Earnings call transcript Q2 2023

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Operator

Thank you for standing by. At this time, I would like to welcome everyone to the Coterra Energy Second Quarter 2023 Earnings Call. [Operator Instructions].

Dan Guffey, Vice President, Finance, Planning and Analysis and Investor Relations, you may begin your conference.

Daniel Guffey

Thank you, Cheryl, and good morning, and thank you for joining Coterra Energy's Second Quarter 2023 Earnings Conference Call. include Shane from and Young, will and Jorden, CFO. remarks and President; Executive prepared an Tom overview CEO Today's Vice President of Also Senior are call Operations; President on Schroeder. and Blake Scott the Vice Sirgo,

prepared session. Q&A our during remarks, your take Following questions will our we

current on our a based reminder, make statements call, today's As will we forward-looking on expectations.

of our will non-GAAP reference comments some Additionally, financial measures.

financial investor earnings other as can on the both comparable GAAP to release which well most our in updated reconciliations Forward-looking measures as disclaimers be provided statements our presentation, and of website. and were directly found

With Tom. that, I'll turn the call over to

Thomas Jorden

Thank all looking business for the joined forward have and our results you, We're our and our outlook discussing as Dan, the quarter second welcome of you to ahead. to morning. years as to call this well who approach

on end our remarks natural on beats an on all exceeded quarter by results. X gas Volumes second oil, driven quarter our liquids. of We commodities excellent guidance. high some had production gas natural and First, the

was from This This X-mile Permian. was completion landing and Our production the optimization expectations. exceeded by factors, the in and performance of including zone primarily that productivity beat spacing, many Anadarko better-than-expected of Marcellus, was true a our driven beat project design, well by laterals. selection driven

productivity go-forward Our well coming in the years. current trends should closely approximate

our shoulder to and and staff, a accounting tremendously the IT confident from a XX/X, midstream We team, marketing, Mostly, learning support our but passion It engineering who to are to group, it hard results excellence our It teamwork operations, describe, are teams. in commitment to achieve. XXX between wheel highly dedication dedication our with our corporate days machine sustainable of Excellent our asset the and year easy field safety. team. performance. put their our and takes takes regulatory and takes team

a it be such of is team. The outstanding and Coterra one, as pleasure an team is to operating member a

the is and cycles, growth Coterra by of a vision consistent one possible through hard work profitable made perseverance. vision Our for

our investor had previously continued deck slightly, we in hoped. in foresee expect a well reduction ticket the cost in We we CapEx cost reduction items, Costs for some but a big our to to annual that moderate significantly announced to XX% XX% fall not as as although net Slide we XX guidance within ahead our ahead range. full year XXXX. look as look X% shows total to to we

service regarding business. Second, remarks a our pristine I'd top-tier flexibility commitments, XXXX we and for beyond. make contractual the tremendous With like to a balance assets, few to have and few approach sheet

is cost and mission dose this. It our supply, profitable of growth. ever, with as Now takes Having at to of a assets gas times, low wherewithal the to oil us courage. generate and, allows consistent a accomplish discipline natural outstanding

commodity stop program and not will in We swings with start short-term pricing. our

We over that around. the up have time is strip fool's learned chasing a or down

short-term us tells world consistency. times than swings especially winners prices. experience commodity in that that reactive in backfire, Highly business, where Our behavior badly in a can be maintain disciplined are the a cycle can can project commodity those longer cyclic

We deliver can design play that so ups reasonable of and We approach returns low the commodity We execution. program cycles. downs choose to win. stress draconian prices, to of our as-steady-as-she-goes at opportunities we all our through and the test

ahead. years remarks a make few Finally, regarding outlook me our let for the

will XXXX be them. not Although on specific are currently comments working plans, on we making we our

Our some plans will considerations. simple be built with

is of continuously our assumptions range-bound commodity we Coterra. as best well in on can that down conditions and that flexibility, pricing they ensure on if inventory appropriate costs. very capital We withstand drafts selecting macro the pivot the so what reexamine We to based for opportunities these estimate expenditure pricing, test with stress increase total commodity we First, goal change. future insist returns. of level as We can of

Coterra basin warrant. In flow we And that framework, of capital basin from within conditions will total as capital. long-term think to planning,

projects large long of some We fluctuations come in We progress architecture and have beyond, to distracted be that have outcome, our get a our don't conviction XXXX if returns firm best by annual as over projects is driver. driven production so project leads online. smart and quarterly goal, fluctuations, primary is it. not an a We'll the achieving quarterly the goal haul. by Consistent

withstand can principles production in These we our are is corporate like for results to beats, Although invest our commodity commitment that DNA. swings.

ahead we options have flexibility. look XXXX, we into As and

still than For years. example, region's and production versus we $XXX flat can drop XXXX to over Marcellus more the million by multiple hold capital in

We to have or a invest at cadence. the option capital to simply redirect slower the

macro We restore gas were significantly activity to to also ability retain the recover. if the

to allocation, Although capital shown assets, updated on our flexibility wide capital capacity as and options our of our ability we in and consistent X-year Coterra. on our the we're confident X our what Slide of outstanding durability our The have investor of of quality our execution allocation. on total deliver range outlook are organizational differentiates deck, and a

than about As results to prefer always, we promises. rather speak

over Shane, Coterra. a in our player be to years Before key come. team to for the want call will I I Shane to turn many to welcome him

it's us or will Welcoming retire. bit Schroeder's Scott are a We He the that quarterly joined books. he bittersweet Scott's Today the is conference of the make last Shane delighted absolutely Scott's has on one record team. for call. heels to career better. be decision will is

and instrumental of success become in in defining Scott our key the all. the and to dear era. of adviser he and a sector one and friend was us Scott's finest a building has were the companies Shale vision wisdom trusted for formation Cabot, Coterra With to

retirement. him our Scott miss will with fruitful and He and leaves We gratitude. deep a satisfying wish

call the to over turn will I that, With Shane.

Shannon Young

for be and the quarter return details you, update It Thank quarter shareholder Tom. and a second our discuss XXXX results, year. activity This and full outlook will the our provide morning, call. to pleasure is on on for program, our today's guidance I third

volumes Bcf per averaged Coterra. second per Natural production the day high quarter, gas to averaged new X.X oil and is which day, volumes Mbo During per total watermark day. XX.X grew XXX MBoe for a

end streams in above well of production high the fact, all came X In guidance.

operations teams executed was by of operational during regions primarily production drove lines well quarter to X% up XX performance net XX and BOE efficiencies. sequentially. positive in Turn-in totaled driven X within improved XX guidance the Our nicely, The productivity all strong wells. our wells, which

during net $XXX and more XX% discretionary lower cash of cash were Production basis, growth quarter. than inclusive by relative and cash a was are flow of net million which $XX quarter. to These results of flow income BOE Coterra realized of the quarter-over-quarter period million during the price commodity gains declines, down driving income offset first on the hedge million. reported $XXX

flow million, capital and cash quarter within after million, accrued totaled flow cash to capital million strip to the Second half during to projected expenditures the and back cash $XXX $XXX XXXX expenditures, of sales. free come and XX% of and NGL million on from are than prices, totaled guidance company free $XXX increase flow which expects $XXX greater Based our oil revenue was its cash million. XXXX, $XXX of

to the base of per share a quarter. $X.XX Turning we announced capital. second dividend for return Yesterday,

industry of dividend at highest Management an Board the share dividend on $X.XX remain base the base annual to of in and levels. dividends yielding increasing Our annual trading on cadence. remains the committed the recent responsibly nearly X X% based base per

prices and by the to its afforded despite cash During and million attractive luxury us $XX.XX flow, to quarter. Coterra shares continue program cash during $XX return quarter, per The X.X for average cash XXX% million relatively commodity company's to quarterly at the continued execute at we of in capital balance the price lower large flow our cash share. prices. free In our repurchasing flow an excess countercyclically buy of total, free return of second shares returned

results $XXX free million and via XX% or Based repurchases. our Coterra's year-to-date, base returned on shareholders share to flow dividend cash of

plus to of to into reiterating When well completed are of to prices, cash expect to excess our recent free we and shareholders. XXXX flow. our account base in annual of taking cash dividend, We activity return flow XX% commitment buyback XX% free strip date return

activity outlook. our Lastly, I'll refinements guidance discuss to XXXX and

capital. on First

XXXX of billion $X.X estimate the reiterating of capital We are billion. accrued some company's to $X

midpoint cost categories, signs seeing flat While are as more crews. X% ticket sticky items frac such of trending up. guidance to we have we surface and and future big and to including above clear labor Other cost the on are steel our currently softening been of rigs, modestly X% range, rentals

customary flexibility release. as detailing a all our retain plan year compared as XXXX substantial Based our for dollar of basins program per next today early our capital XXXX. to on per best we coupled a service decrease our contract we with costs, leading-edge the of repricing, timing foot information estimate on see guidance amount will on and that X% approximately in We is annual our program X based of have XXXX

to On production guidance.

midpoint well performance by per increasing oil both strong the our year full day, Mbo are to XX XX guidance We at Anadarko by driven to and primarily X% basins. Permian the in

We BOE the back are X% increasing of the at midpoint natural performance gas on guidance solid the our in well Marcellus. and

will is third Bcf oil production per production sequential MBoe X.X gas to and average XXX solely day average internally. per timing the average day. related quarter, estimate per previously we XX.X The to For natural day, decline and to was forecasted Mbo

year quarter. in our we see full fourth expect return a As implied guidance, the growth to by to

to X% a is in strong X%. company achieves natural We and change X% One X-year in CAGR to XXXX BOE X-year now assumes date. with to oil to X%. CAGR and our investor performance that reiterated CAGR be of the expect driven by we was update our oil In change levels. greater than the activity our our presentation, presentation observed is outlook, to outlook. This our well primarily XXXX in CAGR relative which of down X-year flat and capital gas a

investment We have and optionality. significant yet XXXX to finalize by retain capital region allocation

most We will capital its to to productive allocate use. continue

from cash is gas is recent Based The discretionary May. billion from our down $X.XX on in XXXX our projected primarily flow in due which by cash to impact decrease and natural AP be XXXX cash cash $X.XX the flow now billion, at NGL lower in is guidance year-end. and cash strip which driven flow cash higher CapEx, The estimated $X.X flow realizations. outlook, free forecasted lower discretionary is includes $X.XX billion, billion, changes of down to and

end of Marcellus during quarter. the above driving the Production Turning unit well guidance. The X% business performance volumes high strong gas X% increased updates. natural total company to delivered a sequentially, few

to per this could XXXX, previously activity capital holding $XXX dropped production we million If decline Marcellus XXXX in As level communicated, X flat. X least by holds rigs while of at and activity year recently Marcellus and crew. relatively

In which second in our half to last of the the both online XXXX, outperform. came continue X Anadarko, projects,

is the online the during Evans currently are quarter. to expected come which We fracking development, X-well fourth

year, during rig region back momentum of X half nice the the in heading provide running are XXXX. We will the into which

X and Permian to per will guide, crews, drilling rigs largely the X as improving turn-in a minimally and are wells efficiencies, come annual to due in the X volumes. operational expected lines feet of utilized frac of to contribute fourth incremental spot which our In end are annual are high and crew. we Permian, currently day. running The online quarter be trending XXXX frac late to including the

I'll down the for approximately on per G&A workover, including per of costs, was $X.XX $X.XX annual our costs. taxes the This to Cash Lastly, BOE. BOE $X.XX LOE, $X.XX production in quarter. and quarter, totaled unit during first well touch within range transportation, second

income XXXX. tax the taxes price of XXXX, NOLs After our in to during guidance. bulk utilizing range One deferred deferred and in note environment of tax the between expect commodity XX% XX% we expense high on

In well Coterra meet need operational targets. execution, annual the our or quarter, range. is production positioned summary, which beats as by XXXX commodity XXXX strong supported our XXXX headwinds to well to raise for despite remains during This quarter guidance the production led to our to for The company momentum continues. and exceed the as

XX-year Finally, for the Schroeder Coterra provided we and and he has personally today. congratulate month. all creating for Cabot instrumental been that his has his efforts thank past to like all would successes a also over bright Coterra. I'd to his him He enjoy me I at over the at Scott support future to career like

Q&A. back call the operator turn to I'll the that, With for

Operator

Instructions]. [Operator

Your Kumar Securities. question is Mizuho first from of Nitin

Nitin Kumar

to congratulations, us through and on prepared productivity, third want retirement, the for X% oil. start you cadence all, And to improved from about rest of of your to decline beat guide start bit. but quarter of on leads the second Could this Shane you're just Scott, you that the in walk the year? came kind the for in unpacking remarks, of looking new guide? emphasized In unpacking just want a by -- by little for role. what the First maybe quarter completions your the I sorry, I congrats congrats.

Thomas Jorden

call when Nitin, bringing We're wells. and what the online XX we it's of which completely process timing is mid- project [indiscernible], come on. our projects in

timing the row production Hills the come the our And in third got our as on We've next strongly fourth over so those that and cadence. will of Red project, that New driving Mexico we complete is when asset come a -- quarter. on

We a surprising with completely upside. overperformance wells concern. also, to had part nice the our in nor us remarks, is quarter, in his significantly County. is X-mile is of us, X It's in a not surprise to was productivity the Shane our Reeves timing, pleasant the second of surprise project, a And said plan. This this it as project

Nitin Kumar

the dip the my follow-up, return. return. I bit it. to you balance a a a commodity into and bit against tape little about We as cash saw want Got guess, I cash touch tough

was flow. end you you you how $XXX million cash, a -- have, maintaining think, balance looking you And how I I between your sort XXX% cash do longer the term? Could quarter. little you're countercyclical bit at at of the in free buybacks? see about it some talk it think How of do of being

Shannon Young

a take of first certainly of you. to think capital and the focusing return from in on the all, company I decisions, say full cycle, that. Listen, totality but quarter-to-quarter on I'll at Thank I the try when it vision looks program program, year Yes. we of keep a mind. make of it

as last low balance back $XXX high X in maintained look almost as billion, million. over over we've as the you $X.X a If as quarters time, the cash

in value I that decisions cash is look shares that's company outlook free make there, the is I and And individual range the internal the think to within. for from as flow, going So a the operating the at look marketplace. we're what's are think the our we what coming is at comfortable trading quarter-to-quarter, the period, of what

Operator

from next Arun Your Chase. JPMorgan question of is Jayaram

Arun Jayaram

outlook. on slight in change wanted the X-year your I to get more some details

highlighting drive that reinvestment And call change? other $XXX oil slight What X% annual X%, it, X you're Marcellus your from above Now was is the which the oil growth that of potential that. potential below before to the to plays? driving million, does contemplate

Thomas Jorden

well And it's in is Yes, change productivity simply. of that no Arun, there's driving reallocation and no, X-year that plan. assumption fairly

Arun Jayaram

at decide than at that there's pricing to just the Basin? And what XXXX today, team -- your you do as you Tom. outlook, Understood, just would looking reallocate that would you chance and say inventory given look that better depth XX% strip Delaware a your in the

Thomas Jorden

would I not No, say.

Arun Jayaram

Okay. now, your fair All a on right, made just to get enough? But you million, Tom. I like thoughts decision on seems that. it $XXX haven't wanted for it, that

Thomas Jorden

correct. That's Arun. Thanks,

Operator

of is Your Sachs. Choudhary Goldman next from question Umang

Umang Choudhary

congratulations, also your And Scott, for retirement.

And, congratulations, miss with Shane, you. look will to forward We working you.

cost the deflation provide appreciate all me Let with the you point. start Slide details, on XX. I which

CapEx, realize incorporated the your the will overall is which your of remind sure, some cost X-year of outlook? might that in in you exposed not to to be Can those XXXX. savings? you this us then mentioned staggered, You not full your And contracts percentage are so benefit be

Blake Sirgo

I'll Yes, this Slide one. XX on take structure is and trying cost moving how is to Really, throughout what 'XX. not our is Blake. we're that is show

those So indicators when built of were the strong had coming our most budget, fruition. And that we to down. come we cost have leading indications some

market ground gained on rigs, hasn't midyear structure sand, So deflation. the we you of but same just repricings, cost with seen see that piece our the frac it's really can remaining our OCTG,

underpinned driven fuel, seen has haven't and smaller there. So that we sticky. and deflation services a It's labor that been bunch by really pretty by part of just

out, got for we've when is indicators leading-edge do a whereas on we year, full all those services them that we for a realize called the year, those this to we're assuming only maintains X% So year. half

Umang Choudhary

thoughts the makes recent I you productive which does efficiency trying operational for you. just complete plans? more to about the how spending? a outlook. have you your mean to And to sense. that drill gains, will Got then wells? more it of earlier wanted long-term change That it more back your and realized. program your mean does I'm around comments activity capital some And that go X-year wells, Would wells, What understand maintaining consistent

Thomas Jorden

wells. our of we commodity productive. Well, where we've -- our team, there look of increasing going skate the bit nice to we opportunity a And see on operations I'll really as We It's remarkable the a wanting capital. with low project a XX-well great efficiencies. always in to certainly, what's commodity where in we'll we as outlined drill have be more is is would options, and our the we that's our to deck, stunningly will look how our at the operational return fall pricing. offers all to outlook be productive say, still achieve Permian, for some we going for price underway, and can And generate on prices, commodity puck efficiencies.

accomplish. we're So strip also be also going I disciplined. the panicking dropping to mean time activity, are your destructive prices the consistent. to to can activity be to but to chase are racing and and going high, works destructive everything it said, horribly it wrong. We're -- add to when you means well low can to productivity, means prices want It that as I but could strip, like we ways. be can when exactly it operational not be destructive It be both efficiency, we but to chasing and

intend exercise is that a to it. Coterra consistency and luxury affords, we So

Operator

America. from next Doug Leggate question is Your of Bank of

Doug Leggate

wonder subtle it's mix if observation, It's Permian all and at XX%. a my with back worth last point. talking were XX%, couple a gratitude housekeeping years, the look going to I If wonder Scott you about just little it XX% go for little if here. to something If production XX%, his 'XX, with forward about. back late I your of just it quarter, End to could yield. help to was of first you. us start seems was year, numbers you -- I it years. I'll the Let I And we Shane, over last me offer also working gas look Gentlemen, thanks give I natural

going function XX%. it's just oil Or flush there production? of Is it something is quarter, a This there? on

Thomas Jorden

-- aware We we're not there's overprint of it, if some of.

so some and spacing consistent Blake, of overall, think to I function -- GOR a of a But that? increases developments. our want of of yes, on seeing it we right, see be assets. comment rapidly it's may we're our spacing getting not some our analysis that on do fairly you

Blake Sirgo

I'd Yes. program just say, driven our by is high-grading. constantly

to in come so means the Permian, And oils projects the that our .

team went job not it doing our a So that. great I'm on. is with that surprised

Doug Leggate

spending. if year. just I doing, that. guys there comments the you on are your about the wondered you thank is but question for activity obviously level My touched earlier earlier what different follow-up a Okay. Shane, about was clarification dropped and Marcellus on really you something this

what So reasonably about -- you're Tom just I your little level elaborate signaling the be growth CapEx signal that It Or maybe billion, to lower on there? output. even understanding everything range. trying could wrong? an sounds reading were you're Am activity, in like you accepting can said $ as for of a current that X.X you bit the the

Shannon Young

into the the that our I And and the million were area. future, X to what capital if have of is trying maintain running in Look, rigs currently I Yes. we Marcellus. would in annual that activity to think $XXX level be Marcellus we lower crew X was say

to deliver is sort -- of we're that today. I trying based that's message that think activity So where on the was

Doug Leggate

the flat you Marcellus? holds that And in

Shannon Young

in Battles the production flat Marcellus.

Operator

Scala of Your Michael next Stephens. is from question

Michael Scialla

telling next years. want flat? more you as CapEx I'll well. around mentioned you your production your have, that want the of that reactionary. cutting offer holding and you of to investors are see X% if Curious few both they What are potentially you over Scott don't Tom, to don't to the than flexibility but just be thoughts growth congratulations any Shane oil my and

Thomas Jorden

a got imagine. we've you of can Mike, range as investors, wide

that us it's different the this have We investors team. anybody we tell to grow, have some is frankly, that if earning voices. Quite right

or We our and I that feel differently. we'll call. the of in have -- We the for do. investors think investors are with heels other enjoy that to consistency, this wave what we're to just progress. down. with on I that conversations getting some looking And But want Coterra feedback, that's our doing They and investors ride certainly to always story here see they're buying be resonate are not think a up

Michael Scialla

seems on getting the Makes you of sense. in, you that exceptionally more project a Can online? an what Culberson those timing XX-well come are where give mentioned the bit group do wells savings, Tom, large maybe color of wells potential there. row like and those

Thomas Jorden

our of just We our stage manage any taking say last led terms out, era infrastructure. Blake kind But It's exactly in up this of Blake, advantage to decade it certainly operational way take I'll take we of Yes. needing. want advantage can We can you and parent-child interference. our take in of advantage of do to We can it start and advantage the reservoir. take We has that Shale take I'll can the advantage of anything? innovations. of the let efficiencies. is coming home. everything what own is minimizing can this wells electrification, really technical that online

Blake Sirgo

X know ops row. look how think it. at important taking it's the consistent What really Yes, our units drill reads but and I prosecuting headline doing sure. I them to project, we're distinct in X XX-well is spacing teams share

on no efficiency. is maximize completion activity So big design. changes about section concentrating or all per well This to

When infrastructure. all crews get and efficiencies bring we're We're those We're together, those add they where that parking said, Tom cutting on and the per all things down up. co-mining can hours centralizing you really all frac So facilities most day. pump mobs.

coming per in cohorts model on And dollar we as about than foot so lower our X% this our average. current project, is

efficiencies that. on just What that's all a doing to Permian of is grand coming the team power So our executing bear. is scale really

Thomas Jorden

we go. where staged wells situation It's complete. online and We XX one we'll the when is wait be completed. add, to as I'll drill we not them bringing as continuously those continuing online last we're online wells bring to a also

Operator

Your next Truist question Securities. is from Neal Dingmann of

Neal Dingmann

great working I'm hear you lot or you. just OFS talk cost wondering, all a OTCG for about those thanks My with just on everything. It's cost, specifically. Could you maybe, and first deflation, question But we Scott, is guys things. been spot Tom, in about know X you maybe contracts? think pricing a X? is less How there the versus long-term the all some how more between today? I opinions. difference you've about had think the And past big

Thomas Jorden

Well, of. the we a you're we'll depends particular it we're typically of and mean lock willing in. even going it look at portion you on what contract. depends that to long-term item what we're do to speaking on program We know a also out have year, we -- what is by going If execute that

know, commitments because So really long-term limits as avoid our we it you flexibility. to try

and example, rigs we for say, X a -- the Permian, that commodity okay, if we'll X sure have look for But we may we case look downside running. know at rigs we have will running in

So we them X of on them X of may have and X-year contract month-to-month. on a

value value the against about so really And you try the flexibility. say do balance anything that? commitment to want Blake, the we the to of But, of

Blake Sirgo

looking It's rising. inflation about to we the were Not I signing from value deals. can contracts we all into longer-term hopefully we're Today, think if deflation ago, you proposition. where keep see a we nailed it. year at entered contracts

balance our things, the to cases. and are because those have on we flexibility, what they downside so reduce that's we can just And

Neal Dingmann

little I asking just if maybe was on then And color. Michael last just could, on Great what bit No. you. a the one,

like one? Just that and you just great where on around say opportunity. Anything tackle pad, that how is does on you'll XX-well seem just that could details

Thomas Jorden

of Well, well the We've named [indiscernible] on area. Culberson calibration, sort Eastern out pressure, the the a in it's lot great oil. it's in I It's reservoir, Culberson it's but got mean side. of defined. good County. landowners a good We it good Central row to It's County roll. ready call South in after there,

Operator

of Derrick is Your next Stifel. question Whitfield from

Derrick Whitfield

prepared regard well. Tom, beat, and with in better-than-expected Scott in production QX both as to noted to Congrats cycle your well Shane times you performance your remarks.

your of amount well Given or oil better-than-expected well call, which the contributed this productivity? the degree you could zones new the in times specifically, landing designs referenced productivity to of more you've to tested and speak beat

Thomas Jorden

to how landing will Well, our combination mixture to space It's I how I say in a our in best little our Wolfcamp, different exploit we those zones. do want shale. of we on we're shale we've changed that. zones, on where a but wells? learned different of sand that or whether we also get and there's don't those specific a landing to land thinking and a how wells, sand wells, We've completion, complete the

people I innovations think different time. the that some a it a than drilling a of tank we over really, also have lot it's and call of competitors it's on to some our viewpoint cube of But or what, called perhaps drilling, slightly of sum impact how manage that.

very these credit changed also of our become planning. it's our and I or interact. I been teams call -- on And something really our and trusted about to say know by transformative machine a doesn't parameters ways some learning operations you want but project learning, I go with the it's thinking machine very, partner Blake? team. And don't a

Blake Sirgo

frac -- and ever that current design are don't is a topic debate the we're them settle I We Yes. never-ending spacing constantly, would at best. the well -- Coterra. design and we

this that So year. you're across portfolio the seeing

Derrick Whitfield

to regarding over follow-up, in if allocation potential the earlier the this expect? zones in does X Permian year that your the capital results you impact have guys of my were for next the relative the there testing Tom, referencing, X landing years the just And Bone as Spring, you are

Thomas Jorden

relative allocation. the impact will it think don't I

lined I don't the necessarily but lot I change it we optimize would projects I look as We're us a on of based optimize, out capital will think help what mean don't learn. our it We allocation. we to will that X think trying -- up it have I continuously impact. years, to next

Operator

Your from Roger next is Wells Fargo. question Read of

Roger Read

have Going different where of being forward? across, at and and Marcellus other you're to if efficiency, opportunity where continuing But much call going be step questions collection here? the some asked. same, it Or that capital come greatest in terms a looking of you productivity assets pure we of let's not to your back play, and have hit in been, been so efficiency, some companies the gains look do is but see Should do the and you have of back on focused it, the you productivity Permian? the the be

Thomas Jorden

think X right productivity. I We're to Basin the for It's, our very Anadarko are pleased flowback. upside. surprising again, all increasing with

a a operational our in are look. And the challenges One lot deck results are optimizing challenges done unique. seeing we just Marcellus. just a nice and really, really we're another but Upper that and field. There're of Marcellus I fronts. the learning numbers updates, from optimization, has job in really is of platform a would are our one improvements doing our Our operational to across some of operating encouraging viewpoint, say team delineation, of Marcellus Marcellus of nice a also really opportunity unique number our that lot everywhere a They're there. some job lot teams on our we slide some on see

Blake, do you want to add to that?

Blake Sirgo

Yes.

in have exceeds length. lateral program done XX,XXX total Marcellus, a on Over of XX% with couple team feet. fantastic the actually Just depth a this of XX,XXX job our has wells We measured focusing of year our saying feet. excess

advantage these that's that project, these all cost developments per project sale So the about In pretty foot. of our down drive Permian, per performance take size. bigger it's light wells really helping

Our project is the X about average XX% over years. last up just wells per

continue. that We expect to

Roger Read

Okay.

-- to a of big fair scale the Permian any is contributor say or individual So development scale pad? in

Blake Sirgo

Right.

hitting completion mean and records on fee are are up our per per I drilling Our also. day hours pumping crews month.

what year. we year. per But expect. this up day XX% is that's we That's fee do drilling every what Our

Roger Read

X going carry then Okay. should question, I in just it's appreciate question. above a that. they going parts in only 'XX? you everything I'm CapEx, asking a was apologize hoping is through follow-up for confidence would. as or to why 'XX. -- X lower to potential go you role be together, us And if sounds doesn't marginal we I there pointing so the here but like to me, outspend, little It like looks to even 'XX. to nugget have for midpoint within a with if that 'XX, give could The

Blake Sirgo

Yes.

why think color through seeing cost end it if some had feel the we give rolled deflation at the at not the the built structure, materialized. structure. Slide whole best the we we through cost few were be hasn't taking on information gave confident of When kind and on We're we'd very time deflation. budget, XX entire range, we but to had the I all just items, but it leading the low a that's that we of

going when X% this assumes give far gains we've the So that else. 'XX, continue got the into we all year is nothing so with

Roger Read

gone And to that or What then has oil noting follow-up related ask some the extent. or Okay. costs Just deflation. logistics on like diesel percentage have and is could back prices to one the up I fuel current anything followed that? mid-XXs to

Blake Sirgo

that call tell have I not you, services. out. don't in I much can baked Yes. exact dollar it's pretty

Operator

Partners. MacCurdy from of Kevin is Energy Your Pickering next question

Kevin MacCurdy

of trajectory the about question OpEx this year. A

didn't higher your The first you year end of guidance, the at and guidance. X quarters were full change

lower Kind given at range. So second year of need that OpEx, comfort outlook? seeing especially volumes the half what suggests on would you be of that the the half out end the second the are to lower the there of you gives

Blake Sirgo

I'd down say quarter-over-quarter. our is Well, LOE

the that's one. So big

that's We But in, of has portfolio our full those see year. are of continue expect in that cost, middle a modeled Most in caps we've the hitting in pressure that can our to seen range. and the not the out. GP&T front loaded CPIs but we're to And you unexpected. come We've capped, that this throughout year. as we're expect little

Shannon Young

for would I of costs we quarter. of sort the cash highlighted sort Yes. on as say

to from to a BOE down LOE last we're $X.XX BOE this quarter. $X.XX quarter down addition overall, In

like I area. So we're in we trending feel think the right

Kevin MacCurdy

Okay. digging And guide bit. a into production the little

You seeing and cycle improvement your you're in expectations, mentioned X-mile outperforming that times. laterals some the were that

you and Just kind quarter those risk when your quarter of calculating curious X items how fourth do third guidance?

Thomas Jorden

something is all that laterals. experience still learning. mean, lateral we're long based Well, on with our I performance long

areas, so we the I but with than different. several We've X back. laterals, don't in some some the went we depending environment project over just the reservoir, and conclusion, we they a different X I had little the operating And nature got have on surprised X-mile frankly, in this grand area. the of learn mean X one on had from we the I from have County, uplift flowed experience depending X-mile more what on stronger to a is well And spacing, broad where quite with forecasted. As flow we Reeves upside. in -- a wells, had although the was is. just wish X-mile the to X-mile horizontal uplift experience any it a depending back to little It's X-mile

Operator

from Your Leo MKM. of is ROTH next question Mariani

Leo Mariani

to just questioning wanted stick of I well productivity. of on line the some with here

You out the mean the the think that second I stood to of was Marcellus that me quarter. in kind one

production where of case Typically, a kind in certainly the think tweaks Marcellus that amount the there's looks the sort quarter. being on I wasn't of an be probably of here had of not that I as mature the tremendous here. like improvements X%. second and can of guess, play, increase sort of it older, material sort So maybe more But

And like came some there online, number that didn't some outsized seems it outsized like wells of were production growth. just seem

can quarter? maybe Marcellus color you us the was why little bit the in a give particularly second strong more So around

Thomas Jorden

is I that Well, stride. team say would really hitting our their

much done and team, the really accurately. field effects to we're the both spacing. in forecast lot We well more great methodology. the tailor in done have to a fantastic our job our they've tailored really and office team And comes it The a in has that, operational manage completions forecasting understand around And parent-child a when and our revising Marcellus.

at big understanding spacing, as prudently. really staged the back They're a mean doing them in interference everything strides they've just Lower I almost job. great tremendous and made to flowing just and tremendous manage it's -- year it's well-to-well just and once. understanding understanding a coming design, completion and They've Marcellus, this ahead. projects we across to board. look out got mixture Upper shout both And it's And of some a together how

Leo Mariani

kind Okay. turning of to That's helpful. CapEx. And just

you're midpoint couple going in end up 'XX. You of being over guys said probably here a percent the to

numbers, the As case, cash us could that, I of kind at cash. in closer at so fourth versus of healthy of I in of the maybe looked maybe and quarter you something either kind kind you're to it know as you're implies to accrual CapEx, let sort that's if kind numbers downturn of looking a maybe getting the But pretty think low XXXs. accrual

to XQ. of of where kind I into here So sort when about to you guys the right end at or sure just accrual talking reading of you're capital think looking cash And I'm you're that on you up want 'XX? are make kind going in

Shannon Young

think said it range XXXX, here. that guidance Shane accrual to for we Leo, the billion. to is midpoint relates we $X.X trending the sort to X% presently X% within that And $X billion and as the is Yes, what of range. we're above

So number of the period. that's the end really out to cash going the in by period there cash to the relative number. Obviously, accrual the the beginning reference between impacted AP around that's of is number the to be to timing

you the some leads and good Anadarko, quarter quarter, you at referencing of a the CapEx. of as lower end observation to look, spot lower your little at and go it, you're to than of the crews really and numbers We're accrued midpoint sort both what's were look Permian we this to fourth leading the through we get on when that's the feel about letting the in the right, that. relates that maybe activity even it As absolutely lower

Operator

of is question next Cheng Scotiabank. from Your Paul

Paul Cheng

mentioned the of you that then the in X to first of next, your That's be miles? drill percent quarter. Could X you to or miles program? the that what the from question. X-year X- you us overall second going have you're many give And your how opportunity for the say, benefit in wells an the X-mile portfolio, well Tom, also Permian idea well could

question pads, the completion not maybe that design that second to How the that the learning also scale better is larger larger maybe instant going the economy talking The on further. just about you expect you curve with and of everything, pad, pad size? the back visibility given larger of pad reducing manage it's into increase between but

Thomas Jorden

tally I of part We have those lands our for a will of questions. generally. out for our wells. lot say inventory. are X-mile be X-mile our parsed don't a developed already you of small A or going it's Thank to program

our going program a taking we'll and X. instance. forward, of And be the so going X-mile is I project you open, exception. Marcellus or miles to advantage just the that be are might is will because probably think fully. be Upper of a that X Go wide rare Permian But most have to see Marcellus wells

also far that of as larger test. cycle ability project to I a of test have opportunity loss program the with as a give then the on us a X-edge It control you -- question understand And lot is if question and lot your because of the properly, things, the sword. for your size XX-well and learnings, opportunity will that's to a

march One is to you it and project individual off that have small experiment control space our an compare in that things to. is don't of you the [indiscernible] if always parameters, and have change you some

that some opportunity and the good cloud conclusions. other have can will project have really several the to attributes have XX-well of to control offset within the that out geologic So and your subtests normalize

think of question. with We that it. ready and do size, good look to project this for really a results delivering forward it's So a we we're outstanding

Operator

from Tuohy is Noel question next of Parks Brothers. Your

Noel Parks

I the on there's with LNG going on mixed risk signals infrastructure in the in you of makes of about wondered thought prices, fare could that I here? associated about about talk the if horizon. oil gas. your thoughts a this And reward of the course, particular strengthening and thinking somewhat bit about investment with that And low uplift from I'm gas forward we're Permian how and me think, might sort

look your of Permian, on heading maybe like And between being so might just thoughts LNG? the just into addition course in Marcellus infrastructure priorities what and

Blake Sirgo

This Yes. take that Blake. I'll is one.

expansions Your actually with has we've quite pressured, up but the open this a been traditionally first bit around That's online. coming year. Waha. seen question new it Waha

of single to We LNG. X the look that of Permian, plenty for to Some We of at of there's yet. Permian found revisions one options works looking forecast for the every stronger. them. is Waha there coming just -- out us haven't get gas And good

cost chose to. seeing move with can Up gas in grow do that's we the our have room We into little than we come but to know we It we're the might the pipes a now, on. higher economics. Marcellus, if factored

Noel Parks

Okay.

on are basin with anxious you're as And you? cost looking terms sort from vendor proactive vendors horizon, behavior wondering, are Okay. of as price just in working Are of fairly on sort to of it softening what any wonder, in more uniform? far basins sort about seeing divergence your of of Fair more basin? enough. and the seeing is significant I some you Or

Blake Sirgo

Yes. Blake. is This

fairly and it's have another basins, is have big a uniform. crews nuances partners and rigs been through the to we together we long enough, between great but wheels. I time, And and if always arbitrage ups But, downs. go we've think there's service mean I in general, with work basin. they'll

Operator

Jorden There now for remarks. are turn closing will I over no further questions this time. at Tom call to the

Thomas Jorden

the to turn for remarks. Well, thank I'd closing you, some Scott to everyone, and like over call

Scott Schroeder

this, all is the And are all you, into hands. you tremendously It great thank investors everybody Coterra years you very together. together and great you It's your for the and It's internally, trust it Shane what and Thank great everything. Tom. assured of put all company support organization. and came here. thank thank ride. I hope go of years entire was for hands externally and the you, in blessed, unique that Again, you something a didn't been Coterra that people all is of in with as I'm happy and think I've that I extremely forward. team coming, over proud a I rest you're see and a we everyone. X tremendous been but

Operator

conference today's Thank call. you This your participation. concludes for

disconnect. may now You

Coterra Energy (CTRA) 8 Aug 232023 Q2 Earnings call transcript