Workflow
Coterra(CTRA) - 2024 Q4 - Earnings Call Transcript
CTRACoterra(CTRA)2025-02-25 18:11
Filings
Slide

Financial Data and Key Metrics Changes - Coterra Energy achieved production levels above the high end of guidance for oil and natural gas, with capital expenditures near the low end of guidance [7][16] - The company returned 61% of free cash flow in Q4 2024 through dividends and share buybacks, totaling 89% for the full year [7][31] - Net income for Q4 was 297millionor297 million or 0.40 per share, with adjusted net income at 358millionor358 million or 0.49 per share [18] - Total equivalent production for 2024 was 677 MBOE per day, exceeding guidance by 4% and showing a 13% year-over-year organic growth in oil production [19][20] - Capital costs for 2024 were 1.76billion,representinga161.76 billion, representing a 16% decrease year-over-year [21] Business Line Data and Key Metrics Changes - The company saw outperformance in new wells in both the Permian and Marcellus regions, with total production for Q4 exceeding guidance by over 3% [16][17] - Incurred capital in Q4 was just above the low end of guidance, driven by lower completion and post-completion costs [18] - The 2025 capital plan includes significant investments in oil while maintaining flexibility to adjust based on market conditions [10][24] Market Data and Key Metrics Changes - Coterra expects total production in 2025 to average between 710 and 770 MBOE per day, with oil production projected to be 152 to 168 MBO per day, a 47% increase year-over-year at the midpoint [26] - Natural gas production is expected to remain relatively flat year-over-year, between 2.675 and 2.875 BCF per day [26] - The company is closely monitoring gas markets and is prepared to accelerate its Marcellus program if positive conditions persist [9][10] Company Strategy and Development Direction - Coterra's strategy focuses on capital efficiency, profitable growth, and maintaining flexibility in capital allocation across its operating regions [13][29] - The company successfully closed the Franklin Mountain and Avant acquisitions, integrating these assets to optimize operational efficiency [11] - The updated three-year outlook anticipates 5% or greater oil volume growth and aims for a capital investment of 2.1 to 2.4billionperyear[28]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′sabilitytodeliversolidresultsin2025,drivenbystrongoperationalperformanceandcapitaldiscipline[34]−Theoutlookforgasmarketsappearsconstructive,withmanagementpreparedtoadjustactivitylevelsbasedonmarketconditions[66][67]−Thecompanyaimstomaintainastrongbalancesheetandprioritizedeleveragingwhilereturningasignificantportionoffreecashflowtoshareholders[32][33]OtherImportantInformation−Coterraannounceda2.4 billion per year [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver solid results in 2025, driven by strong operational performance and capital discipline [34] - The outlook for gas markets appears constructive, with management prepared to adjust activity levels based on market conditions [66][67] - The company aims to maintain a strong balance sheet and prioritize deleveraging while returning a significant portion of free cash flow to shareholders [32][33] Other Important Information - Coterra announced a 0.22 per share dividend for Q4, increasing the annual base dividend by 5% to 0.88pershare[30]−Thecompanyrepurchased17millionsharesfor0.88 per share [30] - The company repurchased 17 million shares for 464 million in 2024, returning 89% of free cash flow through repurchases and dividends [31] Q&A Session Summary Question: Key lessons learned from the Wyndham Row project - Management noted excellent reservoir performance and plans to continue co-developing wells based on positive results [54][56] Question: Clarification on 2025 guidance and production from acquired assets - Management confirmed that production guidance remains consistent despite the partial month of January production from acquired assets [59][60] Question: Restarting rigs in the Marcellus and conditions for increasing capital - Management indicated that returns from the Marcellus program are now competitive, and they are prepared to increase activity based on market conditions [64][66] Question: Future acquisition strategy post-Franklin Mountain - Management emphasized a focus on opportunistic acquisitions that align with the company's asset mix and value creation goals [70][72] Question: Capital efficiencies in the Marcellus and future run rates - Management expects to return to a run rate of 2 BCF per day in the Marcellus by mid to late 2026, contingent on market conditions [76][79] Question: Opportunities in power generation and midstream interests - Management is engaged in discussions regarding power generation opportunities, particularly in the Permian basin [82][123] Question: Growth capital allocation in a constructive gas market - Management stated that capital allocation will be based on return on investment, with flexibility to adjust based on market conditions [134][135]