Coterra Energy at Barclays Conference: Strategic Balance in Oil and Gas

On Thursday, 04 September 2025, Coterra Energy (NYSE:CTRA) presented its strategic initiatives at the Barclays 39th Annual CEO Energy-Power Conference 2025. CEO Tom Jordan outlined the company’s focus on balancing its oil and gas portfolio to ensure consistent profitable growth. While emphasizing flexibility and innovation, Jordan also acknowledged challenges such as market volatility and operational hurdles.

Key Takeaways

• Coterra aims for consistent profitable growth through balanced oil and gas investments.
• The company prioritizes free cash flow and maintains a low reinvestment rate of 50% or less.
• Coterra is leveraging AI and machine learning to optimize operations and enhance competitive advantage.
• The company plans to retire a $1 billion term loan before initiating a stock buyback program.
• Operational challenges include saltwater disposal issues in the Delaware Basin, which are being proactively managed.

Financial Results

Coterra Energy is focused on generating consistent free cash flow, a key metric for its growth strategy. The company boasts one of the lowest reinvestment rates in the sector, maintaining it at or below 50%, which allows for strategic capital investments based on returns rather than fixed growth targets.

Recently, Coterra took out a $1 billion term loan for the acquisition of North Lea County assets. The company’s financial strategy includes retiring this debt and subsequently launching a stock buyback program, reflecting its commitment to shareholder value.

Operational Updates

In the Marcellus Shale, Coterra maintains a steady capital allocation strategy, avoiding fluctuations based on short-term market sentiments. The company is prepared to shut in production if netbacks fall significantly below $1, though this has not occurred this year.

Challenges in the Permian Basin, particularly with saltwater disposal in the Delaware Basin, are being addressed by shifting from deep to shallow injection methods. The Franklin Avant asset in the Northern Delaware Basin presents exciting potential due to its complex geology, with Coterra planning midstream infrastructure development for sour gas treatment.

AI and machine learning have been integral to Coterra’s operations for the past 7-8 years, aiding in tasks such as well forecasting and project design, with potential for further improvements in production optimization.

Future Outlook

Coterra’s growth strategy does not focus on growth rates but rather on investing in profitable opportunities. The company runs financial models at conservative price levels, ensuring profitability even in challenging market conditions. Capital efficiency remains a priority, alongside active leasing of new acreage.

Succession planning is also a significant focus, with the board engaged in developing young talent for future leadership roles, ensuring a robust pipeline of capable leaders.

Q&A Highlights

During the Q&A session, CEO Tom Jordan reiterated Coterra’s strategy of maintaining a balanced oil and gas portfolio to generate consistent profitable growth. He emphasized the company’s flexible capital allocation, which allows for profitable production management. Jordan also noted that the market has yet to fully appreciate Coterra’s valuation, which could improve with increased cash returns.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - Barclays 39th Annual CEO Energy-Power Conference 2025:

Unidentified speaker: I want to welcome everyone to Day three of our thirty ninth Barclays Energy and Power Conference. It’s my pleasure to introduce Tom Jordan, CEO of Energy. Tom, thank you for being here and flying out last night.

Tom Jordan, CEO, Coterra: Yes, happy to be here.

Unidentified speaker: Great. Well, I want to start off the conversation with Caterra’s strategy. It’s about a balance of oil and gas portfolio that demonstrate resilience through the cycles. And I do think that the portfolio execution has demonstrated the resilience of that. So for but some investors are still questioning if that’s the best strategy.

So what are some of the things that Catera look at to assess the execution of that balanced strategy?

Tom Jordan, CEO, Coterra: Thank you for that question. Our model, I think, can be simplified in that what we’re really looking to do is generate consistent profitable growth. And there’s a lot of metrics for that, but certainly free cash flow is an outcome of that behavior. And so we’d like to see growing free cash flow over time and really demonstrate to the market that we have great durability in that. I think that we have a very deep inventory of low cost of supply and the optionality between oil and gas.

What we’re really pleased with the performance of our portfolio. And in our latest deck, if you look at that, you’ll see some sensitivity of our free cash flow under various commodity price iterations. And that’s not just theoretical. We’re finding that now as oil and gas oscillates, sometimes correlated and sometimes uncorrelated. We’re really seeing a stability of cash flow, which allows us to have a consistent level of activity.

And our own experience tells us that’s the best way to play a cyclic commodity business is maintain some level of consistency. So free cash flow and duration, and that’s the Cotera story.

Unidentified speaker: So talking about the flexibility of capital allocation, we have seen quite a bit of volatility in gas prices. It’s almost roundabout in price in the last six months or so. Caterra is actually adding capital to Marcellus in the second half of the year. So there does the near term price action change how you think about that allocation of capital to the Marcellus?

Tom Jordan, CEO, Coterra: No. We don’t fluctuate based on quarterly sentiment. And in some respects, we’re still in the weather business with natural gas. And so it’s remarkable when you look at the growth in production over the last fifty years and how decoupled it is from the growth in storage. So I think as we look, we’re going to see a fair amount of volatility in natural gas.

It’s also something to be aware of as LNG becomes a bigger part of the story. One or two maintenance cycles may introduce tremendous volatility. So I think it’s important to realize that and have some patience through these oscillations. We’re very constructive on natural gas for a whole host of reasons. I mean not only LNG exports, but the talk about power demand, although I think many of us probably think it’s exaggerated, even if it’s tempered significantly, it’s still significant to our industry.

And then you have growing export Mexican exports. I think there’s every reason to be constructive about natural gas. And so we’re steady as she goes there.

Unidentified speaker: And so talking about volatility that we see in the near term, is there flexibility to manage production and like whether that’s active production management or deferring activity without really changing the broad direction of the program?

Tom Jordan, CEO, Coterra: There is. Year, we shut in some volumes, and we’ve talked about that this year as well. We haven’t done that this year, but that’s not to say we wouldn’t. I mean, think typically in the Marcellus, if our netbacks get significantly below $1 we have that conversation. And we’re close to that now, but we haven’t shut in anything.

Unidentified speaker: Got it. You mentioned power, and it’s such a big theme this conference so far. And if anything, feels like there’s more confidence in these really big power demand numbers. So in your view, how’s do you see Marcellus as a potential growth engine or more as a cash flow generating machine? As in is there an opportunity to capture that growing power demand from Appalachia?

Tom Jordan, CEO, Coterra: Well, we need hesitate to use the word infrastructure, but I’ll because infrastructure doesn’t necessarily mean pipes out of the basin, it could mean a pathway to an additional demand in basin, but a pathway for your molecules. You’ve seen a couple of deals that are index pricing. And that’s interesting to us because at first we ask, well, why do people why would you do a long term convert to index pricing? And I think the answer to that is because for those that did that, it allows them to grow in basin without necessarily disturbing the basin gestalt, if you will, because it’s a particular contract around particular supply. CoTERRA, we’re probably less interested in that because of our optionality in a multi basin, multi commodity.

So I mean to answer your question, I think when we look at the Marcellus, we’re probably looking at it more in maintenance mode. I think we would seek out of basin egress before we’d probably look to grow it. That said, one or two opportunities change this conversation. Mean we’re very opportunistic. We’re always looking for deals that make sense.

And we our power deal in the Permian, we think, what is fascinating, the amount of attention that got, that to us said a lot about the marketplace.

Unidentified speaker: Right. I mean if anything, even just holding a flat, it’s a super capital efficient and powerful productive asset, so it gives you a lot of optionality. Talking about optionality, Catera has fifteen years of inventory runway. 40% of that or economic CapEx delivers the 2x PV-ten that you guys talk about at $75 oil and $3.75 gas. How would you say is your this year’s development program compared to that overall benchmark of your overall inventory?

Tom Jordan, CEO, Coterra: Yes. I would say it’s top tier. I mean it’s representative of that upper most. The way we look at capital allocation, we don’t have placeholders for any particular business unit. We’ve got the Permian, we have the Anadarko, we have the Marcellus.

And we have very few commitments. We really avoid long term vendor commitments and we generally avoid long term market commitments. At least we don’t want to make commitments that require us to invest into them. We’ll make long term market commitments on our base production because that’s not at risk. But we don’t like to make commitments that involve us being forced to invest capital because we may not want to invest in that particular place to satisfy that commitment.

Our flexibility is huge. And this year, in answer to your question, we’re seeing returns that are at the upper end of that creaming curve.

Unidentified speaker: Got it. And then what are the opportunities to high grade the thing that’s in that 1x to 2x range, in that 1x to 2x PV type inventory range? And I want to tie in here with the AI integration, perhaps that it’s actually being a big topic throughout the conference so far that it’s really having a big impact on how companies are being run, the productivity and cost. Maybe just speak to the overall ability to enhance the inventory you have.

Tom Jordan, CEO, Coterra: Well, yes, technology, technology, technology are the three ways we can enhance it. And that not only is that drilling completion technology, but you’re absolutely right to call out artificial intelligence or machine learning. We left fairly early on that. We’ve had a very serious internal machine learning project for going on seven or eight years. And we stumbled along the way.

We but we got some things right. And one of the things we got right is that we didn’t take our machine learning effort and put it in an ivory tower. We do a lot of networking in the industry, and there are some peers of ours that I would have to say have more sophisticated algorithmic development than ours, but they’re confined to ivory towers. At what we did right is we marbled it into our organization by taking some operations people, bring them into our machine learning effort and then repopulating them in our business units. So at CoTERRA, you will not go to a serious operation meeting without our operations engineers, people that come in from the field insisting that the machine learning team be at the table.

It’s truly adopted broadly through our company. Now we started with very high level tasks. So we started with asking, all right, what are the needle movers and well forecasting, project design in terms of completion spacing, those are the projects that we started on first and we’ve made tremendous progress on that. Oddly enough, some of the low hanging fruit that other companies went to first are still available to us. Production optimization, accounting and how you can faster pay invoices, some of the just simple process tactical things that machine learning is almost designed to optimize.

We’ve got a lot of low hanging fruit in the organization there. And so the potential for Kotera to get better with machine learning is really tremendous.

Unidentified speaker: How impactful do you think that could be? Is it just more smaller incremental changes or potential big needle movers?

Tom Jordan, CEO, Coterra: Well, in our viewpoint, the geoscience are the big needle movers. I always ask questions when we have projects is this going to make us a great company or not? Is this going to really move us forward in big leaps? And I think a lot of the implementations on paying a bill faster with one third less people. That’s a great thing for efficiency.

But we’re not going to distinguish ourselves by paying our invoices faster. We’re not going to distinguish ourselves by processing expense accounts faster. We need to do that, but we’re more focused on what are the big needle movers. How can machine learning help us with rearchitecting our own capital program where we spend billions of dollars? How can it make us more competitive in acquiring assets, how can it make us faster in evaluating opportunities, those are the needle movers.

You have to do all of it. But it’s just my desk, I’m going to focus on those big steps.

Unidentified speaker: Got it. That makes sense. Speaking to the three year outlook, I’ll say Cutera has been consistently outperforming mid single digit oil growth that’s been laid out in the last few years. As the company continues to scale up, do you think that’s still the right type of growth rate for a company of Caterasize now?

Tom Jordan, CEO, Coterra: Well, I don’t know what the right growth rate is. We don’t manage by growth rate. We really manage by we assess our capital and we decide how much of what we want to invest and then we try to find the most profitable investments we can find and growth is an outcome. We’re not afraid of growth as long as that growth comes with a lot of windage between what’s reasonable commodity price forecast and where you’d scrape against your cost of capital. So we look at that, we run our price file the durations down to $40 oil, dollars 2 gas.

We want to make sure we’ve got a lot of headspace between the market we’re investing into and the market we might be producing into. And so because of our low cost of supply, generally, we have a lot of degrees of freedom there. But we also have one of the lowest reinvestment rates in our sector. We’re as we look ahead, we’re at or below 50% depending on what price file that you want cite. But a reinvestment rate of 50% is certainly competitive in our sector.

And that’s kind of what we look at. And then growth is an outcome, not necessarily an input. It’s all about return on capital and future profitability.

Unidentified speaker: And as we think about that continued efficiency gains, whether that’s from AI or just operations, is there a tendency to want to save more on the CapEx side and letting the program continue to sort of run at the most efficient pace?

Tom Jordan, CEO, Coterra: Well, we always love to save on the CapEx side. I mean we seek to optimize, become as capital efficient as we can. But we are also in the business to invest. I mean, we’re not in the business to be dead in the water. I mean, like to invest and we have long duration assets, but we also like to invest in our own assets.

So we’re out there on a ground game leasing in various plays where we’re active and it’s about the future and making sure that, that future is available to our investors.

Unidentified speaker: No, that makes sense. So speaking to that 50% reinvestment rate, I think the strong cash flow generative ability of the business, not quite fully appreciated by the market, still the valuation is very attractive in our view. Are there ways in your view to really highlight the resilience of the business? And is there a way to maybe narrow that valuation gap? And I’m speaking to like how you guys think about cash return and really buying back stock if you think it’s attractive?

Tom Jordan, CEO, Coterra: Yes. Right now, I think the fault line for us in conversations with our owners is between retiring our debt or buying our stock. We took out $1,000,000,000 term loan when we bought these North Lea County assets and our state of intent is to retire those term loans. That’s still where we are. I think as you look ahead six months, we’ll be at a point where we will retire those term loans and we would pivot to a buyback.

Now we may feather that decision in. We may start buying back before the term loans are paid off. We’re having that discussion now. We have made new decisions. But that’s on a long term trajectory.

We want to get that debt retired and then get back to a fairly aggressive buyback. We see real value in our shares and we’d like to be in the market using that free cash flow.

Unidentified speaker: We’d love to see that. And even that, the balance sheet is quite good right now. Maybe speaking operationally, I’m just going to touch very quickly on Harki just because it’s still something that comes up every once in a while, just where the remediation efforts are now for these wells. And I’m also interested in the water issue. Like do you think the Harki wells is isolated in that area because of the saltwater disposal wells in proximity?

Or is it because of the that’s of the Harki interval themselves?

Tom Jordan, CEO, Coterra: Well, there are a lot of reasons why it’s happening in Culberson County. I will say it’s generally a basin wide phenomenon and that saltwater disposal in the Delaware Basin and really the larger Permian Basin is an emerging and serious issue. We started out injecting in the deep section and that had tremendous potential, but we ran into an induced seismicity issue. So in Texas, we’ve I believe in CoTERRA in particular, we pivoted, we got completely out of the deep injection and we’ve gotten into shallow injection as most operators inject shallow. That pore space is limited.

There’ll be a point where that pore space fills up. Now in Culberson County, we’re part of the basin that’s slightly less pressure than the Deep Basin. And that means that when we inject shallow, we’re pressuring up the shallow formation and introducing a pressure differential between that and surrounding formations. And so that’s introduced the issue. It’s not unique to Kotera.

In fact, I’ve said that after our second quarter call, we had some inbounds from offset operators wanting to discuss it because they’re facing the same issue. And there’s some public litigation going on over this issue that others are tied up in. We understand the phenomena. We think it’s well addressed. We don’t see it as material in any way to our future inventory.

And we’re very pleased with new wells we brought online that are responding very well with a subtle tweak in how we complete the well. So we’re very optimistic that we can manage this and get it behind us.

Unidentified speaker: Great. Do you think the industry is adequately prepared to handle that growing water issue in Delaware?

Tom Jordan, CEO, Coterra: Well, industry is a broad term. There are a few leading companies that are getting in front of this issue, and I’m proud to say, Kotera is one of them. And I think that dealing with our regulators, dealing with our peers, I think that the industry will find productive ways to solve this problem.

Unidentified speaker: Great. I also want to ask about the Franklin Avant asset in our Northern Delaware Basin. It’s almost a new sandbox for the technical team. What are some areas are they most excited about as they integrate the asset?

Tom Jordan, CEO, Coterra: Well, yes, we were talking about that in a meeting this morning. It’s an area where geology counts. There’s a lot of the basin where it’s just repeatable throughout and you can go three or four miles in the air direction and it’s just layer cake. This is an area of the basin where there’s rapid variation in geology. It’s extension of productivity that think has surprised many people and it really is hand knitting.

You can have a section that’s highly perspective and one next to it that’s less perspective. And so being good at geoscience really counts there and that’s exciting to us. We’re very involved in a land ground game and we’re having some success. I’ll say that our viewpoint of the asset and the inventory has increased since we’ve brought it into organization. We don’t like to talk about stick count.

We’ll talk about gross perforated interval, the entire lateral feet that the asset will make available to us. It’s increased significantly since we bought it, and we really love this area.

Unidentified speaker: Is there any midstream or infrastructure build out that’s needed to really start growing to really develop that asset?

Tom Jordan, CEO, Coterra: Yes. This is it’s sour gas, and so gas needs to be treated, and that’s a challenge to our midstream partners. But there are several good companies in the area and they’re coming up to speed and we’re working closely with them.

Unidentified speaker: Great, great. Maybe take a step back as maybe rounding this up in that before this conversation, we’re just talking about the history of Cimarex and how you were the founding member of Cimarex Energy in 2002 and have been the CEO since 2011. A lot has changed in the transformation of Cimarex and now Catera. How would you say is the culture of the company evolved through the transformation?

Tom Jordan, CEO, Coterra: I love talking about our culture. I’m a geophysicist. And so my passion is the technology and the science, the energy around ideas. And we’ve over time through a very aggressive intern program, built our company from the ground up with young talent. And today, we’re still a very young company.

I find myself when I started in this job, in this role, I was the youngest person in the room and now I’m finding I’m being referred to as the older statesman. And it’s a lot of fun because I’m surrounded by people that you have to work really hard to keep up with them. People that don’t know what can’t be done, people that have grown up in a culture of open ideas, non political, a culture that’s absolutely dedicated on facing our problems head on and not spinning our way through things, being transparent with our investors, with our regulators, but most importantly with ourselves throughout the organization. We freely exchange ideas and collaborate and it’s a culture that’s powerful and is the reason for our success. And we move people around.

We really expose people to different opportunities. Like for example, we’ve just taken two of our executives, as many of you know, Blake Sergo and Michael Deshazer. Michael has been long term head of our business units and Blake was our ops guy and we flipped their roles. And so now Michael is over operations and Blake is over the business units. And that’s not as big a change at Cotera than one would think because of our open culture, our degree of high collaboration.

Everybody is fairly familiar with there’s no silos at Kotera. So we have a lot of visibility into one another’s jobs and we do a lot of collaborating. But it’s an exciting opportunity for CoTERRA because they’ll bring fresh eyes, fresh perspectives. I’ve told both of them that you’re not getting each other’s jobs, you’re getting your new job and do it differently. And Cotero is a very young culture.

It shows up in everything we do. I’m surrounded by people that are younger and it’s exciting. The energy is exciting.

Unidentified speaker: And it speaks to your leadership in enabling that type of culture and that open mindset. I hate to ask this, but as we look ahead, Tom, I feel like I grew up in the industry watching you speak. But how do you think about the succession planning of the company and then the future leadership?

Tom Jordan, CEO, Coterra: Well, the Board is highly engaged as am I, and talent developments are one of our top challenges. We’ve got some great internal candidates and I think it’s probably apparent to anybody who looks at Kotera that my successor will be a fair amount younger than I was when I took the job. But the thing that I tell our Board is don’t ever get distracted by somebody’s age. Look at what they’ve done, what their capabilities are, what their temperament is. There’s a lot of very successful young CEOs in the industry generally.

And I will tell you, of the things I worry about, the future of Kotera and the future of our leadership is absolutely not one of them. And that’s not just because I have confidence in the executive team. From top to bottom, we’ve hired people out of school and given them big challenges early in their career. So I’ll take a 30 year old at Kotera and put them against anybody in our industry because they’ve managed multimillion dollar projects. They’ve had to stand and make recommendations.

They’ve also been challenged with dealing with failure and they know how to adapt. They’re innovative, they’re flexible and they’re also operating in a high trust environment. So I the future of Kotera is really, really secure.

Unidentified speaker: Well, that’s an inspiring message with a really high quality asset and enduring asset as well. So with that, Tom, it’s always a treat to have this conversation, and thank you again for being here.

Tom Jordan, CEO, Coterra: Betty, thank you so much.

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