Coterra Energy (CTRA) Q3 Results - Nov 1

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On October 31 Coterra Energy Inc. (NYSE: CTRA) reported third-quarter 2024 financial and operating results and declared a quarterly dividend of $0.21 per share. Additionally, the Company provided fourth-quarter production and capital guidance and updated full-year 2024 guidance.

Tom Jorden, Chairman, CEO and President of Coterra, noted, "Coterra continues to exceed its 2024 plan and has strong momentum with significant optionality heading into 2025. Our teams continue to deliver strong and improving capital efficiency through operational execution, all of which is guided by our relentless focus on economic returns. The Company's strong positioning is underpinned by its advantaged balance sheet, operational aptitude, diversified commodity mix and its durable, high-quality inventory.

We are also pleased to announce our three new LNG agreements. The U.S. has an abundant, low-cost natural gas resource that can help support energy reliability and energy affordability around the world. America's role as a major energy exporter strengthens our nation's standing on the global stage. As part of Coterra’s ongoing strategy, these agreements further diversify our natural gas marketing portfolio with the addition of international LNG pricing exposure to European and Asian markets."

Third-Quarter 2024 Highlights

Net Income (GAAP) totaled $252 million, or $0.34 per share. Adjusted Net Income (non-GAAP) was $233 million, or $0.32 per share. < Compares to my Net Income forecast of $244 million, or $0.33 per share.

Cash Flow From Operating Activities (GAAP) totaled $755 million. Discretionary Cash Flow (non-GAAP) totaled $670 million. < Compares to my forecast of $703 million Adjusted Operating Cash Flow.
Free Cash Flow (non-GAAP) totaled $277 million.

Cash paid for capital expenditures for drilling, completion and other fixed asset additions (GAAP) totaled $393 million. Capital expenditures from drilling, completion and other fixed asset additions (non-GAAP) totaled $418 million, below the low-end of our guidance range of $450 to $530 million. < This is good.

Unit operating cost (reflecting costs from direct operations, transportation, production taxes and G&A) totaled $8.73 per BOE, within our annual guidance range of $7.45 to $9.55 per BOE.

Total equivalent production of 669 MBoepd (thousand barrels of oil equivalent per day), was 3% above the high-end of guidance (620 to 650 MBoepd), driven by timing and strong well performance in all three of our regions. < My forecast was 668,000 Boepd.

Oil production averaged 112.3 MBopd (thousand barrels of oil per day), slightly exceeding the high-end of guidance (107 to 111 MBopd) by 1%. < Beat my forecast of 108,550 bpd of oil.

Natural gas production averaged 2,682 MMcfpd, exceeding the high end of guidance (2,500 to 2,630 MMcfpd) by 2%, driven primarily by Permian growth.

NGLs production averaged 109.7 MBopd. < Beat my forecast of 96,860 bpd of NGLs. Higher percentage of liquids is very good news.

Realized average prices:

Oil was $74.04 per Bbl (barrel), excluding the effect of commodity derivatives, and $74.18 per Bbl, including the effect of commodity derivatives.

Natural Gas was $1.30 per Mcf (thousand cubic feet), excluding the effect of commodity derivatives, and $1.41 per Mcf, including the effect of commodity derivatives.

NGLs were $18.42 per Bbl.
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Key Takeaways & Updates

For the third quarter of 2024, total barrels of oil equivalent (BOE) production, natural gas production, and oil production all beat the high-end of guidance, and capital expenditures (non-GAAP) came in below the low-end of guidance.

Increasing full-year 2024 production guidance mid-point for BOE, natural gas, and oil. The full-year 2024 oil guidance mid-point now assumes 12% year over year growth and a 5% increase compared to the initial guidance mid-point provided in February. These upward revisions throughout the year have been driven by faster cycle times and strong well performance across our portfolio.

Lowering full-year 2024 capital expenditure (non-GAAP) guidance by $50 million at the mid-point, to $1.75-1.85 billion, driven by lower midstream, saltwater disposal, and infrastructure capital as well as lower Marcellus activity.

During the quarter, the Company signed three new LNG agreements to sell a total of 200 MMcfpd (million cubic feet per day) of natural gas, indexed to international price points. Sales will begin in 2027 and 2028 and will be sourced from the Permian Basin, Anadarko Basin, and Marcellus Shale.

For the third quarter of 2024, shareholder returns totaled 96% of Free Cash Flow (non-GAAP), inclusive of our declared quarterly base dividend and $111 million of share repurchases during the quarter (cash basis, excluding 1% excise tax). The Company remains committed to returning 50% or greater of its annual Free Cash Flow (non-GAAP) to shareholders and has returned 100% year to date, in addition to the retirement of $75 million of debt, net of new issue proceeds.

To date, 36 of the 57 Windham Row wells have come online.

Currently, 10 additional wells are expected to come online by the end of the year.

The final 11 wells are expected to come online in first-quarter 2025.