oil and natural gas development activities; disruption from the Merger making it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management time on integration-related issues; the potential effects of further developments to the long-term impact of the COVID-19 pandemic and variants thereof on Coterra’s business, financial condition and results of operations; actions by, or disputes among or between, the Organization of Petroleum Exporting Countries and other producer countries; market factors; market prices (including geographic basis differentials) of oil and natural gas; impacts of inflation; labor shortages and economic disruption (including as a result of the pandemic or geopolitical disruptions such as the war in Ukraine); determination of reserves estimates, adjustments or revisions, including factors impacting such determination such as commodity prices, well performance, operating expenses and completion of Coterra's annual PUD reserves process, as well as the impact on our financial statements resulting therefrom; the presence or recoverability of estimated reserves; the ability to replace reserves; environmental risks; drilling and operating risks; exploration and development risks; competition; the ability of management to execute its plans to meet its goals; and other risks inherent in Coterra's businesses. In addition, the declaration and payment of any future dividends, whether regular base quarterly dividends, variable dividends or special dividends, will depend on Coterra's financial results, cash requirements, future prospects and other factors deemed relevant by Coterra's Board. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to Coterra's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other filings with the SEC, which are available on Coterra's website at www.coterra.com.
Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Except to the extent required by applicable law, Coterra does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
Investor Contact
Daniel Guffey - Vice President of Finance, Planning & Analysis and Investor Relations
281.589.4875
Hannah Stuckey - Investor Relations Manager
281.589.4983
