Coterra Energy Inc.

Coterra Energy Inc. is an independent oil and gas company engaged in the development, exploration and production of oil, natural gas and NGLs, with assets concentrated in areas with known hydrocarbon resources conducive to multi-well, repeatable development programs. The company operates in one segment, oil and natural gas development, exploration and production, exclusively within the continental U.S., with headquarters in Houston, Texas and regional offices in Midland, Texas, Pittsburgh, Pennsylvania, and Tulsa, Oklahoma.

The oil and gas industry is highly competitive, and Coterra primarily competes with integrated, independent and other energy companies for the sale and transportation of its oil and natural gas production to pipelines, marketing companies and end users. Many competitors have greater financial, technical and personnel resources, but Coterra believes its concentrated acreage positions and access to both third-party and company-owned gathering and pipeline infrastructure in its core operating areas, along with its expected activity level and secured services and equipment, enhance its competitive position. During the year ended December 31, 2025, two customers accounted for approximately 22 percent ¹ and 14 percent ² of total sales, and during the year ended December 31, 2024, two customers accounted for approximately 21 percent ³ and 19 percent ⁴ of total sales.

Coterra generates revenue through the development, exploration and production of oil, natural gas and NGLs, with substantially all production sold under both long-term and short-term sales contracts at market-sensitive prices to a broad portfolio of domestic and international customers, including industrial customers, local distribution companies, oil and gas marketers, major energy companies, pipeline companies and power generation facilities. The company also incurs gathering and transportation expenses when moving production from wellhead markets to other downstream markets.

Coterra's operations are primarily concentrated in three core operating areas. In the Permian Basin, the company holds approximately 345,000 ⁵ net acres in its core operating area in the Delaware Basin, with 2025 net production of 357 MBoe per day ⁶, representing 46 percent ⁷ of total oil equivalent production, and net oil production averaging 152 MBbl per day ⁸, representing 95 percent ⁹ of total company oil production; as of December 31, 2025, there were 1,615.3 ¹⁰ producing net wells in the Permian Basin, of which approximately 91 percent ¹¹ are operated by Coterra. In the Marcellus Shale, the company holds approximately 186,000 ¹² net acres in the dry gas window, with 2025 net production of 342 MBoe per day ¹³, representing 44 percent ¹⁴ of total oil equivalent production, and net natural gas production averaging 2,053 MMcf per day ¹⁵, representing 69 percent ¹⁶ of total natural gas production; as of December 31, 2025, there were 1,122.6 ¹⁷ producing net wells in the Marcellus Shale, of which over 99 percent ¹⁸ are operated by Coterra. In the Anadarko Basin, the company holds approximately 208,000 ¹⁹ net acres, with 2025 net production of 82 MBoe per day ²⁰, representing 10 percent ²¹ of total oil equivalent production; as of December 31, 2025, there were 527.0 ²² producing net wells in the Anadarko Basin, of which approximately 63 percent ²³ are operated by Coterra.

On January 17, 2025, Coterra completed the acquisition of certain interests in oil and gas properties located in the Delaware Basin in New Mexico from certain privately owned sellers for total cash consideration of $1.5 billion ²⁴ (the Avant assets). On January 27, 2025, the company completed the acquisition of all of the issued and outstanding equity ownership interests of a group of privately owned oil and gas exploration and production companies with assets and operations in the Delaware Basin of New Mexico (the FME Interests) for total consideration of $2.5 billion ²⁵, which included $1.7 billion ²⁶ in cash and the issuance of 28,190,682 ²⁷ shares of common stock valued at $785 million ²⁸ based on the closing price of common stock on the closing date. During 2025, the company repurchased 6 million ²⁹ shares of common stock for $140 million ³⁰, at a weighted average share price of $24.92 per share ³¹. In February 2023, the Board of Directors approved a share repurchase program authorizing the purchase of up to $2.0 billion ³² of common stock, and as of December 31, 2025, the company was authorized to repurchase up to approximately an additional $1.0 billion ³³ of outstanding common stock. The company increased its annual dividend $0.08 per share, or 10 percent ³⁴, on its common stock to $0.88 per share ³⁵ and has returned over $2.2 billion ³⁶ to stockholders through dividends over the past three years. In January 2025, the company borrowed $1.0 billion ³⁷ under its term loan to partially fund the FME and Avant acquisitions, consisting of a $500 million ³⁸ Tranche A Term Loan and a $500 million ³⁹ Tranche B Term Loan, and during 2025 repaid the full $500 million ⁴⁰ Tranche A Term Loan and $200 million ⁴¹ of the Tranche B Term Loan; in February 2026, the company repaid the remaining $300 million ⁴² of the Tranche B Term Loan.

Net income increased $596 million ⁴³ from $1.1 billion ⁴⁴, or $1.51 per share ⁴⁵, in 2024 to $1.7 billion ⁴⁶, or $2.25 per share ⁴⁷, in 2025. Net cash provided by operating activities increased $1.2 billion ⁴⁸, from $2.8 billion ⁴⁹ in 2024 to $4.0 billion ⁵⁰ in 2025. Oil equivalent production increased 38.0 MMBoe ⁵¹ from 247.6 MMBoe ⁵², or 676.5 MBoe per day ⁵³, in 2024 to 285.6 MMBoe ⁵⁴, or 782.4 MBoe per day ⁵⁵, in 2025. Total capital expenditures for drilling, completion and other fixed assets were $2.3 billion ⁵⁶ in 2025 compared to $1.8 billion ⁵⁷ in 2024.

Coterra's 2026 full year capital program is expected to be in the range of approximately $2.175 billion to $2.325 billion ⁵⁸, a decrease of 3 percent ⁵⁹ (at the mid-point) from $2.318 billion ⁶⁰ in 2025. The company expects to turn-in-line 174 to 208 ⁶¹ total net wells in 2026 across its three operating regions. Approximately 68 percent ⁶² of capital expenditures will be invested in the Permian Basin, 16 percent ⁶³ in the Marcellus Shale, eight percent ⁶⁴ in the Anadarko Basin and remaining eight percent ⁶⁵ for gathering systems infrastructure, saltwater disposal and other spend.

Coterra's asset portfolio offers scale, duration, commodity optionality and resilient investment returns, with operations in the Permian Basin, Marcellus Shale and Anadarko Basin providing both commodity and geographic diversification, allowing for capital allocation flexibility that may prove opportunistic in navigating commodity price cycles. During 2025 and 2024, the company invested 59 percent ⁶⁶ and 63 percent ⁶⁷, respectively, of its cash flow from operations in its capital programs, and in 2026 expects to invest approximately 50 percent ⁶⁸ of its cash flow from operations, based on recent strip prices.

Coterra expects to fund its 2026 capital expenditures with its operating cash flow. The company turned in line 199.7 ⁶⁹ net wells in 2025 and expects to turn-in-line 174 to 208 ⁷⁰ total net wells in 2026 across its three operating regions.

Coterra's lower budgeted capital program for 2026 reflects a return to normalized Permian investment levels after elevated first-half 2025 spending, tied to acquisition-related rig activity, was fully phased out in the back half of the year.

Coterra is committed to maintaining a disciplined capital investment strategy to maximize capital efficiency and create value for stockholders. The company's 2026 full year capital program is expected to be in the range of approximately $2.175 billion to $2.325 billion ⁷¹.

Coterra's strategy includes maintaining a top-tier balance sheet with significant financial flexibility. At year-end 2025, the company had a $114 million ⁷² cash balance and $2.0 billion ⁷³ of unused commitments under its revolving credit agreement.

Coterra faces headwinds from commodity price volatility, as prices for oil, natural gas and NGLs fluctuate widely due to factors beyond its control, including global events, actions of OPEC+ members, and climate change legislation. The company also faces risks from constrained pipeline capacity and oversupply in certain geographic areas, which resulted in negative spot market pricing at times for natural gas in the Permian Basin at the Waha Hub during 2024, 2025, and early 2026.

Coterra's ability to sell its production and the prices received could be materially harmed if it fails to obtain adequate services such as gathering, transportation and processing, as the lack of available capacity on third-party systems could reduce prices or result in shut-in of producing wells. The company also faces risks from the integration of acquired businesses, as the integration of the FME and Avant acquisitions could be difficult and may divert management's attention and financial resources.

Coterra's business is materially exposed to commodity price volatility, as revenues, operating results and financial condition depend substantially on prices received for oil, natural gas and NGLs, which have historically been volatile and are likely to continue to be volatile due to factors including global events, actions of OPEC+ members, and climate change legislation. The company's proved reserves estimates are inherently imprecise and subject to revision; as of December 31, 2025, approximately 17 percent ⁷⁴ of estimated proved reserves (by volume) were undeveloped, and developing these PUD reserves requires significant capital expenditures that may not occur as scheduled. The company faces risks from its hedging activities, as derivative instruments used to manage commodity price risk limit the benefit of price increases and expose the company to counterparty credit risk; during 2025, oil collars covered 20.4 MMBbls ⁷⁵, or 35 percent ⁷⁶, of oil production, and natural gas collars covered 277.2 Bcf ⁷⁷, or 26 percent ⁷⁸, of natural gas production. The company is subject to extensive federal, state and local environmental regulations, including those related to hydraulic fracturing, which could result in increased costs and operating restrictions; the company received a Notice of Violation from the EPA in June 2023 alleging violations of the Clean Air Act and state implementation plans, and while the company believes any fines or penalties will not be material, the outcome is uncertain. The pending merger with Devon Energy Corporation is subject to stockholder and regulatory approvals, and if not completed, the company could be required to pay Devon a termination fee of $865 million ⁷⁹ and up to $40 million ⁸⁰ as reimbursement for expenses.

Management's message emphasizes that Coterra is a premier U.S.-focused exploration and production company that embraces innovation, technology and data to create value for investors and communities. The strategic priorities emphasized for the period ahead include generating sustainable returns through commodity diversification and disciplined capital investment, maintaining financial strength with a top-tier balance sheet, and focusing on safe, responsible and sustainable operations. Management states that over the past three years, the company has increased its annual dividend $0.08 per share, or 10 percent ⁸¹, on its common stock to $0.88 per share ⁸² and has returned over $2.2 billion ⁸³ to stockholders through dividends, and that during 2025, the company repurchased 6 million ⁸⁴ shares of common stock for $140 million ⁸⁵.