Coterra Energy Reports Second-Quarter 2023 Results, Announces Quarterly Dividend
- Coterra reported strong Q2 2023 financial and operating results with net income of $209 million and adjusted net income of $291 million.
- Cash flow from operating activities totaled $646 million, and discretionary cash flow reached $705 million.
- Total equivalent production exceeded guidance at 665 MBoepd, with oil production averaging 95.8 MBopd and natural gas production averaging 2,904 MMcfpd.
- Coterra plans to increase 2023 production guidance by 2% for BOE and natural gas and 3% for oil.
- None.
Second-Quarter 2023 Highlights
-
Net Income (GAAP) totaled
, or$209 million per share. Adjusted Net Income (non-GAAP) was$0.28 , or$291 million per share.$0.39 -
Cash Flow From Operating Activities (GAAP) totaled
. Discretionary Cash Flow (non-GAAP) totaled$646 million .$705 million -
Cash capital expenditures for drilling, completion and other fixed asset additions (GAAP) totaled
. Accrued capital expenditures from drilling, completion and other fixed asset additions (non-GAAP) totaled$592 million , within our guidance range of$537 million -$510 .$570 million -
Free Cash Flow (non-GAAP) totaled
.$113 million -
Unit operating cost totaled
per BOE (barrel of oil equivalent), within our annual guidance range of$8.27 per BOE.$7.30 -$9.40 -
Total equivalent production of 665 MBoepd (thousand barrels of oil equivalent per day), exceeded the high-end of guidance (650 MBoepd), driven by strong well performance and improved cycle times in all three of our regions.
- Oil production averaged 95.8 MBopd (thousand barrels of oil per day), exceeding the high-end of guidance (91.5 MBopd).
- Natural gas production averaged 2,904 MMcfpd (million cubic feet per day), exceeding the high-end of guidance (2,850 MMcfpd).
- Natural Gas Liquids (NGLs) production averaged 85.0 MBoepd.
-
Realized average prices:
-
Oil:
per Bbl (barrel), excluding the effect of commodity derivatives, and$71.88 per Bbl, including the effect of commodity derivatives$72.17 -
Natural Gas:
per Mcf (thousand cubic feet), excluding the effect of commodity derivatives, and$1.65 per Mcf, including the effect of commodity derivatives$1.95 -
Natural Gas Liquids (NGLs):
per BOE (barrel of oil equivalent)$16.67
-
Oil:
Shareholder Return Highlights
Jorden noted, "Given that commodity prices were down more than
-
Common Dividend: On August 7, 2023, Coterra's Board of Directors (the "Board") approved a quarterly base dividend of
per share, which will be paid on August 31, 2023 to holders of record on August 17, 2023.$0.20 -
Share Repurchases: During the quarter, the Company repurchased 2.4 million shares for
at an average price of$57 million per share, leaving$23.55 remaining on the$1.7 billion share repurchase authorization as of June 30, 2023.$2.0 billion -
Total Shareholder Return: During the quarter, total shareholder return amounted to
, comprised of$208 million of declared dividends and$151 million of share repurchases, representing$57 million 184% of Free Cash Flow. Year-to-date, total shareholder return amounted to , comprised of$628 million of declared dividends and$303 million of share repurchases, representing$325 million 94% of Free Cash Flow. -
Reiterate Shareholder Return Strategy: Coterra remains committed to returning
50% + of Free Cash Flow to shareholders through its /share annual dividend and share repurchases. Based on the share repurchases executed to date and expected declared dividends for the year, Coterra is on track to return at least$0.80 75% of currently forecasted Free Cash Flow.
Guidance Update and Activity Outlook:
-
Increasing full-year 2023 production guidance to the following:
-
Total production volumes of 630-655 MBoepd; mid-point +
2% from prior guidance -
Oil production of 91.0-94.0 MBopd; mid-point +
3% from prior guidance -
Natural gas production of 2,750-2,900 MMcfpd; mid-point +
2% from prior guidance
-
Total production volumes of 630-655 MBoepd; mid-point +
-
2023 capital budget (accrual basis) remains unchanged at
-$2.0 $2.2 billion -
Estimate 2023 Discretionary Cash Flow of approximately
, at recent strip prices$3.4 billion -
Estimate 2023 Free Cash Flow of approximately
, at recent strip prices$1.2 billion
Third-quarter 2023 production and capital guidance:
- Total production volumes of 625-655 MBoepd
- Oil production of 88.0-91.0 MBopd
- Natural gas production of 2,775-2,875 MMcfpd
-
Expect capital expenditures (accrual basis) of
–$540 $610 million
Coterra is currently running six rigs and three completion crews in the Permian Basin, one rig and one completion crew in the Anadarko Basin, and two rigs and one completion crew in the Marcellus.
Strong Financial Position
Coterra maintains a strong financial position with an investment-grade credit rating and approximately
- Year-to-date 2023 Summary Highlights
-
Net Income (GAAP) totaled
, or$886 million per share. Adjusted Net Income (non-GAAP) totaled$1.16 , or$953 million per share.$1.25 -
Cash Flow From Operating Activities of
. Discretionary Cash Flow (non-GAAP) totaled$2,140 million .$1,744 million -
Cash capital expenditures for drilling, completion and other fixed asset additions (GAAP) totaled
. Accrued capital expenditures for drilling, completion and other fixed asset additions (non-GAAP) totaled$1,075 million .$1,105 million -
Free Cash Flow equaled
(non-GAAP).$669 million
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 "A Sustainable Future" on www.coterra.com. Coterra plans to publish its 2023 Sustainability Report in the fourth quarter of 2023.
Second-Quarter 2023 Conference Call
Coterra will host a conference call tomorrow, Tuesday, August 8, 2023, at 9:00 AM CT (10:00 AM ET), to discuss second-quarter 2023 financial and operating results.
Conference Call Information
Date: August 8, 2023
Time: 10:00 AM ET / 9:00 AM CT
Dial-in (for callers in the
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
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 first 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" 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 risk that the combined businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the Merger may not be fully realized or may take longer to realize than expected; the volatility in commodity prices for crude oil and natural gas; cost increases; supply chain disruptions; the effect of future regulatory or legislative actions, including the risk of new restrictions with respect to well spacing, hydraulic fracturing, natural gas flaring, seismicity, produced water disposal, or other oil and natural gas development activities; disruption from the Merger making it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management time on integration-related issues; the potential effects of further developments to the long-term impact of the COVID-19 pandemic and variants thereof 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
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, |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
PRODUCTION VOLUMES |
|
|
|
|
|
|
|
||||
Marcellus Shale |
|
|
|
|
|
|
|
||||
Natural gas (Bcf) |
|
211.4 |
|
|
199.8 |
|
|
403.5 |
|
|
403.7 |
Equivalent production (MMBoe) |
|
35.2 |
|
|
33.3 |
|
|
67.2 |
|
|
67.3 |
Daily equivalent production (MBoepd) |
|
387.1 |
|
|
366.0 |
|
|
371.5 |
|
|
371.7 |
|
|
|
|
|
|
|
|
||||
Permian Basin |
|
|
|
|
|
|
|
||||
Natural gas (Bcf) |
|
37.0 |
|
|
38.9 |
|
|
75.5 |
|
|
76.4 |
Oil (MMBbl) |
|
8.1 |
|
|
7.5 |
|
|
15.7 |
|
|
14.4 |
NGL (MMBbl) |
|
5.9 |
|
|
5.6 |
|
|
11.7 |
|
|
10.4 |
Equivalent production (MMBoe) |
|
20.2 |
|
|
19.6 |
|
|
40.0 |
|
|
37.5 |
Daily equivalent production (MBoepd) |
|
222.9 |
|
|
215.0 |
|
|
221.2 |
|
|
207.4 |
|
|
|
|
|
|
|
|
||||
Anadarko Basin |
|
|
|
|
|
|
|
||||
Natural gas (Bcf) |
|
15.8 |
|
|
15.0 |
|
|
33.3 |
|
|
30.0 |
Oil (MMBbl) |
|
0.6 |
|
|
0.5 |
|
|
1.3 |
|
|
1.1 |
NGL (MMBbl) |
|
1.8 |
|
|
1.6 |
|
|
3.5 |
|
|
3.2 |
Equivalent production (MMBoe) |
|
4.9 |
|
|
4.6 |
|
|
10.3 |
|
|
9.3 |
Daily equivalent production (MBoepd) |
|
54.7 |
|
|
50.4 |
|
|
57.1 |
|
|
51.2 |
|
|
|
|
|
|
|
|
||||
Total Company |
|
|
|
|
|
|
|
||||
Natural gas (Bcf) |
|
264.3 |
|
|
253.9 |
|
|
512.4 |
|
|
510.3 |
Oil (MMBbl) |
|
8.7 |
|
|
8.0 |
|
|
17.0 |
|
|
15.5 |
NGL (MMBbl) |
|
7.7 |
|
|
7.2 |
|
|
15.2 |
|
|
13.6 |
Equivalent production (MMBoe) |
|
60.5 |
|
|
57.5 |
|
|
117.7 |
|
|
114.2 |
Daily equivalent production (MBoepd) |
|
664.9 |
|
|
631.7 |
|
|
650.1 |
|
|
630.8 |
|
|
|
|
|
|
|
|
||||
AVERAGE SALES PRICE (excluding hedges) |
|
|
|
|
|
|
|||||
Marcellus Shale |
|
|
|
|
|
|
|
||||
Natural gas ($/Mcf) |
$ |
1.78 |
|
$ |
5.54 |
|
$ |
2.70 |
|
$ |
4.90 |
|
|
|
|
|
|
|
|
||||
Permian Basin |
|
|
|
|
|
|
|
||||
Natural gas ($/Mcf) |
$ |
0.92 |
|
$ |
6.51 |
|
$ |
1.16 |
|
$ |
5.51 |
Oil ($/Bbl) |
$ |
71.71 |
|
$ |
109.25 |
|
$ |
72.80 |
|
$ |
101.67 |
NGL ($/Bbl) |
$ |
15.36 |
|
$ |
38.23 |
|
$ |
18.85 |
|
$ |
37.70 |
|
|
|
|
|
|
|
|
||||
Anadarko Basin |
|
|
|
|
|
|
|
||||
Natural gas ($/Mcf) |
$ |
1.57 |
|
$ |
7.09 |
|
$ |
2.40 |
|
$ |
5.98 |
Oil ($/Bbl) |
$ |
74.32 |
|
$ |
108.74 |
|
$ |
74.56 |
|
$ |
100.90 |
NGL ($/Bbl) |
$ |
21.02 |
|
$ |
42.47 |
|
$ |
24.27 |
|
$ |
41.32 |
|
|
|
|
|
|
|
|
||||
Total Company |
|
|
|
|
|
|
|
||||
Natural gas ($/Mcf) |
$ |
1.65 |
|
$ |
5.78 |
|
$ |
2.46 |
|
$ |
5.05 |
Oil ($/Bbl) |
$ |
71.88 |
|
$ |
109.23 |
|
$ |
72.93 |
|
$ |
101.62 |
NGL ($/Bbl) |
$ |
16.67 |
|
$ |
39.17 |
|
$ |
20.11 |
|
$ |
38.55 |
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
AVERAGE SALES PRICE (including hedges) |
|
|
|
|
|
|
|
||||
Total Company |
|
|
|
|
|
|
|
||||
Natural gas ($/Mcf) |
$ |
1.95 |
|
$ |
5.15 |
|
$ |
2.81 |
|
$ |
4.66 |
Oil ($/Bbl) |
$ |
72.17 |
|
$ |
92.78 |
|
$ |
73.11 |
|
$ |
84.76 |
NGL ($/Bbl) |
$ |
16.67 |
|
$ |
39.17 |
|
$ |
20.11 |
|
$ |
38.55 |
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
WELLS DRILLED(1) |
|
|
|
|
|
|
|
||||
Gross wells |
|
|
|
|
|
|
|
||||
Marcellus Shale |
|
16 |
|
|
20 |
|
|
36 |
|
|
42 |
Permian Basin |
|
33 |
|
|
43 |
|
|
72 |
|
|
72 |
Anadarko Basin |
|
11 |
|
|
10 |
|
|
17 |
|
|
13 |
|
|
60 |
|
|
73 |
|
|
125 |
|
|
127 |
|
|
|
|
|
|
|
|
||||
Net wells |
|
|
|
|
|
|
|
||||
Marcellus Shale |
|
16.0 |
|
|
20.0 |
|
|
36.0 |
|
|
42.0 |
Permian Basin |
|
21.3 |
|
|
21.8 |
|
|
37.9 |
|
|
39.8 |
Anadarko Basin |
|
5.1 |
|
|
5.1 |
|
|
8.4 |
|
|
6.5 |
|
|
42.4 |
|
|
46.9 |
|
|
82.3 |
|
|
88.3 |
|
|
|
|
|
|
|
|
||||
TURN IN LINES |
|
|
|
|
|
|
|
||||
Gross wells |
|
|
|
|
|
|
|
||||
Marcellus Shale |
|
20 |
|
|
18 |
|
|
45 |
|
|
30 |
Permian Basin |
|
34 |
|
|
36 |
|
|
79 |
|
|
67 |
Anadarko Basin |
|
3 |
|
|
1 |
|
|
7 |
|
|
8 |
|
|
57 |
|
|
55 |
|
|
131 |
|
|
105 |
|
|
|
|
|
|
|
|
||||
Net wells |
|
|
|
|
|
|
|
||||
Marcellus Shale |
|
20.0 |
|
|
18.0 |
|
|
45.0 |
|
|
27.1 |
Permian Basin |
|
19.1 |
|
|
13.9 |
|
|
42.2 |
|
|
29.8 |
Anadarko Basin |
|
— |
|
|
0.1 |
|
|
0.1 |
|
|
0.1 |
|
|
39.1 |
|
|
32.0 |
|
|
87.3 |
|
|
57.0 |
|
|
|
|
|
|
|
|
||||
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
AVERAGE UNIT COSTS ($/Boe)(2) |
|
|
|
|
|
|
|
||||
Direct operations |
$ |
2.16 |
|
$ |
2.03 |
|
$ |
2.24 |
|
$ |
1.90 |
Transportation, processing and gathering |
|
4.27 |
|
|
4.13 |
|
|
4.20 |
|
|
4.12 |
Taxes other than income |
|
1.05 |
|
|
1.72 |
|
|
1.27 |
|
|
1.53 |
General and administrative (excluding stock-based compensation, severance expense and merger-related expense) |
|
0.79 |
|
|
0.92 |
|
|
0.85 |
|
|
0.92 |
Unit Operating Cost |
$ |
8.27 |
|
$ |
8.80 |
|
$ |
8.56 |
|
$ |
8.47 |
Depreciation, depletion and amortization |
|
6.54 |
|
|
7.21 |
|
|
6.50 |
|
|
6.78 |
Exploration |
|
0.09 |
|
|
0.12 |
|
|
0.08 |
|
|
0.11 |
Stock-based compensation |
|
0.11 |
|
|
0.36 |
|
|
0.19 |
|
|
0.39 |
Merger-related expense |
|
— |
|
|
— |
|
|
— |
|
|
0.06 |
Severance expense |
|
0.05 |
|
|
0.24 |
|
|
0.09 |
|
|
0.34 |
Interest expense |
|
0.09 |
|
|
0.36 |
|
|
0.09 |
|
|
0.37 |
|
$ |
15.15 |
|
$ |
17.09 |
|
$ |
15.51 |
|
$ |
16.52 |
_______________________________________________________________________________
(1) |
Wells drilled represents wells drilled to total depth during the period. Wells completed includes wells completed during the period, regardless of when they were drilled. |
|
(2) |
Total unit costs may differ from the sum of the individual costs due to rounding. |
Derivatives Information |
||||||
As of June 30, 2023, the Company had the following outstanding financial commodity derivatives: |
||||||
|
|
2023 |
||||
Natural Gas |
|
Third Quarter |
|
Fourth Quarter |
||
Waha gas collars |
|
|
|
|
||
Volume (MMBtu) |
|
|
8,280,000 |
|
|
8,280,000 |
Weighted average floor ($/MMBtu) |
|
$ |
3.03 |
|
$ |
3.03 |
Weighted average ceiling ($/MMBtu) |
|
$ |
5.39 |
|
$ |
5.39 |
|
|
|
|
|
||
NYMEX collars |
|
|
|
|
||
Volume (MMBtu) |
|
|
32,200,000 |
|
|
29,150,000 |
Weighted average floor ($/MMBtu) |
|
$ |
4.07 |
|
$ |
4.03 |
Weighted average ceiling ($/MMBtu) |
|
$ |
6.78 |
|
$ |
6.61 |
|
|
2023 |
||||
Oil |
|
Third Quarter |
|
Fourth Quarter |
||
WTI oil collars |
|
|
|
|
||
Volume (MBbl) |
|
|
920 |
|
|
920 |
Weighted average floor ($/Bbl) |
|
$ |
65.00 |
|
$ |
65.00 |
Weighted average ceiling ($/Bbl) |
|
$ |
89.66 |
|
$ |
89.66 |
|
|
|
|
|
||
WTI Midland oil basis swaps |
|
|
|
|
||
Volume (MBbl) |
|
|
920 |
|
|
920 |
Weighted average differential ($/Bbl) |
|
$ |
1.01 |
|
$ |
1.01 |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) |
|||||||||||||||
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||
(In millions, except per share amounts) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
OPERATING REVENUES |
|
|
|
|
|
|
|
||||||||
Natural gas |
$ |
436 |
|
|
$ |
1,468 |
|
|
$ |
1,258 |
|
|
$ |
2,579 |
|
Oil |
|
626 |
|
|
|
876 |
|
|
|
1,241 |
|
|
|
1,575 |
|
NGL |
|
129 |
|
|
|
280 |
|
|
|
306 |
|
|
|
525 |
|
Gain (loss) on derivative instruments |
|
(12 |
) |
|
|
(66 |
) |
|
|
126 |
|
|
|
(457 |
) |
Other |
|
6 |
|
|
|
14 |
|
|
|
31 |
|
|
|
29 |
|
|
|
1,185 |
|
|
|
2,572 |
|
|
|
2,962 |
|
|
|
4,251 |
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
||||||||
Direct operations |
|
130 |
|
|
|
116 |
|
|
|
264 |
|
|
|
216 |
|
Transportation, processing and gathering |
|
258 |
|
|
|
238 |
|
|
|
494 |
|
|
|
471 |
|
Taxes other than income |
|
63 |
|
|
|
98 |
|
|
|
149 |
|
|
|
174 |
|
Exploration |
|
5 |
|
|
|
7 |
|
|
|
9 |
|
|
|
13 |
|
Depreciation, depletion and amortization |
|
395 |
|
|
|
414 |
|
|
|
764 |
|
|
|
774 |
|
General and administrative (excluding stock-based compensation, severance expense and merger-related expense) |
|
48 |
|
|
|
52 |
|
|
|
100 |
|
|
|
104 |
|
Stock-based compensation(1) |
|
7 |
|
|
|
21 |
|
|
|
23 |
|
|
|
44 |
|
Merger-related expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
Severance expense |
|
3 |
|
|
|
14 |
|
|
|
11 |
|
|
|
39 |
|
|
|
909 |
|
|
|
960 |
|
|
|
1,814 |
|
|
|
1,842 |
|
Gain (loss) on sale of assets |
|
— |
|
|
|
(3 |
) |
|
|
5 |
|
|
|
(1 |
) |
INCOME FROM OPERATIONS |
|
276 |
|
|
|
1,609 |
|
|
|
1,153 |
|
|
|
2,408 |
|
Interest expense |
|
16 |
|
|
|
22 |
|
|
|
33 |
|
|
|
43 |
|
Interest income |
|
(10 |
) |
|
|
(1 |
) |
|
|
(22 |
) |
|
|
(1 |
) |
Income before income taxes |
|
270 |
|
|
|
1,588 |
|
|
|
1,142 |
|
|
|
2,366 |
|
Income tax expense |
|
61 |
|
|
|
359 |
|
|
|
256 |
|
|
|
529 |
|
NET INCOME |
$ |
209 |
|
|
$ |
1,229 |
|
|
$ |
886 |
|
|
$ |
1,837 |
|
Earnings per share - Basic |
$ |
0.28 |
|
|
$ |
1.53 |
|
|
$ |
1.16 |
|
|
$ |
2.28 |
|
Weighted-average common shares outstanding |
|
755 |
|
|
|
803 |
|
|
|
760 |
|
|
|
806 |
|
_______________________________________________________________________________
(1) |
Includes the impact of our performance share awards and restricted stock. |
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) |
|||||
(In millions) |
June 30,
|
|
December 31,
|
||
ASSETS |
|
|
|
||
Current assets |
$ |
1,640 |
|
$ |
2,211 |
Properties and equipment, net (successful efforts method) |
|
17,801 |
|
|
17,479 |
Other assets |
|
438 |
|
|
464 |
|
$ |
19,879 |
|
$ |
20,154 |
|
|
|
|
||
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY |
|
|
|
||
Current liabilities |
$ |
941 |
|
$ |
1,193 |
Long-term debt, net (excluding current maturities) |
|
2,171 |
|
|
2,181 |
Deferred income taxes |
|
3,367 |
|
|
3,339 |
Other long term liabilities |
|
733 |
|
|
771 |
Cimarex redeemable preferred stock |
|
8 |
|
|
11 |
Stockholders’ equity |
|
12,659 |
|
|
12,659 |
|
$ |
19,879 |
|
$ |
20,154 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) |
|||||||||||||||
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||
(In millions) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
209 |
|
|
$ |
1,229 |
|
|
$ |
886 |
|
|
$ |
1,837 |
|
Depreciation, depletion and amortization |
|
395 |
|
|
|
414 |
|
|
|
764 |
|
|
|
774 |
|
Deferred income tax expense |
|
4 |
|
|
|
65 |
|
|
|
27 |
|
|
|
101 |
|
(Gain) loss on sale of assets |
|
— |
|
|
|
3 |
|
|
|
(5 |
) |
|
|
1 |
|
(Gain) loss on derivative instruments |
|
12 |
|
|
|
66 |
|
|
|
(126 |
) |
|
|
457 |
|
Net cash received (paid) in settlement of derivative instruments |
|
84 |
|
|
|
(293 |
) |
|
|
184 |
|
|
|
(464 |
) |
Stock-based compensation and other |
|
7 |
|
|
|
18 |
|
|
|
24 |
|
|
|
38 |
|
Income charges not requiring cash |
|
(6 |
) |
|
|
(9 |
) |
|
|
(10 |
) |
|
|
(19 |
) |
Changes in assets and liabilities |
|
(59 |
) |
|
|
(614 |
) |
|
|
396 |
|
|
|
(524 |
) |
Net cash provided by operating activities |
|
646 |
|
|
|
879 |
|
|
|
2,140 |
|
|
|
2,201 |
|
|
|
|
|
|
|
|
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
||||||||
Capital expenditures for drilling, completion and other fixed asset additions |
|
(592 |
) |
|
|
(471 |
) |
|
|
(1,075 |
) |
|
|
(741 |
) |
Capital expenditures for leasehold and property acquisitions |
|
(5 |
) |
|
|
(3 |
) |
|
|
(6 |
) |
|
|
(4 |
) |
Proceeds from sale of assets |
|
28 |
|
|
|
2 |
|
|
|
33 |
|
|
|
4 |
|
Net cash used in investing activities |
|
(569 |
) |
|
|
(472 |
) |
|
|
(1,048 |
) |
|
|
(741 |
) |
|
|
|
|
|
|
|
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
||||||||
Repayment of finance leases |
|
(1 |
) |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(3 |
) |
Common stock repurchases |
|
(57 |
) |
|
|
(303 |
) |
|
|
(325 |
) |
|
|
(487 |
) |
Dividends paid |
|
(152 |
) |
|
|
(484 |
) |
|
|
(588 |
) |
|
|
(940 |
) |
Tax withholding on vesting of stock awards |
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(7 |
) |
Capitalized debt issuance costs |
|
— |
|
|
|
— |
|
|
|
(7 |
) |
|
|
— |
|
Cash received for stock option exercises |
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
10 |
|
Cash paid for conversion of redeemable preferred stock |
|
— |
|
|
|
(10 |
) |
|
|
(1 |
) |
|
|
(10 |
) |
Net cash used in financing activities |
|
(210 |
) |
|
|
(795 |
) |
|
|
(925 |
) |
|
|
(1,437 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
$ |
(133 |
) |
|
$ |
(388 |
) |
|
$ |
167 |
|
|
$ |
23 |
|
Supplemental Non-GAAP Financial Measures (Unaudited)
We report our financial results in accordance with accounting principles generally accepted in
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 future impairments and future changes in capital. 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.
Present Value Index (PVI10) is often used by management as a return-on-investment metric and defined as the estimated net present value (using a
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, merger-related expenses 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
|
|
Six Months Ended
|
||||||||||||
(In millions, except per share amounts) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
As reported - net income |
$ |
209 |
|
|
$ |
1,229 |
|
|
$ |
886 |
|
|
$ |
1,837 |
|
Reversal of selected items: |
|
|
|
|
|
|
|
||||||||
(Gain) loss on sale of assets |
|
— |
|
|
|
3 |
|
|
|
(5 |
) |
|
|
1 |
|
(Gain) loss on derivative instruments(1) |
|
96 |
|
|
|
(227 |
) |
|
|
58 |
|
|
|
(7 |
) |
Stock-based compensation expense |
|
7 |
|
|
|
21 |
|
|
|
23 |
|
|
|
44 |
|
Merger-related expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
Severance expense |
|
3 |
|
|
|
14 |
|
|
|
11 |
|
|
|
39 |
|
Tax effect on selected items |
|
(24 |
) |
|
|
43 |
|
|
|
(20 |
) |
|
|
(19 |
) |
Adjusted net income |
$ |
291 |
|
|
$ |
1,083 |
|
|
$ |
953 |
|
|
$ |
1,902 |
|
As reported - earnings per share |
$ |
0.28 |
|
|
$ |
1.53 |
|
|
$ |
1.16 |
|
|
$ |
2.28 |
|
Per share impact of selected items |
|
0.11 |
|
|
|
(0.18 |
) |
|
|
0.09 |
|
|
|
0.08 |
|
Adjusted earnings per share |
$ |
0.39 |
|
|
$ |
1.35 |
|
|
$ |
1.25 |
|
|
$ |
2.36 |
|
Weighted-average common shares outstanding |
|
755 |
|
|
|
803 |
|
|
|
760 |
|
|
|
806 |
|
_______________________________________________________________________________
(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
|
|
Six Months Ended
|
||||||||||||
(In millions) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flow from operating activities |
$ |
646 |
|
|
$ |
879 |
|
|
$ |
2,140 |
|
|
$ |
2,201 |
|
Changes in assets and liabilities |
|
59 |
|
|
|
614 |
|
|
|
(396 |
) |
|
|
524 |
|
Discretionary cash flow |
|
705 |
|
|
|
1,493 |
|
|
|
1,744 |
|
|
|
2,725 |
|
Cash paid for capital expenditures for drilling, completion and other fixed asset additions |
|
(592 |
) |
|
|
(471 |
) |
|
|
(1,075 |
) |
|
|
(741 |
) |
Free cash flow |
$ |
113 |
|
|
$ |
1,022 |
|
|
$ |
669 |
|
|
$ |
1,984 |
|
Capital Expenditures |
||||||||||||||
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||
(In millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
Cash paid for capital expenditures for drilling, completion and other fixed asset additions |
|
$ |
592 |
|
|
$ |
471 |
|
|
$ |
1,075 |
|
$ |
741 |
Change in accrued capital costs |
|
|
(55 |
) |
|
|
(2 |
) |
|
|
30 |
|
|
53 |
Capital expenditures for drilling, completion and other fixed asset additions |
|
$ |
537 |
|
|
$ |
469 |
|
|
$ |
1,105 |
|
$ |
794 |
Reconciliation of Adjusted EBITDAX
Adjusted EBITDAX is defined as net income plus interest expense, other expense, 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, severance expense and merger-related 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
|
|
Six Months Ended
|
|||||||||||
(In millions) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
209 |
|
$ |
1,229 |
|
|
$ |
886 |
|
|
$ |
1,837 |
|
Plus (less): |
|
|
|
|
|
|
|
|||||||
Interest expense, net |
|
6 |
|
|
21 |
|
|
|
11 |
|
|
|
42 |
|
Income tax expense |
|
61 |
|
|
359 |
|
|
|
256 |
|
|
|
529 |
|
Depreciation, depletion and amortization |
|
395 |
|
|
414 |
|
|
|
764 |
|
|
|
774 |
|
Exploration |
|
5 |
|
|
7 |
|
|
|
9 |
|
|
|
13 |
|
(Gain) loss on sale of assets |
|
— |
|
|
3 |
|
|
|
(5 |
) |
|
|
1 |
|
Non-cash (gain) loss on derivative instruments |
|
96 |
|
|
(227 |
) |
|
|
58 |
|
|
|
(7 |
) |
Merger-related expense |
|
— |
|
|
— |
|
|
|
— |
|
|
|
7 |
|
Severance expense |
|
3 |
|
|
14 |
|
|
|
11 |
|
|
|
39 |
|
Stock-based compensation |
|
7 |
|
|
21 |
|
|
|
23 |
|
|
|
44 |
|
Adjusted EBITDAX |
$ |
782 |
|
$ |
1,841 |
|
|
$ |
2,013 |
|
|
$ |
3,279 |
|
|
Trailing Twelve Months Ended |
||||||
(In millions) |
June 30,
|
|
December 31,
|
||||
Net income |
$ |
3,114 |
|
|
$ |
4,065 |
|
Plus (less): |
|
|
|
||||
Interest expense, net |
|
39 |
|
|
|
70 |
|
Loss on debt extinguishment |
|
(28 |
) |
|
|
(28 |
) |
Other expense |
|
(2 |
) |
|
|
(2 |
) |
Income tax expense |
|
831 |
|
|
|
1,104 |
|
Depreciation, depletion and amortization |
|
1,625 |
|
|
|
1,635 |
|
Exploration |
|
25 |
|
|
|
29 |
|
(Gain) loss on sale of assets |
|
(5 |
) |
|
|
1 |
|
Non-cash (gain) loss on derivative instruments |
|
(234 |
) |
|
|
(299 |
) |
Merger-related expense |
|
1 |
|
|
|
7 |
|
Severance expense |
|
33 |
|
|
|
62 |
|
Stock-based compensation |
|
65 |
|
|
|
86 |
|
Adjusted EBITDAX (trailing twelve months) |
$ |
5,464 |
|
|
$ |
6,730 |
|
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 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 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 to reduce debt in calculating the Net Debt to Adjusted Capitalization ratio.
(In millions) |
June 30,
|
|
December 31,
|
||||
Long-term debt, net |
|
2,171 |
|
|
|
2,181 |
|
Stockholders’ equity |
|
12,659 |
|
|
|
12,659 |
|
Total capitalization |
$ |
14,830 |
|
|
$ |
14,840 |
|
|
|
|
|
||||
Total debt |
$ |
2,171 |
|
|
$ |
2,181 |
|
Less: Cash and cash equivalents |
|
(841 |
) |
|
|
(673 |
) |
Net debt |
$ |
1,330 |
|
|
$ |
1,508 |
|
|
|
|
|
||||
Net debt |
$ |
1,330 |
|
|
$ |
1,508 |
|
Stockholders’ equity |
|
12,659 |
|
|
|
12,659 |
|
Total adjusted capitalization |
$ |
13,989 |
|
|
$ |
14,167 |
|
|
|
|
|
||||
Total debt to total capitalization ratio |
|
14.6 |
% |
|
|
14.7 |
% |
Less: Impact of cash and cash equivalents |
|
5.1 |
% |
|
|
4.1 |
% |
Net debt to adjusted capitalization ratio |
|
9.5 |
% |
|
|
10.6 |
% |
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,
|
|
December 31,
|
||
Total debt |
$ |
2,171 |
|
$ |
2,181 |
Net income |
|
3,114 |
|
|
4,065 |
Total debt to net income ratio |
0.7 x |
|
0.5 x |
||
|
|
|
|
||
Net debt |
$ |
1,330 |
|
$ |
1,508 |
Adjusted EBITDAX (Trailing twelve months) |
|
5,464 |
|
|
6,730 |
Net debt to Adjusted EBITDAX |
0.2 x |
|
0.2 x |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230807424652/en/
Investor Contact
Daniel Guffey - Vice President of Finance, Planning & Analysis and Investor Relations
281.589.4875
Hannah Stuckey - Investor Relations Manager
281.589.4983
Source: Coterra Energy Inc.
FAQ
What were Coterra's net income and adjusted net income for Q2 2023?
What was the total equivalent production for Q2 2023?
What is Coterra's plan for increasing production guidance for 2023?
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