The paragraph is about Coterra Energy Inc.'s fourth quarter 2024 earnings conference call. Dan Guffey, Vice President of Finance, introduces the call and mentions that key executives, including CEO Tom Jorden and CFO Shane Young, will provide updates. The call will cover the company's fourth-quarter performance, 2024 results, and 2025 plans. Coterra exceeded production expectations for oil and natural gas while maintaining low capital expenditures. They returned 61% of free cash flow through dividends and share buybacks in the fourth quarter and 89% for the full year 2024. The call also includes forward-looking statements and references to non-GAAP financial measures.

In 2024, the organization achieved strong financial returns from capital investments and plans a capital-efficient program for 2025 following the acquisitions of Franklin Mountain and Avant. Flexibility is emphasized, with the ability to adjust plans based on market conditions, particularly in gas and oil markets. The acquisitions were completed in January and are being integrated to enhance efficiency in Permian operations. The organization is prepared to potentially increase the Marcellus program if favorable conditions persist, potentially adding $50 million to the 2025 capital program to increase natural gas production by early 2026. An updated three-year outlook was also released.

The article discusses Coterra's successful implementation of its three-year plan, which was initially released with caution due to the volatile nature of such forecasts. They have since exceeded their projections by focusing on capital efficiency and reinvestment, supported by strong assets and organizational performance. Shane Young then outlines the company's key achievements, including higher-than-expected oil and natural gas production in the fourth quarter, successful well operations in the Permian and Marcellus areas, and re-introduction of previously curtailed volumes in Marcellus. He also shares future projections and plans for continued growth, production, capital outlook, and shareholder returns.

In the fourth quarter, Coterra reported impressive financial and operational results, with free hedge revenue exceeding $1.4 billion and net income of $297 million. The company's discretionary and free cash flows were $776 million and $351 million, respectively. For 2024, total equivalent production surpassed guidance, driven by strong oil and natural gas outputs and improved capital efficiency. Capital spending decreased by 16% from the previous year, and cash operating costs were in line with projections. Looking ahead to 2025, Coterra has integrated new Permian assets, with first-quarter production expected to average between 710 and 750 MBOE per day. Oil and natural gas outputs are anticipated to maintain solid levels.

The company expects to incur between $525 and $625 million in capital investments during the first quarter and $2.1 to $2.4 billion for the full year 2025. This aligns with their previous projections, with adjustments made for lower spending in the Permian Basin due to expected cost savings and capital synergies from recent acquisitions. They aim to achieve $50 million in run-rate synergies, not from reduced activity, but from cost-efficiency compared to previous operators. Increased activity and investment are planned for the Marcellus due to improved natural gas fundamentals. They maintain the flexibility to adjust investments while targeting total production of 710-770 MBOE per day for 2025. Oil production is projected to rise by 47% year over year at the midpoint, while natural gas production remains relatively flat. Production guidance reflects a slight adjustment due to the partial impact of newly acquired assets in January.

The paragraph outlines Coterra's new three-year outlook for 2025 to 2027, highlighting anticipated 5% or greater oil volume growth and 0-5% growth per BOE through an annual capital investment of $2.1 to $2.4 billion. Including recent acquisitions, the company plans flexible capital reallocation and increased capital efficiency to deliver consistent growth, meaningful free cash flow, and support shareholder returns and deleveraging goals. In 2024, despite challenging natural gas prices, Coterra repurchased 17 million shares, returning 89% of free cash flow to shareholders through repurchases and dividends. For 2025, the focus will shift to deleveraging by repaying $1 billion in term loans, aiming for a leverage ratio of 0.5 times net debt to EBITDA. Additionally, a $0.22 per share fourth-quarter dividend was announced, marking a 5% increase in its annual base dividend.

Coterra is committed to maintaining a strong financial position to capitalize on market opportunities and aims to return at least 50% of its annual free cash flow to shareholders in 2025 through dividends and share repurchases. The company achieved strong financial and operational results in 2024 and expects a solid first quarter in 2025, setting a foundation for the year. Blake Sirgo emphasized the company's focus on consistent improvement in execution, efficiency, and productivity. For 2025, Coterra plans increased activity in the Permian Basin, ongoing operations in the Anadarko Basin, and a return to the Marcellus with a reduced cost structure. In 2024, Coterra achieved cost reductions and efficiency gains, exceeding production expectations.

In Culberson County, a significant advancement was made with the first grid-powered electric simulfrac, setting records in pumping hours. The Marcellus team efficiently drilled and completed wells in Dimock Box, expected to be among the best Lower Marcellus developments. These wells were brought online in December to capitalize on peak winter pricing while maintaining strong safety records. For 2025, the company plans to operate three frac crews and 10 rigs in the Permian, aiming for a cost of $960 per foot, a reduction from 2024 due to efficiency gains and competitive service contracts. Integration of new assets and optimization of operations are projected to decrease 2025 capital expenditures by 10%, or around $50 million, enhancing capital efficiency.

In Culberson County, Coterra has completed the 57-well Wyndham Row development ahead of schedule and under budget, investing $500 million and achieving costs of $864 per foot. With strong initial production, they are beginning two new developments, Barbara Row and Bowler Row, focusing on the Upper Wolfcamp. Coterra plans to continue efficient road developments in the area. In the Anadarko, they are aiming for cost reductions and plan to launch three-mile developments in 2025 at $1,070 per foot, 18% less than the previous year. In Marcellus, responding to low prices in 2024, they dropped all rigs, leading to a 2025 plan with significantly reduced costs of $800 per foot, achieved through structural changes and improved project reengineering. Overall, they are focused on cost efficiency and strategic development across these regions.

The paragraph discusses Coterra's strategic plans and outlook for 2025. The company plans to restart two rigs in April and maintain distributed frac activity throughout the year, with potential to increase activity if gas markets improve. They are focused on maximizing their gas sales portfolio and exploring export opportunities to enhance their international market presence. The company is also collaborating with power providers to meet power generation demands and plans to leverage the increasing power demand within their operational basins. Coterra anticipates a capital-efficient plan for 2025 and aims for consistent business improvements. Tom Jorden thanks the team for their efforts and opens the floor for a Q&A session with Arun Jayaram from JPMorgan initiating the questions.

In the paragraph, Tom Jorden discusses the Wyndham Row project's key lessons, including the interaction between the Wolfcamp and Harkey programs. He notes that the reservoir's performance aligns well with forecasts, resulting in excellent production outcomes. The team is still gathering and analyzing data to decide between co-developing or overfilling, but they are encouraged by the results so far and plan to continue co-developing where possible. Michael DeShazer adds that they've drilled over 40 Harkey wells in Culberson, with more planned. They will analyze data from the Wyndham Row to inform future decisions. Arun Jayaram then seeks clarification on the company's 2025 guidance, noting questions about maintaining guidance with one less month of production from acquired assets.

In the paragraph, Blake Sirgo explains that after acquiring a new asset, his team was able to enhance production, particularly by reducing costs in the Permian Basin. Some of these savings have been reallocated to the Marcellus to boost activity. This adjustment is considered standard process noise associated with acquisitions and normal quarterly variations. Neil Mehta from Goldman Sachs then asks about plans to restart two rigs in the Marcellus in April and the conditions that would lead to increased capital investment in the area later in the year. Tom Jorden responds, stating that their current program returns are now competitive given the existing price outlook, bolstered by favorable winter conditions and improved storage scenarios.

The paragraph discusses the outlook for Europe's LNG storage and pricing, indicating a positive but cautious approach to future activities based on economic fundamentals. Shane Young notes that any increase in activity will be gradual rather than aggressive. Neil Mehta then inquires about the company's growth strategy, particularly in acquisitions. Tom Jorden responds by emphasizing the company's opportunistic approach to acquisitions, focusing on opportunities that align with their organization and provide value to their owners, citing the Franklin and Avalon assets as examples of successful acquisitions.

The paragraph features a discussion between operators about their strategic approach to operations and investments. One operator emphasizes that while they have operational advantages and a robust inventory, they are not seeking to expand for expansion's sake, focusing instead on entry costs and value creation. They are particularly looking at organic growth and leases with attractive entry costs and different risk profiles. Nitin Kumar from Mizuho then asks about their gas operations in the Marcellus, pointing out their capital efficiencies and reduced well activity compared to last year. Tom Jorden responds by explaining that they paused all activity in 2024, a decision facilitated by prior efforts in water handling, giving them flexibility in operations.

The paragraph discusses a strategic restart of a program aimed at preventing declines and setting a growth trajectory in shale reservoirs, specifically in the Marcellus. The goal is to reach a target of 2 BCF per day by 2026-2027, requiring investment above maintenance capital. Blake Sirgo highlights that reengineering plans have extended lateral lengths of wells. Nitin Kumar asks about power and midstream interests, noting peers' focus on power for data centers in the Permian. Blake confirms active engagement in these discussions, emphasizing the attractiveness of the Waha gas molecule for power generation and data centers.

The paragraph details a discussion about the company's strategic positioning regarding energy solutions, including traditional combined cycle plants and behind-the-meter options for data centers. While there is uncertainty in the landscape, the company feels well-equipped with resources and anticipates upcoming announcements. Neal Dingmann from Truist Securities poses a question about operational efficiency improvements, particularly in the Permian and Marcellus areas. Blake Sirgo responds, highlighting the company's focus on drilling efficiency and records achieved in 2024, as well as improved frac efficiencies through strategies developed with partners to maximize resources and minimize transition times between stages.

The paragraph discusses the company's ongoing focus on managing well trouble and improving frac design, particularly in the Bone Spring sands and shallower zones in New Mexico, using machine learning models to optimize productivity and cost-effectiveness. It also highlights plans to resume activity in the Marcellus region in 2025, with an emphasis on co-developing both Upper and Lower Marcellus wells, acknowledging that the Upper Marcellus is less productive but emphasizing the high quality of the Lower Marcellus shale rock.

The paragraph discusses the strategic approach of a company in managing its gas production program, particularly in the Marcellus shale. The company is focusing on increasing lateral drilling lengths to improve capital efficiency and maintain production levels at 2 BCF. Tom Jorden highlights the importance of reducing costs and innovating, which has made both lower and upper drilling more appealing compared to past periods. He dismisses concerns about inventory cannibalization, emphasizing that inventory should be utilized in the most capital-efficient manner. David Deckelbaum from TD Cohen inquires about the company's future drilling plans, particularly regarding the increase in lateral lengths and how it fits into their broader development strategy.

The paragraph discusses a strategic approach to drilling, emphasizing the benefits of drilling fewer wells with longer laterals to maintain high production levels while reducing environmental impact and costs. The conversation highlights this strategy's application in regions like the Marcellus and the Permian Basin, underscoring its environmental friendliness and operational efficiency. Tom Jorden explains that their budget planning is somewhat flexible, contingent on the strength of the gas market, and indicates they are prepared to adjust their capital program if necessary based on market conditions. David Deckelbaum acknowledges this strategic insight, and the discussion then transitions to the next question from another participant.

In this exchange, Derrick Whitfield asks about the potential for growth in the Anadarko and Marcellus gas assets over the next three years, considering the current supportive gas market environment and capital allocation. Tom Jorden expresses optimism, highlighting the importance of having assets that adapt to changing commodity markets and cash flow dynamics. He emphasizes the competitive nature within their portfolio, driven by efficiency and strategic capital decisions. Blake Sirgo concurs, clarifying that the company's focus is on maximizing returns rather than growth, although sustained high gas prices could naturally lead to increased gas production. He notes the dynamic nature of the gas market, influenced by factors like LNG flows and power demand.

The paragraph discusses the company's focus on monitoring international gas pricing and its impact on the Henry Hub, emphasizing the dynamic nature of the market. The company is strategically positioning itself to capitalize on these changes by allocating capital across business units based on the oil-to-gas price ratio, particularly in regions like the Permian, Marcellus, and Anadarko. The conversation also touches on the company's involvement in downstream partnerships to support data center build-outs, especially in the Permian, where there is significant interest from power providers. The company recognizes the complexity of securing long-term commercial deals and is actively negotiating in this area while also working to enhance power pricing in its Marcellus gas portfolio.

In the conversation, Blake Sirgo discusses the potential for increasing gas volumes, noting that capacity in the Marcellus region is not maxed out, suggesting there's room for growth despite costs potentially increasing with higher volumes. He acknowledges that drilling decisions account for these factors. Josh Silverstein inquires about the company's financial strategy, particularly regarding a $1 billion debt reduction and share buybacks. Shane Young clarifies that while debt repayment is prioritized, the buyback program is not on hold and will be pursued opportunistically, with buybacks likely occurring more towards the year's end, and loan repayments earlier. The dialogue concludes with a transition to Scott Gruber from Citigroup, who expresses interest in discussing growth capital allocation.

The paragraph discusses the strategic allocation of resources between the Marcellus and Anadarko regions, highlighting a focus on return on investment in light of current gas and oil prices. Tom Jorden emphasizes the competitiveness of their Anadarko gas assets, which include natural gas liquids, and notes that Marcellus dry gas is performing well. Scott Gruber inquires about development costs in the Delaware region, particularly in Culberson, where infrastructure is well-developed. Blake Sirgo expresses optimism about closing the cost gap over a three-year plan, mentioning the flexibility and capital efficiency gained from owning and operating key infrastructure in Culberson. He also notes the importance of optimizing marketing contracts and midstream assets and highlights the significance of power in that area.

The paragraph is a segment from a conference call, discussing the company's future power needs and strategies for achieving them, utilizing economies of scale similar to past operations in Lee County and Culberson. Kalei Akamine from Bank of America asks about the increasing unit operating expenses, attributed to the integration of new, more oil-rich assets, which lead to higher costs but also better margins. The company's product mix, with more oil compared to gas, affects these costs. Kalei also inquires about expectations for Permian oil production in 2025, to which Blake Sirgo explains that while no exact exit rate is given, they anticipate consistent growth and steady operations throughout the year. Another question, from Matt Portillo of DPH, revisits an earlier discussion about the return threshold for capital allocation to the upper Marcellus gas asset.

In the dialogue, Tom Jorden discusses the company's approach to evaluating investments in the Upper Marcellus region and their focus on resiliency amidst fluctuating market prices. While current projections are based on existing prices, the company also prepares for potential price drops. Jorden highlights the strength of their Permian program, which remains profitable even if oil prices drop significantly. He emphasizes that the company's strategy is not solely about current pricing but also about building resilience against market volatility. Additionally, they are optimistic about the future due to potential increases in demand, LNG exports, and changes in energy policy that may support strong gas investments.

In the paragraph, an analyst, Matt Portillo, asks Tom Jorden about the company's drilling plans in the Marcellus region with two rigs starting in April, seeking details on the number of wells they could drill and the split between the upper and lower Marcellus program. Tom Jorden declines to provide specific guidance due to multiple pivot points and detailed modeling. John Abbott from Wolfe Research asks Shane Young about the impact of recent acquisitions on future cash taxes. Shane explains that they are still refining their tax allocations and suggests an effective tax rate of 20% to 25%, with a likely cash basis between 90% to 100%.

The paragraph is part of a conversation involving John Abbott, Blake Sirgo, and Leo Mariani about capital efficiency and drilling activities in oil and gas fields like the Permian and Marcellus. Blake mentions that current inventory is performing better than expected and anticipates continued capital efficiency improvements across different zones beyond just the Wolfcamp A. John expresses appreciation for these insights. Leo then shifts the focus to the Marcellus field, specifically Dimock, noting a recent return to drilling there and seeks clarification on the potential drilling runway in terms of wells or years with a single rig program. Michael DeShazer is about to respond to Leo's query.

The paragraph discusses future development plans for the Dimock box, with overfill wells scheduled for 2025 and additional development on the north side using longer laterals to increase efficiency and reduce costs. The team has optimized the project during a period of low activity, reducing capital costs by over $50 million. In a follow-up question, Leo Mariani asks about the economic returns of their developments compared to traditional Permian projects, to which Tom Jorden responds that returns are comparable, but there is caution due to unpredictable gas prices. Paul Cheng from Scotiabank then attempts to ask a question despite background noise.

In this discussion, Tom Jorden emphasizes that the company focuses on returns rather than production levels, and while they do not anticipate returning to the high growth rates of a decade ago, they are considering modest, steady single-digit growth. The company is exploring new markets to enhance their weighted average sales price. Blake Sirgo mentions that they will not provide quarter-to-quarter guidance but outlines plans for rig activities in the Marcellus and the Permian, with consistent operations in the latter due to steady frac crews. Shane Young refers to a document that visually outlines the year's activities, which will reflect capital allocation over time.

The paragraph expresses anticipation for fulfilling plans for 2025 and beyond and concludes with the operator thanking attendees and indicating the end of the conference call.

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