Group 1 - The article promotes a free two-week trial for the investment group Distressed Value Investing, which provides exclusive research on various companies and investment opportunities [1] - The author, Aaron Chow, has over 15 years of analytical experience and co-founded a mobile gaming company that was acquired by PENN Entertainment, indicating a strong background in the gaming and entertainment sectors [2] - The focus of the Distressed Value Investing group is on value opportunities and distressed plays, particularly in the energy sector, highlighting a niche investment strategy [2] Group 2 - The article emphasizes that past performance is not indicative of future results, which is a common disclaimer in investment communications [3] - It clarifies that no specific investment recommendations are being made, and the views expressed may not represent the entire platform's opinions [3] - The analysts contributing to the platform include both professional and individual investors, suggesting a diverse range of perspectives in the analysis provided [3]

Question-and-Answer SessionGreat. Well, I want to start off the conversation with Coterra's strategy. It's about a balance of oil and gas portfolio that demonstrate resilience through the cycles. And I do think that the portfolio execution has demonstrated the resilience of that. So for -- but some investors are still questioning if that's the best strategy. So what are some of the things that Coterra look at to assess the execution of that balanced strategy?Thomas JordenCEO, President & Chairman No, thank ...

Coterra Energy (CTRA) FY 2025 Conference September 04, 2025 09:45 AM ET Company ParticipantsThomas Jorden - CEO, President & ChairmanConference Call ParticipantsBetty Jiang - Senior Equity Research Analyst - US Integrated Oil and E&PsBetty JiangI want to welcome everyone to Day three of our thirty ninth Barclays Energy and Power Conference. It's my pleasure to introduce Tom Jordan, CEO of Energy. Tom, thank you for being here and flying out last night.Thomas JordenYes, happy to be here.Betty JiangGreat. Wel ...

Financial Data and Key Metrics Changes - The company aims to generate consistent profitable growth, with a focus on increasing free cash flow over time, demonstrating durability in its operations [3][4] - The company has a low reinvestment rate of around 50%, which is competitive in the sector, allowing for flexibility in capital allocation [27][31] Business Line Data and Key Metrics Changes - The company is maintaining a balanced portfolio between oil and gas, with a deep inventory of low-cost supply [3][4] - The Marcellus region is viewed more as a maintenance mode rather than a growth engine, with a focus on capital efficiency [12][13] Market Data and Key Metrics Changes - The company acknowledges volatility in natural gas prices but remains constructive about the market due to factors like LNG exports and power demand [7][8] - The company is actively managing production and has the flexibility to shut in volumes if netbacks fall significantly [10] Company Strategy and Development Direction - The company emphasizes the importance of technology, including machine learning, to enhance operational efficiency and inventory management [18][20] - The company is focused on maintaining a capital-efficient operation while also seeking investment opportunities to ensure future growth [29][30] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the future, citing a strong internal culture and a young, dynamic workforce that is adaptable and innovative [46][51] - The company is addressing industry challenges, such as water disposal issues, and believes it is well-prepared to handle these emerging problems [36][40] Other Important Information - The company is considering a shift towards stock buybacks after retiring its term loans, indicating confidence in its share value [32][33] - The Franklin Avant asset in the Northern Delaware Basin presents new opportunities due to its geological variability, which requires strong geoscience capabilities [41][42] Q&A Session Summary Question: How does Coterra assess the execution of its balanced strategy? - The company focuses on generating consistent profitable growth and increasing free cash flow as key metrics for assessing strategy execution [3] Question: How does the company view capital allocation in the Marcellus region amidst price volatility? - The company does not fluctuate capital allocation based on quarterly sentiment and remains steady in its approach [6][10] Question: What role does technology play in enhancing the company's inventory? - Technology, particularly machine learning, is seen as crucial for improving operational efficiency and optimizing capital programs [18][20] Question: How does the company plan to manage its debt and potential stock buybacks? - The company intends to retire its term loans first before pivoting to stock buybacks, indicating a strategic approach to capital management [32][33] Question: What is the company's perspective on the water disposal issue in the Delaware Basin? - The company acknowledges the issue as a basin-wide phenomenon but believes it is well-addressed and not material to future inventory [36][39]

Core Insights - Coterra Energy reported $329 million in free cash flow despite a decline in crude and natural gas prices during the quarter [1] Financial Performance - The free cash flow of $329 million represents a decrease from a strong performance in Q1 [1]

Core Insights - Coterra Energy Inc. (CTRA) reported second-quarter 2025 adjusted earnings per share of 48 cents, exceeding the Zacks Consensus Estimate of 43 cents and the previous year's 37 cents, driven by strong operational performance in oil and natural gas production volumes [1][13] - The company's operating revenues reached $2 billion, surpassing the Zacks Consensus Estimate of $1.7 billion and significantly higher than the year-ago figure of $1.3 billion, attributed to increased natural gas price realizations [2] Financial Performance - Coterra Energy declared a quarterly dividend of 22 cents per share, representing a 3.6% annualized yield, to be paid on August 28, 2025 [3] - The company repurchased 0.9 million shares for $23 million during the quarter, with $1.1 billion remaining under its $2 billion share repurchase authorization as of June 30, 2025 [4] - Total shareholder returns for the quarter amounted to $191 million, consisting of $168 million in declared dividends and $23 million in share repurchases, alongside a debt repayment of approximately $100 million [5] Production and Pricing - Average daily production increased by 17.1% to 783.9 thousand barrels of oil equivalent (Mboe) from 669.2 Mboe year-over-year, exceeding the Zacks Consensus Estimate of 741 Mboe [8] - Oil production rose by 45% to 155.4 thousand barrels (MBbl) per day, surpassing the Zacks Consensus Estimate of 154 MBbl per day, while natural gas liquids (NGL) production increased by 30.3% to 128.7 MBbl per day [9] - The average sales price for crude oil was $62.80 per barrel, a 20.9% decrease from the prior year's $79.37, while the average realized natural gas price was $2.20 per thousand cubic feet, up from $1.26 year-over-year [10][11] Costs and Expenses - The average unit cost rose to $18.41 per barrel of oil equivalent from $16.26 the previous year, with total operating expenses increasing by 29.2% to $1,261 million [14] - Cash flow from operations increased by 68% to $937 million, with cash capital expenditures totaling $569 million, resulting in a free cash flow of $329 million for the quarter [15] Financial Position - As of June 30, 2025, Coterra Energy had $192 million in cash and cash equivalents, with no debt outstanding under its $2 billion revolving credit facility, leading to total liquidity of approximately $2.2 billion [16] - The company reported long-term net debt of $4.2 billion, reflecting a debt-to-capitalization ratio of 22.3% [16] Guidance - Coterra Energy has revised its full-year 2025 capital expenditures range to $2.1-$2.3 billion and anticipates an effective tax rate of 22% for the year [17] - For Q3 2025, the company expects total equivalent production between 740-790 Mboe per day, with oil production between 158-168 MBbl per day and natural gas production between 2,750 and 2,900 MMcf/d [18] - The estimated discretionary cash flow for 2025 is projected at approximately $4.4 billion, with free cash flow around $2.1 billion based on commodity price assumptions [19]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheet, statement of operations, cash flows, and stockholders' equity, with detailed notes [Condensed Consolidated Balance Sheet](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) Total assets increased to $24.0 billion, driven by acquisitions, while cash decreased significantly due to funding these purchases Condensed Consolidated Balance Sheet (In millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,522 | $3,321 | | **Properties and equipment, net** | $22,097 | $17,890 | | **Total assets** | **$23,982** | **$21,625** | | **Total current liabilities** | $1,352 | $1,136 | | **Long-term debt** | $4,175 | $3,535 | | **Total liabilities** | **$9,418** | **$8,495** | | **Total stockholders' equity** | **$14,556** | **$13,122** | [Condensed Consolidated Statement of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations) Net income significantly increased to $1,027 million for the six-month period, driven by a 43% rise in operating revenues to $3.87 billion Condensed Consolidated Statement of Operations (In millions, except per share) | (In millions, except per share) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Operating Revenues** | $3,869 | $2,704 | | **Income from Operations** | $1,410 | $736 | | **Net Income** | **$1,027** | **$572** | | **Diluted EPS** | **$1.35** | **$0.76** | [Condensed Consolidated Statement of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Operating cash flow increased to $2.08 billion, but significant investing activities, primarily acquisitions, led to a $2.06 billion net decrease in cash Condensed Consolidated Statement of Cash Flows (In millions) | (In millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $2,080 | $1,414 | | **Net cash used in investing activities** | ($4,370) | ($1,188) | | **Net cash provided by (used in) financing activities** | $229 | ($112) | | **Net (decrease) increase in cash** | **($2,061)** | **$114** | [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain significant financial events, including major acquisitions, changes in long-term debt, derivative gains, revenue recognition, and capital stock adjustments [Note 2. Acquisitions](index=7&type=section&id=Note%202.%20Acquisitions) Coterra completed two major acquisitions, FME for $2.5 billion and Avant assets for $1.5 billion, primarily allocated to oil and gas properties - Closed the acquisition of Franklin Mountain Energy (FME) for total consideration of **$2.5 billion**, including **$1.7 billion** in cash and **28.2 million** shares of common stock valued at **$785 million**[20](index=20&type=chunk) - Closed the acquisition of certain oil and gas properties (the "Avant assets") for total cash consideration of **$1.5 billion**[24](index=24&type=chunk) FME and Avant Acquisition Allocation (In millions) | (In millions) | FME Allocation | Avant Allocation | | :--- | :--- | :--- | | **Total Consideration** | **$2,518** | **$1,518** | | Proved oil and gas properties | $1,833 | $640 | | Unproved oil and gas properties | $590 | $696 | | Gathering and pipeline systems | $172 | $161 | | **Net Assets Acquired** | **$2,518** | **$1,518** | [Note 4. Long-Term Debt and Credit Agreements](index=11&type=section&id=Note%204.%20Long-Term%20Debt%20and%20Credit%20Agreements) Long-term debt increased to $4.18 billion due to a $1.0 billion term loan for acquisitions, with $350 million repaid and no revolving credit outstanding Long-Term Debt (In millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Senior notes | $3,750 | $3,500 | | Term loan | $650 | $0 | | **Total Principal** | **$4,150** | **$3,500** | | **Total Long-term debt** | **$4,175** | **$3,535** | - In January 2025, the Company borrowed **$1.0 billion** under its Term Loan to partially fund the FME and Avant acquisitions and subsequently repaid **$350 million** during the first half of 2025[40](index=40&type=chunk) [Note 9. Revenue Recognition](index=16&type=section&id=Note%209.%20Revenue%20Recognition) Revenue from contracts increased to $3.75 billion, driven by higher sales across all product categories, with $5.8 billion in long-term natural gas obligations Revenue by Product (In millions) | Revenue by Product (In millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Oil | $1,774 | $1,475 | | Natural gas | $1,499 | $857 | | NGL | $425 | $349 | | Other | $51 | $39 | | **Total** | **$3,749** | **$2,720** | - As of June 30, 2025, the Company had **$5.8 billion** of unsatisfied performance obligations for natural gas sales with a fixed pricing component and a contract term greater than one year, expected to be recognized over the next 14 years[66](index=66&type=chunk) [Note 11. Capital Stock](index=17&type=section&id=Note%2011.%20Capital%20Stock) The company issued 28.2 million shares for an acquisition, increased its quarterly dividend, and repurchased 2 million shares for $47 million - The Board of Directors approved an increase in the base quarterly dividend from **$0.21 to $0.22 per share**, effective Q1 2025[71](index=71&type=chunk) - During the first six months of 2025, the company repurchased and retired **2 million shares** for **$47 million**, with **$1.1 billion** remaining under the share repurchase program as of June 30, 2025[73](index=73&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses significant increases in net income and cash flow, driven by acquisitions and higher natural gas prices, outlining the 2025 capital program and operational factors [Overview](index=22&type=section&id=Overview) Net income nearly doubled to $1.0 billion and operating cash flow increased to $2.1 billion, driven by acquisitions, higher production, and increased natural gas prices Key Financial and Operational Metrics (Six Months Ended June 30) | Metric (Six Months Ended June 30) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $1.0 billion | $572 million | +76% | | Net Cash from Operations | $2.1 billion | $1.4 billion | +47% | | Equivalent Production (MBoe/d) | 765.4 | 677.7 | +13% | | Realized Natural Gas Price ($/Mcf) | $2.74 | $1.76 | +56% | | Realized Oil Price ($/Bbl) | $66.52 | $77.25 | -14% | - The 2025 full-year capital program is expected to be near the high end of the **$2.1 billion to $2.3 billion** range, with approximately 66% allocated to the Permian Basin[103](index=103&type=chunk) [Financial Condition](index=24&type=section&id=Financial%20Condition) Coterra maintains a strong financial position with $192 million cash and $2.0 billion unused credit, despite working capital decreasing due to acquisitions and capital returns Capitalization (in millions) | Capitalization (in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Long-term debt | $4,175 | $3,535 | | Stockholders' equity | $14,556 | $13,122 | | **Total capitalization** | **$18,731** | **$16,657** | | Debt to total capitalization | 22% | 21% | - Capital expenditures for drilling, completion, and other fixed assets totaled **$1.12 billion** for the first six months of 2025, up from **$927 million** in the same period of 2024[120](index=120&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Operating revenues increased 43% to $3.87 billion due to acquisitions and higher natural gas prices, while operating expenses rose 25% to $2.46 billion Production & Price (Six Months Ended June 30) | Production & Price (Six Months Ended June 30) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Oil Production (MMBbl) | 26.9 | 19.1 | +41% | | Natural Gas Production (Bcf) | 546.8 | 522.3 | +5% | | Avg. Oil Price ($/Bbl, excl. derivatives) | $66.08 | $77.31 | -15% | | Avg. Gas Price ($/Mcf, excl. derivatives) | $2.74 | $1.64 | +67% | Operating Expenses per BOE (Six Months Ended June 30) | Operating Expenses per BOE (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Direct operations | $3.26 | $2.56 | | Gathering, processing and transportation | $4.00 | $3.99 | | Taxes other than income | $1.32 | $1.04 | | Depreciation, depletion and amortization | $7.83 | $7.12 | | General and administrative | $1.27 | $1.16 | | **Total per BOE** | **$17.78** | **$15.95** | [Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages commodity price volatility with derivatives, but a significant portion of production remains unhedged, and it faces interest rate risk on $650 million of floating-rate debt - The most significant market risk is the pricing of oil, natural gas, and NGL production, which the company mitigates using financial commodity derivatives[178](index=178&type=chunk) - As of June 30, 2025, the company had **$650 million** in floating-rate term loan borrowings, where a hypothetical 100 basis point increase in interest rates would increase annual interest expense by approximately **$3 million**[187](index=187&type=chunk) [Controls and Procedures](index=41&type=section&id=Controls%20and%20Procedures) Management concluded that disclosure controls and procedures are effective, having integrated controls from the recently acquired FME and Avant businesses - Management concluded that the Company's disclosure controls and procedures are **effective** as of June 30, 2025[192](index=192&type=chunk)[193](index=193&type=chunk) - During the second quarter of 2025, the company **integrated the controls and procedures** of the FME and Avant acquisitions into its internal control over financial reporting[194](index=194&type=chunk) [Part II. Other Information](index=44&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) A stockholder derivative lawsuit was dismissed, and the company is addressing EPA Notices of Violation for alleged Clean Air Act violations, not expecting a material financial impact - A stockholder derivative action was dismissed with prejudice, and the dismissal was affirmed by the Fifth Circuit Court of Appeals on May 13, 2025[60](index=60&type=chunk) - The company received **Notices of Violation from the EPA** in 2023 for alleged Clean Air Act violations and is engaged in discussions to resolve the allegations, with no material financial impact expected[198](index=198&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors are reported in this section - The report refers to Item 1A of the company's Form 10-K for information about risk factors, indicating **no new significant risks** have emerged during the quarter[199](index=199&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Coterra repurchased 929,000 shares at $24.67 per share in Q2 2025, with $1.08 billion remaining under its share repurchase program Share Repurchases (Q2 2025) | Period | Shares Purchased (thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 524 | $24.67 | | May 2025 | 405 | $24.66 | | June 2025 | 0 | $0.00 | | **Total Q2 2025** | **929** | **~$24.67** | [Other Information](index=44&type=section&id=Item%205.%20Other%20Information) The company amended its bylaws and extended the employment agreement for Chairman, CEO, and President Thomas E. Jorden through the 2027 annual meeting - The Board of Directors **amended and restated the Company's bylaws**, effective July 30, 2025, to enhance clarity and conform to recent Delaware court decisions[201](index=201&type=chunk)[202](index=202&type=chunk)[206](index=206&type=chunk) - On July 31, 2025, the company entered into an amendment to **extend the employment term of CEO Thomas E. Jorden** from October 1, 2026, to the date of the 2027 annual meeting of stockholders[203](index=203&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including amended bylaws, the CEO's employment agreement amendment, and standard certifications - Key exhibits filed with this report include the **Amended and Restated Bylaws** (Exhibit 3.2) and an **amendment to the employment agreement** with Thomas E. Jorden (Exhibit 10.1)[208](index=208&type=chunk)

Financial Data and Key Metrics Changes - Cotera Energy reported revenues of $1.7 billion for the quarter, with 52% coming from oil production, reflecting a 7% increase in oil contribution quarter over quarter [15][18] - Net income was $511 million or $0.67 per share, while adjusted net income was $367 million or $0.48 per share for the quarter [15][18] - Cash operating costs totaled $9.34 per BOE, down 6% quarter over quarter [15][18] Business Line Data and Key Metrics Changes - Oil production was 2% above the midpoint of guidance, while natural gas production exceeded the high end of guidance due to outperformance in all business units [14][15] - The Permian had 49 net turn in lines, Anadarko had 9, and Marcellus had 3 during the quarter [14][15] - The company expects total production to average between 740 and 790 MBOE per day for the year, with oil between 158 and 168 MBO per day and natural gas between 2.75 and 2.9 Bcf per day [16][17] Market Data and Key Metrics Changes - There has been a weakening in natural gas prices and a softening of oil markets due to the cessation of OPEC plus curtailments [8][9] - The company maintains a steady operational cadence despite commodity price fluctuations, supported by its asset quality and capital allocation discipline [8][9] Company Strategy and Development Direction - Cotera aims to grow free cash flow and demonstrate its durability, with a focus on maintaining a low reinvestment rate of around 50% of cash flow [10][18] - The company is committed to a fortress balance sheet, prioritizing deleveraging and shareholder returns through dividends and share repurchases [20][21] - Cotera plans to maintain consistent activity across its business units, with a focus on capital efficiency and cost reductions [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects for the industry and Cotera, despite facing headwinds [11][12] - The company anticipates a gradual recovery in oil production from the Wyndham Row wells, with a conservative approach to future forecasts [36][37] - Management highlighted the importance of maintaining operational consistency and capital efficiency in a volatile market [80][82] Other Important Information - The company announced a quarterly dividend of $0.22 per share, representing one of the highest yielding base dividends in the industry at over 3.5% [20] - Cotera has repaid $350 million of its outstanding term loans in 2025, with plans to fully repay the remaining $650 million during the year [20][21] Q&A Session Summary Question: Can you provide an update on the Harkey issues and production timeline? - Management indicated that remediation efforts have been successful, and while production will take time to return to optimal levels, they are optimistic about the Harkey program moving forward [35][36] Question: Is now the right time to lean into the gas program given current production levels? - Management noted that they see growing demand with LNG exports and believe their Marcellus program offers the best returns currently [37][38] Question: What are the expectations for oil growth in the second half of the year? - Management expressed high confidence in achieving their oil guidance, citing a strong pipeline of high working interest projects coming online [42][44] Question: How does the company view the potential for federal lease sales in New Mexico? - Management hopes to be competitive in future federal lease sales, which they view as a desirable opportunity [90][91] Question: What is the strategy regarding share buybacks and debt repayment? - Management emphasized that debt repayment is a priority, but they also see potential for increased buyback activity in the latter half of the year as cash flow remains strong [88][89]

Financial Data and Key Metrics Changes - Coterra Energy reported revenues of $1.7 billion for Q2 2025, with 52% coming from oil production, reflecting a 7% increase in oil contribution quarter over quarter due to higher oil volumes [14] - Net income for the quarter was $511 million, or $0.67 per share, while adjusted net income was $367 million, or $0.48 per share [14] - Cash operating costs were $9.34 per BOE, down 6% quarter over quarter, aligning with annual guidance [14] - Free cash flow for the quarter was $329 million after cash capital expenditures [14] Business Line Data and Key Metrics Changes - Oil production was 2% above the midpoint of guidance, while natural gas production exceeded the high end of guidance due to outperformance across all business units [13] - The Permian region had 49 net turn-in-lines, while Anadarko and Marcellus had 9 and 3 net turn-in-lines, respectively [13] - The company expects total production to average between 740 and 790 MBOE per day for 2025, with oil between 158 and 168 MBO per day and natural gas between 2.75 and 2.9 Bcf per day [15][17] Market Data and Key Metrics Changes - There has been a weakening in natural gas prices and a softening of oil markets due to the cessation of OPEC plus curtailments [7] - The company is maintaining nine rigs in the Permian, two in the Marcellus, and one to two in the Anadarko, ensuring consistent activity through 2025 [8] Company Strategy and Development Direction - Coterra aims to grow free cash flow and demonstrate its durability, focusing on capital efficiency and maintaining a low reinvestment rate of around 50% of cash flow [9][17] - The company is committed to maintaining a strong balance sheet and prioritizing deleveraging, with plans to fully repay remaining term loans during 2025 [20][21] - Coterra is optimistic about the long-term prospects for the industry, emphasizing the importance of having a deep inventory of low-cost assets [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the perpetual uncertainty in commodity prices but expressed confidence in the company's ability to maintain steady operations [7] - The company plans to update its three-year outlook in February, underpinned by steady cash flow and investment returns [8] - Management remains confident in the durability of free cash flow and the potential for production growth despite industry challenges [9] Other Important Information - Coterra announced a quarterly dividend of $0.22 per share, representing one of the highest yielding base dividends in the industry at over 3.5% [20] - The company repaid an additional $100 million of outstanding term loans during the quarter, bringing the total term loan paydown to $350 million in 2025 [20] Q&A Session Summary Question: Can you provide an update on the Harkey issue and production timeline? - Management expressed high confidence in the remediation efforts and noted that production is expected to gradually improve over time [36][37] Question: Is now the optimal time to lean into the gas program given current production levels? - Management highlighted growing demand from LNG exports and emphasized the quality and cost efficiency of their Marcellus program [39][40] Question: What are the expectations for oil growth in the second half of the year? - Management indicated high confidence in achieving the midpoint of oil guidance due to several high working interest projects coming online [44] Question: How does the company view the potential for federal lease sales in New Mexico? - Management expressed hope to participate in future federal lease sales, viewing them as a competitive opportunity [90][91] Question: Will the company consider more aggressive buybacks once term loans are paid off? - Management confirmed that once the term loans are repaid, they expect to balance buybacks with shareholder returns [66][88]

Financial Performance & Outlook - 2Q25 production exceeded guidance, leading to an increase in the full-year 2025 BOE (Barrels of Oil Equivalent) guidance by 4% at the midpoint[20] - The company estimates a 2025 Free Cash Flow (FCF) of $2.1 billion, supported by a balanced commodity exposure between oil and natural gas[20] - Coterra's pro forma leverage is approximately 0.9x, with $350 million of Term Loans retired during 1H25[20] - The company anticipates a 2025 reinvestment rate of approximately 52%[23] Capital Allocation & Investment - The company expects to be near the high end of the $2.1 billion to $2.3 billion 2025 capex guidance range due to increased gas activity[23] - Approximately $1.52 billion is allocated to Permian D&C (Drilling & Completion), $350 million to Marcellus D&C, and $230 million to Anadarko D&C for 2025[24] - Coterra has approximately $31 billion of economic capex opportunities, with approximately 45% expected to generate a 20x PVI10 or better, based on benchmark prices of $75/bbl WTI and $3.75/mmbtu[35] Asset Overview & Operational Highlights - The Permian asset has a midpoint D&C capex of $1.52 billion, targeting 150-165 net wells online with an average lateral length of 10,600 feet[45] - The Marcellus asset has a midpoint D&C capex of $350 million, targeting 10-15 net wells online with an average lateral length of 19,000 feet[54] - The Anadarko asset has a midpoint D&C capex of $230 million, targeting 15-25 net wells online with an average lateral length of 11,060 feet[57] Shareholder Returns - Coterra offers an attractive shareholder return with a 36% dividend yield[9] - The company's 2025 estimated FCF is projected to increase by 73% year-over-year[29]