Coterra Energy Reports Second-Quarter 2025 Results, Announces Quarterly Dividend, and Provides Guidance Update

Coterra Energy Inc. (NYSE:CTRA) ("Coterra" or the "Company") today reported second-quarter 2025 financial and operating results and declared a quarterly dividend of $0.22 per share. Additionally, the Company provided third-quarter production and capital guidance and updated full-year 2025 guidance.

Tom Jorden, Chairman, CEO and President of Coterra, noted, "We are pleased to report an excellent quarter with strong capital efficiency driven by lower than expected capital expenditures and higher than expected production.

"We are expecting to run consistent activity in the second half of 2025, with nine rigs in the Permian, two rigs in the Marcellus, and one to two rigs in the Anadarko. Our high-quality assets provide robust returns in the current environment and remain durable through the cycles. While we maintain significant operational flexibility, we expect our steady activity cadence to support a highly capital efficient 2026.

"Coterra provides a unique and compelling investment opportunity, with durable cash flows supported by the Company's diversified commodity mix and differentiated inventory depth and quality, all supported by a peer-leading balance sheet."

Key Takeaways & Updates

• For the second quarter of 2025, total BOE (barrels of oil equivalent) and natural gas production exceeded the high-end of our guidance ranges while oil volumes beat the midpoint by approximately 2%. Capital expenditures (non-GAAP) were below the low-end of our guidance range.
• Increasing full-year 2025 total equivalent and natural gas production guidance, maintaining oil production midpoint.
• Expect 2025 capital expenditures (non-GAAP) to be approximately $2.3 billion, which assumes consistent activity in the second half of the year with nine rigs in the Permian, two rigs in the Marcellus, and one to two rigs in the Anadarko.
• Expect 2025 Free Cash Flow (non-GAAP) to total $2.1 billion, at recent strip prices.
• Second-quarter 2025 direct shareholder returns totaled approximately 58% of Free Cash Flow (non-GAAP), which includes our declared dividend of $0.22 per share, or approximately $168 million, and $23 million of share repurchases. Additionally, the Company repaid $100 million of term loans bringing total returns to 89% of Free Cash Flow (non-GAAP). In 2025, Coterra remains committed to reducing leverage and executing opportunistic share repurchases.
• Announcing a new power netback gas sale agreement in the Permian, expected to start in 2028, further diversifying our natural gas marketing portfolio.
• Coterra published its 2025 Sustainability Report on August 4, 2025. The report can be found under "Sustainability" on the Company's website.

Second-Quarter 2025 Highlights

• Net Income (GAAP) totaled $511 million, or $0.67 per share. Adjusted Net Income (non-GAAP) was $367 million, or $0.48 per share.
• Cash Flow From Operating Activities (GAAP) totaled $937 million. Discretionary Cash Flow (non-GAAP) totaled $949 million. Free Cash Flow (non-GAAP) totaled $329 million.
• Cash paid for capital expenditures for drilling, completion and other fixed asset additions (GAAP) totaled $620 million. Incurred capital expenditures from drilling, completion and other fixed asset additions (non-GAAP) totaled $569 million, below the low end of our guidance range of $575 to $650 million.
• Unit operating cost (reflecting costs from direct operations, transportation, production taxes and G&A) totaled $9.34 per BOE, near the mid-point of our annual guidance range.
• Total equivalent production of 783.9 MBoepd (thousand barrels of oil equivalent per day), above the high end of guidance (710 to 760 MBoepd).
  • Oil production averaged 155.4 MBopd (thousand barrels of oil per day), near the high end of our guidance range (147 to 157 MBopd).
  • Natural gas production averaged 2,998.6 MMcfpd (million cubic feet of gas per day), exceeding the high end of guidance (2,700 to 2,850 MMcfpd).
  • NGLs production averaged 128.7 MBopd.
• Realized average prices:
  • Oil was $62.80 per Bbl (barrel), excluding the effect of commodity derivatives, and $64.01 per Bbl, including the effect of commodity derivatives.
  • Natural Gas was $2.20 per Mcf (thousand cubic feet), excluding the effect of commodity derivatives, and $2.27 per Mcf, including the effect of commodity derivatives.
  • NGLs were $18.72 per Bbl.

Shareholder Return Highlights

• Common Dividend: On August 4, 2025, Coterra's Board of Directors approved a quarterly dividend of $0.22 per share, equating to a 3.6% annualized yield, based on the Company's $24.39 closing share price on July 31, 2025. The dividend will be paid on August 28, 2025 to holders of record on August 14, 2025.
• Share Repurchases: During the quarter, the Company repurchased 0.9 million shares for $23 million, leaving $1.1 billion remaining as of June 30, 2025 on its $2.0 billion share repurchase authorization.
• Shareholder Returns: During the quarter, direct shareholder returns amounted to approximately $191 million, comprised of approximately $168 million of declared dividends and $23 million of share repurchases, totaling approximately 58% of Free Cash Flow (non-GAAP).The Company also repaid $100 million of debt during the quarter.
• Reiterate Shareholder Return Strategy: Coterra expects to return 50% or greater of annual Free Cash Flow (non-GAAP) to shareholders through the cycles via its base dividend and share repurchases. However, in 2025, after payment of its base dividend, the Company is prioritizing debt reduction as it looks to retire the outstanding $650 million term loans, associated with the Company's Delaware Basin acquisition in first quarter. Coterra retired $350 million of term loans in the first half of 2025.

Guidance Updates

• Expect 2025 capital expenditures (non-GAAP) of approximately $2.3 billion.
• Announcing third-quarter 2025 guidance, including total equivalent production of 740 to 790 MBoepd, oil production of 158 to 168 MBopd, natural gas production of 2,750 to 2,900 MMcfpd, and capital expenditures (non-GAAP) of $625 to $675 million.
• Estimate full-year 2025 effective tax rate of 22%, which we expect to be 40% to 60% current tax.
• For more details on annual and third-quarter 2025 guidance, see 2025 Guidance Section in the tables below.

Announcing New Power Sales Agreement in the Permian

Coterra is announcing a new power netback gas sale agreement with CPV Basin Ranch Energy Center, a proposed 1,350 megawatt (MW) combined-cycle natural gas power plant designed with the option to include a carbon capture system. The agreement to sell 50 MMcf per day for a seven-year term is expected to start in 2028, and will be indexed to ERCOT West pricing, adding to the Company's two existing power netback deals in the Marcellus which currently comprise 330 MMcf per day. Coterra has also secured a right to purchase up to 250 MW per day of power from the facility, located in Ward County, Texas. This is the first power netback deal secured by Coterra in the Permian Basin. Coterra will continue to explore ways to further diversify its gas sales portfolio across all three of its operating basins through power, LNG, data centers and other long-term opportunities.

Strong Financial Position

In conjunction with the closing of the Franklin Mountain Energy and Avant Natural Resources acquisitions in late January, Coterra issued $1.0 billion of new debt through its term loan agreements. Subsequently, Coterra has paid down $350 million of the term loans year-to-date, including an incremental $100 million during the second quarter, leaving $650 million of term loan debt outstanding. As of June 30, 2025, Coterra had total debt outstanding of $4.15 billion (principal balance). The Company exited the quarter with cash and cash equivalents of $192 million, and no debt outstanding under its $2.0 billion revolving credit facility, resulting in total liquidity of approximately $2.19 billion. Coterra's Net Debt to trailing twelve-month Adjusted Pro Forma EBITDAX ratio (non-GAAP) at June 30, 2025 was 0.9x, pro forma for the Franklin and Avant acquisitions. The Company remains committed to near-term debt reduction.

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.

Committed to Sustainability and ESG Leadership

Coterra is committed to environmental stewardship, sustainable practices, and strong corporate governance. The Company's sustainability report can be found under "Sustainability" on www.coterra.com. Coterra published its 2025 Sustainability report on August 4, 2025.

Second-Quarter 2025 Conference Call

Coterra will host a conference call tomorrow, Tuesday, August 5, 2025, at 9:00 AM CT (10:00 AM ET), to discuss second-quarter 2025 financial and operating results.

Conference Call Information

Date: August 5, 2025

Time: 9:00 AM CT / 10:00 AM ET

Dial-in (for callers in the U.S. and Canada): (800) 715-9871

International dial-in: +1 (646) 307-1963

Conference ID: 4309719

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 Energy

Coterra is a premier exploration and production company based in Houston, Texas with focused operations in the Permian Basin, Marcellus Shale, and Anadarko Basin. We strive to be a leading energy producer, delivering sustainable returns through the efficient and responsible development of our diversified asset base. Learn more about us at www.coterra.com.

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, 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", "guide" 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 volatility in commodity prices for crude oil and natural gas; changes in U.S. and international economic policy (including tariffs and retaliatory tariffs and the impacts thereof); cost increases; the effect of future regulatory or legislative actions; actions by, or disputes among or between, the Organization of Petroleum Exporting Countries and other producer countries; market factors; market prices (including geographic basis differentials) of oil and natural gas; impacts of inflation; labor shortages and economic disruption, (geopolitical disruptions such as the war in Ukraine or conflict in the Middle East or further escalation thereof); determination of reserves estimates, adjustments or revisions, including factors impacting such determination such as commodity prices, well performance, results of future drilling and marketing activities (including seismicity and similar data), operating expenses and completion of Coterra's annual PUD reserves process, as well as the impact on our financial statements resulting therefrom; the presence or recoverability of estimated reserves; the ability to replace reserves; environmental risks; drilling and operating risks; exploration and development risks; competition; the ability of management to execute its plans to meet its goals; the impact of public health crises, including pandemics and epidemics and any related company or governmental policies or actions, financial condition and results of operations; and other risks inherent in Coterra's businesses. In addition, the declaration and payment of any future dividends, whether regular base quarterly dividends, variable dividends or special dividends, will depend on Coterra's financial results, cash requirements, future prospects and other factors deemed relevant by Coterra's Board. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to Coterra's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other filings with the SEC, which are available on Coterra's website at www.coterra.com.

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.

Supplemental Non-GAAP Financial Measures (Unaudited)

We report our financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, we believe certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between current results and results of prior periods. In addition, we believe these measures are used by analysts and others in the valuation, rating and investment recommendations of companies within the oil and natural gas exploration and production industry. See the reconciliations below that compare GAAP financial measures to non-GAAP financial measures for the periods indicated.

We have also included herein certain forward-looking non-GAAP financial measures, including, among others, the reinvestment rate, which is defined as capital expenditures (non-GAAP) as a percentage of Discretionary Cash Flow (non-GAAP). We believe the reinvestment rate provides investors with useful information on management's projected use and reinvestment of its future cash flows back into Coterra's operations. 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 changes in assets and liabilities (including future impairments) and cash paid for certain capital expenditures. 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.

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, 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.