Coterra Energy Inc.

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cotera Energy fourth quarter 2023 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, then the number one on your telephone keypad. To withdraw your question, press star one again. We do ask that you please limit your questions to two. I would now like to turn the conference over to Dan Guffey, Vice President, Finance, Planning, and Investor Relations. Please go ahead.

Thank you, Operator. Good morning, and thank you for joining Cotera Energy's fourth quarter and full year 2023 earnings and 2024 outlook conference call. Today's prepared remarks will include an overview from Tom Jordan, Chairman, CEO, and President, Shane Young, Executive Vice President and CFO, and Blake Sergo, Senior Vice President of Operations. 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 reconciliation for the most directly comparable GAAP financial measures, We're provided in our earnings release an 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 welcome to all of you who are joining us on the call. Cotera had an excellent fourth quarter, as shown by the results that we released last night. Shane will walk you through the specifics here, which include coming in above the high end of our guidance on oil, natural gas, and BOE, or barrels of oil equivalent, and below our capital guide. For full year 2023, we finished the year with 5% year-over-year growth in BOE and 10% year-over-year growth in oil volumes, while hitting the midpoint of our capital guide. More importantly, we generated excellent returns. We also made great progress on emissions reduction and continue to push the envelope on our environmental initiatives. As we look ahead to 2024, total capital is projected to be between $1.75 and $1.95 billion. Given the outlook for commodity prices and commensurate revenue, We think that this is a prudent level of investment as it invests approximately 60% of our projected cash flow. We will grow our investments in the Permian and the Anadarko basins and retrench in the Marcellus. We are reducing our Marcellus investments by over 400 million in 2024 compared to 2023. Mark Twain said that A man learned something by carrying a cat by the tail that he can learn in no other way. Through the commodity cycles, we have learned that although downswings typically do not last long, they also do not come pre-labeled with how long they will last. We have learned to be disciplined and patient. Experience tells us that our focus should always be on returns and never on production or activity. In this case, That means throttling back on our Marcellus program. We remain highly optimistic on the 12 to 18 month outlook for the gas macro. The impact of new LNG export capacity coming online at the end of 2024 and early 2025, coupled with the possibility of cold weather, provides reasonable hope for significant price recovery in natural gas. However, Experience tells us that although we will underwrite our hopes with the future strip price, we should never underwrite our capital program with it. We will be patient and watch for recovery in the gas macro. Missing a few months of the recovery is much better than fully participating in the downside. We project that this slowdown in the Marcellus will result in our natural gas volume shrinking 6% in the Marcellus in 2024. If we see signs of recovery in natural gas, our 2024 capital range includes a contingency plan to accelerate our Marcellus program in the latter half of the year, which would reposition us for significant growth in our gas volumes in 2025 and 2026. We will watch and be ready to act. In the meantime, we will pivot to our deep inventory in the Anadarko and Permian where our returns are excellent. We have a tremendous program ahead of us in 2024, and we are excited to be increasing activity in both the Permian and the Adarco. All three business units, however, are poised and ready for out-year acceleration should conditions warrant. This ability to redirect and reposition activity around premier assets is one of the differentiating strengths of Cotera. We also provided an update on our three-year outlook. Our new 2024 to 2026 outlook has Cotera with an average annual CapEx of $1.75 to $1.95 billion, which is expected to generate annual growth in the low single digits for BOE and 5% plus for oil growth. This plan leverages our deep, high-quality inventory, demonstrates improving capital efficiency, and clearly displays the confidence we have in our ability to continue a cadence of operational excellence. This is an achievable outlook under current conditions. As always, we continuously adjust our plans with changing conditions. As we have previously said, planning at Cotera is a guided missile, not a rocket. In closing, I want to acknowledge our remarkable field organization. They set the pace for operational excellence. They work in hostile environments with dedication, perseverance, and an unwavering commitment to safety. They serve as an example to all of us. The Cotera brand stands for operational excellence, leading edge technology and innovation, best in class development of outstanding assets, and the ability to adapt nimbly to changing market conditions. We want to be known for a pristine balance sheet, investment discipline, and rigorous economic decision analysis. We are not perfect. However, having a great organization, great assets, and a great balance sheet allows us to learn from our mistakes, make continuous progress, and always push ourselves farther and harder. With that, I will turn the call over to Shane.