CTRA - Earnings call transcript Q1 2024

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Operator

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Coterra Energy Inc.'s First Quarter 2024 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Dan Guffey, Vice President of Finance, Investor Relations and Treasurer. Please go ahead.

Daniel Guffey

Audra. you, Thank thank XXXX and joining Energy's Coterra Good Conference you Call. Quarter Earnings First morning, for Today's will Vice CEO of and and prepared Jorden, Sirgo, Operations. President; Tom remarks Blake Shane include an Young, Vice Executive Senior President CFO; from and President overview Chairman,

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

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

most statements directly will investor and our can GAAP release some comments reference reconciliations call website. With non-GAAP our to measures, earnings as of I'll found be were the disclaimers, other presentation, measures over turn forward-looking comparable as financial which our provided the well Additionally, Tom. financial to on that, both in of updated and

Thomas Jorden

who Thank pleased you, quarter. are morning. call report on to Dan, an We're this the and us welcome excellent you Coterra of joining had that first to all

for total equivalent was day, which oil equivalent was guidance. Our of high our production XXX,XXX barrels per of the the near quarter end

XXX,XXX range. completions. which reductions this. on was X.XX came cost our guidance provide guidance. the production Oil beat a in day, was in which and above by of and exceeded This guidance. barrels expectations, was billion oil performance which Capital our will combination timing and well the production at gas a high This production production was day of cubic of barrels high further feet day, of timing. Natural a the oil below driven per averaged expenditures averaged that above X,XXX end was per combination of optimization slightly oil end of Blake $XXX detail million,

full Shane provide natural year commentary our here. guidance oil have our unchanged. while will gas guidance We leaving raised

rebound. room additional guidance our said, for activity, As to the in XXXX capital if we Marcellus for were our adding includes received prices Marcellus previously

will severe our Rapid evaluated are any against our price course, activity additional commodity of business. opportunities shovel-ready and in Of other swings be portfolio. feature

an inherent there humbling and try As predict unpredictability to we market them. anticipate much to is movements, as

exposure we price Revenue QX, QX saw to while stability allows Oil, us did, of upward maintaining revenue with came retaining coupled however, these movement XXXX. in be Coterra swings, with currently QX at flat movement XXXX upside online. luxury delay consistent recovery. We of a downward turn-in-lines Despite for in roughly During during for We revenue This gas level some in Gas. activity, brought significant completed the have wells comprising pads to waiting and Marcellus a QX. XX X in

XXXX. the hard on to will not the consumption of activity spite wholly demands heard for We We by LNG headwinds, are coming making it is online provide the go/no-go Gas long-term XX-plus monthly center Natural data center basis. evolving power AI-driven near-term range be data incremental constructive have day, With about wells detail discussion demand and Bcf the of year and completion Blake have on further this on gas. on X natural watch Gas. ongoing the we per needs, a and demand future capacity, this. In optimistic forecast on by power from to growing remain driven conversation per bringing decision export Bcf that near-term day Natural closely of

anywhere demand within range. that increased welcome will We

that exceed to we reporting Finally, are again once be pleased results expectations.

advantage. With over be an Coterra, the important choose partners. At continues office contractors I Our of and I'll addition continually responsible to strong discipline and over turn financial And want and being costs, This entire on organization of staff, acknowledge includes, we comfort. in that, progress organization focused of field the call and is optimization, members highly work to on our competitive tremendous excellence, culture reduction operational up. service dedication emission field our the safety, innovation on from to Shane. communities. our to

Shannon Young

everyone, you, the summarize I joining thank year focus financial quarter provide for first call. highlights update from will on I results, Thank first, on well as as second and guide. you, full will morning, XXXX our production today's us X and I'll the guidance for quarter, then areas: This Tom, capital

we're recent Finally, our I'll return bond provide offering for and highlights our the on making progress shareholder program.

our strong to quarter. performance the first Turning during

MBoe well a per quarter high timing. gas with acceleration production per X.XX and above of MBo modest the came by Permian and First averaging total averaged Oil natural end XXX.X guidance, Gas XXX driven averaging production performance day, Oil day and in Natural strong Bcf TIL per of day.

in wells our we Permian, I of Marcellus, further the our XX at discuss remarks. XX In will we of on contrast, the tilled my brought wells. this guidance versus later guidance. below wells the midpoint In in XX wells XX

range. were $X.X approximately or by $XXX the During to of taxes were capital flow and the BOE. Cash of current primarily income capital maintaining the including after in and and In NGL of capital the end was reported $XX was revenues during net quarter, near we BOE, just Oil during first driven expenditures which $X.XX million generated or Total income timing million, $X.XX Discretionary million quarter, cash our Lower-than-expected year gains are million of our guidance transportation, million. LOE, per $X.XX In million, production flow full the share $X.XX and XX% low annual $XXX free hedge net midpoint guide. totaled adjusted quarter was billion, by G&A prehedge totaled below first per range million. expenditures cash share. $XXX $XXX capital $XXX unit quarter, the of of $X.XX per cash totaled per we costs sales. and the our of $XXX quarter guidance

remainder the XXXX. of to ahead Looking

production execution. Natural second X.X XXXX, XXX In day. per we and expect be XXX quarter to continued to Bcf up between average be and on and total other between day. XXX to Oil of between X.X% MBoe Oil to words, per per we expect XXX MBo day the approximately be During X.X and Gas quarter-over-quarter strong

capital second during the $XXX million incurred quarter total to million. $XXX expect between would we investment, be Regarding and

don't chosen online natural line have in during any flattening we volumes pricing, lower current anticipate bringing quarter-over-quarter low year. the totaling As of half the to Marcellus the prices, second gas in XX a resulting on in turn before the Based X defer quarter, in projects result we the wells. of second Marcellus projects separate in-basin of gas

turn year full There well BOE change changes guidance. our there production our full counts or and for initial year. we no year production MBo well XXXX -- increased are to Oil Yesterday, is XXX XXX to from February. range Similarly, X.X% MBo our up turn-in-line guidance guide guidance year. day our by gas X.X natural the approximately between in to day for and per the in per cost unit no XXXX Or

lower year capital are the billion, between $X.XX our guidance the billion XXXX reiterating For full we XXXX, $X.XX spend. is our XX% and which midpoint than at capital incurred to

previously Anadarko Permian our XXXX Marcellus Basins, XX% than will As modestly discussed, decreasing year-over-year. capital and capital more by in program the increase to while liquids-rich allocation the

shareholder to on returns. Moving

to this to maturity As third the first the with offering quarter. previously quarter, X.X% Coterra the of with reception on bond at of use coupon and Coterra's notes million retire notes the announced, the during a We a the carrying the of hand issued timing maturity $XXX a along proceeds We intend market. offering we million in $XXX senior were of pleased during successfully and the of of cash XXXX XXXX. inaugural of story transaction

rate the proceeds of the invested interest have we with to maturity, to continues a similar a of Coterra low the and time the at at first maintain leverage quarter. deposits ratio the of end coupon its X.Xx Until profile notes. the

maintain even a at and below to remains Xx target deleveraging, refinancing return maintaining lower ratio us a liquidity Our high robust shareholder leverage position us allowed scenarios. maturity This XXXX. our affords in profile, modest price program while extend

million return by $XXX execute repurchasing million price X.X quarter flow. Coterra the or over its share. to shareholders the XX% an free during In of on total, continued $XX.XX During at million for program first returned of shareholder we per cash average quarter, to shares $XXX

for dividends share our annual at dividend of we We approximately committed quarter, healthy $X.XX one free base or maintaining XX% first X%. dividend flow a strategy returning per through our $X.XX program. a at Last night, to the of cash share This announced remains shareholders peers the also remain base of to dividend our yielding combination of per more and our repurchase share. base base of annual our highest

the the team and summary, cadence. responsibly to in another committed delivered another remain Board the Management increasing of results In an annual base in financially. successful high-quality on which quarter dividend resulted quarter field, the

are momentum our business that, poised has on track for strong Our we we operations. hand X-year the or to in details February. With Blake and outlook to XXXX meet differentiated over to call provide the I exceed operating significant will provided a on Blake? and are

Blake Sirgo

I expenditures morning, This and an provide operational capital discuss Thanks, our Shane. update. will

totaled end coming expenditures our the of capital $XXX guidance. accrued First quarter below just in low million,

in in oil continued production strong our with Our at field execution above guidance. end high per day, QX, of the our the oil XXX,XXX of in barrels coming

We electric our in our continued Permian, simul-frac by County. in crew well performance times from crew gains are seeing on led diesel completion transition strong reduced as the initial Culberson as

contracts crews X are month. foot it with During record realized These not our pumping that per highs per the hit and gain Permian cycle and efficiencies hours in X new first efficiencies, just when is quarter, crew all-time in times. coupled our in our with Anadarko ensure we dollar efficiency

the Permian. drilling X frac running are rigs currently We X crews in and

electrification, from leveraging as to also more facilities continue in operational per We including year, existing the times. and improved to on footage infrastructure cycle lower cost dollar cycle foot. well savings Faster benefit times drives as efficiencies, contributing

cost around foot. XXXX per we As our estimate per dollar X% our a foot, below roughly result, Permian $XX.XX

project now simul-frac Row and underway. Windham is XX drilled running with our operations Our off and wells

crew the our is field in off grid Coterra-owned required. generation with Our simul-frac electric directly no powered

our foot. zipper from cost completed per are of seeing $XX with simul-frac initial our day performance an encouraging per with X,XXX versus feet normal We of crew a performance increase decreased

$XX efficiencies current of project we addition realizing the diesel part we simul-frac cost total per and grid is diesel-powered wells total zipper between the with the One Row the to western of our When current project to are Row, of cost wells. XX compared bringing the power, combine to operations. Windham a savings to spread Harkey update foot, X the

these codeveloped our Shale X without on X different shown to us in the with interaction these we've basin. facility than existing further projects or wells have a schedule is our across execution new the were landings. we understand the between observation zones. Due asset costs. the to to And Culberson our Upper wells This far, what with tests seen Harkey these additional new Harkey project benefit other to will Recent possible so incurring help Wolfcamp fit able our strong codeveloping infrastructure

Row expect discussed, to previously County. Culberson in many development we come execute large to for As years

and rig build continues and X to XXXX. In the is X we to frac in off team crew. start reduced currently Permian are strong Our momentum a Marcellus, running

in focus and be markets continues activity Our costs challenging. the as reducing gas near-term remain decelerating Marcellus to

Our Marcellus play which our and program which portfolio, multiple NYMEX pricing. is floors, sales at lower contains into long-term buoyed by price come indices

X pads We are TILs of rest consisting Each incremental currently choosing delaying until our compared pricing of local stronger in these Therefore, are XX on have the we pricing. total wells to receives portfolio. see in-basin we delay turn-in-lines. molecule to we bring we that

wellhead We chosen delay a volumes as not a our into compression program XXXX, into have also accelerate to weakened to market. so portion of

spend. focused teams and field our ways capital in are on the to looking reducing Our costs optimize for

running Anadarko, As projects discussed, in the several teed macro should ready we the rigs strong year, are up unit are has frac and warrant. later to have conditions execute currently Marcellus and In X crew. we business X our that

of maintains the in the activity, are the in current of of on strong projects are first fracked of with X liquids-rich block projects over gas which a focused environment. portions being These completion XXXX. economics our asset, large We middle half

is Our in starting fruit. the activity bear consistent Anadarko to

day our As pumping we an as in seen ago. to increase as day per XX% per a of increased year compared drilled have well XX% year-over-year, feet hours

Anadarko Our capital strong. for to returns remains continues the and across team compete basin the

at Coterra Our on firing operating are teams all cylinders.

improving are areas our to cycle beating continue of minimizing gaining that times including our downtime, trouble make and emissions all operations, efficiencies. materially new targets, well new costs, initiatives across reducing production positive We strides

of continue Our our they our turn and operations that, with heartbeat fuel it company, back momentum. And Tom. the I'll to are field to

Thomas Jorden

continued our to look execution and we Thank appreciate you, Shane march and discussing our as and through XXXX. interest Coterra pleased Blake. with your momentum outlook. results forward in We We're

to questions. future As always to that, turn always, the pleased deliver more promises, results, we we'll and talking over like them. With we're it about

Operator

[Operator Instructions] We'll Nitin Kumar take Mizuho. our first question at from

Nitin Kumar

to conditions? looking still to, Tom the results. be is the us you XX and put price? to the calls and the I equation want XX how Tom, there a Shane, X, about a maybe are wells? specific one, wells you're think XX wells -- for the year? for how The you great or plan congrats off you Or start Is program would year. that the of talk market on Marcellus, online. demand later deferred in completed on supply through there in what And the the are for bring about rest at Could

Thomas Jorden

Thank that Nitin. that say, or going it's I'm I we complex me into it's first, at a price. when with looking shared I if a that and yet. indices. okay, you, Well, say And specific has the say I'll point to. say is Leidy supply. But have And nobody I off price typically $X. to we we and low we we But of And quite sub probably think would frankly, really when there's the that? look one our sell a formula, our received this, cost But that. there's we're at we a $X.XX, north very netback price. particular LOE what's transportation we for outlook like wouldn't of say, And would to have of do comes see do that --

my We're going watching July. model making optimistic, or said additional to wells -- We our on I month-to-month go/no-go that we a making we're that. that be do in online so we're basis. as current we're bringing by not remarks, And our -- us not, driven but we're model. Whether has in

ask want what on driven price there's to our There's it's the bring be wells the issues, price. also when you for by we the way when we increase X the will when terrain We online, price but that of say the ground. I looks investments. would

we that's price And 'XX. different said, really do that, capital to if a comparison. ramp-up. whole rebound strong I volumes and our XXXX And As our we room into program going a has for in a were see

turn-in-lines and of gas, in on to lot Gas. going look, There's do. way also moderating constructive going market But online, these doing. think We're go. and that wells a when look coming impact But to as be the really our I decision. just we're real we said, see online, thoughtful conditions doing if at of just Natural others near-term lot what may these we a we're there's and we're hostile and flood of gas we're a environment, look to the And bring players what a

Nitin Kumar

reduction this I talk the less you learned? Could us for XX% something if you But in I result Harkey lessons Permian the the that to if think the that. and look you're down a about is seeing? Row. the about of you we the could walk bit billion Permian the appreciate want spend $X the the through a in I And you can and cost road? a to year, X% what maybe XX% Tom, same little Windham is spend seeing, which few what at capital Great. some what wells to adding talk shift are Permian positive. are about have in And seen, obviously,

Thomas Jorden

at hit going and let Blake Harkey the cost look the to I'm reduction. Yes.

a general we recovery that unit. in our program observation that is or a that exploit spacing a incremental layer at out drilling don't lot reservoirs has assets, in see X our Delaware our Our been time these observation not whether we really of any of

because back a side build absolute things infrastructure do to volumes boost an life of I'd County, an if County wells. absolute months doing our facilities for the another they're we us you're you I'll have XX your of these basin, did advantage build did We in XX to the on peak the new And really while that in with we we pressure. months, or production the is full early that incremental Harkey we and to allows we we Culberson decline. where It's So them see in we codeveloping that take on the year the stages Wolfcamp and XX the learn, facilities But concluding continue I think XX but say because peak not is little coming option. production, versus probably on little our are a to going projects, the stage can X, you wells in project did western different. say see lower experiment a underutilized. and in on Harkey find Harkey, And very Culberson in not did at to time to last waiting Row what and same the think over the default few added prudently recovery. We're this, see for that

not and to continue chiseling we here. As and final granted conclusions we're learn,

Blake Sirgo

we in would Row When but And strong. we $XX right and going room there's cost is We're see mean, We least of performance further, simul-frac. the go about foot. I Yes. talk the even out we've question. well. close. watching simul-frac To the there. for seen has $XX. the were that hoping Windham to gate, about date, early I'll very take very it The at per we're game been

we in how change pad Windham exploit have where and because now, at we right how our take program simul-fracking effective, as As you with to across learnings, teams to goes. XX% see wells really of initial whole Permian looking program. we're the But on part cost wells that just these drilling Row. slap that excited and expand Permian looking got it a far per whole this make number this we're the success, are I but cost simul-frac to of at our year can XX as wouldn't could team only hard is our this the

Operator

We'll go at JPMorgan. Arun next Jayaram to

Arun Jayaram

is question return. cash on first My

broader philosophy views some the your the maybe of stock. of You I to on overall flow on But this the XX% free given valuation thoughts cash get wanted returned quarter. just

of that sheet billion did $XXX on addition How million issue. balance year. excluding notes valuation about decision? You stock buy to on of the notes in free $XXX we maturity the today, stock? issued of recent sheet to minimum the the attractiveness balance, later the help payment think perhaps the flow in the cash into million have on leaning of thoughts How recently cash balance this do return, play and to net refund the back cash that balance cash $X of Tom, the about You

Thomas Jorden

I'll let one. that handle Shane Yes,

Shannon Young

you've the a the program appreciate I'll look about it. I Look, them. And we pace. at look, things. Yes, We and many the on of question. of think take return variety touched

and compelling valuation. we our foremost, we a at stock and First look is believe valuation,

if to to And there. then we're going so, more inclined be do

The sit liquidity any second where is is target quarter. in and liquidity the helpful. there's target does and we're the And And sitting end we flow above our is the but period. of as if think I of you it's other those, then the around third and what of cash business first free things, the know triangulate our given

we about And year, having around We of maturity. As were liquidity. a hand on at how XXXX discussion we were cash into last the and to getting good scenarios. we looked handle late variety here had a

So of took. up into an the and and part got one that we that had year, this debt the improve as really for ended being that's early generally cash. and began been speaking, to we option new path We us, do for issuances was of option -- the to market

into price, as of and on the repaying million impact year, maturity us attractive question could on of stock And of So once with that But lean a and liquidity. for $XXX a of the what did, really million we'll later buyback hand. combination that flow in our the to it the clarified first new program largely issue cash debt cash saw bit share have you quarter. $XXX with free of be kind little us this proceeds that

Arun Jayaram

view do the what balance Great. you'd to keep Shane, the sheet? on like cash you minimum And as

Shannon Young

to But I range. a And gone live somewhere us quarters. $X within as continue go. broad as million $X.X as as range. it, you'll last, the over We've think call been target billion. reside And billion. to think see in -- that range. again, think you'll low see and We as $XXX I that low X, probably I continue us as high It's We've X that we

Thomas Jorden

I -- it's So add If could some color. just

relaxed a cash on have number our bit We sheet. $X the little billion on balance

of We have liquidity. plenty

stock stock, we value, value see buyback really because look is we prudent Our is frankly, buy. our at and think our in quite net a asset we really

far going anybody our is as being to then I accuse overlevered. And think as leverage, Coterra overall don't

in going Coterra financial before, minute management. I about sheet say the on that lose theory worrying a me the a have when on cyclic I textbooks business those heard never of balance how run. to theory. debt you good is. for with business, people find we're You've into somehow papers. read way long sleep that low that you live commodity know financial But their I'll our violates manage the the bankruptcy school And filing just

Arun Jayaram

sleep balance are And Yes, about [ is the $XXX to to go-forward night half. $X,XXX just a run foot is in your ] the for us second follow-up it's that rate? down maybe decline? good guided Talk Blake costs what's at My well versus the Marcellus in sheet. a half well foot a first

Blake Sirgo

The the on well just driven the really bringing part decline we're by of that that year. set is

exactly, that trend to one, you're We hard down they great, long is on it really kind pin and talking there dollar have Run lower Marcellus. if upper are depends foot. per lower some a in of rate laterals Marcellus

foot. could that going I $X,XXX could anywhere to flow Lateral be It's per drive little from to a it probably in there. lengths think $X,XXX lower.

Operator

Goldman We'll move next Sachs. Neil to at Mehta

Neil Mehta

great quarter. really Tom,

you do any love ago, of portfolio? the perspective your -- your across certainly, and much deal a in role where see do I of just so Coterra you consolidation -- first the and large landscape. future seen ask we've And on years see I just was The landscape and you the had question bid did the gaps energy consolidation but couple guys and

Thomas Jorden

Shane comment. we -- announced that We're the transaction. the see Yes. I'll haven't fact let that

assets. And a misinterpreted looking landscape what think liked I'll recently and we those against may "Oh, our me shouldn't be or out, bolt-ons. we've for assets. We're there's the really deals, evaluating But just lot at that the that evaluating fit of were portfolio As them slide they space. had say, say, demands active X of before, have we heard that. you've reviewed we're into small probably only to those say as not X how we We're market the might in have

review find on But I at decisions made we team on misinterpreted sleeping curious that. everything. in to more think we sidelines. we of say feel to for that. we're as look And active don't to the have we the pretty we're them operations good And and gray/silver. I assets a just But we going remain be would lot want our it and love that to about confidence on

We tactical comment are engaged want and on firm. Shane, actively have you both to do that? made to decisions

Shannon Young

couple the I it put love We And of in allocation. Yes. a to been capital team incredibly terms under than executing more The and assets we their I'll of nothing just strengths think we'd execution helps an plays opportunity also more it field. have add on well, has think and of in to wholeheartedly into opportunity agree. our things. stewardship.

I think find shape, balance high. that had in. highly very in the valuation right parameters sheet the but I remains would and bar think we be -- the and something And be were right something to we'd that left strategic the if good fit, has interested been

Neil Mehta

And the follow-up M&A. on also

just well? less best on and You're product focus and It the and that on return. seems you the been focused focused M&A more you Is fit as what's the generate perspective where on commodity us think to on can more have agnostic. consolidation? the about Oil Gas versus highest type You way

Thomas Jorden

Yes.

financial our think is everything I on lens we first do. always

supply, we'd are little more would markets, a all I else and Now Oil check to But Gas. Oil all being get with things months never And from equal. back both structural for else X that in cost I on say equal, our the amount on have the add we and equal, focus Natural portfolio. file price if mean being you windage sound we me probably we our changes focus on our the on of focus now that's feedback history of focus. really financials, have quality, asset between of we if we right a that.

to interested I Gas, that. a say completely, also to balance. in not DNA, a balance we would our But mean not we revenue have fundamental it's And whether Oil NGLs. or our indifference we're to in want mix. say I

Operator

next to Betty Barclays. We'll at go Jiang

Wei Jiang

ask to want outlook. about I X-year the

You would have efficiency all that fair great a to better X-plus is into beaten and outlook type that just is to it XXXX talking into entire growth period translate that With maybe gains to XXXX, they a about, flowing think the better just you're 'XX CapEx? be and delivering that's over to see. you that numbers, X-year continue which the for and lower will seeing of

Thomas Jorden

Yes, I'll and that to see I Blake want comment.

are them. apologize I I for think think come try that and achieve. to reductions are. kind kind we line sight -- have with And than better credit out of aggressive that's modelers do give sometimes we because what are we us for have not outlooks an people being unless We or that of of really cost organization. future to in future we can we efficiencies model do innovative We to

progress. sick we never say, get We way want it been to because wake up every we're morning and of our successful success highly in very we've of and we

You've progress talk heard about us versus comfort.

beat humility when we in percent. might X% growth, we sign let's tell that -- a we with hotly our February, we X-plus debate was to say plus we oil I'll whether we that because in So plus laid "No, you were said, out debated. the to X-year internally as and put great say that." And plan had going X And

things we we've we're -- will innovative. than and results, organization solidly in the But is eye can't we'd it. X added that deliver look years, that we growth. our here rather promise really that the XX% last sandbagging It's Oil And not we say, talk can't about It's in our model.

we'd some if have promising, company. issue, [indiscernible] sense, we a under So than overpromising. it's in end rather cultural up And that

Shannon Young

say, still would conviction I in put Yes, in remarks, we have in February. we said as that just out earlier outlook my I Betty, strong the

Oil at billion growth, capital. Gas to billion X% $X.XX growth, to $X.XX X% BOE of plus and all X% So annual

we delivered gives that quarter further results that outlook. in around the conviction I have the think only first us

deliver So able And it. we're excited we'll believe it. about be to still

Thomas Jorden

Blake, do the anything to about you want say future position?

Blake Sirgo

echo don't We Tom said, doing gains every we would as any in I year. outlook. single our is just we're X-year that in the What we here better what show. Tom expectation efficiency bake said. But is get today what

have for excellence. We we what not yesterday, will of culture a That did it means cut operational today.

teams are cost expected. ways structure are our our for and to constantly And looking drive efficiencies

How the our are many other structure, of what's Now There's control. do? we many there's lots things running? lots are how affect of market cost crews going to things costs, don't that rigs running, around

So anything. bake see inflation, -- efficiency in way we it's we the don't put the out When We bake bake don't guide, today. deflation, gains. world we further don't in don't we in bake we a in

Wei Jiang

That's all great. across a the an -- board, definitely that's issue the momentum to the operational at Harkey. can On not from I culture want my about and it follow-up, see And a ask perspective.

your in the I on within think you next you months. will the X the XX Harkey slide Windham deck, in Row that back mentioned go Phase to

codevelopment. you And you the Tom, shares anything from mentioned any Harkey, that savings wondering, there you phase can some second that along you facilities extract cost saw line side? Just from or benefit that then on secondarily, that that is incremental expect can both from

what So could the does development? -- Harkey pad Harkey that what for that road mean --

Blake Sirgo

bench in efficiencies are cost. can built, This there like is we volume, are our This back. historically, benches come that when ones The little pads right in we biggest incremental develop cost is facilities I'll our come let Blake. built. why, if decline at are can a bench one. for The another take you we back very Yes. separately, --

savings come back the that's codeveloped in those benefits, learning enjoy we're So really we what cost interested we Harkey some possible about. will when of from

lately some codevelop us, performance we we'll results of we seen do, said, just But the that. what the learning is round overfill. we're in. Tom interested We've where codeveloped Harkey We're in and we're leaning more tell us. that versus the takes better says going next about as these And Wolfcamp the see wells of until when Upper with data

Operator

to next TD Deckelbaum with move We'll David Cowen.

David Deckelbaum

analysis. benefit of maybe bit ask just to I little wanted cost a a

been steadily to the finding what which quite largely have in production things commendable. do field, now cycle times beating to just ways appears is and guys faster on You be

the of I benefits on you Windham in guys things articulated like range. the the think Row savings XX% cost

project about you that As the think do would be get get think developments? as smaller better that to how even you with improve balance you upon that achieved the versus we accomplishments Or with larger that exponentially to some of projects, savings? you some larger should smaller that of faster developments able with you've

Blake Sirgo

that David, I'll this Yes, Blake. one. is take

output important iterate think to is decision-making. I our it's cost an of

really of economics, some and highest cost on projects total returns lower drive focused helped so of are the our And we while our PVI.

lean Culberson that's into. what that help. And Lea cost we the go. where tell gains rigs so, And really project being the X-well full where if a help, Cycle drives it really economic up County go in really to go. analysis, us It we in XX-well County, doesn't continued obviously, project but ends versus and a us drive times that PVIs

Thomas Jorden

order the example An first cost love that, Blake of said, I isn't a driver. what

the can't now best make propose we we'll benefit the always and early and -- we'll yourself science or We incremental financially teams underway. all But at have learned a cost decision learned project on that we additional look the save on more either can. we up. and And through rich. you spending to For analysis, soon be our project on underway a drives again, completions

to create have You value.

David Deckelbaum

activity programs completion line appreciate lost process thought in the color there or thought completion of gets train? kins, existing sort to and is production inefficiency if crews that. guys and you sort of pivoting that how you drilling up that deferring approach I frac that a versus of the the Maybe with of just just how the on questioning on Marcellus, curtailing similar through keeping

Blake Sirgo

take that Sure. This on. I'll is Yes, spot as a one. Blake. it absolutely you're trade-off,

Our get that's But, preference best we the efficiencies. to project. run the crew back frac case it's what We is once that know our investment continuously. to and a when of economics are again,

to where We given just prices slow gas investment And we have the to need that better might down. need throttle are, in can't of while We level that Marcellus efficiencies, right down. now. us give

that prudent to doing usually a we're and of but so it. make, still little that's bit And does capital the that's why mean up giving decision efficiency

Thomas Jorden

operating seen we're tell be operate. on going we've we But and answer to pleased give part different area, very hasn't to reentered And operator responsible gets just is a field time. you know, also that to great little and very a want constructive And this the we of drilling over an doing David. being a The that. to communities my a you spin here, Marcellus that, gas I I'm natural prices. as are on

whole we've of one development in the that participated have years because And resource it. are -- thriving. Forest a from XX County that Counties precluded that of And because ago we Susquehanna of an the Pennsylvania. area group drilling had county is in landowners there's there, been was

just not really so our we ongoing our on going defer is we going be financially we're an there. thoughtful and before to because to that won't. And have completions community continue the part reckless But to And of decision-making. we impact to be activity want we're

Operator

our question Citigroup. to next go We'll from Gruber at Scott

Scott Gruber

been How because still Tom, the growth you about have data right, $X range, all excitement, if to Oil forward in and the 'XX? is in how Anadarko center allocation? long-dated the late And it, on $X.XX 'XX, allocation capital and in think about the we're Marcellus, you higher gas would curve is the healthy, between they call XXs. that think moving would

Thomas Jorden

to we the are. wouldn't the thank I best and I'd incremental where Well, look economics economics have very at go hard.

a we both or put compress pure really have to the methane, and gas basins. which and gas has But which and Marcellus an line, so -- resources into natural economic supply, -- in tremendous just We we Anadarko amazingly cost provides low boost. pipeline. state an have has liquids, air produce of The

look so And would the we at economics.

some natural give were we gas basins comment through want pricing. Blake, creative the -- exposure the both that? on seek promise also on if increased us us think for you contracts in see comes and need that long-term electricity generation, I if to activity might increase to probably you of electricity and

Blake Sirgo

it's talking our mean a get of AI That's markets. lot lot We're needs, Coast. easily going folks huge. we And Lots all lot a and we're very this we're of these I existing can unknowns, proximal those to and of there's There's the business excitement it learning pipes be gen to that their we but ready directly of very asset. to there's their participate. of sure. on interested. to to will lot going Yes, is trying be a our there gas to understand the power that's demand come like to required looks East story power a together, and

Scott Gruber

word. It's And to Windham exciting. a back for just We'll then turning wait Row.

tag the than And Just curious, not simul-frac to with What's some there? half you on doing mentioned the the the or technique upside any why color the doing doing it the there's scheduling Just or on frac crews? wells. it configuration limitation all half? limitation on Is comfort there, if on wells? more

Blake Sirgo

take optimal a it's might wellheads is and because Scott, think basically together. a sometimes no I'll Blake. you to X to of That's frac save crew some you Yes, crews cost is just savings. the sometimes And have simul-frac where simul in frac pad a smashed that. on pad optimize one There I missed money have something is frac question. that it's gets really great lot with an

efficiencies us optimally. a to have the And drill doesn't pad lot units wells a paying you lot that of you're for always to layout of per of on use pad. be there. spacing enough The money So just simul-frac when one these come crew wells give

back economic is most to The it's to whole make So simul-frac goal analysis. to not wells. is the goal everything. The that cycle

so sense. it makes where we're chasing And it only

Operator

comes Our next from Dingmann Neal Truist. at question

Neal Dingmann

My comes you on maybe first question for specifically. inventory, Blake, or

that cost, a sense, you you've the recent or things seen and versus like. in out and consider lot wondering I'm you that's on conservative And I your you X, Slide the at Looking an all of in interesting aggressive based trends cadence would estimates makes the total fluctuates just spacing play how that think had comment suggest like quarters? what well

Thomas Jorden

say, very I'll we what have that when to we say modeled how inventory. that want I deliver be about talk landing to inventory. But we future just with And I not want we that, in Well, mean, zones are we promise. careful

didn't has deep. have maximum the and pretty we throw acre we're one out think published of don't And in, an can to we we our inventory inventory ability ago. inventory years still And zones we about land. kitchen that zones tested, are is to extract that sink be in a today so few of both although the value shallow we our But optimistic deliver. our There

Neal Dingmann

question just second And on spend. capital good. then a Very

just is or about area? CapEx what you what productivity XX Specifically, upper is Slide driving of I XX% what's Upper highlight noticed directly from spend this Marcellus. a I the Is of that result the now think on in

Blake Sirgo

upper some locations Well, have field. great we the in

lengths, economics. Our X really uppers long Tier lateral competitive

the And capital. so future they're But for just also upper competing the of the is assets.

learning -- our understand like zone. activity that we design. our important, still in and we we're it's continue having trying it. the So still And to upper. in projects We're We're spacing about well frac

Operator

go Stifel. at to Whitfield We'll Derrick next

Derrick Whitfield

continue Tom of more increased reallocation of Anadarko capital. to teams CapEx were would prices evaluate the bit your return between gas and decision If would I underperform of or a on and suspect a capital? weigh an throughout question. to Permian Shane, or earlier like you build XXXX. How

Thomas Jorden

Yes.

the kind through it and this the where saying is rest in year? of around Marcellus the You're pricing like stays of

Derrick Whitfield

That is correct.

Thomas Jorden

here's planning. say and of that's little environment build don't to plans bit. Well, market and couple a if foundational One, a deteriorate decelerate firm what in things and to flexibility up some if is of in things. better I'd accelerate this also get they a to we Yes. or, And into capital really couple of look, a do lot our that changes case,

flexibility portfolio the what get what have certainly period and of say, we about of go. economics. would I just remain the end into prices through the an next inventory on call capital like have a set And of market extended that's time. if on, We into throughout this if element contracting. in for signals really that second a lot the translates great as make that's we talked that's the that this us the what long-term and as think is to would we maintain year, say don't we I adjustments to flexibility And those year engage gives that a we of

Derrick Whitfield

regarding in before completion? or Marcellus. compromising the deferring the follow-up, long in you would be deferred wells you'd the concerned turn-in-lines be with effectiveness of my the technically As comfortable integrity the How

Thomas Jorden

that a I is -- reservoirs shut-ins. those later don't we're it. don't we're it. at see suffer year. and online a part shut-in fairly data because looked not don't decade We've to really because We that go attached anticipating these But And in wells in of -- And history There's us long hard water a we significant the much of a there. tells of turning time will time. produce our degradation that we clock as have you and back

basins. don't you issues might have other the the so you have in really that And

Operator

to go at Mariani We'll next Roth MKM. Leo

Leo Mariani

the that just CapEx I second CapEx a dive down quarter potentially a here year-to-date? in just I of for of a on the of See is little the you kind CapEx are of wanted sort to know here. come expect function room how more quarter, -- couple savings talk half seen to sense a do higher, bit versus times, kind the about flexibility you bit kind first when and of to second activity. more more half, you've trending. kind the numbers is some second potentially a of in of of peak wanted I you going mentioned program, get little to in the Is

Shannon Young

around, of capital does if the take divide peak point a and the would shows the the for a that. sort Hana look, the the in just that point XX couple some of you of be slide residual to, And than like deck, over activity thanks a a together course the question. great slide, in year. then may new be is back year, made of I could by feel the put appendix things where second lower just number of that one, a And and your there's the X, half quarter you the quarter Leo, that it

And that think, itself sort this I of page. bears out, on

don't for you're XXXX. could terms look data the in like yes, pace I I of think So what the interpreting way -- right the

Leo Mariani

just Then little on kind wanted Okay. to Marcellus. a Upper I bit I up that. of follow appreciate

Upper be somewhat you depletion see kind increasing here? the As you that your couple driven do percentage overall of look lower the going to of inventory just of stack the out Marcellus the of years, of a activity. the Marcellus in by Marcellus Is next becoming kind

Blake Sirgo

has all the zone, Leo, future the and nailed drilling here we next and you we on the Marcellus the -- wonderful a in the the all remaining Yes, remaining been the That's is know it. upper. Lower them And It's few sticks, plan years. of asset.

each so and see our proving yes, more out. it bigger bigger will year. the delineating and a upper you'll portion inventory, our chewing lower focused And are upper we just We're in program. come But be as depending on through and on really capital upper testing the of spend,

Leo Mariani

like No, it message the Okay. the look assets But as that's with helpful. is other sounds it you at you very competitive can think gas today? very, upper be

Blake Sirgo

Marcellus of competitive think the crop don't lower I our very there's with still a but the competitive, rock of caveat Lower this are -- I that super in the the mean parts going all absolute asset compete of it's been And I'll capital it's drilled. the allocation. best just that's is to cream field XX. in some Yes. But Lower in with there's

Thomas Jorden

changes. based an price. really shift and have allows competitiveness said on capital it Leo, is performance, Coterra always of do a And also function but about a that's where asset mix we to well Yes. is thing And we allocate nice those us

is So competitiveness static thing. of not assets a

Operator

Rice. Next, at go Meade Johnson to we'll Charles

Charles Meade

are to of and the Just approach guys around year. the way going one me, the Marcellus question the for you back in it's half

in cooling lot in we mentioned the fall price plan about turning see can think your weakness heard some see I think recent on guys Marcellus, in wells times, then but the the we summer, in that has -- bout of you away. a demand I in bounce good as And the up of your another a July. comments goes prepared I you you history when

and you to guys does there shut them decide you turn So you're that then once it Or again some of on July going them more just of where a the later? lines wells on -- to going you You're you them to curtail on? in bring fall? the them along and to is bring on keep kind in bias guys in or them is scenario

Thomas Jorden

just your manage we -- question the a I'll We've way Yes. I'll answer missile. not shot, X it's program the that is rifle analogy. guided day from said our a with

So rifle sitting and missile way. don't about here going up to the guide every in going our production talking we're manage price typically wells of near-term turn that on down shot. saying the and July, that's step We're a to with file. We

have the prices, structural us by we're for turned we've luxury line. It with is our And production July make going Right in now, around And to price. something structural low-cost will usually the that's to issue having way. model decisions of supply, why be is we carrying decision that what business low a and make which takes just the current in say and best down. I'll model, those gas we're

we So get make I to north We of our see to sure low-cost worry want with of ramp I file. price production like up a don't don't to changing a that. it. about place the have down you'd supply, But think and where just us with

Operator

will conference our concludes over session. turn back And Tom I the closing Q&A Jorden to remarks. now for that

Thomas Jorden

of Great set want to everybody. thank questions. I Yes. just

is our results to the conversation many this said have. And to it's We are very want the on talking about times results to present presented that. last forward night pleased as we repeating and look I call, -- we

all you participation much this for thank very So your morning.

Operator

your participation. conference today's you call. thank concludes Again, this And for

now disconnect. may You

Coterra Energy (CTRA) 3 May 242024 Q1 Earnings call transcript