Coterra Energy - $CTRA - Earnings Analysis: Strong operational execution and capital efficiency.
Business Model
Coterra Energy generates revenue primarily through the sale of oil, natural gas, and natural gas liquids (NGLs) from its operations in the Permian Basin, Marcellus Shale, and Anadarko Basin.
Revenue Sources
- Oil sales: accounted for $713 million in Q4 2024 and $2,953 million for the full year 2024.
- Natural gas sales: contributed $516 million in Q4 2024 and $1,693 million for the full year 2024.
- NGL sales: generated $203 million in Q4 2024 and $738 million for the full year 2024.
Income Statement Analysis
- Revenue decreased by 12.59% from Q4 2023 to Q4 2024, primarily due to lower realized prices for oil, natural gas and NGL.
- Operating expenses increased by 4.91% from Q4 2023 to Q4 2024, mainly from direct operations and gathering, processing and transportation
- Net income decreased by 28.61% from Q4 2023 to Q4 2024 due to lower revenue and higher operating expenses.
Balance Sheet Analysis
- Total assets increased by 5.93% from Dec 31, 2023 to Dec 31, 2024, driven by increase in current assets.
- Total stockholders equity increased by 0.64% from Dec 31, 2023 to Dec 31, 2024, reflecting net earnings.
- Total liabilities increased by 19.68% mainly from debt financing
Cash Flow Analysis
- Net cash provided by operating activities decreased by 17.63% from Q4 2023 to Q4 2024, mainly driven by lower net income.
- Net cash used in investing activities decreased by 7.45% from Q4 2023 to Q4 2024
- Net cash provided by financing activities of $1,238 million in Q4 2024 compared to net cash used in financing activities of $181 million in Q4 2023, primarily due to debt financing.
- The company ended the quarter with a significant increase in cash, cash equivalents and restricted cash, driven by net borrowings.
Capital Allocation
Coterra is committed to returning value to shareholders by returning 50% or more of annual Free Cash Flow. In 2025, the Company intends to utilize a significant portion of its Free Cash Flow (non-GAAP) for its base dividend, the retirement of its term loans and share repurchases. Coterra also expects to continue to review increasing its base dividend on an annual cadence.
Management Commentary
Coterra had an excellent fourth quarter. We achieved production levels above the high end of our guidance range for oil and natural gas with capital expenditures coming in near the low end of our guidance.
Our 2025 capital plan aligns with the preliminary guidance we provided during our November announcement regarding the Franklin Mountain and Avant acquisitions.
We are closely monitoring gas markets and remain prepared to modestly accelerate our Marcellus program if the current positive outlook were to persist through mid year.
Overall Sentiment: Positive, reflecting confidence in operational execution, capital efficiency, and value creation.
Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.