Coterra Energy Inc at Goldman Sachs Energy, CleanTech & Utilities Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Neil Mehta - Goldman Sachs Group Inc - Analyst : So maybe we start with you, Shane and talk about the benefits of operating a diversified upstream portfolio. And -- and how do you think the -- what's needed to get the market to better appreciate operating in multiple basis?

Question: Neil Mehta - Goldman Sachs Group Inc - Analyst : Yes. Thanks, Shannon. I mean, Corey, your perspective from Ovintiv is also -- this is something that we've talked about for the last decade, what is the optimal portfolio. And really, over the last five years, you have transformed brand have transformed the business to core up to two key places to the Montney and the Permian. Talk about that transformation. Why did you elect to shrink the portfolio to those two places? And one of the key catalysts that we'll be watching for this year is the monetization of the Mid-Con to really now get you into those two key basins. So talk about the portfolio transformation. Unidentified Company Representative Yes. And first of all, I mean if anybody up here wants to buy our Anadarko, we can figure out a -- if you look at our portfolio, I mean, some of the reasons we like our Permian Money position a lot is the inventory that is remaining there. So you ask, what's the right company strategy, whether you're a pure player, multi-basin, I think understanding -- and this is maybe a little bit Jim you're talking about, what's your company really good at? And how are we going to create value by having a differential advantage -- so as we look at our operations in different basins, how can we procure our strategy of developing cubes and getting good returns and do that for a long period of time. So we like the Montney because it's got that long runway. I mean, everybody knows the Permian. Our advantage in the Montney is probably we've been there for longer than most companies. It's -- the good news is it's largely undeveloped. The bad news is that's the history of not having construction and egress built in the basin. And now that's changing, it's really unlocked the opportunity to develop more of that resource. So I don't think about it so much as the debate between is it better to be in one or two or three or four. But as a company, what are we good at and how do we drive that to the bottom line and actually have a competitive advantage by being a good operator. A lot of the things that we do in the Permian, some of them came from the Montney. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 06, 2026 / 8:00PM, CTRA.N - Coterra Energy Inc at Goldman Sachs Energy, CleanTech & Utilities Conference One of the most interesting things we're doing up there is a lot of the automation around our not just our D&C business, but our base business and bringing in the acquisition we did last year, and we'll do that again as we close NuVista, it allows us to operate remotely and it allows us start to use automation and AI. And that's something that maybe is a little bit different structure than exists in the Permian, but we'll absolutely start doing that in the Permian. And likewise, all the advances we've had in simul-frac and trammel frac and continuous pumping, that pushes our Montey team to get better and to try that. And if you're only in one of those basins, you don't have that opportunity to look across and test yourself against the performance of other companies in the basin as well as your own operating team. So I think there is definitely benefits to being in more than one. If you can show that you've got an advantage of doing.

Question: Neil Mehta - Goldman Sachs Group Inc - Analyst : Which one is better? Unidentified Company Representative You are both very good. Devin is one of our largest operators. But what I would tell you is that that underwriting case is going to be very different. The PDP will be the same because it's reducing asset, but the development case can be very different. So it's not plug-and-play -- but we tend to hold out who we're going to pick as our dance partner because we obviously want to see if we can win the transaction -- and in this case, obviously, the transaction in and of itself is going to be tied to whether or not Antero in and of itself was going to win the HG transaction. So when that happened, obviously, you had a situation where it came together very, very fast. And for our partner, in particular, which is the smaller, newer public company, our capital was incredibly important in order to facilitate this transaction. What I can tell you is that there's something very unique about this transaction, which is that we're buying the midstream and the upstream assets in this case. -- For the upstream company, even though they are affiliated, the upstream company has to pay the midstream company. And so its cost structure is very different than ours will be. So when you don't own the midstream and you're paying your midstream entity $4 plus for your water that costs $0.75, it really does change the cost structure of that -- of your upstream entity. So what was once a field that cost that operator call it, $3 an Mcf to operate now goes down to about $1.80 when it's fully integrated. And so for that asset, it has -- it has meant that once produced in a midstream system that has $0.5 billion invested in it alone that once produced about $600 million a day down to around 150 million a day and yet has tons of running room, so we will be able to grow it almost triple the volumes over the next five years. And because of that midstream system that is built out already, there's a huge ability to grow both the midstream and the upstream footprint along the way. So for us, it's a huge both volume and acreage growth engine for us in the gas play. And again, that's not adding on to the fact that I think that we think the pretty interesting cost and performance upside along the way.

Question: Neil Mehta - Goldman Sachs Group Inc - Analyst : Can you talk about -- you've talked about concentric circles of competency. What are things that could be part of -- with that profile? Does offshore come back again? We've talked about for example, being an area of interesting growth in geothermal long term. Where could you see Devon evolving? Unidentified Company Representative Yes. Certainly, we've had two big parallel missions over the last year. The first, we've been very transparent about talking to the organization and then talking to investors about as well. And that's the business optimization. That's the $1 billion sustainable free cash flow target. The parallel, which we've been a little bit quieter on just because most of the time, our investors don't really have a lot of appetite for a very long-term discussions, some investors do, most investors don't. And I think we have to pay close attention to making sure that we're also passing kind of everyone, every day SNF test. When we think about that opportunity and we think much longer term and the work that we've been doing, we've done a lot of soul-searching on what's Devon's capabilities, what those opportunities are, where they've been diagram overlaps and then what could be kind of next steps for us. Devon has a long history. We've been around the globe and back. And I would think some of those things could come back into vogue. When I think about something a bigger step, let's go pretty far extreme, West African exploration, deepwater have probably not Devon's next logical next best step. You mentioned something like Fervo. That sounds very far afield from what we do today geothermal. But when you think about its exceptionally good geology work and geophysics work. It's ground floor leasing of land. It's drilling horizontal wells, completing horizontal wells, and then building surface facilities. That kind of sounds familiar to what we do. Now we don't market electrons today, but we're smart enough to figure out how to partner, how to close that gap, and we think about those kind of things. I think that really could be something that's interesting when you look further out kind of into the next decade. Meanwhile, we're exceptionally happy with the portfolio we have. We're really focused on achieving these near-term targets. And when I think about the most important things that we can do for value creation for our shareholders, is deliver on that control the controllables, LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 06, 2026 / 8:00PM, CTRA.N - Coterra Energy Inc at Goldman Sachs Energy, CleanTech & Utilities Conference make sure quarter-after-quarter, we deliver, and therefore, we get -- we earn the right to be thinking further and further out in the future and some of these more interesting longer-term opportunities.

Question: Neil Mehta - Goldman Sachs Group Inc - Analyst : So talk about how important that is to you achieving your $1 billion free cash flow target and just how much confidence you have in your ability to exceed it. Unidentified Company Representative Yes. Neil, I've thought about it as kind of the analogy of -- you've got this organization and everybody wants to pull the same direction. Everybody wants to know where we're going. Everybody wants to know kind of tell me what winning looks like. And so we had to find the mountain that we were going to point to and say, okay, that's the mountain we're going to take. And in our case, sustainable free cash flow. It was just all inclusive. Everyone in the organization can contribute in one way or another, all the way through the value chain, right? The sustainability piece is so very important as well. The question then becomes, okay, how do we take this mountain? And the way that we've been able to equip people to be able to take this mountain is through technology. And so right now, in addition to the 60% plus that we've already accomplished, we have 80 value work streams that are running in parallel. When a project gets to a point where we've kind of christened it as it's doable, it's material enough, and we want to track it. We put a template around it to make sure that we've got goals set around it. We hold people accountable -- we achieved the goals as per plan, and then then we actually see it flow all the way through the financial statements and get tracked all the way through the bottom line. Right now, we have 80 of those. I can tell you every single one of those are enabled by AI. One way or another, they are enabled by. Internally, we talk about these three ways. Wave 1 is essentially making data more accessible. That's kind of how most of us use AI today. We had engineers that spend 75% of their time trying to find data, 25% analyze the data. We footflupp that. Now they're 25% finding the data 75% analyzing the data, therefore, they're 3x more effective. That's kind of wave 1, very common, right? Wave 2 is where you have integral AI into the workflow. It's part of the team, it's part of the process, and we have teams that are working very much in that realm today. Now that's not across the board whereas Wave 1 is pretty ubiquitous around the company, Wave 2 is just really starting, and we've got two or three groups that are really breaking out. What's really interesting is by year-end, we will have full-fledged Wave 3 opportunities. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 06, 2026 / 8:00PM, CTRA.N - Coterra Energy Inc at Goldman Sachs Energy, CleanTech & Utilities Conference Wave 3 is where you take a whiteboard on a project. You say, look, if I were to start over on how we do this thing, whatever this is, -- at the center of it would be technology, and then we would build out the capabilities around that. That's true Wave 3. And I'll tell you, we have early projects on that by year-end, we'll have projects completely rebuilt around AI and ground for as a technology center.

Question: Neil Mehta - Goldman Sachs Group Inc - Analyst : Shane, let's talk about the Marcellus and also the Permian. But on the Marcellus, -- maybe you can address directly kind of the question in the room about there are some who want you to monetize your Marcellus position. And what are, in your minds, the pluses and minuses of doing so? And what's if there is a financial constraint that you want the market to know about, maybe you can share that. And then in the Permian, overall, you exited the year very strong, but it was a choppy middle with some of the water issues. And so talk about lessons learned and confidence you have around operational momentum in 2026. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 06, 2026 / 8:00PM, CTRA.N - Coterra Energy Inc at Goldman Sachs Energy, CleanTech & Utilities Conference

Question: Neil Mehta - Goldman Sachs Group Inc - Analyst : Thank you, Shane. Nick, you've got a unique perspective of what's happening across the United States given that you're an investor in a number of these different assets. We're in a period of commodity softness. There's an argument to say that we go even lower. Are we at these breakeven levels where some of these basins might shift into decline as we think about 2026? Unidentified Company Representative Yes. I mean, I don't want to sound -- sorry, I don't want to sound pessimistic or anything like that towards the asset base, but we see it all. We're in basins existing plays, we evaluate almost every M&A process that comes across the table every single year. And we evaluate over 400 ground game deals a year. So -- we see the gamut. We own over 1 million gross acres. We've spent over $20 million on a Palantir back system. So I put our data against anyone in the country. And what I would tell you is that this is a cyclical industry. And I think I'm actually a little bit interested when I speak to investors, I spent 18 years since a buy-side investor, so I know how you guys think and I spend a lot of time doing it. And I look at what's happened to the equities over the last year, what I've seen is oil prices have gone down and the stocks have gone down and so of the multiples, right? And that's not typical, right? If you go back to 2024, right, gas prices to $2 and what happened with gas docs was the multiples expanded and that's what happens at trough because everybody knows that the marginal cost of production for natural gas in the country is about 350. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 06, 2026 / 8:00PM, CTRA.N - Coterra Energy Inc at Goldman Sachs Energy, CleanTech & Utilities Conference Well, the marginal cost for production in the United States in my opinion and based on what we and we evaluate every AFE individually in our business, and we'll use the Williston Basin, which is our legacy basin is about $70, maybe 65%, and costs are not going down. In fact, we're budgeting actually this year for inflation because now it may or may not happen, maybe we'll see some deflation. We'll see. But the bulk of the cost savings we've seen in the US over the last couple of years has been folks like these guys going faster than they've been shaving days, and that's how they've been saving money. And so the -- and the average well we're going to cube development, so the average well is actually getting worse. It doesn't mean that the well itself is getting worse, but it means that we're not just cherry-picking and drilling the best zones, the Wolfcamp A or what have you, now we're drilling a full -- we're drilling the full cube, right? And so what that means is that the average well in the Permian will appear to you to be worse. And certainly, as we drill longer laterals in the Williston, as an example, we get better wells, but they're also much longer laterals. That's why they're better wells. And so what I'll tell you is that if you look at last year's 914 data, -- the US production is up about 600,000 or 700,000 barrels a day, and the entirety of that is New Mexico and the Gulf of Mexico -- sorry, Gulf of America, excuse me, sorry, I apologize. And that is a handful of projects. I'm not an expert on the Gulf, but that's a handful of projects, as I understand, the major is offshore and New Mexico, which has been really the sole growth engine in the Permian. The Eagle Ford is in decline. The Bakken is largely in line and the rest of the conventional basins in the US are in either flat or in decline. I mean California, as an example, is down over 50% over the last six years. And so what I would tell you is that this is a cyclical business and what I find interesting is that the pessimist happens, oil could go anywhere. Certainly, we are in a period of oversupply today. But the cure for low prices is low prices. And so if we have a period where oil prices go to $40 they could go anywhere. I mean, I've learned this the hard way in my premier, which is that prices can go anywhere. They can go to 120, they can go to 0 or negative 37%, I believe, which is the bottom. That was fun. But what I would tell you is that we are below the price in which it will keep US production at its current levels, really low cost of capital, big public companies can sustain their volumes for a long time, but private companies can't. We have a good portion of private companies, and they're already cutting their capital. And so it might have happened today or tomorrow. But this is cyclical business. And I believe strongly that we're at the bottom of the cycle, and I don't think the equity markets are prepared for that. And I don't think oil prices are there. So Venezuela will be damned at the end of the day, 65% of every incremental barrel produced in the world for growth over the last 10 years has come from the United States. So you can crowd out those barrels, but you still need the price to be at a level that keeps US production flat. 40% of every barrel produced in this country a year is drilled in this year. And so it's going to need at the end of the day to be at a price that can sustain and what -- on the data we it doesn't do it. And people are willing in our industry to drill a marginal barrel for a while, but they can only do that for so long.

Question: Neil Mehta - Goldman Sachs Group Inc - Analyst : Clay, you have a different perspective, you may be more inframarginal but your perspective because you operate a number of these bases too. Unidentified Company Representative So when I rewind back from 2010 to 2020, we were getting incrementally better. You look at just the average well productivity for that decade. It was incredible. It just kept getting better in a matter as we figured out how to drill these wells, how to land the zones, understand the rock, or stand the stimulation. And then somewhere around 2020 to current, we've kind of plateaued on productivity and actually have seen a rollover on a per well and some of that is moving from core to Tier 1, 2, 3, however you describe those? And then it's also what Nick just talked about some of this development where you're really making sure that you're grabbing all of the wells at one time. The interesting thing is we are still seeing an incremental capital efficiency because the operational technology has been able to offset that normal portfolio degradation. So we are still seeing capital efficiency hold its own. Now how long can that tug of war go? You've got a normal maturing of these portfolios and then you've got a technological innovation, operational kind of pulling the other way and that's inevitably will roll. I would say I'm a little more optimistic as I look at the numbers close in, I think we're holding our own. We actually have continued to improve from '23 to '24, '24 to '25 high single-digit improvement on well cost year-over-year, twice now. I don't know where it goes from here, but that's more than offset the productivity degradation or the maturing of those portfolios. Can't last forever. But I think so far, we've done a really good job of holding our own in this kind of first half of the decade. Second half of the decade continues to get harder. We believe our portfolio holds up really strong, continue to get smarter, apply more technology, I think we can hold our own on capital efficiency and maybe even improve.