Coterra (CTRA) Q2 Earnings Down Y/Y, Sales Lag Estimates

Core Viewpoint - Coterra Energy Inc. reported weaker-than-expected earnings and revenues for the second quarter of 2024, primarily due to lower natural gas prices and increased operating expenses Financial Performance - Adjusted earnings per share for Q2 2024 were 35 cents, missing the Zacks Consensus Estimate of 40 cents and down from 38 cents in the same quarter last year [1] - Operating revenues were $1.3 billion, missing the consensus estimate by $75 million but up 7.3% from $1.2 billion year-over-year, driven by higher oil revenues [2] - Cash flow from operations decreased by 13.6% to $558 million, while free cash flow for the quarter was $246 million [9] Shareholder Returns - The board approved a quarterly base dividend of 21 cents per share, payable on August 29, 2024 [2] - Total shareholder returns for the quarter amounted to $295 million, including $155 million in dividends and $140 million in share repurchases [4] Production and Price Realizations - Average daily production increased by 0.6% year-over-year to 669.2 thousand barrels of oil equivalent (Mboe), exceeding the consensus estimate of 652 Mboe [5] - Oil production rose by 11.9% to 107.2 thousand barrels per day, while natural gas production fell by 4.3% to 2,779.8 million cubic feet per day [6] - The average realized price for crude oil was $79.37 per barrel, a 10.4% increase from $71.88 a year ago [6] Costs and Expenses - Average unit cost rose to $16.26 per barrel of oil equivalent from $15.15 the previous year, driven by a 12.2% increase in depreciation expenses [8] - Total operating expenses increased to $976 million from $909 million year-over-year [8] Guidance - Coterra reaffirmed its capital expenditure budget at $1.75 billion to $1.95 billion and increased its oil production estimate to 105.5-108.5 thousand barrels per day [10] - For Q3 2024, the company anticipates production of 620-650 MBoepd and capital expenditures of $450-$530 million [11] - The company expects $3.2 billion in discretionary cash flow and $1.3 billion in free cash flow for the year [11] Financial Position - As of June 30, 2024, Coterra had $1.1 billion in cash and cash equivalents and long-term debt of $2.1 billion, resulting in a debt-to-capitalization ratio of 16.9% [9]