Coterra Energy Reports Third-Quarter 2022 Results, Announces Quarterly Dividend and Provides Update on Share Repurchase Program
Third -Quarter 2022 Highlights
- Net income for third-quarter 2022 totaled
$1,196 million , or$1.51 per share; adjusted net income (non-GAAP) for third-quarter 2022, excluding non-recurring items, was$1,126 million , or$1.42 per share. - Generated cash flow from operating activities of
$1,771 million . - Discretionary Cash Flow totaled
$1,524 million (non-GAAP), inclusive of$13 million of merger-related/severance costs. - Incurred cash paid for capital expenditures (GAAP) of
$460 million , including$410 million of drilling and completion capital. - Generated Free Cash Flow of
$1,064 million (non-GAAP) inclusive of$13 million of merger-related/severance costs. - Total equivalent production of 641 MBoepd (thousand barrels of oil equivalent per day), exceeding the high-end of guidance due to strong well performance and improving cycle times.
- Natural gas production averaged 2,807 MMcfpd (million cubic feet per day), exceeding the high-end of guidance.
- Oil production averaged 87.9 MBopd (thousand barrels of oil per day), above the mid-point of guidance.
- Realized average prices of:
-
$93.35 per barrel (Bbl) of oil, excluding the effect of commodity derivatives, and$86.37 per Bbl of oil, including the effect of commodity derivatives -
$6.37 per thousand cubic feet (Mcf) of natural gas, excluding the effect of commodity derivatives, and$5.58 per Mcf of natural gas, including the effect of commodity derivatives -
$32.78 per barrel of natural gas liquids (NGLs)
Shareholder Return Highlights
Jorden added, "We are pleased to announce that we will return 74 percent of our third-quarter 2022 free cash flow to shareholders, which includes 50 percent in the form of cash dividends and 24 percent in the form of share repurchases. Driven by strong operational execution and healthy commodity prices during the quarter, our cash dividends increased 5 percent over the second quarter of 2022. We remain committed to returning 50 percent plus of free cash flow via dividends, supplemented by share repurchases, and potential future debt reduction."
- On
November 3, 2022 , Coterra's Board of Directors (the "Board") approved a total quarterly dividend equal to$0.68 per share ($0.15 base,$0.53 variable), which will be paid onNovember 30, 2022 to holders of record onNovember 16, 2022 . - Total quarterly shareholder return of
$1.00 per share includes$0.68 per share quarterly dividend (payable inNovember 2022 ) and$0.32 per share of repurchases (settled in third-quarter). The total return equals 44 percent of third-quarter 2022 Cash Flow From Operating Activities, or 74 percent of Free Cash Flow (non-GAAP). - During the quarter, the Company repurchased 9.3 million shares for
$253 million , averaging$27.03 per share. - As of
September 30, 2022 , the Company had repurchased 28.0 million shares for a total cost of$740 million , leaving$510 million remaining on the$1.25 billion share repurchase authorization. - The timing and volume of share repurchases under this authorization will be determined at management's discretion, based on both relative and intrinsic valuation.
- Share repurchases represent an incremental 14 percent return of third-quarter 2022 Cash Flow From Operating Activities, or 24 percent of Free Cash Flow (non-GAAP), to shareholders.
- As previously disclosed, Coterra retired
$830 million of notes during the quarter, which includes$124 million of legacy Cabot private notes with various maturities and$706 million of the$750 million 2024 legacy Cimarex notes. Subsequent to the quarter close, the company retired the remaining$44 million of 2024 notes.
Marcellus Update
In late first-quarter 2022, Coterra brought online a seven well Upper Marcellus development. As noted in our updated corporate presentation, the Upper Marcellus development, after six months, has produced an average cumulative volume of 324 Mcf/Lateral Foot. This compares to the Company's average
Driven by strong well performance, the Company's 2022 Marcellus production continues to trend above originally budgeted expectations.
Activity Outlook and Guidance Update
-
Capital Investment and Free Cash Flow Guidance - Estimate 2022 Discretionary Cash Flow of approximately
$5.6 billion at recent strip prices - Now expect 2022 capital budget of
$1.7 billion , the high end of the previously provided guidance range. The capital budget is expected to be approximately 30 percent of 2022 Discretionary Cash Flow, even as inflationary impacts have driven capital costs +25 percent year-over-year - Estimate 2022 Free Cash Flow of approximately
$3.9 billion at current strip prices, and expect to return the vast majority to shareholders. - Increasing full-year 2022 production guidance:
- Total equivalent production: 625-640 MBoepd, +1 percent at the midpoint from 615-635 MBoepd
- Natural gas production: 2,775-2,850 MMcfpd, +1 percent at the midpoint from 2,750-2,825 MMcfpd
- Lease operating expense, gathering, processing and transportation, and general and administrative, taxes other than income, and deferred income tax ratio guidance remains unchanged
- No change to full-year 2022 turn-in-line guidance
Coterra is currently running six rigs and two completion crews in the
Production volumes in fourth-quarter 2022 are expected to average between 615 and 635 MBoepd, with oil volumes estimated to average between 86 and 89 MBopd. Natural gas volumes in fourth-quarter are projected to average between 2,725 and 2,775 MMcfpd.
See "Supplemental non-GAAP Financial Measures" below for descriptions of the above non-GAAP measures as well as reconciliations of these measures to the associated GAAP measures.
Year-to-date 2022 Summary Highlights
- Net income totaled
$3,033 million , or$3.78 per share; adjusted net income (non-GAAP) for the same period, excluding non-recurring items, was$3,028 million , or$3.78 per share. - Generated cash flow from operating activities of
$3,972 million . - Discretionary cash flow totaled
$4,249 million (non-GAAP). - Incurred cash paid for capital expenditures (GAAP) of
$1,205 million . - Generated free cash flow of
$3,044 million (non-GAAP)
Strong Financial Position
Coterra maintains a strong financial position with investment-grade credit ratings and substantial liquidity. As of
Proved Reserves Update
In connection with the Merger, we have continued to evaluate and refine our process for assessing the estimated proved reserves of our legacy Cimarex and Cabot operations. Based on the analysis to date, as of
Committed to Sustainability and ESG Leadership
Coterra believes that environmental, social and governance (ESG) performance and practices are foundational to our success. Today we published the first Coterra Energy Sustainability Report, which can be accessed on the "Sustainable Future" section of our website at www.coterra.com.
Third -Quarter 2022 Conference Call
Coterra will host a conference call tomorrow,
Conference Call Information
Date:
Time:
Dial-in (for callers in the
International dial-in: (646) 960-0819
Conference ID: 3813676
The live audio webcast and related earnings presentation can be accessed on the "Events & Presentations" page under the "Investors" section of the Company's website at www.coterra.com. The webcast will be archived and available at the same location after the conclusion of the live event.
About
Coterra is a premier exploration and production company based in
Cautionary Statement Regarding Forward-Looking Information
This press release contains certain forward-looking statements within the meaning of federal securities laws. Forward-looking statements are not statements of historical fact and reflect Coterra's current views about future events. Such forward-looking statements include, but are not limited to, statements about returns to shareholders, enhanced shareholder value, reserves estimates, future financial and operating performance and goals and commitment to sustainability and ESG leadership, strategic pursuits and goals, including with respect to the publication of Coterra's first Sustainability Report, and other statements that are not historical facts contained in this press release. The words "expect," "project," "estimate," "believe," "anticipate," "intend," "budget," "plan," "predict," "potential," "possible," "may," "should," "could," "would," "will," "strategy," "outlook" and similar expressions are also intended to identify forward-looking statements. We can provide no assurance that the forward-looking statements contained in this press release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, without limitation, the risk that the combined businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the Merger may not be fully realized or may take longer to realize than expected; the volatility in commodity prices for crude oil and natural gas; cost increases; supply chain disruptions; the effect of future regulatory or legislative actions, including the risk of new restrictions with respect to well spacing, hydraulic fracturing, natural gas flaring, seismicity, produced water disposal, or other oil and natural gas development activities; disruption from the Merger making it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management time on integration-related issues; the potential effects of further developments to the long-term impact of the COVID-19 pandemic and variants thereof on Coterra's business, financial condition and results of operations; actions by, or disputes among or between, the
Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Except to the extent required by applicable law, Coterra does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
Operational Data
The tables below provide a summary of production volumes, price realizations and operational activity by region and units costs for the Company for the periods indicated:
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
PRODUCTION VOLUMES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (Bcf) |
203.7 |
|
217.4 |
|
607.4 |
|
623.9 |
|
Equivalent production (MMBoe) |
34.0 |
|
36.2 |
|
101.2 |
|
104.0 |
|
Daily equivalent production (MBoepd) |
369.1 |
|
394.0 |
|
370.8 |
|
380.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (Bcf) |
37.8 |
|
— |
|
114.2 |
|
— |
|
Oil (MMBbl) |
7.6 |
|
— |
|
22.0 |
|
— |
|
NGL (MMBbl) |
6.0 |
|
— |
|
16.4 |
|
— |
|
Equivalent production (MMBoe) |
19.9 |
|
— |
|
57.5 |
|
— |
|
Daily equivalent production (MBoepd) |
216.4 |
|
— |
|
210.5 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (Bcf) |
16.5 |
|
— |
|
46.5 |
|
— |
|
Oil (MMBbl) |
0.5 |
|
— |
|
1.6 |
|
— |
|
NGL (MMBbl) |
1.9 |
|
— |
|
5.1 |
|
— |
|
Equivalent production (MMBoe) |
5.1 |
|
— |
|
14.4 |
|
— |
|
Daily equivalent production (MBoepd) |
55.5 |
|
— |
|
52.7 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (Bcf) |
258.2 |
|
217.4 |
|
768.5 |
|
623.9 |
|
Oil (MMBbl) |
8.1 |
|
— |
|
23.6 |
|
— |
|
NGL (MMBbl) |
7.9 |
|
— |
|
21.5 |
|
— |
|
Equivalent production (MMBoe) |
59.0 |
|
36.2 |
|
173.2 |
|
104.0 |
|
Daily equivalent production (MBoepd) |
641.2 |
|
394.0 |
|
634.4 |
|
380.9 |
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES PRICE (excluding hedges) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
$ 6.20 |
|
$ 2.95 |
|
$ 5.33 |
|
$ 2.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
$ 6.63 |
|
$ — |
|
$ 5.88 |
|
$ — |
|
Oil ($/Bbl) |
$ 93.40 |
|
$ — |
|
$ 98.81 |
|
$ — |
|
NGL ($/Bbl) |
$ 31.84 |
|
$ — |
|
$ 35.56 |
|
$ — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
$ 7.78 |
|
$ — |
|
$ 6.62 |
|
$ — |
|
Oil ($/Bbl) |
$ 92.60 |
|
$ — |
|
$ 98.38 |
|
$ — |
|
NGL ($/Bbl) |
$ 35.81 |
|
$ — |
|
$ 39.28 |
|
$ — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
$ 6.37 |
|
$ 2.95 |
|
$ 5.49 |
|
$ 2.45 |
|
Oil ($/Bbl) |
$ 93.35 |
|
$ — |
|
$ 98.78 |
|
$ — |
|
NGL ($/Bbl) |
$ 32.78 |
|
$ — |
|
$ 36.44 |
|
$ — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
AVERAGE SALES PRICE (including hedges) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
$ 5.58 |
|
$ 2.65 |
|
$ 4.97 |
|
$ 2.35 |
|
Oil ($/Bbl) |
$ 86.37 |
|
$ — |
|
$ 85.31 |
|
$ — |
|
NGL ($/Bbl) |
$ 32.78 |
|
$ — |
|
$ 36.44 |
|
$ — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
WELLS DRILLED(1) |
|
|
|
|
|
|
|
|
Gross wells |
|
|
|
|
|
|
|
|
|
24 |
|
17 |
|
66 |
|
73 |
|
|
46 |
|
— |
|
118 |
|
— |
|
|
9 |
|
— |
|
22 |
|
— |
|
|
79 |
|
17 |
|
206 |
|
73 |
|
|
|
|
|
|
|
|
|
|
Net wells |
|
|
|
|
|
|
|
|
|
24.0 |
|
17.0 |
|
66.0 |
|
70.1 |
|
|
19.2 |
|
— |
|
59.0 |
|
— |
|
|
2.3 |
|
— |
|
8.8 |
|
— |
|
|
45.5 |
|
17.0 |
|
133.8 |
|
70.1 |
|
|
|
|
|
|
|
|
|
|
WELLS COMPLETED(1) |
|
|
|
|
|
|
|
|
Gross wells |
|
|
|
|
|
|
|
|
|
18 |
|
30 |
|
62 |
|
71 |
|
|
35 |
|
— |
|
91 |
|
— |
|
|
6 |
|
— |
|
15 |
|
— |
|
|
59 |
|
30 |
|
168 |
|
71 |
|
|
|
|
|
|
|
|
|
|
Net wells |
|
|
|
|
|
|
|
|
|
18.0 |
|
30.0 |
|
59.0 |
|
67.1 |
|
|
15.8 |
|
— |
|
42.3 |
|
— |
|
|
2.0 |
|
— |
|
2.8 |
|
— |
|
|
35.8 |
|
30.0 |
|
104.1 |
|
67.1 |
|
|
|
|
|
|
|
|
|
|
TURN IN LINES |
|
|
|
|
|
|
|
|
Gross wells |
|
|
|
|
|
|
|
|
|
27 |
|
31 |
|
57 |
|
70 |
|
|
38 |
|
— |
|
105 |
|
— |
|
|
7 |
|
— |
|
15 |
|
— |
|
|
72 |
|
31 |
|
177 |
|
70 |
|
|
|
|
|
|
|
|
|
|
Net wells |
|
|
|
|
|
|
|
|
|
25.0 |
|
31.0 |
|
52.1 |
|
67.1 |
|
|
18.0 |
|
— |
|
47.8 |
|
— |
|
|
2.7 |
|
— |
|
2.8 |
|
— |
|
|
45.7 |
|
31.0 |
|
102.7 |
|
67.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
AVERAGE UNIT COSTS ($/Boe)(2) |
|
|
|
|
|
|
|
|
Direct operations |
$ 1.99 |
|
$ 0.59 |
|
$ 1.93 |
|
$ 0.52 |
|
Transportation, processing and gathering |
4.33 |
|
4.10 |
|
4.19 |
|
4.03 |
|
Taxes other than income |
1.72 |
|
0.23 |
|
1.59 |
|
0.17 |
|
Exploration |
0.17 |
|
0.11 |
|
0.13 |
|
0.09 |
|
Depreciation, depletion and amortization |
7.16 |
|
2.68 |
|
6.91 |
|
2.72 |
|
General and administrative (excluding stock-based compensation and merger-related expense)(3) |
1.14 |
|
0.41 |
|
0.99 |
|
0.43 |
|
Stock-based compensation |
0.44 |
|
0.28 |
|
0.40 |
|
0.25 |
|
Merger-related expense |
0.22 |
|
1.11 |
|
0.34 |
|
0.45 |
|
Interest expense |
0.29 |
|
0.35 |
|
0.34 |
|
0.36 |
|
|
$ 17.45 |
|
$ 9.86 |
|
$ 16.83 |
|
$ 9.02 |
|
_______________________________________________________________________________ |
|
|
(1) |
Wells drilled represents wells drilled to total depth during the period. Wells completed includes wells completed during the period, regardless of when they were drilled. |
|
(2) |
Total unit costs may differ from the sum of the individual costs due to rounding. |
|
(3) |
For the nine months ended |
|
|
|
|
Variable Dividend Calculation |
|||
|
|
|||
|
(In millions) |
|
Quarter Ended |
|
|
Free cash flow(1) |
|
$ 1,064 |
|
|
50% payout (Board discretion: 50% plus) |
|
50 % |
|
|
Quarterly return to shareholders(2) |
|
532 |
|
|
Quarterly base dividend(2) ( |
|
118 |
|
|
Variable cash dividend (2) |
|
$ 414 |
|
|
_______________________________________________________________________________ |
|
|
(1) |
See "Supplemental non-GAAP Financial Measures" below for a description of free cash flow as well as reconciliations of this measures to discretionary cash flow and cash flow from operating activities. |
|
(2) |
Total cash amounts paid are subject to change based on the number of shares of issued common stock on the dividend record date. |
|
|
|
|
Derivatives Information |
||||||||||
|
|
||||||||||
|
As of |
||||||||||
|
|
||||||||||
|
|
|
2022 |
|
2023 |
||||||
|
Natural Gas |
|
Fourth |
|
First |
|
Second |
|
Third |
|
Fourth |
|
Waha swaps(1) |
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu) |
|
1,550,000 |
|
— |
|
— |
|
— |
|
— |
|
Weighted average price |
|
$ 4.77 |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
|
|
|
|
|
|
|
|
|
|
|
|
Waha gas collars(1) |
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu) |
|
1,840,000 |
|
8,100,000 |
|
8,190,000 |
|
8,280,000 |
|
8,280,000 |
|
Weighted average floor |
|
$ 2.50 |
|
$ 3.03 |
|
$ 3.03 |
|
$ 3.03 |
|
$ 3.03 |
|
Weighted average ceiling |
|
$ 3.12 |
|
$ 5.39 |
|
$ 5.39 |
|
$ 5.39 |
|
$ 5.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX collars |
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu) |
|
63,770,000 |
|
40,500,000 |
|
4,550,000 |
|
4,600,000 |
|
1,550,000 |
|
Weighted average floor |
|
$ 4.47 |
|
$ 5.14 |
|
$ 4.50 |
|
$ 4.50 |
|
$ 4.50 |
|
Weighted average ceiling |
|
$ 7.20 |
|
$ 9.41 |
|
$ 8.39 |
|
$ 8.39 |
|
$ 8.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
El Paso Permian gas collars(2) |
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu) |
|
1,840,000 |
|
— |
|
— |
|
— |
|
— |
|
Weighted average floor |
|
$ 2.50 |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
Weighted average ceiling |
|
$ 3.15 |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
|
|
|
|
|
|
|
|
|
|
|
|
PEPL gas collars(3) |
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu) |
|
1,840,000 |
|
— |
|
— |
|
— |
|
— |
|
Weighted average floor |
|
$ 2.60 |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
Weighted average ceiling |
|
$ 3.27 |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
|
|
|
|
|
|
|
|
|
|
|
|
Leidy basis swaps (4) |
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu) |
|
1,550,000 |
|
— |
|
— |
|
— |
|
— |
|
Weighted average price |
|
$ (1.50) |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
________________________________________________________ |
|
|
(1) |
The index price is Waha West Texas Natural Gas Index ("Waha") as quoted in Platt's Inside FERC. |
|
(2) |
The index price is |
|
(3) |
The index price is |
|
(4) |
The index price is |
|
|
|
|
|
|
2022 |
|
2023 |
|||
|
Oil |
|
Fourth Quarter |
|
First Quarter |
|
Second Quarter |
|
|
WTI oil collars |
|
|
|
|
|
|
|
|
Volume (Mbbl) |
|
2,116 |
|
1,350 |
|
1,365 |
|
|
Weighted average floor |
|
$ 67.65 |
|
$ 70.00 |
|
$ 70.00 |
|
|
Weighted average ceiling |
|
$ 112.50 |
|
$ 116.03 |
|
$ 116.03 |
|
|
|
|
|
|
|
|
|
|
|
WTI Midland oil basis swaps (1) |
|
|
|
|
|
|
|
|
Volume (Mbbl) |
|
2,116 |
|
1,350 |
|
1,365 |
|
|
Weighted average differential |
|
$ 0.46 |
|
$ 0.63 |
|
$ 0.63 |
|
|
________________________________________________________ |
|
|
(1) |
The index price is WTI Midland as quoted by Argus Americas Crude. |
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) |
|||||||
|
|
|||||||
|
|
Quarter Ended |
|
Nine Months Ended
|
||||
|
(In millions, except per share amounts) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
OPERATING REVENUES |
|
|
|
|
|
|
|
|
Natural gas |
$ 1,644 |
|
$ 641 |
|
$ 4,223 |
|
$ 1,526 |
|
Oil |
755 |
|
— |
|
2,330 |
|
— |
|
NGL |
259 |
|
— |
|
784 |
|
— |
|
Loss on derivative instruments |
(156) |
|
(201) |
|
(613) |
|
(302) |
|
Other |
18 |
|
— |
|
47 |
|
— |
|
|
2,520 |
|
440 |
|
6,771 |
|
1,224 |
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Direct operations |
118 |
|
21 |
|
334 |
|
54 |
|
Transportation, processing and gathering |
255 |
|
149 |
|
726 |
|
419 |
|
Taxes other than income |
102 |
|
8 |
|
276 |
|
17 |
|
Exploration |
10 |
|
4 |
|
23 |
|
9 |
|
Depreciation, depletion and amortization |
422 |
|
97 |
|
1,196 |
|
283 |
|
General and administrative (excluding stock-based compensation and merger-related expense)(1) |
68 |
|
14 |
|
173 |
|
44 |
|
Stock-based compensation(2) |
26 |
|
10 |
|
70 |
|
26 |
|
Merger-related expense |
13 |
|
40 |
|
58 |
|
46 |
|
|
1,014 |
|
343 |
|
2,856 |
|
898 |
|
Loss on sale of assets |
— |
|
— |
|
(1) |
|
— |
|
INCOME FROM OPERATIONS |
1,506 |
|
97 |
|
3,914 |
|
326 |
|
Interest expense, net |
17 |
|
13 |
|
59 |
|
38 |
|
Gain on debt extinguishment |
(26) |
|
— |
|
(26) |
|
— |
|
Income before income taxes |
1,515 |
|
84 |
|
3,881 |
|
288 |
|
Income tax expense |
319 |
|
20 |
|
848 |
|
68 |
|
NET INCOME |
$ 1,196 |
|
$ 64 |
|
$ 3,033 |
|
$ 220 |
|
Earnings per share - Basic |
$ 1.51 |
|
$ 0.16 |
|
$ 3.78 |
|
$ 0.55 |
|
Weighted-average common shares outstanding |
792 |
|
400 |
|
801 |
|
399 |
|
_______________________________________________________________________________ |
|
|
(1) |
For the three and nine months ended |
|
(2) |
Includes the impact of our performance share awards and restricted stock. |
|
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) |
|||
|
|
|||
|
(In millions) |
|
|
|
|
ASSETS |
|
|
|
|
Current assets |
$ 2,350 |
|
$ 2,136 |
|
Properties and equipment, net (successful efforts method) |
17,429 |
|
17,375 |
|
Other assets |
526 |
|
389 |
|
|
$ 20,305 |
|
$ 19,900 |
|
|
|
|
|
|
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current liabilities |
$ 1,371 |
|
$ 1,220 |
|
Current portion of long-term debt |
44 |
|
— |
|
Long-term debt, net (excluding current maturities) |
2,188 |
|
3,125 |
|
Deferred income taxes |
3,229 |
|
3,101 |
|
Other long term liabilities |
803 |
|
666 |
|
Cimarex redeemable preferred stock |
11 |
|
50 |
|
Stockholders' equity |
12,659 |
|
11,738 |
|
|
$ 20,305 |
|
$ 19,900 |
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) |
|||||||
|
|
|||||||
|
|
Quarter Ended |
|
Nine Months Ended
|
||||
|
(In millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income |
$ 1,196 |
|
$ 64 |
|
$ 3,033 |
|
$ 220 |
|
Depreciation, depletion and amortization |
422 |
|
97 |
|
1,196 |
|
283 |
|
Deferred income tax expense |
27 |
|
2 |
|
128 |
|
17 |
|
Loss on sale of assets |
— |
|
— |
|
1 |
|
— |
|
Loss on derivative instruments |
156 |
|
201 |
|
613 |
|
302 |
|
Net cash paid in settlement of derivative instruments |
(259) |
|
(64) |
|
(723) |
|
(61) |
|
Stock-based compensation and other |
24 |
|
9 |
|
62 |
|
24 |
|
Income charges not requiring cash |
(42) |
|
1 |
|
(61) |
|
2 |
|
Changes in assets and liabilities |
247 |
|
(64) |
|
(277) |
|
(71) |
|
Net cash provided by operating activities |
1,771 |
|
246 |
|
3,972 |
|
716 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Capital expenditures |
(460) |
|
(184) |
|
(1,205) |
|
(459) |
|
Proceeds from sale of assets |
18 |
|
— |
|
22 |
|
— |
|
Net cash used in investing activities |
(442) |
|
(184) |
|
(1,183) |
|
(459) |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Net borrowings (repayments) of debt |
(830) |
|
(100) |
|
(830) |
|
(188) |
|
Repayment of finance leases |
(1) |
|
— |
|
(4) |
|
— |
|
|
(253) |
|
— |
|
(740) |
|
— |
|
Dividends paid |
(519) |
|
(44) |
|
(1,459) |
|
(128) |
|
Tax withholding on vesting of stock awards |
(8) |
|
— |
|
(15) |
|
(6) |
|
Cash received for stock option exercises |
1 |
|
— |
|
11 |
|
— |
|
Cash paid for conversion of redeemable preferred stock |
— |
|
— |
|
(10) |
|
— |
|
Net cash used in financing activities |
(1,610) |
|
(144) |
|
(3,047) |
|
(322) |
|
Net decrease in cash, cash equivalents and restricted cash |
$ (281) |
|
$ (82) |
|
$ (258) |
|
$ (65) |
|
|
|||||||
Supplemental Non-GAAP Financial Measures (Unaudited)
We report our financial results in accordance with accounting principles generally accepted in
We have also included herein certain forward-looking non-GAAP financial measures. Due to the forward-looking nature of these non-GAAP financial measures, we cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures, such as future impairments and future changes in capital. Accordingly, we are unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures. Reconciling items in future periods could be significant.
Present Value of Investment (PVI10) is often used by management as a return-on-investment metric and defined as the estimated net present value (using a 10% discount rate) of the future net cash flows from such reserves (for which we utilize certain assumptions regarding future commodity prices and operating costs), adding back our direct net costs incurred in drilling and adding back our completing, constructing facilities, and flowing back such wells, and then dividing that sum by our direct net costs incurred in drilling, completing, constructing facilities, and flowing back such wells.
Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings Per Share
Adjusted Net Income and Adjusted Earnings per Share are presented based on our management's belief that these non-GAAP measures enable a user of financial information to understand the impact of identified adjustments on reported results. Adjusted Net Income is defined as net income plus gain and loss on sale of assets, non-cash gain and loss on derivative instruments, stock-based compensation expense, severance expense, merger-related expenses and tax effect on selected items. Adjusted Earnings per Share is defined as Adjusted Net Income divided by weighted-average common shares outstanding. Additionally, we believe these measures provide beneficial comparisons to similarly adjusted measurements of prior periods and use these measures for that purpose. Adjusted Net Income and Adjusted Earnings per Share are not measures of financial performance under GAAP and should not be considered as alternatives to net income and earnings per share, as defined by GAAP.
|
|
Quarter Ended |
|
Nine Months Ended
|
||||
|
(In millions, except per share amounts) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
As reported - net income |
$ 1,196 |
|
$ 64 |
|
$ 3,033 |
|
$ 220 |
|
Reversal of selected items: |
|
|
|
|
|
|
|
|
Loss on sale of assets |
— |
|
— |
|
1 |
|
— |
|
Loss (gain) on derivative instruments(1) |
(103) |
|
137 |
|
(110) |
|
241 |
|
Stock-based compensation expense |
26 |
|
10 |
|
70 |
|
26 |
|
Gain on debt extinguishment |
(26) |
|
— |
|
(26) |
|
— |
|
Severance expense |
12 |
|
— |
|
51 |
|
2 |
|
Merger-related expense |
1 |
|
40 |
|
7 |
|
46 |
|
Tax effect on selected items |
20 |
|
(43) |
|
2 |
|
(72) |
|
Adjusted net income |
$ 1,126 |
|
$ 208 |
|
$ 3,028 |
|
$ 463 |
|
As reported - earnings per share |
$ 1.51 |
|
$ 0.16 |
|
$ 3.78 |
|
$ 0.55 |
|
Per share impact of selected items |
(0.09) |
|
0.36 |
|
— |
|
0.61 |
|
Adjusted earnings per share |
$ 1.42 |
|
$ 0.52 |
|
$ 3.78 |
|
$ 1.16 |
|
Weighted-average common shares outstanding |
792 |
|
400 |
|
801 |
|
399 |
|
_______________________________________________________________________________ |
|
|
(1) |
This amount represents the non-cash mark-to-market changes of our commodity derivative instruments recorded in Loss on derivative instruments in the Condensed Consolidated Statement of Operations. |
|
|
|
Reconciliation of Discretionary Cash Flow and Free Cash Flow
Discretionary Cash Flow is defined as cash flow from operating activities excluding changes in assets and liabilities. Discretionary Cash Flow is widely accepted as a financial indicator of an oil and gas company's ability to generate available cash to internally fund exploration and development activities, return capital to shareholders through dividends and share repurchases, and service debt and is used by our management for that purpose. Discretionary Cash Flow is presented based on our management's belief that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies that use the full cost method of accounting for oil and gas producing activities or have different financing and capital structures or tax rates. Discretionary Cash Flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities or net income, as defined by GAAP, or as a measure of liquidity.
Free Cash Flow is defined as Discretionary Cash Flow less cash paid for capital expenditures. Free Cash Flow is an indicator of a company's ability to generate cash flow after spending the money required to maintain or expand its asset base, and is used by our management for that purpose. Free Cash Flow is presented based on our management's belief that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies. Free Cash Flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities or net income, as defined by GAAP, or as a measure of liquidity.
|
|
Quarter Ended |
|
Nine Months Ended
|
|||||
|
(In millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
Cash flow from operating activities |
$ 1,771 |
|
$ 246 |
|
$ 3,972 |
|
$ 716 |
|
|
Changes in assets and liabilities |
(247) |
|
64 |
|
277 |
|
71 |
|
|
Discretionary cash flow |
1,524 |
|
310 |
|
4,249 |
|
787 |
|
|
Cash paid for capital expenditures |
(460) |
|
(184) |
|
(1,205) |
|
(459) |
|
|
Free cash flow |
$ 1,064 |
|
$ 126 |
|
$ 3,044 |
|
$ 328 |
|
|
|
||||||||
|
Capital Expenditures |
||||||||
|
|
||||||||
|
|
|
Quarter Ended |
|
Nine Months Ended
|
||||
|
(In millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Cash paid for capital expenditures (GAAP) |
|
$ 460 |
|
$ 184 |
|
$ 1,205 |
|
$ 459 |
|
Change in accrued capital costs |
|
(4) |
|
(13) |
|
49 |
|
2 |
|
Capital expenditures |
|
$ 456 |
|
$ 171 |
|
$ 1,254 |
|
$ 461 |
|
|
||||||||
Reconciliation of Adjusted EBITDAX
Adjusted EBITDAX is defined as net income plus interest expense, other expense, income tax expense, depreciation, depletion, and amortization (including impairments), exploration expense, gain and loss on sale of assets, non-cash gain and loss on derivative instruments, stock-based compensation expense, severance expense and merger-related expense. Adjusted EBITDAX is presented on our management's belief that this non-GAAP measure is useful information to investors when evaluating our ability to internally fund exploration and development activities and to service or incur debt without regard to financial or capital structure. Our management uses Adjusted EBITDAX for that purpose. Adjusted EBITDAX is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities or net income, as defined by GAAP, or as a measure of liquidity.
|
|
Quarter Ended |
|
Nine Months Ended
|
||||
|
(In millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Net income |
$ 1,196 |
|
$ 64 |
|
$ 3,033 |
|
$ 220 |
|
Plus (less): |
|
|
|
|
|
|
|
|
Interest expense, net |
17 |
|
13 |
|
59 |
|
38 |
|
Gain on debt extinguishment |
(26) |
|
— |
|
(26) |
|
— |
|
Income tax expense |
319 |
|
20 |
|
848 |
|
68 |
|
Depreciation, depletion and amortization |
422 |
|
97 |
|
1,196 |
|
283 |
|
Exploration |
10 |
|
4 |
|
23 |
|
9 |
|
Loss on sale of assets |
— |
|
— |
|
1 |
|
— |
|
Non-cash loss on derivative instruments |
(103) |
|
137 |
|
(110) |
|
241 |
|
Merger-related expense |
1 |
|
40 |
|
7 |
|
46 |
|
Severance expense |
12 |
|
— |
|
51 |
|
2 |
|
Stock-based compensation |
26 |
|
10 |
|
70 |
|
26 |
|
Adjusted EBITDAX |
$ 1,874 |
|
$ 385 |
|
$ 5,152 |
|
$ 933 |
|
|
|||||||
Reconciliation of Net Debt
The total debt to total capitalization ratio is calculated by dividing total debt by the sum of total debt and total stockholders' equity. This ratio is a measurement which is presented in our annual and interim filings and our management believes this ratio is useful to investors in assessing our leverage. Net Debt is calculated by subtracting cash and cash equivalents from total debt. The Net Debt to Adjusted Capitalization ratio is calculated by dividing Net Debt by the sum of Net Debt and total stockholders' equity. Net Debt and the Net Debt to Adjusted Capitalization ratio are non-GAAP measures which our management believes are also useful to investors when assessing our leverage since we have the ability to and may decide to use a portion of our cash and cash equivalents to retire debt. Our management uses these measures for that purpose. Additionally, as our planned expenditures are not expected to result in additional debt, our management believes it is appropriate to apply cash and cash equivalents to reduce debt in calculating the Net Debt to Adjusted Capitalization ratio.
|
(In millions) |
|
|
|
|
Current portion of long-term debt |
$ 44 |
|
$ — |
|
Long-term debt, net |
2,188 |
|
3,125 |
|
Total debt |
2,232 |
|
3,125 |
|
Stockholders' equity |
12,659 |
|
11,738 |
|
Total capitalization |
$ 14,891 |
|
$ 14,863 |
|
|
|
|
|
|
Total debt |
$ 2,232 |
|
$ 3,125 |
|
Less: Cash and cash equivalents |
(778) |
|
(1,036) |
|
Net debt |
$ 1,454 |
|
$ 2,089 |
|
|
|
|
|
|
Net debt |
$ 1,454 |
|
$ 2,089 |
|
Stockholders' equity |
12,659 |
|
11,738 |
|
Total adjusted capitalization |
$ 14,113 |
|
$ 13,827 |
|
|
|
|
|
|
Total debt to total capitalization ratio |
15.0 % |
|
21.0 % |
|
Less: Impact of cash and cash equivalents |
4.7 % |
|
5.9 % |
|
Net debt to adjusted capitalization ratio |
10.3 % |
|
15.1 % |
|
|
|
|
|
Reconciliation of Net Debt to Adjusted EBITDAX
Net debt to Adjusted EBITDAX is defined as net debt divided by trailing twelve month Adjusted EBITDAX. Net debt to Adjusted EBITDAX is a non-GAAP measure which our management believes is useful to investors when assessing our credit position and leverage.
|
(In millions) |
|
|
|
|
Net debt |
$ 1,454 |
|
$ 2,089 |
|
Adjusted EBITDAX (Trailing twelve months) |
6,463 |
|
2,196 |
|
Net debt to Adjusted EBITDAX |
0.2 x |
|
1.0 x |
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