Coterra(CTRA) - 2024 Q3 - Quarterly Results

Coterra Energy Third-Quarter 2024 Financial and Operating Results Executive Summary & Key Highlights Coterra reported strong Q3 2024 results, exceeding production and lowering capital expenditures, while announcing a $0.21 dividend and new LNG agreements - CEO Tom Jorden highlighted the company's strong performance, improving capital efficiency, and strategic diversification into international LNG pricing through three new agreements[3][4] - Q3 2024 performance exceeded expectations, with total BOE, natural gas, and oil production all beating the high-end of guidance, while capital expenditures came in below the low-end[5] - The company increased its full-year 2024 production guidance and lowered its capital expenditure guidance by $50 million at the mid-point to $1.75-$1.85 billion[6][7] - Signed three new LNG agreements to sell a total of 200 MMcfpd of natural gas indexed to international prices, with sales beginning in 2027 and 2028[8] - Shareholder returns for Q3 2024 totaled 96% of Free Cash Flow, including a declared base dividend and $111 million in share repurchases. The company has returned 100% of its year-to-date Free Cash Flow to shareholders[9] Third-Quarter 2024 Performance Coterra generated $252 million GAAP Net Income and $277 million Free Cash Flow in Q3 2024, with total equivalent production of 669 MBoepd exceeding guidance by 3% Q3 2024 Financial Highlights | Metric | Value | | :--- | :--- | | Net Income (GAAP) | $252 million | | Adjusted Net Income (non-GAAP) | $233 million | | Earnings Per Share (GAAP) | $0.34 | | Adjusted EPS (non-GAAP) | $0.32 | | Cash Flow From Operating Activities | $755 million | | Free Cash Flow (non-GAAP) | $277 million | | Capital Expenditures (non-GAAP) | $418 million | Q3 2024 Production vs. Guidance | Production | Q3 2024 Actual | Guidance High-End | Variance | | :--- | :--- | :--- | :--- | | Total Equivalent (MBoepd) | 669 | 650 | +3% | | Oil (MBopd) | 112.3 | 111 | +1% | | Natural Gas (MMcfpd) | 2,682 | 2,630 | +2% | Q3 2024 Realized Average Prices | Commodity | Price (Excluding Derivatives) | Price (Including Derivatives) | | :--- | :--- | :--- | | Oil (per Bbl) | $74.04 | $74.18 | | Natural Gas (per Mcf) | $1.30 | $1.41 | | NGLs (per Bbl) | $18.42 | $18.42 | Shareholder Returns and Capital Allocation The company declared a $0.21 quarterly dividend and repurchased $111 million in shares, totaling $265 million in Q3 shareholder returns, maintaining its commitment to return 50% or more of annual Free Cash Flow - The Board of Directors approved a quarterly base dividend of $0.21 per share, representing a 3.5% annualized yield based on the October 30, 2024 closing price[14] - Repurchased 4.3 million shares for $111 million during Q3, with $1.2 billion remaining on the share repurchase authorization as of September 30, 2024[15] - Total shareholder returns in Q3 amounted to $265 million, comprising $154 million in declared dividends and $111 million in share repurchases[16] - Reiterated its strategy to return 50% or greater of annual Free Cash Flow (non-GAAP) to shareholders, noting that 100% of year-to-date Free Cash Flow has been returned[16] Financial Position As of September 30, 2024, Coterra maintained a strong balance sheet with $2.066 billion total debt and approximately $2.843 billion total liquidity, including $843 million cash Key Balance Sheet and Liquidity Metrics (as of Sept 30, 2024) | Metric | Value | | :--- | :--- | | Total Debt Outstanding | $2.066 billion | | Cash and Cash Equivalents | $843 million | | Revolving Credit Facility | $2.0 billion (undrawn) | | Total Liquidity | ~$2.843 billion | | Net Debt to TTM EBITDAX Ratio | 0.3x | - During the quarter, Coterra repaid $575 million of senior notes that matured and expanded its credit facility to $2.0 billion from $1.5 billion[19] Business Outlook and Guidance Coterra updated its full-year 2024 guidance, lowering capital expenditures by $50 million while increasing production forecasts, and provided Q4 2024 projections Updated Full-Year 2024 Guidance | Metric | Prior Guidance (Mid-point) | Updated Guidance (Mid-point) | Change | | :--- | :--- | :--- | :--- | | Capital Expenditures | $1.85 billion | $1.80 billion | -$50 million | | Total Production (MBoepd) | 660 | 668 | +1% | | Oil Production (MBopd) | 107 | 107.5 | +0.5 MBopd | | Gas Production (MMcfpd) | 2,725 | 2,755 | +1% | Fourth-Quarter 2024 Guidance | Metric | Q4 2024 Guidance Range | | :--- | :--- | | Total Production (MBoepd) | 630 - 660 | | Oil Production (MBopd) | 106 - 110 | | Natural Gas Production (MMcfpd) | 2,530 - 2,660 | | Capital Expenditures (non-GAAP) | $410 - $500 million | - The company estimates 2024 Discretionary Cash Flow of approximately $2.9 billion and Free Cash Flow of approximately $1.1 billion, based on WTI at $75.58/bbl and NYMEX at $2.22/mmbtu[17] Operational and Financial Data This section provides detailed operational and financial tables, including production, prices, well activity, unit costs, derivatives, and consolidated financial statements Operational Data This subsection details Q3 2024 production volumes by commodity, average sales prices, well drilling activity, and unit operating costs compared to Q3 2023 Q3 2024 vs Q3 2023 Daily Production Volumes | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Company | | | | Natural Gas (MMcf/day) | 2,682.0 | 2,903.2 | | Oil (MBbl/day) | 112.3 | 91.9 | | NGL (MBbl/day) | 109.7 | 94.5 | | Daily Equivalent (MBoepd) | 669.1 | 670.3 | Q3 2024 vs Q3 2023 Average Sales Prices (Excluding Hedges) | Commodity | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Natural Gas ($/Mcf) | $1.30 | $1.80 | | Oil ($/Bbl) | $74.04 | $80.80 | | NGL ($/Bbl) | $18.42 | $19.52 | - In Q3 2024, the company drilled 36.2 net wells and turned 35.5 net wells to sales, compared to 50.5 and 45.7, respectively, in Q3 2023[28] - Unit Operating Cost was $8.73 per BOE in Q3 2024, an increase from $7.99 per BOE in Q3 2023, primarily driven by higher direct operations costs[29] Derivatives Information This section outlines the company's outstanding financial commodity derivatives, including oil and natural gas collars and basis swaps, extending into 2026 - As of September 30, 2024, the company had outstanding financial commodity derivatives, including oil and natural gas collars and basis swaps, for the remainder of 2024, all of 2025, and the first quarter of 2026[33][34][36] - In October 2024, the company added new WTI oil collars and basis swaps for Q4 2024 and for all quarters of 2025[37] Condensed Consolidated Financial Statements This section presents the condensed consolidated Income Statement, Balance Sheet, and Cash Flow Statement for Q3 2024 and comparative periods Condensed Statement of Operations (Q3 2024 vs Q3 2023) | (In millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Operating Revenues | $1,359 | $1,356 | | Income from Operations | $327 | $424 | | Net Income | $252 | $323 | | Earnings per Share - Basic | $0.34 | $0.43 | Condensed Balance Sheet Highlights | (In millions) | Sept 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $843 | $956 | | Total Assets | $20,126 | $20,415 | | Long-term debt, net | $2,066 | $1,586 | | Total Stockholders' Equity | $13,034 | $13,039 | Condensed Statement of Cash Flows (Q3 2024 vs Q3 2023) | (In millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $755 | $758 | | Net cash used in investing activities | $(139) | $(541) | | Net cash used in financing activities | $(847) | $(211) | Supplemental Non-GAAP Financial Measures This section provides reconciliations of non-GAAP financial measures, including Adjusted Net Income, Free Cash Flow, and Adjusted EBITDAX for Q3 2024 Reconciliation to Adjusted Net Income (Q3 2024) | (In millions) | Value | | :--- | :--- | | Net Income (GAAP) | $252 | | Adjustments (derivatives, stock comp, etc.) | $(19) | | Adjusted Net Income (non-GAAP) | $233 | Reconciliation to Free Cash Flow (Q3 2024) | (In millions) | Value | | :--- | :--- | | Cash flow from operating activities | $755 | | Changes in assets and liabilities | $(85) | | Discretionary Cash Flow | $670 | | Cash paid for capital expenditures | $(393) | | Free Cash Flow | $277 | Reconciliation to Adjusted EBITDAX (Q3 2024) | (In millions) | Value | | :--- | :--- | | Net Income (GAAP) | $252 | | Adjustments (Interest, Taxes, DD&A, etc.) | $534 | | Adjusted EBITDAX (non-GAAP) | $786 |