The operator introduces the Coterra Energy 2024 Earnings Call and turns the call over to the Vice President of Finance, who introduces the speakers. The Chairman, CEO, and President of Coterra Energy discusses the company's strong financial results and return of capital to shareholders in the second quarter. He mentions that the company beat production guidance and delivered capital efficiency, and his colleagues will provide more details on the results and updated guidance. He also briefly discusses the company's positioning in the market, the macro outlook, and their perspective on mergers and acquisitions.

Coterra is in a strong financial position despite a drop in natural gas prices. They have a diverse portfolio and can make long-term capital allocation decisions without being affected by short-term commodity swings. The gas market is oversupplied, leading to downward pressure on prices. Coterra has made the decision to curtail production and delay upcoming projects in response. These decisions are not expected to have a significant impact on their cash flow for 2024.

The company's current decisions regarding capital allocation are not based on short-term market fluctuations, but rather on long-term market conditions. They are prepared to quickly adjust their activity based on changing market conditions. The company believes that sustainable price support in the mid-$3s or better is necessary to motivate producers to bring more gas to market. They are willing to delay or defer drilling and completion investments in response to an oversupplied market. The company's main goal is to allocate capital prudently and prioritize their most profitable programs for long-term success.

Coterra maintains the option to redirect capital to other opportunities or reduce capital expenditures. They have a strong track record of execution and disciplined capital allocation. They are open to M&A opportunities but will only pursue assets that offer both quality and value. They are willing to be patient, disciplined, and counter-cyclical in their approach. They have also released a sustainability report, showcasing their progress and ongoing efforts towards operational excellence and emissions reduction.

In this paragraph, the speaker, Shane Young, summarizes the financial highlights from the organization's second quarter results, including production and capital guidance for the third quarter and an update on their full year 2024 guide. He also mentions the progress of their shareholder returns program. He notes that total production was above the high end of guidance, driven by strong well performance and a modest acceleration of timing. He also mentions the number of net wells brought online in the Permian and Anadarko regions, as well as the negligible contribution of previously deferred wells in the Marcellus. The higher than expected gas production is attributed to strong base production and outperformance of wells turned in line during the first quarter.

During the second quarter, the company generated approximately $1.3 billion in pre-hedge revenues, with 75% coming from oil and NGL sales. Net income was reported at $220 million, with adjusted net income at $272 million. Total unit cost for the quarter was $8.35 per BOE, within the annual guidance range. Capital expenditures were lower than expected, but the company is maintaining its full-year guidance. Cash and liquidity are in a strong position, with plans to retire debt in September. Looking ahead to the third quarter, the company expects production to average between 620 to 650 MBoepd, with a decline in natural gas volumes due to low pricing. However, this is not expected to have a significant impact on cash flow, and the company will continue to monitor gas market conditions.

Coterra expects to invest between $450 million and $530 million in the third quarter and has increased its 2024 oil production guidance by 2.4%. Natural gas production guidance remains the same, but overall BOE guidance has been increased by 5 MBoepd. The company plans to maintain its incurred capital guidance for 2024 and will allocate more capital to the Permian and Anadarko Basins while decreasing it in the Marcellus. Shareholder returns include a base dividend of $0.21 per share and $140 million in share repurchases during the quarter. Coterra remains committed to returning 50% or more of its annual free cash flow to shareholders, but has increased its buyback program in response to low natural gas prices. The company sees its shares as a good use of capital.

The team at Coterra delivered strong results in the field and financially in the last quarter. They have significant operational momentum going into the second half of the year and are on track to meet or exceed their three-year outlook. The drilling and fracking process has become more efficient, leading to shorter cycle times and increased production. The company is currently running eight drilling rigs and two frack crews in the Permian, with plans to bring in another crew later in the year. However, efficiency gains have resulted in some capital acceleration, offsetting cost savings. The company's 2024 cost per foot is estimated to be 11% lower than 2023, due to both cost inflation and efficiency gains. In Culberson County, the Windham Row project is meeting or exceeding expectations in terms of timing and cost, with several wells in different stages of production.

The drilling team's excellent performance in the Row has allowed for the addition of three more Harkey wells to Windham Row, bringing the project well count to 57. The team has also begun drilling 16 remaining Harkey wells on the eastern side of Windham Row, expected to come online in early 2025. This project showcases oil field efficiency and the use of new technology such as simul-fracing. In the Marcellus, one drilling rig and one frack crew are currently operating, with completion operations underway on the first of three Tier 1 lower Marcellus pads. Due to weak gas prices, 12 TILs were delayed last quarter but brought on in July. However, due to unattractive pricing in August, 325 million cubic feet per day gross and 275 million cubic feet per day net were strategically curtailed across the field.

The paragraph discusses the company's near-term portfolio, including exposure to Marcellus in-basin pricing and plans to make further cuts as sales commitments roll off. The company also mentions its operations in the Anadarko and its focus on operational excellence and value creation. The CEO invites questions from analysts.

Nitin Kumar congratulates Tom and Blake on their great quarter and asks about their progress on the Windham Row project. He asks if there are any specific learnings that will be incorporated into their program and what the cost savings have been. Tom defers to Blake who explains that the simul-frac performance has met or exceeded expectations and they plan on using it in Culberson County. They are also looking at using it in other parts of the basin. Blake also clarifies that the cost savings range is 5% to 15%, not just 10% to 15%.

Tom Jorden, CEO of Cotera Energy, discusses the company's recent success in the Windham Row savings project, which has exceeded expectations and reaffirmed their operational abilities. He also addresses concerns about overdrilling and emphasizes the company's commitment to responsible and calibrated projects. In response to a question about free cash flow, Jorden mentions the potential impact of weak gas macro but remains optimistic about the company's position. He does not want to engage in an "arms race" and will continue to prioritize responsible and sustainable growth.

Tom Jorden and Shane Young discuss the company's opportunistic approach to business and their focus on market disconnects. They also mention the potential for continued buybacks and the company's strong performance in the first six months of the year. Analyst Arun Jayaram asks about the company's three-year outlook, which has been updated with a higher oil guide for 2024 and is currently on track to meet the 2025 target. Jorden and Young do not provide specific guidance, but mention the company's positive outlook and potential for continued growth.

The speaker discusses the updated three-year guide for their company's assets and organization. They emphasize that it is not a set plan, but a snapshot based on current conditions. They also mention that they do not manage by production goals, but rather focus on returns and the cost of supply. They are confident in their ability to meet or exceed their plan for the year.

In this paragraph, Shane Young and Arun Jayaram discuss the company's focus on capital efficiency and how it has improved since their initial plan in February. They also touch on the company's 2024 program and how it is balanced between assets in Texas and New Mexico, with a higher concentration in Culberson and Reeves in the first half and more activity in Southern Lee County in the second half. Blake Sirgo explains that this is due to project planning and external factors, rather than a strategic decision based on rock quality.

Tom Jorden, CEO of an energy company, is discussing the company's operations during a conference call. He mentions a federal rule that restricts their operations in certain areas due to the presence of prairie chickens. He clarifies that the prairie chicken population is doing well and they respect their habitat. When asked about their operational flexibility, Jorden explains that they can quickly adjust their production based on gas prices and would like to see netbacks above one dollar. He also mentions that they are currently in a good drilling window if gas prices are above three dollars.

Tom Jorden, the CEO of Cimarex Energy, discusses the company's performance and future plans. He mentions that they are hoping for a mid-threes return on the upper Marcellus before fully investing in it. He also talks about the company's flexibility to redirect resources and their commitment to efficient use of shareholder capital. In regards to Anadarko, they believe they still have a lot of inventory and are open to adding assets if they create value. However, they are cautious about paying too high of a price for future drilling. The company is always looking for opportunities to create value throughout their portfolio.

Tom Jorden and his team are watching the current political climate closely as they plan their business strategy. They believe that the outcome of the election will bring different pressures, but they have faith that reality will temper any extreme promises made during campaigns. They are focused on being Americans first and will continue to work towards making the country strong, regardless of who is in control of the government. Shane Young mentions that they will be paying higher cash taxes this year and next, but they anticipate being a full cash tax payer for the year.

In the paragraph, the speaker discusses the changes in the company's deferred tax and how it will eventually normalize over the next few years. They also mention the better performance of the Marcellus base and how lower fuel pressures and a wellhead compression program have contributed to this. The speaker does not want to make any predictions for 2025, but mentions that they have seen positive results in 2024.

The company is seeing strong performance in their volumes and is not concerned about maintaining momentum. They are focused on making prudent decisions and have a zero-based budgeting approach. The Permian oil guidance for 2026 has been raised, but the exact factors contributing to this are unclear. The company is not committed to specific plans yet and their capital efficiency needs are driven by timing.

The company is experiencing increased efficiency in the field, with a diesel zipper crew completing 40% more footage in a year and an electric crew also showing improvements. This, combined with pot savings and simul-frac efficiencies, is leading to increased capital efficiency. The company's D&C team believes there is still room for improvement. The company has not yet completed any of the Harky wells, but they plan to develop 12-20 more in 2025 based on positive initial observations.

The company has not completed any Harky wells on Windham yet, but expects strong performance based on calibration. The specificity of the 275 curtailment is based on the portfolio's exposure to in-basin pricing, with the rest of the portfolio having higher netbacks. The company is looking for north of $1 to bring volumes back on and has the ability to increase curtailment if needed.

Blake Sirgo and Tom Jorden discuss the potential for multi-section developments like Windham Row in Culberson County. They explain that the large contiguous block of acreage in Culberson County allows for operational flexibility and economies of scale, but these types of projects are unique to the area. They also mention the benefits of controlling their own infrastructure in the area. They also mention the decision to co-develop the Harkey area due to lower pressures.

Tom Jorden from Cimarex Energy discussed the company's approach to co-developing the Harkey and Upper Wolfcamp formations in the Permian Basin. While they do not have concrete conclusions yet, they have seen some interference between the two formations and believe co-development may lead to better recovery. As they continue to collect data, their default option will be co-developing. In regards to the Marcellus program, Jorden mentioned that the lower is in the money at strip prices, but the upper may need higher prices to justify drilling in 2025. The company has had strong well results and returns in the Anadarko program.

Matt Portillo asks Tom Jorden about the potential for the company to shift its capital allocation to the Anadarko region in 2025, and Jorden responds that they are open to pivoting their capital to the highest productive use. They also discuss the potential for curtailing production in the shoulder season and Jorden emphasizes the importance of flexibility in their operations.

The company's flexibility in vendor commitments has been crucial to their success, thanks to strong relationships and the ability to lay down and pick up activity without being locked into long-term contracts. This is a testament to the hard work of the team, led by Blake. There have been no changes in their thinking regarding delaying turn in lines after completion in the Marcellus, despite some concerns during the last batch. The Anadarko was also briefly mentioned.

The company, Coterra, had positive results this quarter, leading to a beat. The improvement in cycle times in the Permian also helped in the Anadarko and Marcellus. The company's cohesive D&C team and open communication across all basins contribute to their success. The company prefers discussing results rather than making promises for the future. The conference call has ended.

This summary was generated with AI and may contain some inaccuracies.