News Release
Coterra Energy Reports First-Quarter 2024 Results, Announces Quarterly Dividend, and Updates 2024 Outlook
HOUSTON, May 2, 2024 - Coterra Energy Inc. (NYSE: CTRA) (“Coterra” or the “Company”) today reported first-quarter 2024 financial and operating results and declared a quarterly dividend of $0.21 per share. Additionally, the Company provided second-quarter production and capital guidance and updated full-year 2024 guidance.
Key Takeaways & Updates
•For the first quarter of 2024, total barrels of oil equivalent (BOE) production beat the mid-point and oil production beat the high-end of guidance, and incurred capital expenditures (non-GAAP) came in below the low-end of guidance.
•Increasing full-year 2024 oil guidance 2.5% from initial guidance, driven by strong well performance and faster cycle times. Maintaining full-year 2024 BOE and incurred capital expenditure (non-GAAP) guidance.
•For the first quarter of 2024, shareholder returns totaled approximately 90% of Free Cash Flow (non-GAAP), inclusive of our quarterly base dividend and $150 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.
•Issued $500 million aggregate principal amount of senior unsecured notes due 2034, with a coupon of 5.60% per annum. Coterra intends to use the net proceeds from the offering, together with cash on hand, to fund the repayment of the $575 million outstanding principal amount, and any other amounts due thereon, of its 3.67% Series L Senior Notes due September 18, 2024.
Tom Jorden, Chairman, CEO and President of Coterra, noted, "Coterra continues to deliver outstanding operational and financial results driven by the company's high-quality asset portfolio and top-tier operating team. Coterra continues to fire on all cylinders, and shifting our near-term capital program to focus on oil and liquids-rich plays remains prudent. However, the Company maintains optionality to take advantage of a structural change in the natural gas macro as LNG exports grow and electricity demand increases. One of our core principles at Coterra is maintaining flexibility and our low-cost, diversified asset portfolio provides ample opportunity to generate consistent, profitable growth through the cycles."
First-Quarter 2024 Highlights
•Net Income (GAAP) totaled $352 million, or $0.47 per share. Adjusted Net Income (non-GAAP) was $383 million, or $0.51 per share.
•Cash Flow From Operating Activities (GAAP) totaled $856 million. Discretionary Cash Flow (non-GAAP) totaled $797 million.
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•Cash paid for capital expenditures for drilling, completion and other fixed asset additions (GAAP) totaled $457 million. Incurred capital expenditures from drilling, completion and other fixed asset additions (non-GAAP) totaled $450 million, below the low end of our guidance range of $460 to $540 million, due to timing.
•Free Cash Flow (non-GAAP) totaled $340 million.
•Unit operating cost (reflecting costs from direct operations, transportation, production taxes and G&A) totaled $8.68 per BOE, within our annual guidance range of $7.45 to $9.55 per BOE.
•Total equivalent production of 686 MBoepd (thousand barrels of oil equivalent per day), was near the high end of guidance (660 to 690 MBoepd), driven by improved cycle times and strong well performance in all three of our regions.
◦Oil production averaged 102.5 MBopd (thousand barrels of oil per day), exceeding the high end of guidance (95 to 99 MBopd).
◦Natural gas production averaged 2,960 MMcfpd (million cubic feet per day), exceeding the high end of guidance (2,850 to 2,950 MMcfpd).
◦NGLs production averaged 90.2 MBoepd.
•Realized average prices:
◦Oil was $75.16 per Bbl (barrel), excluding the effect of commodity derivatives, and $75.00 per Bbl, including the effect of commodity derivatives
◦Natural Gas was $2.00 per Mcf (thousand cubic feet), excluding the effect of commodity derivatives, and $2.10 per Mcf, including the effect of commodity derivatives
◦NGLs were $21.09 per Bbl
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Shareholder Return Highlights
•Common Dividend: On May 1, 2024, Coterra's Board of Directors (the "Board") approved a quarterly base dividend of $0.21 per share, equating to a 3.1% annualized yield, based on the Company's $26.91 closing share price on May 1, 2024. The dividend will be paid on May 30, 2024 to holders of record on May 16, 2024.
•Share Repurchases: During the quarter, the Company repurchased 5.6 million shares for $150 million (cash basis, excluding 1% excise tax) at a weighted-average price of approximately $26.94 per share, leaving $1.4 billion remaining as of March 31, 2024 on its $2.0 billion share repurchase authorization.
•Total Shareholder Return: During the quarter, total shareholder returns amounted to $307 million, comprised of $157 million of declared dividends and $150 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.
Guidance Updates:
•Reiterating 2024 incurred capital expenditures (non-GAAP) of $1.75 to $1.95 billion.
•Increasing 2024 oil production guidance to 102 to 107 MBopd, up 2.5% at the mid-point versus prior guidance.
•Expect second-quarter 2024 total equivalent production of 625 to 655 MBoepd, oil production of 103 to 107 MBopd, natural gas production of 2,600 to 2,700 MMcfpd, and incurred capital expenditures (non-GAAP) of $470 to $550 million.
•Estimate 2024 Discretionary Cash Flow (non-GAAP) of approximately $3.1 billion and 2024 Free Cash Flow (non-GAAP) of approximately $1.3 billion, at $79/bbl WTI and $2.35/mmbtu average NYMEX assumptions.
•For more details on annual and second quarter 2024 guidance, see 2024 Guidance Section in the tables below.
Strong Financial Position
During the quarter, Coterra issued new $500 million senior unsecured notes due 2034. As of March 31, 2024, Coterra had total debt outstanding of $2.651 billion, of which $575 million is due in September 2024. The Company exited the quarter with a cash and cash equivalents of $1.289 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 $3.039 billion. Coterra intends to use the net proceeds from the recent debt offering, together with cash on hand, to fund the repayment of the $575 million notes due September 18, 2024. Coterra's net debt to trailing twelve-month EBITDAX ratio (non-GAAP) at March 31, 2024 was 0.3x.
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.
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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.
First-Quarter 2024 Conference Call
Coterra will host a conference call tomorrow, Friday, May 3, 2024, at 8:00 AM CT (9:00 AM ET), to discuss first-quarter 2024 financial and operating results.
Conference Call Information
Date: May 3, 2024
Time: 8:00 AM CT / 9:00 AM ET
Dial-in (for callers in the U.S. and Canada): (888) 550-5424
International dial-in: (646) 960-0819
Conference ID: 3813676
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
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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 (such as the coronavirus pandemic) and epidemics and any related governmental policies or actions on Coterra’s business, 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 (including as a result of the pandemic or geopolitical disruptions such as the war in Ukraine or conflict in the Middle East); 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.
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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:
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| PRODUCTION VOLUMES | |||||||||||
| Marcellus Shale | |||||||||||
| Natural gas (Mmcf/day) | 2,310.8 | 2,134.4 | |||||||||
| Daily equivalent production (MBoepd) | 385.1 | 355.7 | |||||||||
| Permian Basin | |||||||||||
| Natural gas (Mmcf/day) | 486.7 | 427.2 | |||||||||
| Oil (MBbl/day) | 97.0 | 84.3 | |||||||||
| NGL (MBbl/day) | 70.1 | 64.1 | |||||||||
| Daily equivalent production (MBoepd) | 248.2 | 219.6 | |||||||||
| Anadarko Basin | |||||||||||
| Natural gas (Mmcf/day) | 161.2 | 194.3 | |||||||||
| Oil (MBbl/day) | 5.5 | 7.9 | |||||||||
| NGL (MBbl/day) | 20.1 | 19.3 | |||||||||
| Daily equivalent production (MBoepd) | 52.4 | 59.6 | |||||||||
| Total Company | |||||||||||
| Natural gas (Mmcf/day) | 2,960.1 | 2,756.6 | |||||||||
| Oil (MBbl/day) | 102.5 | 92.2 | |||||||||
| NGL (MBbl/day) | 90.2 | 83.4 | |||||||||
| Daily equivalent production (MBoepd) | 686.1 | 635.0 | |||||||||
| AVERAGE SALES PRICE (excluding hedges) | |||||||||||
| Marcellus Shale | |||||||||||
| Natural gas ($/Mcf) | $ | 2.20 | $ | 3.71 | |||||||
| Permian Basin | |||||||||||
| Natural gas ($/Mcf) | $ | 1.02 | $ | 1.40 | |||||||
| Oil ($/Bbl) | $ | 75.18 | $ | 73.96 | |||||||
| NGL ($/Bbl) | $ | 20.53 | $ | 22.46 | |||||||
| Anadarko Basin | |||||||||||
| Natural gas ($/Mcf) | $ | 2.10 | $ | 3.14 | |||||||
| Oil ($/Bbl) | $ | 74.78 | $ | 74.75 | |||||||
| NGL ($/Bbl) | $ | 23.05 | $ | 27.63 | |||||||
| Total Company | |||||||||||
| Natural gas ($/Mcf) | $ | 2.00 | $ | 3.31 | |||||||
| Oil ($/Bbl) | $ | 75.16 | $ | 74.03 | |||||||
| NGL ($/Bbl) | $ | 21.09 | $ | 23.66 | |||||||
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| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| AVERAGE SALES PRICE (including hedges) | |||||||||||
| Total Company | |||||||||||
| Natural gas ($/Mcf) | $ | 2.10 | $ | 3.72 | |||||||
| Oil ($/Bbl) | $ | 75.00 | $ | 74.09 | |||||||
| NGL ($/Bbl) | $ | 21.09 | $ | 23.66 | |||||||
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
WELLS DRILLED(1) | |||||||||||
| Gross wells | |||||||||||
| Marcellus Shale | 14 | 20 | |||||||||
| Permian Basin | 48 | 39 | |||||||||
| Anadarko Basin | 8 | 6 | |||||||||
| 70 | 65 | ||||||||||
| Net wells | |||||||||||
| Marcellus Shale | 13.0 | 20.0 | |||||||||
| Permian Basin | 23.2 | 16.6 | |||||||||
| Anadarko Basin | 6.7 | 3.3 | |||||||||
| 42.9 | 39.9 | ||||||||||
| TURN IN LINES | |||||||||||
| Gross wells | |||||||||||
| Marcellus Shale | 11 | 25 | |||||||||
| Permian Basin | 42 | 45 | |||||||||
| Anadarko Basin | 5 | 4 | |||||||||
| 58 | 74 | ||||||||||
| Net wells | |||||||||||
| Marcellus Shale | 11.0 | 25.0 | |||||||||
| Permian Basin | 21.9 | 23.1 | |||||||||
| Anadarko Basin | 0.1 | 0.1 | |||||||||
| 33.0 | 48.2 | ||||||||||
| AVERAGE RIG COUNTS | |||||||||||
| Marcellus Shale | 2.0 | 3.0 | |||||||||
| Permian Basin | 8.0 | 6.0 | |||||||||
| Anadarko Basin | 2.0 | 1.0 | |||||||||
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| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
AVERAGE UNIT COSTS ($/Boe)(2) | |||||||||||
| Direct operations | $ | 2.50 | $ | 2.34 | |||||||
| Gathering, processing and transportation | 4.00 | 4.13 | |||||||||
| Taxes other than income | 1.19 | 1.50 | |||||||||
| General and administrative (excluding stock-based compensation and severance expense) | 0.99 | 0.93 | |||||||||
| Unit Operating Cost | $ | 8.68 | $ | 8.90 | |||||||
| Depreciation, depletion and amortization | 6.92 | 6.45 | |||||||||
| Exploration | 0.07 | 0.07 | |||||||||
| Stock-based compensation | 0.22 | 0.28 | |||||||||
| Severance expense | — | 0.12 | |||||||||
| Interest expense, net | 0.06 | 0.09 | |||||||||
| $ | 15.94 | $ | 15.91 | ||||||||
(1)Wells drilled represents wells drilled to total depth during the period.
(2)Total unit costs may differ from the sum of the individual costs due to rounding.
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Derivatives Information
As of March 31, 2024, the Company had the following outstanding financial commodity derivatives:
| 2024 | ||||||||||||||||||||
| Natural Gas | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||||||
NYMEX collars | ||||||||||||||||||||
| Volume (MMBtu) | 44,590,000 | 45,080,000 | 16,690,000 | |||||||||||||||||
| Weighted average floor ($/MMBtu) | $ | 2.70 | $ | 2.75 | $ | 2.75 | ||||||||||||||
| Weighted average ceiling ($/MMBtu) | $ | 3.87 | $ | 3.94 | $ | 4.23 | ||||||||||||||
| 2025 | ||||||||||||||||||||||||||
| Natural Gas | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||||||||||
NYMEX collars | ||||||||||||||||||||||||||
| Volume (MMBtu) | 9,000,000 | 9,100,000 | 9,200,000 | 9,200,000 | ||||||||||||||||||||||
| Weighted average floor ($/MMBtu) | $ | 3.25 | $ | 3.25 | $ | 3.25 | $ | 3.25 | ||||||||||||||||||
| Weighted average ceiling ($/MMBtu) | $ | 4.79 | $ | 4.79 | $ | 4.79 | $ | 4.79 | ||||||||||||||||||
| 2024 | ||||||||||||||||||||
| Oil | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||||||
| WTI oil collars | ||||||||||||||||||||
| Volume (MBbl) | 3,185 | 2,760 | 2,760 | |||||||||||||||||
| Weighted average floor ($/Bbl) | $ | 67.57 | $ | 65.00 | $ | 65.00 | ||||||||||||||
| Weighted average ceiling ($/Bbl) | $ | 90.47 | $ | 87.17 | $ | 87.17 | ||||||||||||||
| WTI Midland oil basis swaps | ||||||||||||||||||||
| Volume (MBbl) | 3,185 | 2,760 | 2,760 | |||||||||||||||||
| Weighted average differential ($/Bbl) | $ | 1.15 | $ | 1.14 | $ | 1.14 | ||||||||||||||
In April 2024, the Company entered into the following financial commodity derivatives:
| 2024 | ||||||||||||||||||||
| Oil | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||||||
| WTI oil collars | ||||||||||||||||||||
| Volume (MBbl) | — | 460 | 460 | |||||||||||||||||
| Weighted average floor ($/Bbl) | $ | — | $ | 65.00 | $ | 65.00 | ||||||||||||||
| Weighted average ceiling ($/Bbl) | $ | — | $ | 86.02 | $ | 86.02 | ||||||||||||||
| 2025 | ||||||||||||||||||||||||||
| Oil | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||||||||||
| WTI oil collars | ||||||||||||||||||||||||||
| Volume (MBbl) | 900 | 910 | — | — | ||||||||||||||||||||||
| Weighted average floor ($/Bbl) | $ | 65.00 | $ | 65.00 | $ | — | $ | — | ||||||||||||||||||
| Weighted average ceiling ($/Bbl) | $ | 84.21 | $ | 84.21 | $ | — | $ | — | ||||||||||||||||||
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions, except per share amounts) | 2024 | 2023 | |||||||||
| OPERATING REVENUES | |||||||||||
| Natural gas | $ | 538 | $ | 822 | |||||||
| Oil | 701 | 615 | |||||||||
| NGL | 173 | 177 | |||||||||
| Gain on derivative instruments | — | 138 | |||||||||
| Other | 21 | 25 | |||||||||
| 1,433 | 1,777 | ||||||||||
| OPERATING EXPENSES | |||||||||||
| Direct operations | 156 | 134 | |||||||||
| Gathering, processing and transportation | 250 | 236 | |||||||||
| Taxes other than income | 74 | 86 | |||||||||
| Exploration | 5 | 4 | |||||||||
| Depreciation, depletion and amortization | 432 | 369 | |||||||||
| General and administrative (excluding stock-based compensation and severance expense) | 62 | 53 | |||||||||
| Stock-based compensation | 13 | 16 | |||||||||
| Severance expense | — | 7 | |||||||||
| 992 | 905 | ||||||||||
| (Loss) gain on sale of assets | (1) | 5 | |||||||||
| INCOME FROM OPERATIONS | 440 | 877 | |||||||||
| Interest expense | 19 | 17 | |||||||||
| Interest income | (16) | (12) | |||||||||
| Income before income taxes | 437 | 872 | |||||||||
| Income tax expense | 85 | 195 | |||||||||
| NET INCOME | $ | 352 | $ | 677 | |||||||
| Earnings per share - Basic | $ | 0.47 | $ | 0.88 | |||||||
| Weighted-average common shares outstanding | 750 | 764 | |||||||||
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CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
| (In millions) | March 31, 2024 | December 31, 2023 | |||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 1,289 | $ | 956 | |||||||
| Short-term investments | 250 | — | |||||||||
| Current assets | 1,011 | 1,059 | |||||||||
| Properties and equipment, net (successful efforts method) | 17,959 | 17,933 | |||||||||
| Other assets | 444 | 467 | |||||||||
| $ | 20,953 | $ | 20,415 | ||||||||
| LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities | $ | 1,134 | $ | 1,085 | |||||||
| Current portion of long-term debt | 575 | 575 | |||||||||
| Long-term debt, net (excluding current maturities) | 2,076 | 1,586 | |||||||||
| Deferred income taxes | 3,391 | 3,413 | |||||||||
| Other long term liabilities | 680 | 709 | |||||||||
| Cimarex redeemable preferred stock | 8 | 8 | |||||||||
| Stockholders’ equity | 13,089 | 13,039 | |||||||||
| $ | 20,953 | $ | 20,415 | ||||||||
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2024 | 2023 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 352 | $ | 677 | |||||||
| Depreciation, depletion and amortization | 432 | 369 | |||||||||
| Deferred income tax expense | (22) | 23 | |||||||||
| (Gain) loss on sale of assets | 1 | (5) | |||||||||
| Gain on derivative instruments | — | (138) | |||||||||
| Net cash received in settlement of derivative instruments | 26 | 100 | |||||||||
| Stock-based compensation and other | 12 | 17 | |||||||||
| Income charges not requiring cash | (4) | (4) | |||||||||
| Changes in assets and liabilities | 59 | 455 | |||||||||
| Net cash provided by operating activities | 856 | 1,494 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures for drilling, completion and other fixed asset additions | (457) | (483) | |||||||||
| Capital expenditures for leasehold and property acquisitions | (1) | (1) | |||||||||
| Purchases of short-term investments | (250) | — | |||||||||
| Proceeds from sale of assets | — | 5 | |||||||||
| Net cash used in investing activities | (708) | (479) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Net proceeds from debt | 499 | — | |||||||||
| Repayment of finance leases | (1) | (2) | |||||||||
| Common stock repurchases | (150) | (268) | |||||||||
| Dividends paid | (158) | (436) | |||||||||
| Tax withholding on vesting of stock awards | — | (1) | |||||||||
| Capitalized debt issuance costs | (5) | (7) | |||||||||
| Cash paid for conversion of redeemable preferred stock | — | (1) | |||||||||
| Net cash provided by (used in) financing activities | 185 | (715) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | $ | 333 | $ | 300 | |||||||
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.
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2024 | 2023 | |||||||||
| Cash paid for capital expenditures for drilling, completion and other fixed asset additions (GAAP) | $ | 457 | $ | 483 | |||||||
| Change in accrued capital costs | (7) | 85 | |||||||||
| Incurred capital expenditures for drilling, completion and other fixed asset additions (non-GAAP) | $ | 450 | $ | 568 | |||||||
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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.
| Three Months Ended March 31, | |||||||||||
| (In millions, except per share amounts) | 2024 | 2023 | |||||||||
| As reported - net income | $ | 352 | $ | 677 | |||||||
| Reversal of selected items: | |||||||||||
| (Gain) loss on sale of assets | 1 | (5) | |||||||||
(Gain) loss on derivative instruments(1) | 26 | (38) | |||||||||
| Stock-based compensation expense | 13 | 16 | |||||||||
| Severance expense | — | 7 | |||||||||
| Tax effect on selected items | (9) | 4 | |||||||||
| Adjusted net income | $ | 383 | $ | 661 | |||||||
| As reported - earnings per share | $ | 0.47 | $ | 0.88 | |||||||
| Per share impact of selected items | 0.04 | (0.01) | |||||||||
| Adjusted earnings per share | $ | 0.51 | $ | 0.87 | |||||||
| Weighted-average common shares outstanding | 750 | 764 | |||||||||
_______________________________________________________________________________
(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.
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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.
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2024 | 2023 | |||||||||
| Cash flow from operating activities | $ | 856 | $ | 1,494 | |||||||
| Changes in assets and liabilities | (59) | (455) | |||||||||
| Discretionary cash flow | 797 | 1,039 | |||||||||
| Cash paid for capital expenditures for drilling, completion and other fixed asset additions | (457) | (483) | |||||||||
| Free cash flow | $ | 340 | $ | 556 | |||||||
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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.
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2024 | 2023 | |||||||||
| Net income | $ | 352 | $ | 677 | |||||||
| Plus (less): | |||||||||||
| Interest expense | 19 | 17 | |||||||||
| Interest income | (16) | (12) | |||||||||
| Income tax expense | 85 | 195 | |||||||||
| Depreciation, depletion and amortization | 432 | 369 | |||||||||
| Exploration | 5 | 4 | |||||||||
| (Gain) loss on sale of assets | 1 | (5) | |||||||||
| Non-cash (gain) loss on derivative instruments | 26 | (38) | |||||||||
| Severance expense | — | 7 | |||||||||
| Stock-based compensation | 13 | 16 | |||||||||
| Adjusted EBITDAX | $ | 917 | $ | 1,230 | |||||||
| Trailing Twelve Months Ended | |||||||||||
| (In millions) | March 31, 2024 | December 31, 2023 | |||||||||
| Net income | $ | 1,300 | $ | 1,625 | |||||||
| Plus (less): | |||||||||||
| Interest expense | 75 | 73 | |||||||||
| Interest income | (51) | (47) | |||||||||
| Income tax expense | 393 | 503 | |||||||||
| Depreciation, depletion and amortization | 1,704 | 1,641 | |||||||||
| Exploration | 21 | 20 | |||||||||
| (Gain) loss on sale of assets | (6) | (12) | |||||||||
| Non-cash loss on derivative instruments | 119 | 54 | |||||||||
| Severance expense | 4 | 12 | |||||||||
| Stock-based compensation | 56 | 59 | |||||||||
| Adjusted EBITDAX (trailing twelve months) | $ | 3,615 | $ | 3,928 | |||||||
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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) | March 31, 2024 | December 31, 2023 | |||||||||
| Current portion of long-term debt | $ | 575 | $ | 575 | |||||||
| Long-term debt, net | 2,076 | 1,586 | |||||||||
| Total debt | 2,651 | 2,161 | |||||||||
| Stockholders’ equity | 13,089 | 13,039 | |||||||||
| Total capitalization | $ | 15,740 | $ | 15,200 | |||||||
| Total debt | $ | 2,651 | $ | 2,161 | |||||||
| Less: Cash and cash equivalents | (1,289) | (956) | |||||||||
| Less: Short-term investments | (250) | — | |||||||||
| Net debt | $ | 1,112 | $ | 1,205 | |||||||
| Net debt | $ | 1,112 | $ | 1,205 | |||||||
| Stockholders’ equity | 13,089 | 13,039 | |||||||||
| Total adjusted capitalization | $ | 14,201 | $ | 14,244 | |||||||
| Total debt to total capitalization ratio | 16.8 | % | 14.2 | % | |||||||
| Less: Impact of cash and cash equivalents | 9.0 | % | 5.7 | % | |||||||
| Net debt to adjusted capitalization ratio | 7.8 | % | 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) | March 31, 2024 | December 31, 2023 | |||||||||
| Total debt | $ | 2,651 | $ | 2,161 | |||||||
| Net income | 1,300 | 1,625 | |||||||||
| Total debt to net income ratio | 2.0 | x | 1.3 | x | |||||||
| Net debt (as defined above) | $ | 1,112 | $ | 1,205 | |||||||
| Adjusted EBITDAX (Trailing twelve months) | 3,615 | 3,928 | |||||||||
| Net debt to Adjusted EBITDAX | 0.3 | x | 0.3 | x | |||||||
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2024 Guidance
The tables below present full-year and second quarter 2024 guidance.
| Full Year Guidance | ||||||||||||||
| 2024 Guidance (February) | Updated 2024 Guidance | |||||||||||||
| Low Mid High | Low Mid High | |||||||||||||
| Total Equivalent Production (MBoed) | 635 - 655 - 675 | |||||||||||||
| Gas (Mmcf/day) | 2,650 - 2,725 - 2,800 | |||||||||||||
| Oil (MBbl/day) | 99.0 - 102.0 - 105.0 | 102.0 - 104.5 - 107.0 | ||||||||||||
| Net wells turned in line | ||||||||||||||
| Marcellus Shale | 37 - 40 - 43 | |||||||||||||
| Permian Basin | 75 - 83 - 90 | |||||||||||||
| Anadarko Basin | 20 - 23 - 25 | |||||||||||||
| Incurred capital expenditures ($ in millions) | ||||||||||||||
| Total Company | $1,750 - $1,850 - $1,950 | |||||||||||||
| Drilling and completion | ||||||||||||||
| Marcellus Shale | $350- $375 -$400 | |||||||||||||
| Permian Basin | $945 - $1,000 - $1,055 | |||||||||||||
| Anadarko Basin | $270 - $290 - $320 | |||||||||||||
| Midstream, saltwater disposal and infrastructure | $185 - $185 - $185 | |||||||||||||
| Commodity price assumptions: | ||||||||||||||
| WTI ($ per bbl) | $75 | $79 | ||||||||||||
| Henry Hub ($ per mmbtu) | $2.51 | $2.35 | ||||||||||||
| Cash Flow & Investment ($ in billions) | ||||||||||||||
| Discretionary Cash Flow | $3.1 | $3.1 | ||||||||||||
| Incurred Capital Expenditures | $1.75 - $1.85 - $1.95 | |||||||||||||
| 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 | |||||||||||||
| Gathering, processing, & transportation | $3.50 - $4.00 - $4.50 | |||||||||||||
| Taxes other than income | $1.00 - $1.10 - $1.20 | |||||||||||||
General & administrative (1) | $0.80 - $0.90 - $1.00 | |||||||||||||
| Unit Operating Cost | $7.45 - $8.50 - $9.55 | |||||||||||||
(1)Excludes stock-based compensation and severance expense
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| Quarterly Guidance | ||||||||||||||||||||
| First Quarter 2024 Guidance | First Quarter 2024 Actual | Second Quarter 2024 Guidance | ||||||||||||||||||
| Low Mid High | Low Mid High | |||||||||||||||||||
| Total Equivalent Production (MBoed) | 660 - 675 - 690 | 686 | 625 - 640 - 655 | |||||||||||||||||
| Gas (Mmcf/day) | 2,850 - 2,900 - 2,950 | 2,960 | 2,600 - 2,650 - 2,700 | |||||||||||||||||
| Oil (MBbl/day) | 95.0 - 97.0 - 99.0 | 102.5 | 103.0 - 105.0 - 107.0 | |||||||||||||||||
| Net wells turned in line | ||||||||||||||||||||
| Marcellus Shale | 20 - 23 - 26 | 11 | 0 - 0 - 0 | |||||||||||||||||
| Permian Basin | 15 - 21 - 27 | 23 | 15 - 23 - 30 | |||||||||||||||||
| Anadarko Basin | 0 - 0 - 0 | 0 | 7 - 10 - 13 | |||||||||||||||||
| Incurred capital expenditures ($ in millions) | ||||||||||||||||||||
| Total Company | $460 - $500 - $540 | $450 | $470 - $510 - $550 | |||||||||||||||||
| Drilling and completion | ||||||||||||||||||||
| Marcellus Shale | $130 | |||||||||||||||||||
| Permian Basin | $209 | |||||||||||||||||||
| Anadarko Basin | $73 | |||||||||||||||||||
| Midstream, saltwater disposal and infrastructure | $38 | |||||||||||||||||||
| Commodity price assumptions: | ||||||||||||||||||||
| WTI ($ per bbl) | $75 | $77 | $82 | |||||||||||||||||
| Henry Hub ($ per mmbtu) | $2.55 | $2.25 | $1.76 | |||||||||||||||||
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Investor Contact
Daniel Guffey - Vice President of Finance, IR & Treasury
281.589.4875
Hannah Stuckey - Investor Relations Manager
281.589.4983
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