Coterra Energy Inc at JPMorgan Energy, Power & Renewables Conference Transcript

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

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Well, just for some of the generalists in the audience today is wondering if you could spend some time, Tom, on your strategy and what you think is unique about Coterra relative to your upstream peers.

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Great. Tom, one of the things that's differentiated a Coterra from your peers is just how technically savvy you are in terms of your subsurface knowledge. You also have a great team full of a bunch of Texas longhorns, which I think is little home cooking better, but kidding aside. Just wondering, post the pandemic, the operating performance in the field has been really strong and I was wondering if you could just talk about without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 18, 2024 / 12:00PM, CTRA.N - Coterra Energy Inc at JPMorgan Energy, Power & Renewables Conference what's been the catalyst to drive this strong performance in the field. We've seen a lot of beat and raises from your team, but what do you -- what's the secret sauce? What's happened at Coterra?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Next topic, Tom, on asking about this capital allocation. Can you talk about your capital allocation plans in 2024? And I know that you did redirect some capital around your three core basins in terms of your 2024 guide?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Tom, one of the unique aspects of the company is you're very capital efficient and your three-year outlook is one that's you know, it's targeting over 5% growth CAGR for oil. Why do you think this is the appropriate level of volume growth for the company?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : And if we look forward, I know you don't have a formal 2025 guide, but what's your thought process around capital allocation between the Permian, Marcellus and Anadarko in 2025, given the contango in the gas strip?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Okay. Next topic is just talk a little bit about a cash return on the balance sheet. Could you just talk about your capital kind of returns framework?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Okay. I wanted to talk a little bit about the balance sheet and what this could imply for kind of cash return through some buybacks. You exited 1Q with around $1.5 billion of cash on the balance sheet. I think that at one point in time you're thinking about using cash on the balance sheet to pay off the September debt maturity of $575 million. Can you talk about what your thoughts your plans are today around that? And I think you've maybe extended the maturity on that or --

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Okay. And what is the thought about you and Shane around the appropriate level of cash to to keep on the balance sheet because we think that the share price kind of isn't pretty attractive for buybacks, just given the macro setting and what you're doing in the field.

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Great to hear, Tom where I make at JPMorgan, what's going to become a bank of leaning into our business model. I'm kidding aside, I was just talking a little bit about the Permian you know, we're going to start as I'm wondering if you could give us maybe a fulsome update on the Windham Row project in Culberson County. And maybe describe for the generalist here, what you're doing with this large development project.

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : So far, so good here. Good to hear. Going back to the Windham Row, I think one of your plans is to run a simul-frar to run it off a grid power. Can you talk about where you're at with that process using a simul-frac versus?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Got it. And then let's talk a little bit about well performance. You had a record year in the Delaware Basin in 2022, still strong. Maybe a little bit lower in 2023, but still very strong on a relative basis. How do you expect well, productivity in the Delaware Basin, the trend this year and what kind of outlook do you have in the future years?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Right? Let's talk a little bit about cost deflation, what you're seeing in the field. As you're aware, the US rig count has countercyclically come down this year despite relatively positive oil prices. Gas obviously has been under pressure. I think that your guide is based around 5%, not a cost inflation, but help us think about what you're seeing from a deflationary standpoint?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Okay, great. final question on the Permian is if you could talk a little bit about your marketing strategy for natural gas. And obviously we've seen some weakness year to date and Waha pricing. Obviously, we have a project in the third quarter, which is going to kick in the Matterhorn project which may help, but give us some thoughts on marketing gas?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : And look, let's shift gears talk a little bit about your gas portfolio. Maybe I'd love to hear your thoughts on just the macro or Coterra's macro view of the US natural gas market?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Can you talk about your overall capital efficiency in the Marcellus? I know that you have the mix of activities moving a little bit more upper Marcellus, but can you give us a sense of how things are going?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Got it. One of the things we've highlighted in our work is that you have an acreage position in Dimock Township in Northeast PA that we think has some core of the core kind of capabilities that give us a sense of your development plan and that part of your portfolio?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Sounds good. And it's going to be lower Marcellus?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Got it. Last question, Tom, I'd be remiss if I didn't ask you about the M&A obviously of Cimarex merged with [Kevin] a couple of -- few years ago, and you haven't done much since that time, but give us a sense of how you evaluate deals and maybe the current landscape around them?

Question: Arun Jayaram - JPMorgan Chase & Co. - Analyst : Great. Tom, we're out of time. Thank you so much. I appreciate your time.