HOUSTON - Coterra Energy Inc. (NYSE: NYSE:CTRA) reported its fourth-quarter earnings, missing analyst expectations for adjusted earnings per share (EPS) but surpassing revenue forecasts. The company posted an adjusted EPS of $0.52, falling short of the consensus estimate of $0.55. However, revenue for the quarter reached $1.6 billion, exceeding the $1.53 billion analyst estimate.
Despite the mixed results, Coterra Energy's stock saw a modest uptick, rising by 1.87% following the earnings release, indicating a relatively positive market response. The revenue beat is identified as the primary driver of the stock's movement.
In the fourth quarter, Coterra Energy's total equivalent production reached 697 thousand barrels of oil equivalent per day (MBoepd), surpassing the high end of its guidance. Oil production averaged 104.7 thousand barrels of oil per day (MBopd), exceeding guidance, while natural gas production also beat expectations at 2,970 million cubic feet per day (MMcfpd).
Looking ahead, Coterra Energy provided guidance for 2024, expecting incurred capital expenditures (non-GAAP) to be between $1.75 and $1.95 billion, which is approximately $250 million lower than in 2023. This reduction is primarily attributed to decreased spending in the Marcellus region and anticipated cost savings. For 2024, the company forecasts total equivalent production to be slightly down by about 2% at the midpoint compared to the previous year, with oil volumes projected to increase by roughly 6% and natural gas volumes to decrease by approximately 6%.
Tom Jorden, Chairman, CEO, and President of Coterra, attributed the strong 2023 results to operational excellence and efficient execution in the field. Jorden emphasized the company's ability to adjust capital investment based on market conditions and highlighted a commitment to capital discipline and shareholder returns.
Coterra Energy's three-year outlook from 2024 through 2026 indicates a 0-5% growth in barrel of oil equivalent and more than 5% growth in oil compound annual growth rates (CAGRs), based on annual incurred capital expenditures averaging between $1.75-$1.95 billion. The company maintains the flexibility to adjust its capital investment levels across its operating regions.
For the first quarter of 2024, Coterra Energy expects total equivalent production to range from 660 to 690 MBoepd, with oil production between 95 and 99 MBopd, and natural gas production between 2,850 and 2,950 MMcfpd. Capital expenditures for the quarter are projected to be between $460 and $540 million.
The company's financial position remains strong, with a net debt to trailing twelve-month EBITDAX ratio (non-GAAP) of 0.3x as of December 31, 2023. Coterra also declared a quarterly dividend of $0.21 per share for the fourth quarter of 2023, marking a 5% increase year-over-year.
InvestingPro Insights
Coterra Energy Inc. (NYSE: CTRA) has demonstrated resilience amidst challenges, as reflected in its recent quarterly performance. According to InvestingPro data, Coterra boasts a robust market capitalization of $19.76 billion and an attractive P/E ratio, currently standing at 8.95. This valuation metric, which slightly improved to 8.84 over the last twelve months as of Q3 2023, suggests that the stock could be undervalued compared to its earnings.
Despite a significant revenue decline of 31.28% over the last twelve months as of Q3 2023, Coterra has maintained a strong gross profit margin of 75.6%. This high margin indicates the company's effective cost management and its ability to generate profit from sales. Moreover, the company's operating income margin of 45.06% during the same period underscores its operational efficiency.
InvestingPro Tips highlight some key attributes that could influence investor sentiment. Coterra Energy's stock is noted for its low price volatility, which may appeal to investors seeking stability in their portfolio. Additionally, Coterra has a commendable track record of dividend payments, having maintained them for 34 consecutive years, with a current dividend yield of 4.47%. This consistent return to shareholders could be a reassuring factor, especially in uncertain market conditions.
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