Coterra Energy Inc.

Thank you for standing by. At this time, I would like to welcome everyone to the Cotera Energy third quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. Dan Guffey, Vice President, Finance, Planning and Analysis and Investor Relations. You may begin your conference.

Thanks, Cheryl, and good morning. Thank you for joining Cotera Energy's third quarter 2022 earnings conference call. Today's prepared remarks will include an overview from Tom Jordan, CEO and President, and Scott Schroeder, Executive Vice President and CFO. Also on the call, we have Blake Sergo and Todd Raymer. Following our prepared remarks, we will take your questions during our Q&A session. As a reminder, on today's call, we will make forward-looking statements based on our current expectations. Additionally, some of our comments will reference non-GAAP financial measures. Forward-looking statements and other disclaimers, as well as reconciliations to the most directly comparable GAAP financial measures, were provided in our earnings release and updated investor presentation, both of which can be found on our website, With that, I'll turn the call over to Tom.

Thank you, Dan, and thank you all for joining us today for our third quarter 2022 recap. At third quarter end, Cotera completed our first full year as a new company. We've made remarkable progress and have established a consistent operating rhythm, a spirit of collaboration and teamwork, a commitment to excellence, and a common economic language throughout the company. We've developed new methodologies, learned from one another, and are building a culture of technical excellence, capital discipline, transparency, and open and productive debate. We are deeply proud of the organization and the progress we've made. It all starts in the field. 100% of our assets are in the field, and the top-notch field staff is foundational to an excellent operating company. I want to give a shout-out and a big thank you to our field personnel. whose perseverance in hostile environments inspires us all. During the past week, I've visited Cotera field offices in Susquehanna, Pennsylvania, Carlsbad, New Mexico, and Oklahoma. It is impossible to spend time in these offices without coming home fired up by the commitment that our field team has to the company and to one another. Their passion for excellence, safety, and environmental stewardship reflects the heartbeat of Cotera. We had a great third quarter. As we announced last night, we reported total production on a BOE basis that was above the high end of our guidance. More importantly, we had excellent economic returns in all three operating basins. Our Permian, Marcellus, and Anadarko business units all posted outstanding economic returns in spite of inflationary headwinds. We reported earnings of $1.51 per share, We declared a fixed plus variable dividend of 68 cents per share, which was an increase over the second quarter. We continued to execute on our buyback with approximately 60% of the authorization now complete, and we retired $874 million of long-term debt. All in, we returned a total of $1 per share during the third quarter in the form of dividends and share repurchases. We have now executed in our return promises for a full year and look forward to making this behavior routine. We are hard at work planning our 2023 capital program. All three of our business units have fielded options that allow us to continue to generate top tier returns while maintaining flexibility. Although we will not be announcing specifics of our 2023 capital program until our fourth quarter update, We are working on plans that preserve the flexibility to accelerate or decelerate as conditions warrant. We will accomplish this with a mix of rigs and frack crews under both long-term contracts and short-term agreements. Although we're optimistic about 2023 and beyond, we're not good at predicting commodity prices or inflation, and we will be prepared to adapt to changing conditions up or down. As I have said, flexibility is the coin of the realm in the commodity business. A few words about inflation. We currently project total well costs in 2023 increasing 10 to 20 percent on the dollar per foot basis year over year. Individual line items, which include rig rates, frack crews, sand, tubulars, fuel and labor, may exceed these ranges, but our projected total well costs are a function of our particular timing and particular efficiencies. Although we will continue to fight inflation with efficiencies, longer laterals, and optimal pad designs, we do not have a silver bullet here. We are market takers. The good news is that once we arrive at a total capital number for 2023, We have the asset quality to generate excellent returns in spite of these inflationary headwinds. You will also note that we disclosed some recent flowback data from a nine-well Marcellus development, seven upper Marcellus wells and two lower Marcellus wells. This project also contains three fully-bound infill wells drilled at an 800-foot well spacing. allowing us the opportunity to study well-to-well interference. We also studied communication between the upper and the lower Marcellus. There were 11 existing lower Marcellus wells underlying this project and offsetting the new upper Marcellus wells. Those wells have cumed a total of 127 BCF, coming online between 2012 and 2019. So that was pre-existing production in the lower Marcellus under these new upper Marcellus wells. We're pleased to announce that we see little to no communication between the upper and lower Marcellus wells, confirming our thesis that the Purcell limestone that separates them serves as an effective frac barrier. This will be very important to our future development of the upper Marcellus. Plus, Owing to the lower dollar per foot cost of the Upper Marcellus wells, the economic returns of the Lower and Upper Marcellus are comparable at a flat $4.25 NYMEX gas price. We will continue to delineate the Upper Marcellus and seek to enhance further capital efficiencies by optimizing spacing and completion parameters. We are very encouraged with the economic learnings from this important test. Finally, Let me comment on the Marcellus Reserve revision that we discussed in our release. This was a culmination of bringing the teams together from both legacy companies, establishing technical consistency, and applying learnings from across Coterra's three basins. These expected revisions are spread over the 50-year life of producing wells. For new wells, the difference between our revised forecast parameters and the original forecast parameters have minor differences within the first five years of production when 80% of the net present value of a new well is captured. Furthermore, these expected revisions will have no material impact on our near-term cash flow, capital allocation, or ability to deliver on the return of capital promises that we have made. I also want to highlight that last night we released our first Cotera sustainability report which can be found on our website. We hope that you will find it to be readable, crisp, and factual. It reflects our commitment to be the very best and to communicate with authenticity and integrity. With that, I will turn the call over to Scott, who will recap a great quarter.