Coterra Energy Reports Second-Quarter 2024 Results, Announces Quarterly Dividend, and Provides Third-Quarter 2024 Guidance and Full-Year 2024 Updates

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

Key Takeaways & Updates

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

• Increasing full-year 2024 BOE production guidance by 1% and oil production guidance by 2.4% from guidance provided in May, driven by faster cycle times and strong well performance. Maintaining full-year 2024 incurred capital expenditure (non-GAAP) guidance.

• For the second quarter of 2024, shareholder returns totaled 120% of Free Cash Flow (non-GAAP), inclusive of our declared quarterly base dividend and $140 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 103% year to date.

• Simul-frac efficiencies are exceeding expectations on our Windham Row Development. To date, 21 of the planned wells in the row have come online an average of 4 days ahead of schedule. We now plan to add an additional 3 Harkey wells to the project, bringing total wells in the row to 57, and further improving the capital efficiency of the project. Furthermore, due to early success, we now plan to simul-frac 45 of the 57 wells in the row.

Tom Jorden, Chairman, CEO and President of Coterra, noted, "Coterra's second quarter results continue the trend of delivering outstanding performance. The ingenuity and hard work of our operating team are driving results that exceed expectations across our portfolio of high-quality assets. As we move into the second half of 2024, we remain focused on executing our plan while maintaining significant investment optionality between oil and gas in 2025. Coterra's investment thesis remains strong. Operational excellence, efficient development of our diversified, low-cost, long-life assets, our fortress balance sheet, and an unwavering commitment to shareholder returns underpin our value proposition."

Second-Quarter 2024 Highlights

• Net Income (GAAP) totaled $220 million, or $0.30 per share. Adjusted Net Income (non-GAAP) was $272 million, or $0.37 per share.
• Cash Flow From Operating Activities (GAAP) totaled $558 million. Discretionary Cash Flow (non-GAAP) totaled $725 million.
• Cash paid for capital expenditures for drilling, completion and other fixed asset additions (GAAP) totaled $479 million. Incurred capital expenditures from drilling, completion and other fixed asset additions (non-GAAP) totaled $477 million, near the low end of our guidance range of $470 to $550 million.
• Free Cash Flow (non-GAAP) totaled $246 million.
• Unit operating cost (reflecting costs from direct operations, transportation, production taxes and G&A) totaled $8.35 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 above the high end of guidance (625 to 655 MBoepd), driven by improved cycle times and strong well performance in all three of our regions.
  • Oil production averaged 107.2 MBopd (thousand barrels of oil per day), slightly exceeding the high end of guidance (103 to 107 MBopd).
  • Natural gas production averaged 2,780 MMcfpd (million cubic feet per day), exceeding the high end of guidance (2,600 to 2,700 MMcfpd) as Marcellus base production outperformed expectations.
  • NGLs production averaged 98.8 MBoepd.
• Realized average prices:
  • Oil was $79.37 per Bbl (barrel), excluding the effect of commodity derivatives, and $79.39 per Bbl, including the effect of commodity derivatives.
  • Natural Gas was $1.26 per Mcf (thousand cubic feet), excluding the effect of commodity derivatives, and $1.40 per Mcf, including the effect of commodity derivatives.
  • NGLs were $19.53 per Bbl.

Shareholder Return Highlights

• Common Dividend: On August 1, 2024, Coterra's Board of Directors (the "Board") approved a quarterly base dividend of $0.21 per share, equating to a 3.3% annualized yield, based on the Company's $25.80 closing share price on July 31, 2024. The dividend will be paid on August 29, 2024 to holders of record on August 15, 2024.

• Share Repurchases: During the quarter, the Company repurchased 5.0 million shares for $140 million (cash basis, excluding 1% excise tax) at a weighted-average price of approximately $27.72 per share, leaving $1.3 billion remaining as of June 30, 2024 on its $2.0 billion share repurchase authorization.

• Total Shareholder Return: During the quarter, total shareholder returns amounted to $295 million, comprised of $155 million of declared dividends and $140 million of share repurchases (cash basis, excluding 1% excise tax).

• Reiterate Shareholder Return Strategy: Coterra is committed to returning 50% or greater of annual Free Cash Flow (non-GAAP) to shareholders through its $0.84 per share annual dividend and share repurchases. Year to date, Coterra has returned 103% of Free Cash Flow (non-GAAP) to shareholders.

Guidance Updates:

• Reiterated 2024 incurred capital expenditures (non-GAAP) of $1.75 to $1.95 billion.

• Increased 2024 oil production guidance to 105.5 to 108.5 MBopd, up 2.4% at the mid-point versus prior guidance.

• Maintained 2024 natural gas production guidance at the mid-point, tightened range to 2,675 to 2,775 MMcfpd.

• Increased 2024 BOE production guidance to 645 to 675, up 1% at the mid-point versus prior guidance.

• Announced third-quarter 2024 total equivalent production of 620 to 650 MBoepd, oil production of 107.0 to 111.0 MBopd, natural gas production of 2,500 to 2,630 MMcfpd, and incurred capital expenditures (non-GAAP) of $450 to $530 million.

• Estimate 2024 Discretionary Cash Flow (non-GAAP) of approximately $3.2 billion and 2024 Free Cash Flow (non-GAAP) of approximately $1.3 billion, at $80/bbl WTI and $2.37/mmbtu annual average NYMEX assumptions.

• For more details on annual and third quarter 2024 guidance, see 2024 Guidance Section in the tables below.

Strong Financial Position

As of June 30, 2024, Coterra had total debt outstanding of $2.646 billion, of which $575 million is due in September 2024. Coterra expects to retire its September 2024 maturity with cash on hand. The Company exited the quarter with cash and cash equivalents of $1.07 billion, $250 million in short-term investments, and no debt outstanding under its $1.5 billion revolving credit facility, resulting in total liquidity of approximately $2.82 billion. Coterra's net debt to trailing twelve-month EBITDAX ratio (non-GAAP) at June 30, 2024 was 0.4x.

See “Supplemental non-GAAP Financial Measures” below for descriptions of the above non-GAAP measures as well as reconciliations of these measures to the associated GAAP measures.

Committed to Sustainability and ESG Leadership

Coterra is committed to environmental stewardship, sustainable practices, and strong corporate governance. The Company's sustainability report can be found under "ESG" on www.coterra.com. Coterra published its 2024 Sustainability report on August 1, 2024.

Second-Quarter 2024 Conference Call

Coterra will host a conference call tomorrow, Friday, August 2, 2024, at 8:00 AM CT (9:00 AM ET), to discuss second-quarter 2024 financial and operating results.

Conference Call Information

Date: August 2, 2024

Time: 8:00 AM CT / 9:00 AM ET

Dial-in (for callers in the U.S. and Canada): [phone]

International dial-in: [phone]

Conference ID: 8017228

The live audio webcast and related earnings presentation can be accessed on the "Events & Presentations" page under the "Investors" section of the Company's website at www.coterra.com. The webcast will be archived and available at the same location after the conclusion of the live event.

About Coterra Energy

Coterra is a premier exploration and production company based in Houston, Texas with operations focused in the Permian Basin, Marcellus Shale, and Anadarko Basin. We strive to be a leading energy producer, delivering sustainable returns through the efficient and responsible development of our diversified asset base. Learn more about us at www.coterra.com.

Cautionary Statement Regarding Forward-Looking Information

This press release contains certain forward-looking statements within the meaning of federal securities laws. Forward-looking statements are not statements of historical fact and reflect Coterra's current views about future events. Such forward-looking statements include, but are not limited to, statements about returns to shareholders, enhanced shareholder value, reserves estimates, future financial and operating performance, and goals and commitment to sustainability and ESG leadership, strategic pursuits and goals, including with respect to the publication of Coterra’s Sustainability Report, and other statements that are not historical facts contained in this press release. The words "expect," "project," "estimate," "believe," "anticipate," "intend," "budget," "plan," "predict," "potential," "possible," "may," "should," "could," "would," "will," "strategy," "outlook", "guide" and similar expressions are also intended to identify forward-looking statements. We can provide no assurance that the forward-looking statements contained in this press release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, without limitation, the volatility in commodity prices for crude oil and natural gas; cost increases; the effect of future regulatory or legislative actions; the impact of public health crises, including pandemics and epidemics and any related company or governmental policies or actions, financial condition and results of operations; actions by, or disputes among or between, the Organization of Petroleum Exporting Countries and other producer countries; market factors; market prices (including geographic basis differentials) of oil and natural gas; impacts of inflation; labor shortages and economic disruption, (geopolitical disruptions such as the war in Ukraine or conflict in the Middle East or further escalation thereof); determination of reserves estimates, adjustments or revisions, including factors impacting such determination such as commodity prices, well performance, operating expenses and completion of Coterra’s annual PUD reserves process, as well as the impact on our financial statements resulting therefrom; the presence or recoverability of estimated reserves; the ability to replace reserves; environmental risks; drilling and operating risks; exploration and development risks; competition; the ability of management to execute its plans to meet its goals; and other risks inherent in Coterra's businesses. In addition, the declaration and payment of any future dividends, whether regular base quarterly dividends, variable dividends or special dividends, will depend on Coterra's financial results, cash requirements, future prospects and other factors deemed relevant by Coterra's Board. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to Coterra's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other filings with the SEC, which are available on Coterra's website at www.coterra.com.

Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Except to the extent required by applicable law, Coterra does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

Operational Data

The tables below provide a summary of production volumes, price realizations and operational activity by region and units costs for the Company for the periods indicated:

 

Quarter Ended June 30,

 

Six Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

PRODUCTION VOLUMES

 

 

 

 

 

 

 

Marcellus Shale

 

 

 

 

 

 

 

Natural gas (Mmcf/day)

 

2,114.4

 

 

 

2,322.8

 

 

2,212.6

 

 

2,229.1

Daily equivalent production (MBoepd)

 

352.4

 

 

 

387.1

 

 

368.8

 

 

371.5

 

 

 

 

 

 

 

 

Permian Basin

 

 

 

 

 

 

 

Natural gas (Mmcf/day)

 

484.5

 

 

 

406.7

 

 

485.6

 

 

416.9

Oil (MBbl/day)

 

99.6

 

 

 

89.7

 

 

98.3

 

 

87.0

NGL (MBbl/day)

 

78.1

 

 

 

65.4

 

 

74.1

 

 

64.7

Daily equivalent production (MBoepd)

 

258.4

 

 

 

222.9

 

 

253.3

 

 

221.2

 

 

 

 

 

 

 

 

Anadarko Basin

 

 

 

 

 

 

 

Natural gas (Mmcf/day)

 

179.4

 

 

 

173.9

 

 

170.3

 

 

184.1

Oil (MBbl/day)

 

7.5

 

 

 

6.1

 

 

6.5

 

 

7.0

NGL (MBbl/day)

 

20.6

 

 

 

19.6

 

 

20.3

 

 

19.4

Daily equivalent production (MBoepd)

 

58.0

 

 

 

54.7

 

 

55.2

 

 

57.1

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

 

 

 

Natural gas (Mmcf/day)

 

2,779.8

 

 

 

2,904.4

 

 

2,869.9

 

 

2,830.9

Oil (MBbl/day)

 

107.2

 

 

 

95.8

 

 

104.9

 

 

94.0

NGL (MBbl/day)

 

98.8

 

 

 

85.0

 

 

94.5

 

 

84.2

Daily equivalent production (MBoepd)

 

669.2

 

 

 

664.9

 

 

677.7

 

 

650.1

 

 

 

 

 

 

 

 

AVERAGE SALES PRICE (excluding hedges)

 

 

 

 

 

 

Marcellus Shale

 

 

 

 

 

 

 

Natural gas ($/Mcf)

$

1.66

 

 

$

1.78

 

$

1.94

 

$

2.70

 

 

 

 

 

 

 

 

Permian Basin

 

 

 

 

 

 

 

Natural gas ($/Mcf)

$

(0.53

)

 

$

0.92

 

$

0.25

 

$

1.16

Oil ($/Bbl)

$

79.37

 

 

$

71.71

 

$

77.30

 

$

72.80

NGL ($/Bbl)

$

18.95

 

 

$

15.36

 

$

19.70

 

$

18.85

 

 

 

 

 

 

 

 

Anadarko Basin

 

 

 

 

 

 

 

Natural gas ($/Mcf)

$

1.35

 

 

$

1.57

 

$

1.70

 

$

2.40

Oil ($/Bbl)

$

79.40

 

 

$

74.32

 

$

77.45

 

$

74.56

NGL ($/Bbl)

$

21.75

 

 

$

21.02

 

$

22.39

 

$

24.27

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

 

 

 

Natural gas ($/Mcf)

$

1.26

 

 

$

1.65

 

$

1.64

 

$

2.46

Oil ($/Bbl)

$

79.37

 

 

$

71.88

 

$

77.31

 

$

72.93

NGL ($/Bbl)

$

19.53

 

 

$

16.67

 

$

20.28

 

$

20.11

 

Quarter Ended June 30,

 

Six Months Ended  June 30,

 

2024

2023

 

2024

 

2023

AVERAGE SALES PRICE (including hedges)

 

 

 

 

Total Company

 

 

 

 

Natural gas ($/Mcf)

$

           1.40

 

$1.95

 

$

           1.76

 

$

           2.81

Oil ($/Bbl)

$

         79.39

 

$72.17

 

$

         77.25

 

$

         73.11 

NGL ($/Bbl)

$

         19.53

 

$16.67

 

$

         20.28

 

$

         20.11 

 

Quarter Ended  June 30,

 

Six Months Ended  June 30,

 

2024

 

2023

 

2024

 

2023

WELLS DRILLED(1)

 

 

 

 

 

 

 

Gross wells

 

 

 

 

 

 

 

Marcellus Shale

 

8

 

16

 

 

               22

 

 

               36

Permian Basin

 

63

 

33

 

 

              111 

 

 

               72

Anadarko Basin

 

11

 

11

 

 

               19

 

 

               17

 

 

82

 

60

 

 

152

 

 

125

 

 

 

 

 

 

 

 

Net wells

 

 

 

 

 

 

 

Marcellus Shale

 

8.0

 

16.0

 

 

             21.0

 

 

             36.0

Permian Basin

 

26.8

 

21.3

 

 

             50.0

 

 

             37.9

Anadarko Basin

 

7.0

 

5.1

 

 

             13.7

 

 

               8.4

 

 

41.8

 

42.4

 

 

84.7

 

 

82.3

 

 

 

 

 

 

 

 

TURN IN LINES

 

 

 

 

 

 

 

Gross wells (2)

 

 

 

 

 

 

 

Marcellus Shale

 

12

 

20

 

 

               23

 

 

               45

Permian Basin

 

56

 

34

 

 

               98

 

 

               79

Anadarko Basin

 

26

 

3

 

 

               31

 

 

                 7

 

 

94

 

57

 

 

152

 

 

131

 

 

 

 

 

 

 

 

Net wells (2)

 

 

 

 

 

 

 

Marcellus Shale

 

12.0

 

20.0

 

 

             23.0

 

 

             45.0

Permian Basin

 

22.6

 

19.1

 

 

             44.5

 

 

             42.2

Anadarko Basin

 

15.2

 

—

 

 

             15.3

 

 

               0.1

 

 

49.8

 

39.1

 

 

82.8

 

 

87.3

 

 

 

 

 

 

 

 

AVERAGE RIG COUNTS

 

 

 

 

 

 

 

Marcellus Shale

 

1.2

 

3.0

 

 

               1.6

 

 

               3.0

Permian Basin

 

8.0

 

6.0

 

 

               8.0

 

 

               6.0

Anadarko Basin

 

1.3

 

2.0

 

 

               1.7

 

 

               1.5

(1)

Wells drilled represents wells drilled to total depth during the period.

(2)

The 12 turn-in lines in the Marcellus Shale were brought online for less than 10 days on average in order to de-water the developments. These wells were subsequently shut-in or heavily curtailed and contributed negligible volumes during the quarter (a total of 18 MMcf/d, or less than 0.1% of total company gas volumes during the quarter). The wells were returned online in early July.

 

Quarter Ended June 30,

 

Six Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

AVERAGE UNIT COSTS ($/Boe) (1)

 

 

 

 

 

 

 

Direct operations

$

2.62

 

$

2.16

 

$

2.56

 

$

2.24

Gathering, processing and transportation

 

3.99

 

 

4.27

 

 

3.99

 

 

4.20

Taxes other than income

 

0.89

 

 

1.05

 

 

1.04

 

 

1.27

General and administrative (excluding stock-based compensation and severance expense)

 

0.85

 

 

0.79

 

 

0.92

 

 

0.85

Unit Operating Cost

$

8.35

 

$

8.27

 

$

8.52

 

$

8.56

Depreciation, depletion and amortization

 

7.34

 

 

6.54

 

 

7.12

 

 

6.50

Exploration

 

0.09

 

 

0.09

 

 

0.08

 

 

0.08

Stock-based compensation

 

0.26

 

 

0.11

 

 

0.24

 

 

0.19

Severance expense

 

—

 

 

0.05

 

 

—

 

 

0.09

Interest expense, net

 

0.23

 

 

0.09

 

 

0.15

 

 

0.09

 

$

16.26

 

$

15.15

 

$

16.10

 

$

15.51

(1)

Total unit costs may differ from the sum of the individual costs due to rounding.

Derivatives Information

As of June 30, 2024, the Company had the following outstanding financial commodity derivatives:

 

 

2024

Natural Gas

 

Third Quarter

 

Fourth Quarter

NYMEX collars

 

 

 

 

Volume (MMBtu)

 

 

45,080,000

 

 

28,890,000

Weighted average floor ($/MMBtu)

 

$

2.75

 

$

2.75

Weighted average ceiling ($/MMBtu)

 

$

3.94

 

$

4.68

 

 

2025

Natural Gas

 

First Quarter

 

Second Quarter

 

Third Quarter

 

Fourth Quarter

NYMEX collars

 

 

 

 

 

 

 

 

Volume (MMBtu)

 

 

27,000,000

 

 

27,300,000

 

 

27,600,000

 

 

27,600,000

Weighted average floor ($/MMBtu)

 

$

2.92

 

$

2.92

 

$

2.92

 

$

2.92

Weighted average ceiling ($/MMBtu)

 

$

5.12

 

$

4.37

 

$

4.37

 

$

6.20

 

 

2026

Natural Gas

 

First Quarter

NYMEX collars

 

 

Volume (MMBtu)

 

 

18,000,000

Weighted average floor ($/MMBtu)

 

$

2.75

Weighted average ceiling ($/MMBtu)

 

$

8.30

 

 

2024

 

2025

Oil

 

Third Quarter

 

Fourth Quarter

 

First Quarter

 

Second Quarter

WTI oil collars

 

 

 

 

 

 

 

 

Volume (MBbl)

 

 

3,220

 

 

3,220

 

 

1,800

 

 

1,820

Weighted average floor ($/Bbl)

 

$

65.00

 

$

65.00

 

$

62.50

 

$

62.50

Weighted average ceiling ($/Bbl)

 

$

87.01

 

$

87.01

 

$

81.67

 

$

81.67

 

 

 

 

 

 

 

 

 

WTI Midland oil basis swaps

 

 

 

 

 

 

 

 

Volume (MBbl)

 

 

4,600

 

 

4,600

 

 

1,800

 

 

1,820

Weighted average differential ($/Bbl)

 

$

1.13

 

$

1.13

 

$

1.24

 

$

1.24

In July 2024, the Company entered into the following financial commodity derivatives:

 

 

2025

Oil

 

First Quarter

 

Second Quarter

 

Third Quarter

 

Fourth Quarter

WTI oil collars

 

 

 

 

 

 

 

 

Volume (MBbl)

 

 

900

 

 

910

 

 

1,380

 

 

1,380

Weighted average floor ($/Bbl)

 

$

65.00

 

$

65.00

 

$

65.00

 

$

65.00

Weighted average ceiling ($/Bbl)

 

$

84.07

 

$

84.07

 

$

83.18

 

$

83.18

 

 

 

 

 

 

 

 

 

WTI Midland oil basis swaps

 

 

 

 

 

 

 

 

Volume (MBbl)

 

 

900

 

 

910

 

 

1,380

 

 

1,380

Weighted average differential ($/Bbl)

 

$

1.13

 

$

1.13

 

$

1.14

 

$

1.14

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

Quarter Ended

Six Months Ended

 

June 30,

 

June 30,

(In millions, except per share amounts)

2024

 

2023

 

2024

 

2023

OPERATING REVENUES

 

 

 

 

 

 

 

Oil

$

774

 

 

$

626

 

 

$

1,475

 

 

$

1,241

 

Natural gas

 

319

 

 

 

436

 

 

 

857

 

 

 

1,258

 

NGL

 

176

 

 

 

129

 

 

 

349

 

 

 

306

 

Gain (loss) on derivative instruments

 

(16

)

 

 

(12

)

 

 

(16

)

 

 

126

 

Other

 

18

 

 

 

6

 

 

 

39

 

 

 

31

 

 

 

1,271

 

 

 

1,185

 

 

 

2,704

 

 

 

2,962

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Direct operations

 

160

 

 

 

130

 

 

 

316

 

 

 

264

 

Gathering, processing and transportation

 

242

 

 

 

258

 

 

 

492

 

 

 

494

 

Taxes other than income

 

54

 

 

 

63

 

 

 

128

 

 

 

149

 

Exploration

 

5

 

 

 

5

 

 

 

10

 

 

 

9

 

Depreciation, depletion and amortization

 

447

 

 

 

395

 

 

 

879

 

 

 

764

 

General and administrative (excluding stock-based compensation and severance expense)

 

52

 

 

 

48

 

 

 

114

 

 

 

100

 

Stock-based compensation

 

16

 

 

 

7

 

 

 

29

 

 

 

23

 

Severance expense

 

—

 

 

 

3

 

 

 

—

 

 

 

11

 

 

 

976

 

 

 

909

 

 

 

1,968

 

 

 

1,814

 

Gain on sale of assets

 

1

 

 

 

—

 

 

 

—

 

 

 

5

 

INCOME FROM OPERATIONS

 

296

 

 

 

276

 

 

 

736

 

 

 

1,153

 

Interest expense

 

34

 

 

 

16

 

 

 

53

 

 

 

33

 

Interest income

 

(19

)

 

 

(10

)

 

 

(35

)

 

 

(22

)

Income before income taxes

 

281

 

 

 

270

 

 

 

718

 

 

 

1,142

 

Income tax expense

 

61

 

 

 

61

 

 

 

146

 

 

 

256

 

NET INCOME

$

220

 

 

$

209

 

 

$

572

 

 

$

886

 

Earnings per share - Basic

$

0.30

 

 

$

0.28

 

 

$

0.77

 

 

$

1.16

 

Weighted-average common shares outstanding

 

742

 

 

 

755

 

 

 

746

 

 

 

760

 

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(In millions)

June 30, 2024

 

December 31, 2023

ASSETS

 

 

 

Cash and cash equivalents

$

1,070

 

$

956

Short-term investments

 

250

 

 

—

Other current assets

 

1,017

 

 

1,059

Properties and equipment, net (successful efforts method)

 

17,996

 

 

17,933

Other assets

 

431

 

 

467

 

$

20,764

 

$

20,415

 

 

 

 

LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities

$

1,090

 

$

1,085

Current portion of long-term debt

 

575

 

 

575

Long-term debt, net (excluding current maturities)

 

2,071

 

 

1,586

Deferred income taxes

 

3,390

 

 

3,413

Other long term liabilities

 

601

 

 

709

Cimarex redeemable preferred stock

 

8

 

 

8

Stockholders’ equity

 

13,029

 

 

13,039

 

$

20,764

 

$

20,415

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

 

Quarter Ended June 30,

 

Six Months Ended June 30,

(In millions)

2024

 

2023

 

2024

 

2023

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

$

220

 

 

$

209

 

 

$

572

 

 

$

886

 

Depreciation, depletion and amortization

 

447

 

 

 

395

 

 

 

879

 

 

 

764

 

Deferred income tax (benefit) expense

 

(1

)

 

 

4

 

 

 

(23

)

 

 

27

 

Gain on sale of assets

 

(1

)

 

 

—

 

 

 

—

 

 

 

(5

)

(Gain) loss on derivative instruments

 

16

 

 

 

12

 

 

 

16

 

 

 

(126

)

Net cash received in settlement of derivative instruments

 

36

 

 

 

84

 

 

 

62

 

 

 

184

 

Stock-based compensation and other

 

13

 

 

 

7

 

 

 

25

 

 

 

24

 

Income charges not requiring cash

 

(5

)

 

 

(6

)

 

 

(9

)

 

 

(10

)

Changes in assets and liabilities

 

(167

)

 

 

(59

)

 

 

(108

)

 

 

396

 

Net cash provided by operating activities

 

558

 

 

 

646

 

 

 

1,414

 

 

 

2,140

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Capital expenditures for drilling, completion and other fixed asset additions

 

(479

)

 

 

(592

)

 

 

(936

)

 

 

(1,075

)

Capital expenditures for leasehold and property acquisitions

 

(2

)

 

 

(5

)

 

 

(3

)

 

 

(6

)

Purchases of short-term investments

 

—

 

 

 

—

 

 

 

(250

)

 

 

—

 

Proceeds from sale of assets

 

1

 

 

 

28

 

 

 

1

 

 

 

33

 

Net cash used in investing activities

 

(480

)

 

 

(569

)

 

 

(1,188

)

 

 

(1,048

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Net proceeds from debt

 

—

 

 

 

—

 

 

 

499

 

 

 

—

 

Repayment of finance leases

 

(2

)

 

 

(1

)

 

 

(3

)

 

 

(3

)

Common stock repurchases

 

(140

)

 

 

(57

)

 

 

(290

)

 

 

(325

)

Dividends paid

 

(156

)

 

 

(152

)

 

 

(314

)

 

 

(588

)

Tax withholding on vesting of stock awards

 

—

 

 

 

—

 

 

 

—

 

 

 

(1

)

Capitalized debt issuance costs

 

—

 

 

 

—

 

 

 

(5

)

 

 

(7

)

Cash paid for conversion of redeemable preferred stock

 

—

 

 

 

—

 

 

 

—

 

 

 

(1

)

Cash received for stock option exercises

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Net cash used in financing activities

 

(297

)

 

 

(210

)

 

 

(112

)

 

 

(925

)

Net increase (decrease) in cash, cash equivalents and restricted cash

$

(219

)

 

$

(133

)

 

$

114

 

 

$

167

 

Reconciliation of Incurred Capital Expenditures

Incurred capital expenditures is defined as capital expenditures for drilling, completion and other fixed asset additions less changes in accrued capital costs.

 

 

Quarter Ended June 30,

 

Six Months Ended June 30,

(In millions)

 

2024

 

2023

 

2024

 

2023

Cash paid for capital expenditures for drilling, completion and other fixed asset additions (GAAP)

 

$

479

 

 

$

592

 

 

$

936

 

 

$

1,075

Change in accrued capital costs

 

 

(2

)

 

 

(55

)

 

 

(9

)

 

 

30

Incurred capital expenditures for drilling, completion and other fixed asset additions (non-GAAP)

 

$

477

 

 

 

537

 

 

$

927

 

 

$

1,105

Supplemental Non-GAAP Financial Measures (Unaudited)

We report our financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, we believe certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between current results and results of prior periods. In addition, we believe these measures are used by analysts and others in the valuation, rating and investment recommendations of companies within the oil and natural gas exploration and production industry. See the reconciliations below that compare GAAP financial measures to non-GAAP financial measures for the periods indicated.

We have also included herein certain forward-looking non-GAAP financial measures. Due to the forward-looking nature of these non-GAAP financial measures, we cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures, such as changes in assets and liabilities (including future impairments) and cash paid for certain capital expenditures. Accordingly, we are unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures. Reconciling items in future periods could be significant.

Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings Per Share

Adjusted Net Income and Adjusted Earnings per Share are presented based on our management's belief that these non-GAAP measures enable a user of financial information to understand the impact of identified adjustments on reported results. Adjusted Net Income is defined as net income plus gain and loss on sale of assets, non-cash gain and loss on derivative instruments, stock-based compensation expense, severance expense, and tax effect on selected items. Adjusted Earnings per Share is defined as Adjusted Net Income divided by weighted-average common shares outstanding. Additionally, we believe these measures provide beneficial comparisons to similarly adjusted measurements of prior periods and use these measures for that purpose. Adjusted Net Income and Adjusted Earnings per Share are not measures of financial performance under GAAP and should not be considered as alternatives to net income and earnings per share, as defined by GAAP.

 

Quarter Ended June 30,

 

Six Months Ended June 30,

(In millions, except per share amounts)

2024

 

2023

 

2024

 

2023

As reported - net income

$

220

 

 

$

209

 

 

$

572

 

 

$

886

 

Reversal of selected items:

 

 

 

 

 

 

 

Gain on sale of assets

 

(1

)

 

 

—

 

 

 

—

 

 

 

(5

)

(Gain) loss on derivative instruments(1)

 

52

 

 

 

96

 

 

 

78

 

 

 

58

 

Stock-based compensation expense

 

16

 

 

 

7

 

 

 

29

 

 

 

23

 

Severance expense

 

—

 

 

 

3

 

 

 

—

 

 

 

11

 

Tax effect on selected items

 

(15

)

 

 

(24

)

 

 

(24

)

 

 

(20

)

Adjusted net income

$

272

 

 

$

291

 

 

$

655

 

 

$

953

 

As reported - earnings per share

$

0.30

 

 

$

0.28

 

 

$

0.77

 

 

$

1.16

 

Per share impact of selected items

 

0.07

 

 

 

0.11

 

 

 

0.11

 

 

 

0.09

 

Adjusted earnings per share

$

0.37

 

 

$

0.39

 

 

$

0.88

 

 

$

1.25

 

Weighted-average common shares outstanding

 

742

 

 

 

755

 

 

 

746

 

 

 

760

 

(1)

This amount represents the non-cash mark-to-market changes of our commodity derivative instruments recorded in Gain (loss) on derivative instruments in the Condensed Consolidated Statement of Operations.

Reconciliation of Discretionary Cash Flow and Free Cash Flow

Discretionary Cash Flow is defined as cash flow from operating activities excluding changes in assets and liabilities. Discretionary Cash Flow is widely accepted as a financial indicator of an oil and gas company’s ability to generate available cash to internally fund exploration and development activities, return capital to shareholders through dividends and share repurchases, and service debt and is used by our management for that purpose. Discretionary Cash Flow is presented based on our management’s belief that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies that use the full cost method of accounting for oil and gas producing activities or have different financing and capital structures or tax rates. Discretionary Cash Flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities or net income, as defined by GAAP, or as a measure of liquidity.

Free Cash Flow is defined as Discretionary Cash Flow less cash paid for capital expenditures. Free Cash Flow is an indicator of a company’s ability to generate cash flow after spending the money required to maintain or expand its asset base, and is used by our management for that purpose. Free Cash Flow is presented based on our management’s belief that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies. Free Cash Flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities or net income, as defined by GAAP, or as a measure of liquidity.

 

Quarter Ended June 30,

 

Six Months Ended June 30,

(In millions)

2024

 

2023

 

2024

 

2023

Cash flow from operating activities

$

558

 

 

$

646

 

 

$

1,414

 

 

$

2,140

 

Changes in assets and liabilities

 

167

 

 

 

59

 

 

 

108

 

 

 

(396

)

Discretionary cash flow

 

725

 

 

 

705

 

 

 

1,522

 

 

 

1,744

 

Cash paid for capital expenditures for drilling, completion and other fixed asset additions

 

(479

)

 

 

(592

)

 

 

(936

)

 

 

(1,075

)

Free cash flow

$

246

 

 

$

113

 

 

$

586

 

 

$

669

 

Reconciliation of Adjusted EBITDAX

Adjusted EBITDAX is defined as net income plus interest expense, interest income, income tax expense, depreciation, depletion, and amortization (including impairments), exploration expense, gain and loss on sale of assets, non-cash gain and loss on derivative instruments, stock-based compensation expense, and severance expense. Adjusted EBITDAX is presented on our management’s belief that this non-GAAP measure is useful information to investors when evaluating our ability to internally fund exploration and development activities and to service or incur debt without regard to financial or capital structure. Our management uses Adjusted EBITDAX for that purpose. Adjusted EBITDAX is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities or net income, as defined by GAAP, or as a measure of liquidity.

 

Quarter Ended June 30,

 

Six Months Ended June 30,

(In millions)

2024

 

2023

 

2024

 

2023

Net income

$

220

 

 

$

209

 

 

$

572

 

 

$

886

 

Plus (less):

 

 

 

 

 

 

 

Interest expense

 

34

 

 

 

16

 

 

 

53

 

 

 

33

 

Interest income

 

(19

)

 

 

(10

)

 

 

(35

)

 

 

(22

)

Income tax expense

 

61

 

 

 

61

 

 

 

146

 

 

 

256

 

Depreciation, depletion and amortization

 

447

 

 

 

395

 

 

 

879

 

 

 

764

 

Exploration

 

5

 

 

 

5

 

 

 

10

 

 

 

9

 

Gain on sale of assets

 

(1

)

 

 

—

 

 

 

—

 

 

 

(5

)

Non-cash loss on derivative instruments

 

52

 

 

 

96

 

 

 

78

 

 

 

58

 

Severance expense

 

—

 

 

 

3

 

 

 

—

 

 

 

11

 

Stock-based compensation

 

16

 

 

 

7

 

 

 

29

 

 

 

23

 

Adjusted EBITDAX

$

815

 

 

$

782

 

 

$

1,732

 

 

$

2,013

 

 

Trailing Twelve Months Ended

(In millions)

June 30, 2024

 

December 31, 2023

Net income

$

1,311

 

 

$

1,625

 

Plus (less):

 

 

 

Interest expense

 

93

 

 

 

73

 

Interest income

 

(60

)

 

 

(47

)

Income tax expense

 

393

 

 

 

503

 

Depreciation, depletion and amortization

 

1,756

 

 

 

1,641

 

Exploration

 

21

 

 

 

20

 

Gain on sale of assets

 

(7

)

 

 

(12

)

Non-cash loss on derivative instruments

 

75

 

 

 

54

 

Severance expense

 

1

 

 

 

12

 

Stock-based compensation

 

65

 

 

 

59

 

Adjusted EBITDAX (trailing twelve months)

$

3,648

 

 

$

3,928

 

Reconciliation of Net Debt

The total debt to total capitalization ratio is calculated by dividing total debt by the sum of total debt and total stockholders’ equity. This ratio is a measurement which is presented in our annual and interim filings and our management believes this ratio is useful to investors in assessing our leverage. Net Debt is calculated by subtracting cash and cash equivalents and short-term investments from total debt. The Net Debt to Adjusted Capitalization ratio is calculated by dividing Net Debt by the sum of Net Debt and total stockholders’ equity. Net Debt and the Net Debt to Adjusted Capitalization ratio are non-GAAP measures which our management believes are also useful to investors when assessing our leverage since we have the ability to and may decide to use a portion of our cash and cash equivalents and short-term investments to retire debt. Our management uses these measures for that purpose. Additionally, as our planned expenditures are not expected to result in additional debt, our management believes it is appropriate to apply cash and cash equivalents and short-term investments to reduce debt in calculating the Net Debt to Adjusted Capitalization ratio.

(In millions)

June 30, 2024

 

December 31, 2023

Current portion of long-term debt

$

575

 

 

$

575

 

Long-term debt, net

 

2,071

 

 

 

1,586

 

Total debt

 

2,646

 

 

 

2,161

 

Stockholders’ equity

 

13,029

 

 

 

13,039

 

Total capitalization

$

15,675

 

 

$

15,200

 

 

 

 

 

Total debt

$

2,646

 

 

$

2,161

 

Less: Cash and cash equivalents

 

(1,070

)

 

 

(956

)

Less: Short-term investments

 

(250

)

 

 

—

 

Net debt

$

1,326

 

 

$

1,205

 

 

 

 

 

Net debt

$

1,326

 

 

$

1,205

 

Stockholders’ equity

 

13,029

 

 

 

13,039

 

Total adjusted capitalization

$

14,355

 

 

$

14,244

 

 

 

 

 

Total debt to total capitalization ratio

 

16.9

%

 

 

14.2

%

Less: Impact of cash and cash equivalents

 

7.7

%

 

 

5.7

%

Net debt to adjusted capitalization ratio

 

9.2

%

 

 

8.5

%

Reconciliation of Net Debt to Adjusted EBITDAX

Total debt to net income is defined as total debt divided by net income. Net debt to Adjusted EBITDAX is defined as net debt divided by trailing twelve month Adjusted EBITDAX. Net debt to Adjusted EBITDAX is a non-GAAP measure which our management believes is useful to investors when assessing our credit position and leverage.

(In millions)

June 30, 2024

 

December 31, 2023

Total debt

$

2,646

 

$

2,161

Net income

 

1,311

 

 

1,625

Total debt to net income ratio

2.0 x

 

1.3 x

 

 

 

 

Net debt (as defined above)

$

1,326

 

$

1,205

Adjusted EBITDAX (Trailing twelve months)

 

3,648

 

 

3,928

Net debt to Adjusted EBITDAX

0.4 x

 

0.3 x

2024 Guidance

The tables below present full-year and second quarter 2024 guidance.

 

 

Full Year Guidance

 

 

2024 Guidance (May)

 

Updated 2024 Guidance

 

 

Low Mid High

 

Low Mid High

Total Equivalent Production (MBoed)

 

635 - 655 - 675

 

645 - 660 - 675

Gas (Mmcf/day)

 

2,650 - 2,725 - 2,800

 

2,675 - 2,725 - 2,775

Oil (MBbl/day)

 

102.0 - 104.5 - 107.0

 

105.5 - 107.0 - 108.5

 

 

 

 

 

Net wells turned in line

 

 

 

 

Marcellus Shale

 

37 - 40 - 43

 

No change

Permian Basin

 

75 - 83 - 90

 

80 - 85 - 90

Anadarko Basin

 

20 - 23 - 25

 

21 - 24 - 27

 

 

 

 

 

Incurred capital expenditures ($ in millions)

 

 

 

 

Total Company

 

$1,750 - $1,850 - $1,950

 

No change

Drilling and completion

 

 

 

 

Marcellus Shale

 

$350- $375 -$400

 

$375 midpoint

Permian Basin

 

$945 - $1,000 - $1,055

 

$1,000 midpoint

Anadarko Basin

 

$270 - $290 - $320

 

$290 midpoint

Midstream, saltwater disposal and infrastructure

 

$185 - $185 - $185

 

$185 midpoint

 

 

 

 

 

Commodity price assumptions:

 

 

 

 

WTI ($ per bbl)

 

$79

 

$80

Henry Hub ($ per mmbtu)

 

$2.35

 

$2.37

 

 

 

 

 

Cash Flow & Investment ($ in billions)

 

 

 

 

Discretionary Cash Flow

 

$3.1

 

$3.2

Incurred Capital Expenditures

 

$1.75 - $1.85 - $1.95

 

No change

Free Cash Flow (DCF - cash capex)

 

$1.3

 

$1.3

 

 

 

 

 

$ per boe, unless noted:

 

 

 

 

Lease operating expense + workovers + region office

 

$2.15 - $2.50 - $2.85

 

No change

Gathering, processing, & transportation

 

$3.50 - $4.00 - $4.50

 

No change

Taxes other than income

 

$1.00 - $1.10 - $1.20

 

No change

General & administrative (1)

 

$0.80 - $0.90 - $1.00

 

No change

Unit Operating Cost

 

$7.45 - $8.50 - $9.55

 

No change

 

 

 

 

 

(1)

Excludes stock-based compensation and severance expense

 

 

Quarterly Guidance

 

 

Second Quarter 2024 Guidance

 

Second Quarter 2024 Actual

 

Third Quarter 2024 Guidance

 

 

Low Mid High

 

 

 

Low Mid High

Total Equivalent Production (MBoed)

 

625 - 640 - 655

 

669

 

620 - 635 - 650

Gas (Mmcf/day)

 

2,600 - 2,650 - 2,700

 

2,780

 

2,500 - 2,565 - 2,630

Oil (MBbl/day)

 

103.0 - 105.0 - 107.0

 

107.2

 

107.0 - 109.0 - 111.0

 

 

 

 

 

 

 

Net wells turned in line

 

 

 

 

 

 

Marcellus Shale

 

0 - 0 - 0

 

12

 

0 – 4 - 7

Permian Basin

 

15 - 23 - 30

 

23

 

15 - 20 - 25

Anadarko Basin

 

7-10-13

 

15

 

5

 

 

 

 

 

 

 

Incurred capital expenditures ($ in millions)

 

 

 

 

 

 

Total Company

 

$470 - $510 - $550

 

$477

 

$450 - $480 - $530

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801776861/en/

Investor Contact Daniel Guffey - Vice President of Finance, IR & Treasury 281.589.4875

Hannah Stuckey - Investor Relations Manager 281.589.4983