Coterra Energy Inc.

Thank you, Kayla. Good morning, and thank you for joining Cotera Energy's first quarter 2025 earnings 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. Michael DeShazer, Senior Vice President of Business Units, is also in the room. 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 for all of you who are joining us on this call. Cotera had an excellent first quarter. We delivered oil production near the high end of our guidance and natural gas production that exceeded the high end of our guidance. CapEx came in near the low end of our guidance. Furthermore, we generated excellent financial results, returned a substantial portion of our free cash to our owners, and retired $250 million of our term loans. We closed on the Franklin Mountain and Avant acquisitions and immediately launched into the job of integrating these high-quality assets into our operations. We are pleased to report that we have identified and captured significant operational efficiencies, are bringing these new assets into emissions performance consistent with Cotera standards, and have seen well performance on recent flowbacks that exceeds our expectations. Shane and Blake will provide more detail on our financial and operational results and outlook. We hope that you will note that the opening slide in our updated investor deck discusses who is Cotera and why own Cotera. We think that the recent volatility in the commodity markets, uncertainty over the impact of tariffs, and fears of recession strengthened the core thesis of why Cotera. Simply put, we were built for this. Cotera is an ark, not a party boat. Our diversified revenue, low-cost oil and natural gas supply, technology-driven organization, economic focus, and financial discipline make us tailor-made to ride out this storm and thrive in it. Slide 4 on our deck illustrates the resiliency of our cash flow under various oil and natural gas price scenarios. None of us can predict the future. Nonetheless, Cotera is a company that can generate significant free cash flow through the cycles, generate outstanding returns and modest growth with a low reinvestment rate, and maintain a pristine balance sheet. This is a testament to organization, our assets, and our culture. Why Cotera? The question answers itself in times like these. Commodity downdrafts are a part of our business. They do not come pre-labeled with how long they will last nor how severe they will be. Our experience tells us that in times like these, it is better to err on the side of caution. We have more concern regarding the oil outlook rather than the outlook for natural gas. Consequently, we are modestly pulling back some activity in the Permian Basin and incrementally adding activity in the Marcellus Shale. In aggregate, these moves will reduce our projected 2025 capex by $100 million. We have plans on the shelf to make further moves up or down if we see material changes in our outlook. Our team continues to put tremendous effort into planned iterations, and we are ready for a wide range of potential scenarios. In particular, the net $100 million reduction in 2025 CapEx is a combination of $150 million of reductions in the Permian coupled with $50 million of increases in the Marcellus. We have contingency plans that would allow us to make additional cuts from the Permian if oil prices continue to weaken. We could redeploy to highly profitable gas opportunities, advance debt retirement, pursue opportunistic buybacks, or bank the savings. Shane will comment further on this. We have described our approach to capital allocation and planning as the difference between a rifle shot and a guided missile. Once the trigger is pulled, the rifle shot is unchangeable. The guided missile can be adjusted and repositioned along the way. In the case of our current macro environment, we not only have a guided missile, but we have a moving and unpredictable target. This screams for flexibility. With low cost of supply oil and natural gas assets, robust drilling returns, few long-term vendor commitments, and a culture that is adaptive, we will guide our way through 2025 and beyond. We are committed to debt reduction in 2025, particularly pertaining to the $1 billion term loan that we executed in conjunction with our recent acquisition. As we have said, we never lose a moment's sleep worrying about our debt being too low. We have seen our peers go through existential crises during significant downdrafts, and we are committed to make sure that Cotera can sail through any storm and emerge stronger because of it. Finally, I want to make a few remarks about our recently completed Windham Row project. To recap, the Windham Row infill project contains 73 total wells, 51 Wolf Camp wells, and 22 Harkey wells. Our results on the Wolf Camp wells have been outstanding. While completing the Harkey wells, however, we noticed abnormally high water production on a handful of wells. We have strong evidence to suggest that this is due to behind-pipe water flow from shallower zones. We have drilled Harkey wells throughout our assets in New Mexico and Texas and have only observed this phenomenon in the eastern portion of our Corberson County acreage block. It is not a reservoir nor a spacing issue. This is also not a co-development or overfill issue. The evidence points to this being a near-wellbore mechanical issue. We think that it is fixable, and we have well remediation solutions underway. We are very encouraged by the results that we have seen thus far. While we work through wellbore remediation, we are pausing harkey development in this local area. It doesn't make any sense for us to continue to drill and complete harkey wells in this immediate area until we are fully satisfied that we have solved the issue. We expect to correct the issue during the second quarter and restore these harkey wells to production. We believe the go-forward production forecast for the affected wells is conservative, providing potential upside for the remainder of the year. With this pause in local harkey development, we are pivoting to our highly productive wolf camp. Ironically, this will increase our capital efficiency. Our full-year production guide remains unchanged, with our capital guide decreasing slightly. We have never managed our company with short-term production goals. We focus on full-cycle value creation underwritten by sound science, objective data, and tough and disciplined decision-making. This is the winning formula for long-term value creation. With that, I'll turn the call over to Shane and Blake to discuss our results and outlook in greater detail.

Thank you, Tom, and thank you, everyone, for joining us today on this morning's call. Today, I'd like to cover three topics. First, I'll summarize the highlights of our first quarter financial results. Then, I'll provide an update on our guidance, including the second quarter as well as the full year 2025. Finally, I'll provide an update on our balance sheet and cash flow priorities for the remainder of the year. Turning to our strong performance during the first quarter. The first quarter's performance included just over two months of results from our recently acquired assets from Franklin Mountain and Avant. We're pleased with the rapid integration of these assets, and their contributions have been in line to slightly better than our expectations. During the first quarter, Cotera's oil production came in about 2% above the midpoint of our guidance, with DOEs near and natural gas above the high end of the guidance ranges. Net turn in lines during the quarter were 37 in the Permian, below the guidance midpoint of 40, and the Marcellus was at zero, as expected. Pre-edge revenues came in at $2 billion, up from $1.4 billion in the fourth quarter of 2024. And 45% of revenues came from natural gas, up significantly from prior quarter due to strong production and a 64% increase in natural gas price realizations. Cash operating costs per unit totaled $9.97 per BOE, inclusive of about $0.21 per BOE of non-recurring costs related to the transaction. We reported net income of $516 million, or 68 cents per share, and adjusted net income of $608 million, or 80 cents per share. Incurred capital expenditures in the first quarter were 4% below the midpoint of our guidance range, with lower than expected drilling and midstream costs. Discretionary cash flow for the quarter was $1.135 billion, up significantly from $776 million in the prior quarter, and free cash flow was $663 million after cash capital expenditures. Looking ahead to the second quarter and full year 2025. Second quarter results will reflect a full quarter's contribution from the recent acquisitions. During the second quarter of 2025, we expect total production to average between 710 and 760 MBOE per day. Oil is expected to be between 147 and 157 MBO per day, and natural gas is expected to be between 2.7 and 2.85 BCF per day. These guidance ranges reflect updates in the Culberson-Harkey program, including the deferment of a few projects as we begin to shift to additional upper Wolf Camp development in Culberson County. The net result of these changes is a reduction in oil production by approximately 5,000 barrels per day in the second quarter relative to our February expectations. Despite these second quarter changes, we are maintaining the midpoint of our 2025 annual oil production guidance. In the second quarter, we expect incurred capital to be between $575 and $650 million, which should be the highest quarter for the year as we will have increased tills in all three business units. Cotera was built to respond to market signals, and we have both the ability and willingness to adapt to changing conditions. For the full year 2025, we're optimizing our investment allocation while lowering capital range by $100 million. We now expect incurred capital to be between $2 and $2.3 billion for the year, an over 4% reduction from February guidance. Given a continued constructive outlook for natural gas, we are maintaining the second rig in the Marcellus into the second half of 2025. As previously noted, this adds $50 million to the 2025 program. Should we choose to keep the second rig working for the full year, this could result in an incremental $50 million added to the program late in 2025. while still staying within our revised guidance range. In addition, due to softness and crude pricing, we are slowing development and reducing Permian activity by $150 million. If warranted, we have the flexibility to make additional adjustments to our investments later in the year that would take total investment towards the lower end of our guidance range. For 2025, while lowering capital, we are maintaining our oil midpoint guidance and increasing the midpoint of production guidance for MBOEs and natural gas, which highlights the capital efficiency of our diverse drilling opportunities. Simultaneously, we're tightening the range for MBOEs, oil, and natural gas. MBOEs are now expected to be between 720 and 770 MBOE per day for the year. Oil is expected to be between 155 and 165 MBO per day for the year, with significant increases in each subsequent quarter. Natural gas is expected to be between 2.725 and 2.875 DCF per day, delivering over one TCF of gas on an annualized basis and providing significant leverage to higher natural gas prices. Having only a partial full quarter contribution from the new Permian assets impacts full-year 2025 production by a little over 4%. NBOE per day relative to if the transactions had closed on January 1, 2025. In this environment, the benefits of our diverse and balanced commodity mix become increasingly evident. On page four of the new slide deck we published last night, we illustrate the durability of our free cash flow across multiple commodity price files. Cotera is positioned to thrive and maintain a reinvestment rate of around 50% of cash flow in a variety of commodity price scenarios and ranges of oil to gas price ratios. Regarding our three-year outlook, we maintain our conviction in our ability to deliver consistent profitable growth to our shareholders. As we've stated before, our deep project inventory can deliver 5% or greater oil volume growth and 0 to 5% BOE growth over this period by investing between 2.1 and $2.4 billion of capital per year, if we choose to do so, even with the changes to our 2025 that we announced today. These growth rates reflect legacy Cotera organic growth in 2025 and include our recent acquisitions for 2026 and 2027 growth. This outlook delivers increasing capital efficiency and is designed to afford Cotera the flexibility to reallocate capital between our business units as market conditions change. We believe this outlook has an attractive, repeatable level of reinvestment and generates meaningful free cash flow to underpin both our shareholder returns and our deleveraging goals. Turning to shareholder returns and the balance sheet. Yesterday, we announced a $0.22 per share dividend for the quarter. This remains one of the highest yielding base dividends in the industry at over 3.4%, and we remain committed to reviewing increasing the base dividend on an annual cadence. During the first quarter, we repaid $250 million of our outstanding term loans that were used as part of the financing of our recent acquisitions. We ended the quarter with an undrawn $2 billion credit facility and a cash balance of $186 million for total liquidity of $2.2 billion. We expect to continue to prioritize deleveraging. And in the current environment, we expect to fully repay our billion-dollar term loan during 2025. As a result, and as previously noted, share repurchases will be back-end weighted in the second half of 2025. We're focused on quickly getting our leverage back to home to around 0.5 times net debt to EBITDA. Cotera is committed to maintaining a Fortress balance sheet that is strong in all phases of the commodity cycles, enables us to take advantage of market opportunities, and protects our shareholder return goals. In summary, Cotera's team delivered a quarter of high quality results, both operationally and financially, and across all three business units. These results show that we've hit the ground running in 2025. For the remainder of the year, We expect strong quarterly oil production increases, substantial free cash flow generation, and rapid deleveraging. With that, I'll hand the call over to Blake to provide additional color and details on our operations.