Coterra Energy Inc. reported fourth-quarter and full-year 2022 financial and operating results.
Thomas E. Jorden, Chairman, Chief Executive Officer and President, commented, "Coterra delivered a strong 2022. Outstanding execution led to value creation, outsized shareholder returns and further improvement of our industry-leading balance sheet. Combining our track record of execution with our deep inventory of high-quality assets, Coterra is positioned to succeed through commodity cycles."
Coterra's average realized prices for oil, natural gas and natural gas liquids (NGLs) for fourth-quarter 2022, excluding the effect of commodity derivatives, were $82.26 per barrel (Bbl), $4.87 per thousand cubic feet (Mcf), and $25.02 per Bbl, respectively. Including the effect of commodity derivatives, average realized prices for oil and natural gas for fourth-quarter 2022 were $81.57 per Bbl and $4.74 per Mcf, respectively.
"Guided by principles focused on full-cycle value creation and disciplined capital allocation, Coterra expects to invest approximately 50 percent of its cash flow, at recent strip prices", commented Jorden. "This is expected to result in a 2023 production profile that will be relatively flat year-over-year before returning to modest growth in 2024 and 2025. Coterra's dynamic organization, top-tier assets and industry-leading balance sheet are poised to generate long-term consistent profitable growth."
Jorden commented, "We are pleased to increase the base dividend, which underscores the confidence in our long-term outlook and financial strength through all cycles. Additionally, we established a new buyback authorization totaling $2.0 billion, which will accelerate returns to shareholders and allow the company to take advantage of value dislocations. We remain committed to returning 50%+ of our Free Cash Flow to shareholders. Due to market conditions and the value proposition of our shares, in 2023 we are realigning our strategy to focus on buybacks ahead of variable dividends. Our 2023 capital return priorities include paying our increased base dividend first, share repurchases second, and variable dividends third. With 2023 estimated Free Cash Flow approaching $2 billion, based on recent strip prices, we are projected to generate sufficient cash flow to fund the base dividend and make meaningful progress on the new buyback authorization."
Full-year 2022 total equivalent production averaged 633.8 MBoepd. Oil production averaged 87.5 MBbls/d and natural gas production averaged 2,806 MMcf/d.
Coterra's average realized prices for oil, natural gas and NGLs for 2022, excluding the effect of commodity derivatives, were $94.47 per Bbl, $5.34 per Mcf, and $33.58 per Bbl, respectively. Including the effect of commodity derivatives, average realized prices for oil and natural gas for 2022 were $84.33 per Bbl and $4.91 per Mcf, respectively.
Net income for full-year 2022 totaled $4,065 million or $5.09 per share. Adjusted net income (non-GAAP) for full-year 2022, excluding non-recurring items, was $3,932 million, or $4.94 per share.
Coterra reported cash flow from operating activities of $5,456 million for full-year 2022. Full-year 2022 discretionary cash flow (non-GAAP) was $5,642 million and free cash flow (non-GAAP) totaled $3,942 million, both of which are inclusive of merger-related costs.
Coterra incurred a total of $1,737 million of capital expenditures in full-year 2022, including $1,617 million of drilling and completion capital.
The company achieved zero routine high-pressure flaring across Coterra's three core operating regions during 2022. Additionally, the company beat its 2022 environmental goals and laid out ambitious 2023 goals.
As of December 31, 2022, Coterra had total long-term debt of $2.2 billion with a principal amount of $2.1 billion, with no substantial maturities until 2024. The Company exited the year with a cash balance of $0.7 billion and no debt outstanding under its revolving credit facility. Coterra's net debt to trailing twelve month EBITDAX ratio (non-GAAP) at December 31, 2022 was 0.2x.
At December 31, 2022, Coterra's proved reserves totaled 2,399 MMBoe, down 17 percent from the Company's proved reserves of 2,893 MMBoe at December 31, 2021, which is in line with estimates provided in the Company's third-quarter 2022 earnings press release. At year-end 2022, proved undeveloped reserves accounted for 24 percent of total proved reserves, down from 26 percent at year-end 2021. The Company's proved reserves are approximately 78 percent natural gas, 10 percent oil and 12 percent NGLs. Proved developed reserves totaled 1,817 MMBoe, or 76 percent of total proved reserves. For a summary of Coterra's estimated proved reserves at December 31, 2022, see the "Year-End Proved Reserves" table below.