Coterra Energy beat Wall Street expectations on Thursday with first-quarter results that after again proved the club holding company’s flexible production strategy is the best one for shareholders. Revenue fell 19% year-on-year to $1.43 billion within the three months ended March 31, beating the consensus forecast of $1.39 billion, in line with analyst estimates compiled by LSEG. Adjusted diluted earnings per share fell 41% to 51 cents from the year-earlier period, but still beat expectations of 41 cents, LSEG data showed. Coterra Energy Why We Own It: Formed through the merger of Cabot Oil & Gas and Cimarex, Coterra Energy is an exploration and production company with a high-quality, diversified portfolio of assets. The company practices capital discipline and is a low-cost operator. The company goals to return 50% or more of annual free money flow to shareholders. Our sole energy stock, Coterra, also serves as a hedge against inflation and geopolitical risks. Competitors: EQT Corp., Devon Energy, Marathon Oil Last Purchased: April 16, 2024 Started: April 14, 2022 The bottom line is that Coterra delivered a powerful first quarter, driven by clean execution. Getting more from the earth without necessarily spending more makes energy producers capital efficient. Coterra delivered exactly what we wanted within the January-March period: production above the midpoint of guidance, oil production above the high end, and capital spending below the low end. Additionally, we were pleased that Coterra raised its full-year oil production outlook without changing its capital expenditure guidance. This dynamic is the results of CEO Tom Jorden’s decision three months ago to focus his production strategy from natural gas to oil- and liquids-rich firms, which was a clever decision given the present economics of the 2 commodities. Since the beginning of the 12 months, U.S. oil benchmark West Texas Intermediate has risen greater than 10% while natural gas prices have fallen 20%. Coterra’s mixture of oil and natural gas acreage gives the corporate the pliability to regulate its drilling focus. It’s something we have long touted as a gorgeous feature of the corporate. Shares of Coterra – which is able to hold its post-earnings conference call on Friday morning – rose greater than 2% to around $27.80 each in prolonged trading on Thursday. Following the report, we reiterate our Buy rating of 1 on Coterra shares and a price goal of $30. Capital Allocation Coterra paid out a complete of $307 million to shareholders in the primary quarter, including $157 million in declared dividends and $150 million from share repurchases. This repurchase represented a rise from the $29 million repurchase within the fourth quarter of 2023. At the tip of March, the Houston-based company had $1.4 billion remaining under its prior authorization of $2 billion . Guidance Coterra has largely maintained its capital efficient outlook for 2024 – with one notable change that makes it even higher. The company reiterated its full-year capital expenditure outlook of $1.75 billion to $1.95 billion, but raised its oil production forecast to 102 to 107 thousand barrels of oil per day (MBopd), up 2.5% on the midpoint corresponds to previous forecast. This is capital efficient as mid-year capital expenditures are down 12% year-on-year – driven by cost reductions, deflation and lower activity within the Marcellus Shale – and yet production in barrels of oil equivalent is anticipated to stay roughly the identical, down 9% oil quantities are higher. For the second quarter, Coterra expects total equivalent production of 624 to 655,000 barrels of oil equivalent per day (MBoepd); Oil production from 103 to 107 MBopd; Natural gas production of two,600 to 2,700 million cubic feet per day; and capital expenditures of $470 million to $550 million. According to Factset, the general production forecast is barely below the expected 668 MBoepd. However, oil prices were higher and natural gas production was lower than expected. Given the present more favorable economic situation, we’re pleased to make use of the oilier mixture. The investment forecast is higher in comparison with Wall Street estimates, but overall spending in the primary two quarters of the 12 months is on the right track. (Jim Cramer’s Charitable Trust has an extended CTRA length. A full list of stocks could be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. 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Drilling rigs within the Permian Basin in 2020, as U.S. crude oil production fell by 3 million a day as pressure from Wall Street forced cuts.
Paul Ratje | Afp | Getty Images
Coterra Energy beat Wall Street expectations on Thursday with first-quarter results that after again proved the club holding company’s flexible production strategy is the best one for shareholders.
