Coterra Energy's Mixed Q4 Bag: EPS Misses But Production Shines, Outlook Cautious

Coterra Energy Inc. CTRA reported fourth-quarter FY23 revenue of $1.596 billion, beating the consensus of $1.528 billion.

Adjusted EPS of $0.52 missed the consensus of $0.55.

Operating cash flow stood at $760 million in the quarter vs. $1.48 billion in the prior-year quarter. Free Cash Flow totaled $413 million.

Total equivalent production came in at 697 MBoepd (thousand barrels of oil equivalent per day), exceeding the high end of guidance (645 to 680 MBoepd), led by improved cycle times and strong well performance.

The company reported oil production averaged 104.7 MBopd (thousand barrels of oil per day), exceeding the guidance of 98 MBopd – 102 MBopd; and natural gas production averaged 2,970 MMcfpd (million cubic feet per day), surpassing the guidance of 2,780-2,900 MMcfpd).

Coterra Energy’s average realized oil prices were $77.10 per barrel (Bbl; excluding the effect of commodity derivatives), and Natural Gas stood at $2.03 per Mcf (thousand cubic feet), excluding the impact of commodity derivatives.

As of December 31, 2023, Coterra had a total debt of $2.161 billion and a cash balance of $956 million and proved reserves totaled 2,321 million barrels of oil equivalent (MMBoe), down approximately 3% Y/Y.

Dividend: Coterra Energy raised its dividend per share by 5% to $0.21 from $0.20, payable on March 28, 2024, to shareholders of record as of March 14, 2024.

Buyback: In the fourth quarter, the company repurchased 1.1 million shares for $29 million and $1.6 billion remaining under the $2.0 billion share repurchase authorization as of December 31, 2023.

Outlook: For 2024, the company expects capital expenditures of $1.75 billion-$1.95 billion, down 12% Y/Y, at the mid-point on lower Marcellus activity and expected cost reductions.

Coterra Energy also projects total barrels of oil equivalent production to be down around 2% Y/Y at the mid-point, with oil volumes up about 6% and natural gas volumes down roughly 6% at the mid-point.

The company expects total equivalent production of 635-675 MBoepd, down approximately 2% Y/Y at the mid-point; oil production of 99-105 MBopd, up about 6% Y/Y at the mid-point; and natural gas production of 2,650 – 2,800 MMcfpd, down approximately 6% Y/Y at the mid-point in the year.

Coterra Energy projects first-quarter FY24 equivalent production of 660-690 MBoepd, oil production of 95-99 MBopd, natural gas production of 2,850-2,950 MMcfpd, and capital expenditures of $460 million-$540 million.

Three-Year Outlook: The company expects 0%-5% barrel of oil equivalent and 5+% oil CAGRs, based on annual incurred capital expenditures averaging between $1.75 billion-$1.95 billion.

Tom Jorden, Chairman, CEO and President, said, “As we look ahead, our 2024 capital plan underscores Coterra’s ability to pivot capital as fundamentals in the commodity markets dictate. Our disciplined, economically driven approach reduces total capital investment by roughly 12% year over year driven by lower natural-gas focused investments partially offset by a modest increase of investment in our liquids-rich basins.”

Price Action: CTRA shares closed higher by 0.65% at $26.33 on Thursday.