Coterra Energy Inc. CTRA reported fourth-quarter 2024 adjusted earnings per share of 47 cents, which beat the Zacks Consensus Estimate of 41 cents. This was largely attributed to stronger-than-expected operational performance, particularly in daily oil and natural gas production volumes. However, the bottom line declined from the year-ago quarter’s 49 cents. The year-over-year underperformance was due to weaker oil, natural gas and NGL realizations and a 4.9% increase in operating expenses.
This oil and gas exploration and production firm’s operating revenues of $1.4 billion missed the Zacks Consensus Estimate by $6 million. Moreover, the figure decreased 12.6% from the year-ago level, driven by a lower year-over-year contribution from oil and natural gas, losses on derivative instruments and other revenues.
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In a positive move for investors, Coterra's board of directors declared a quarterly cash dividend of 22 cents per share to its common shareholders of record on March 13. The payout, which represents a 5% sequential increase, will be made on March 27.
In addition to the increased dividend, the Houston, TX-based independent oil and gas company actively engaged in share repurchases during the quarter. The company repurchased 2.1 million shares for $50 million (excluding the 1% excise tax) at an average price of $24.29 per share. Furthermore, for the full year of 2024, CTRA repurchased 17.1 million shares for $451 million at a weighted average price of $26.41 per share. As a result, as of Dec. 31, 2024, CTRA has $1.1 billion remaining under its $2 billion shares repurchase authorization.
Consequently, during the quarter, total shareholder returns reached $218 million, comprising $168 million in declared dividends and $50 million in share repurchases (excluding the 1% excise tax). Similarly, in the full year, total shareholder returns amounted to $1,086 million, made up of $635 million in declared dividends and $451 million in share repurchases (excluding the 1% excise tax), representing 89% of the company’s 2024 free cash flow (non-GAAP).
Moreover, in late January 2025, CTRA finalized its previously announced Permian acquisitions, valued at approximately $3.2 billion in cash and 28.2 million shares of common stock, subject to post-closing price adjustments. Subsequently, these acquisitions, together with existing leaseholds, form a new focus area in the Northern Delaware Basin, totaling about 83,000 acres.
Coterra Energy Inc. Price, Consensus and EPS Surprise
Coterra Energy Inc. price-consensus-eps-surprise-chart | Coterra Energy Inc. Quote
CTRA’s Production & Price Realizations
The average fourth-quarter daily production decreased 2.3% from the year-ago level to 697.4 thousand barrels of oil equivalent (Mboe). However, the figure surpassed the Zacks Consensus Estimate of 654 Mboe. The daily production of natural gas decreased 6.4% year over year to 2970 million cubic feet (Mmcf) per day. The figure surpassed the Zacks Consensus Estimate of 2623 Mmcf.
Turning to specific production types, oil production rose 7.9% to 113 thousand barrels (MBbl) per day. Furthermore, the figure surpassed the Zacks Consensus Estimate of 110 MBbl. On the other end, natural gas liquids (“NGL”) production increased 7.8% to 105.4 MBbl per day in the quarter under review. However, the figure missed the Zacks Consensus Estimate of 107 MBbl.
Regarding pricing, the average sales price for crude oil was $68.57 per barrel, indicating an 11.1% decrease from the prior-year level of $77.1.The figure slightly missed the Zacks Consensus Estimate of $69 per barrel.
The average realized natural gas price was $2.02 per thousand cubic feet compared with $2.03 in the year-earlier period. However, the figure surpassed the consensus estimate of $1.97 per thousand cubic feet.
The average realized NGL was $20.94 per thousand cubic feet compared with $18.66 in the year-earlier period. The figure surpassed the consensus estimate of $19.52 per thousand cubic feet.
CTRA’s Costs & Expenses
In the quarter under discussion, the average unit cost rose to $17.31 per barrel of oil equivalent from the previous year's $16. This increase was due to Coterra's depreciation, depletion and amortization expenses, which increased 8.2% year over year on a per-barrel basis. Additionally, total operating expenses of $1069 million increased from the year-ago quarter’s $1019 million.
CTRA’s Financial Position
Cash flow from operations went down 17.6% to $626 million, while CTRA’s cash capital expenditure for drilling and development totaled $425 million. The company’s free cash flow for the quarter amounted to $351 million.
As of Dec. 31, 2024, the company had $2 billion in cash and cash equivalents. Coterra Energy had a long-term debt (including the current portion) of $3.5 billion as of the same date, indicating a debt-to-capitalization of 21.2%.
CTRA’s Guidance
Coterra Energy has outlined its capital expenditure plans, predicting a budget between $2.1 billion and $2.4 billion for 2025. For the first quarter of 2025, management anticipates spending between $525 million and $625 million. Moving to production guidance, CTRA expects total equivalent production in the range of 710-750 thousand barrels of oil equivalent per day for the first quarter, with oil production in the band of 134-144 thousand barrels per day and natural gas production between 2,850 Mmcf and 3,000 Mmcf per day.
Looking ahead to the full year, the company forecasts total equivalent production ranging from 710-770 thousand barrels of oil equivalent per day, oil production in the band of 152-168 thousand barrels per day and natural gas production between 2,675 Mmcf and 2,875 Mmcf per day.
Furthermore, Coterra expects an estimated discretionary cash flow (non-GAAP) of approximately $5 billion and free cash flow (non-GAAP) of around $2.7 billion for 2025. To achieve these targets, CTRA plans to maintain an average of roughly 11 drilling rigs and three completion crews in the Permian Basin, one drilling rig and half completion crew in the Marcellus, along with one and half drilling rigs and half completion crew in the Anadarko Basin, throughout 2025.
In terms of shareholder returns, CTRA anticipates returning 50% or more of its annual free cash flow (non-GAAP) to shareholders. The company aims to allocate a substantial portion of this free cash flow (non-GAAP) toward its base dividend, the repayment of term loans and share repurchases. Moreover, the company plans to continue annual review process for potential increases to its base dividend.
CTRA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Important Earnings at a Glance
While we have discussed CTRA’s fourth-quarter results in detail, let us take a look at three other key reports of this space.
Oil and gas equipment and services provider Liberty Energy LBRT reported a fourth-quarter 2024 adjusted net income of 10 cents per share, which marginally beat the Zacks Consensus Estimate of 9 cents, due to a year-over-year decrease in costs and expenses. However, the bottom line underperformed the year-ago quarter’s reported figure of 54 cents, due to poor equipment and service execution, along with lower activity.
As of Dec. 31, Liberty had approximately $20 million in cash and cash equivalents. The pressure pumper’s long-term debt of $190.5 million represented a debt-to-capitalization of 8.8%.
Another oil and gas equipment and services provider Halliburton Company HAL posted a fourth-quarter 2024 adjusted net income per share of 70 cents, same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 86 cents (adjusted). The numbers indicated softer activity in the region of North America, partly offset by improved fluid work in the Gulf of Mexico.
As of Dec. 31, 2024, the company had approximately $2.6 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.4. The company generated $1.5 billion of cash flow from operations in the fourth quarter, leading to a free cash flow of $1.1 billion.
Energy infrastructure provider Kinder Morgan KMI reported fourth-quarter adjusted earnings per share of 32 cents, shy of the Zacks Consensus Estimate of 33 cents. The lower-than-expected quarterly earnings were primarily due to decreased volumes on certain systems, asset divestitures and lower crude, CO2 and NGL volumes. KMI’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year ago.
As of Dec. 31, 2024, Kinder Morgan reported $88 million in cash and cash equivalents. Its long-term debt amounted to $29.8 billion at the quarter-end. For 2025, Kinder Morgan anticipates a net income of $2.8 billion, up 8% from the prior-year level, and an adjusted EPS of $1.27, up 10%. The company expects to declare dividends of $1.17 per share, up 2% from the prior-year figure. It also anticipates budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous-year level.
This article originally published on Zacks Investment Research (zacks.com).
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