Coterra Energy Inc. (CTRA) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 delivered strong operations: oil and gas production beat guidance ranges, capex came in below midpoint, GAAP EPS was $0.68 and adjusted EPS was $0.80; management reduced 2025 capex by ~$100M and tightened 2025 production ranges .
Versus S&P Global consensus, adjusted EPS modestly beat ($0.80 vs $0.796*), while revenue and EBITDA (Adj. EBITDAX proxy) were below ($1.904B vs $2.029B*; $1.337B vs $1.383B*)—derivative losses (-$112M) depressed reported operating revenues and EBITDA-like metrics . Values retrieved from S&P Global*.
Guidance: 2025 capex lowered to $2.0–$2.3B (from $2.1–$2.4B) and Q2 2025 production guided to 710–760 MBoed; oil midpoint maintained while gas and BOE midpoints raised; dividend set at $0.22 and balance sheet priority is deleveraging $1.0B term loans in 2025 .
Catalyst: Reallocation from oil to gas (Permian rigs cut, Marcellus rigs added), explicit deleveraging plan, and remediation of Windham Row Harkey wells with confidence in fix; medium-term free cash flow focus and optionality across basins .

What Went Well and What Went Wrong

What Went Well

Production outperformed: total 747 MBoed near high end; gas 3,044 MMcfpd above high end; oil 141.2 MBopd ~2% above midpoint .
Capital discipline: incurred capex $552M vs $525–$625M guidance lower half; Q1 FCF $663M; unit operating costs tightly managed at $9.97/boe .
Strategic flexibility and balance sheet: cutting Permian rigs to 7 in H2, adding Marcellus rigs; plan to retire $1.0B term loans; “Coterra is an arc, not a party boat,” emphasizing resilience through cycles .

What Went Wrong

Reported revenue/EBITDA below consensus, driven by non-cash derivative losses (-$112M) lowering operating revenues to $1.904B and pressuring EBITDA-like measures vs expectations .
Windham Row Harkey wells had mechanical/cementing issues leading to increased water production and deferred projects; remediation underway and volumes excluded from 2025 guidance ramp .
Unit operating cost rose sequentially ($9.97/boe in Q1 vs $8.89/boe in Q4), reflecting mix shift to oilier assets with higher per-unit LOE (but with strong margins) .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Operating Revenues ($USD Billions)	$1.433	$1.395	$1.904
Net Income ($USD Millions)	$352	$297	$516
GAAP EPS (Basic, $)	$0.47	$0.40	$0.68
Adjusted EPS (non-GAAP, $)	$0.51	$0.49	$0.80
Adjusted EBITDAX ($USD Billions)	—	$0.896	$1.337
Unit Operating Cost ($/boe)	$8.68	$8.89	$9.97
Cash from Operations ($USD Billions)	$0.856	—	$1.144

Segment and regional operations (production):

Region	Q1 2024	Q1 2025
Marcellus daily eq. production (MBoepd)	385.1	372.1
Permian daily eq. production (MBoepd)	248.2	303.4
Anadarko daily eq. production (MBoepd)	52.4	70.8
Total Company daily eq. production (MBoepd)	686.1	746.8
Total Company oil (MBbl/day)	102.5	141.2
Total Company gas (MMcf/day)	2,960.1	3,043.8

KPIs:

KPI	Q1 2024	Q1 2025
Realized Oil Price ($/Bbl, ex-hedges)	$75.16	$69.73
Realized Gas Price ($/Mcf, ex-hedges)	$2.00	$3.28
Realized NGL Price ($/Bbl, ex-hedges)	$21.09	$23.23
Free Cash Flow ($USD Millions)	$340	$663
Incurred Capex ($USD Millions, D&C + fixed assets)	$450	$552

Consensus vs Actual (Q1 2025):

Metric	Consensus	Actual	Surprise
Adjusted EPS ($)	0.796*	0.80	+0.004*
Revenue ($USD Billions)	2.029*	1.904	-0.125*
EBITDA ($USD Billions)	1.383*	1.337 (Adj. EBITDAX proxy)	-0.046*

Values retrieved from S&P Global*.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Capex ($B, non-GAAP)	FY 2025	$2.1–$2.4	$2.0–$2.3	Lowered
Total Prod (MBoed)	FY 2025	710–770 (mid 740)	720–770 (mid 745)	Raised midpoint (BOE)
Oil (MBbl/day)	FY 2025	152–168 (mid 160)	155–165 (mid 160)	Maintained midpoint
Gas (MMcf/day)	FY 2025	2,675–2,875 (mid 2,775)	2,725–2,875 (mid 2,800)	Raised midpoint
DCF ($B)	FY 2025	~$5.0	~$4.3	Lowered (price deck change)
FCF ($B)	FY 2025	~$2.7	~$2.1	Lowered
Q2 Total Prod (MBoed)	Q2 2025	—	710–760	New
Q2 Oil (MBbl/day)	Q2 2025	—	147–157	New
Q2 Gas (MMcf/day)	Q2 2025	—	2,700–2,850	New
Q2 Capex ($M, non-GAAP)	Q2 2025	—	575–650	New
Dividend ($/share)	Q2 payout	$0.22 (raised in Feb)	$0.22 declared May 5	Maintained

Key drivers: reduce Permian rigs to 7 in H2 (cut ~$150M Permian capex); add/extend 2 Marcellus rigs (add $50M, with option +$50M) .

Earnings Call Themes & Trends

Topic	Q3 2024 (Previous Mentions)	Q4 2024 (Previous Mentions)	Q1 2025 (Current Period)	Trend
Capital allocation flexibility	Emphasized optionality; signed LNG agreements; returning >50% FCF	Reiterated 3-year outlook, ability to pivot; Marcellus restart if gas constructive	Cutting Permian rigs; adding Marcellus rigs; capex lowered $100M; debt repayment prioritized	Flex increasing; tilt toward gas
Macro (oil/gas; tariffs)	Focus on LNG and markets	Gas constructive via storage, LNG; caution on firm signals	Oil price volatility, tariffs; prepared for prolonged weak oil environment	More cautious on oil
Operations: Permian (Wolfcamp/Harkey)	Windham Row progressing; TIL cadence updated	Culberson simul-frac efficiencies; Wolfcamp strong; studying Harkey codev vs overfill	Harkey mechanical/cement remediation; pivot to Upper Wolfcamp; oil guide unchanged	Temporary issue; remediation underway
Marcellus program & costs	Lower activity; capital reallocation	Cost per foot $800; longer laterals; restart 2 rigs in April	Keep 2 rigs into H2; potential +$50M; strong gas macro; power pricing optionality	Re-accelerating with better efficiency
Balance sheet & returns	Debt reduction, high dividend, buybacks; 0.3x net debt/EBITDAX	Prioritize deleveraging, maintain ≥50% FCF returns	Repay $250M; plan to retire $1B term loans in 2025; buybacks back-end weighted	Aggressive deleveraging
Power/data center offtake	—	Exploring power generation/data center partnerships	Pursuing power pricing deals; Waha gas attractive; more opportunities	Growing theme

Management Commentary

“The company's top-tier balance sheet, diversified portfolio… and low reinvestment rate position Coterra to prosper throughout cyclical commodity price environments.” — Tom Jorden .
“We are lowering Permian investment… and added two natural gas-focused rigs in the Marcellus… These decisions… bolster free cash flow… and allow us to maintain oil production guidance while slightly increasing natural gas and BOE volumes.” — Tom Jorden .
“Coterra is an arc, not a party boat… tailor made to ride out this storm and thrive in it.” — Tom Jorden .
“Our priority is going to be debt repayment… buybacks will be back-end weighted… focused on quickly getting our leverage back to ~0.5x net debt-to-EBITDA.” — Shane Young .
“Harkey wells… due to behind pipe water flow… a near wellbore mechanical issue… fixable… remediation solutions underway.” — Tom Jorden .

Q&A Highlights

Harkey remediation: cementing/wellbore isolation fix in Windham Row; volumes excluded from guidance with remediation timeline of months, not weeks .
Production trajectory: large sequential oil ramp in H2; Q2 oil ~5 kbpd below earlier expectations due to program updates, but annual oil midpoint maintained .
Capital allocation amid macro: if oil/gas ratio stays wide, Coterra will reallocate toward highest returns across basins; capex “guided missile” approach .
Power offtake and capacity: growing interest in Permian/Marcellus power deals and data centers; Waha-based generation attractive; Constitution Pipeline developments monitored .
Shareholder returns: ≥50% of annual FCF through cycles, but 2025 prioritizes deleveraging; opportunistic buybacks likely back-end weighted .

Estimates Context

Q1 2025 adjusted EPS beat consensus ($0.80 vs $0.796*)—driven by stronger gas realizations (+64% QoQ) and production beats; GAAP operating revenues missed consensus ($1.904B vs $2.029B*) largely due to non-cash derivative loss (-$112M) included in reported revenues . Values retrieved from S&P Global*.
EBITDA (Adj. EBITDAX proxy) missed ($1.337B vs $1.383B*) as mix and hedging impacted reported figures despite operational strength . Values retrieved from S&P Global*.
Near-term estimate revisions likely: raise gas/BOE trajectory midpoints (per updated guidance), maintain oil trajectory; incorporate lower FY25 capex and deleveraging; Q2 guidance implies lower oil than February guide but stronger H2 ramp .

Key Takeaways for Investors

Operational execution strong across basins; pivot to Upper Wolfcamp mitigates Harkey issues without sacrificing 2025 oil guidance .
Flex-first capital allocation: Permian rigs cut; Marcellus rigs added; FY25 capex lowered to $2.0–$2.3B—improves capital efficiency and FCF resilience .
Balance sheet priority: active deleveraging with $250M repaid in Q1 and plan to retire $1.0B term loans in 2025; buybacks to be opportunistic and back-end weighted .
Gas leverage building: gas production midpoint raised; longer laterals and $800/ft cost structure enhance Marcellus returns; optional +$50M capex later in 2025 .
Reported revenue/EBITDA misses vs consensus reflect hedge losses; monitor estimate methodologies (GAAP vs pre-hedge) when benchmarking .
Q2 guide sets lower near-term oil but strong H2 ramp; track Harkey remediation progress and Wolfcamp TIL cadence as key drivers for H2 oil exit rate .
Medium term: diversified commodity mix, discipline on reinvestment (~50%) and optional LNG/power contracts position Coterra for sustained FCF through cycles .