Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Coterra Energy Inc (CTRA, Financial) achieved production levels above the high end of their guidance range for oil and natural gas in Q4 2024.
• The company returned 61% of its free cash flow in Q4 2024 through dividends and share buybacks, and 89% for the full year.
• Coterra Energy Inc (CTRA) successfully closed the Franklin Mountain and Avant acquisitions, integrating these assets to optimize capital and operational efficiency.
• The company has a flexible capital plan for 2025, allowing for adjustments based on market conditions, particularly in the Marcellus program.
• Coterra Energy Inc (CTRA) reported strong financial results with a net income of $297 million and adjusted net income of $358 million for Q4 2024.

Negative Points

• Coterra Energy Inc (CTRA) faces potential challenges in the oil market, with plans to adjust their capital plan if oil markets become unstable.
• The company's 2025 capital plan includes significant oil investments, which could be risky if oil prices fluctuate.
• There is uncertainty regarding the integration and optimization of newly acquired assets, which could impact operational efficiency.
• Coterra Energy Inc (CTRA) has a high level of capital expenditure planned for 2025, which may strain financial resources if market conditions worsen.
• The company is prioritizing deleveraging in 2025, which may limit the availability of funds for other strategic initiatives.

Q & A Highlights

Q: Can you discuss the key lessons learned from the Windham Row project, particularly regarding the interplay between the Wolfcamp and Harkey programs? A: Thomas Jorden, CEO, explained that the Windham Row project met forecasts with excellent reservoir performance. The company is still analyzing data to decide on co-development or overfill strategies. Michael DeShazer, VP of Business Units, added that they have drilled over 40 Harkey wells and plan 30 more this year, with data from co-developed and overfilled wells still being studied.

Q: Could you clarify the 2025 guidance, particularly regarding the impact of the acquired assets? A: Blake Sirgo, SVP of Operations, confirmed that the guidance maintains the November forecast despite having one less month of production from acquired assets. The company has bolstered production to offset the partial month in January and reallocated some capital to the Marcellus to restart activity.

Q: What factors are influencing the decision to restart two rigs in the Marcellus in April, and what conditions would lead to increased capital investment there? A: CEO Thomas Jorden stated that the returns from the Marcellus program are now competitive with the current price outlook. Improved storage levels, LNG exports, and positive market conditions could lead to increased investment. CFO Shannon Young emphasized that the decision is driven by fundamentals and economics.

Q: How does the company view future acquisitions following the Franklin Mountain and Avant deals? A: CEO Thomas Jorden mentioned that while they do not target acquisitions strategically, they remain opportunistic. The Franklin Mountain and Avant acquisitions were beneficial, and similar opportunities would be considered if they align with the company's goals and offer reasonable entry prices.

Q: With the current gas market outlook, do you expect both the Anadarko and Marcellus to return to growth over the next three years? A: CEO Thomas Jorden expressed optimism about the gas market, noting that the company targets returns rather than growth. Blake Sirgo added that capital allocation is based on returns, and if gas prices remain elevated, capital could flow to these basins, potentially leading to growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.