10q10k10q10k.net

What changed in Coterra's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Coterra's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+255 added−224 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-25)

Top changes in Coterra's 2025 10-K

255 paragraphs added · 224 removed · 161 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+51 added−20 removed141 unchanged
Biggest changeOur bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of us, (2) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or agent of Coterra to Coterra or our stockholders, including a claim alleging the aiding and abetting of such a breach of fiduciary duty, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our bylaws or charter or (4) any action asserting a claim governed by the internal affairs doctrine or asserting an "internal corporate claim" shall, to the fullest extent permitted by law, be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the U.S. federal district court for the District of Delaware). 30 Table of Contents To the fullest extent permitted by applicable law, this exclusive-forum provision applies to state and federal law claims, including claims under the federal securities laws, including the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), although our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
Biggest changeOur bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of us, (2) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or agent of Coterra to Coterra or our stockholders, including a claim alleging the aiding and abetting of such a breach of fiduciary duty, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our bylaws or charter or (4) any action asserting a claim governed by the internal affairs doctrine or asserting an "internal corporate claim" shall, to the fullest extent permitted by law, be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the U.S. federal district court for the District of Delaware).
As a result, our ability to sell assets, engage in strategic transactions or obtain additional financing for working capital, capital expenditures, general corporate and other purposes may be adversely impacted. Our ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash in the future from operations, financings or asset sales.
As a result, our ability to buy and sell assets, engage in strategic transactions or obtain additional financing for working capital, capital expenditures, general corporate and other purposes may be adversely impacted. Our ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash in the future from operations, financings or asset sales.
To the extent we face increased regulatory requirements, we may be required to expend significant additional resources to meet such requirements. Risks Related to our Indebtedness, Hedging Activities and Financial Position We have substantial capital requirements, and we may not be able to obtain needed financing on satisfactory terms, if at all.
To the extent we face increased regulatory requirements, we may be required to expend significant additional resources to meet such requirements. Risks Related to our Indebtedness, Hedging Activities and Financial Position We have substantial capital expenditure requirements, and we may not be able to obtain needed financing on satisfactory terms, if at all.
A successful cyber-attack involving our information or operational technology systems and related infrastructure, or that of our business associates or partners, 25 Table of Contents could result in supply chain disruptions that delay or prevent the transportation and marketing of our production, equipment damage, fires, explosions or environmental releases, non-compliance leading to regulatory fines or penalties, loss or disclosure of, or damage to, our or any of our customer’s or supplier’s data or confidential information that could harm our business by damaging our reputation, subjecting us to potential financial or legal liability and requiring us to incur significant costs, including costs to repair or restore our systems and data or to take other remedial steps.
A successful cyber-attack involving our information or operational technology systems and related infrastructure, or that of our business associates or partners, 28 Table of Contents could result in supply chain disruptions that delay or prevent the transportation and marketing of our production, equipment damage, fires, explosions or environmental releases, non-compliance leading to regulatory fines or penalties, loss or disclosure of, or damage to, our or any of our customer’s or supplier’s data or confidential information that could harm our business by damaging our reputation, subjecting us to potential financial or legal liability and requiring us to incur significant costs, including costs to repair or restore our systems and data or to take other remedial steps.
Failure, or a perceived failure, to adequately respond to or meet evolving investor, stockholder or public ESG expectations, concerns and standards may cause a business entity to suffer reputational damage and materially and adversely affect the entity’s business, financial condition, or stock and debt prices.
Failure, or a perceived failure, to adequately respond to or meet evolving investor, stockholder or public expectations, concerns and standards may cause a business entity to suffer reputational damage and materially and adversely affect the entity’s business, financial condition, or stock and debt prices.
In addition, significant acquisitions can change the nature of our operations and business if the acquired properties have substantially different operating and geological characteristics or are in different geographic locations than our existing properties. 23 Table of Contents The integration of the businesses and properties we have acquired or may in the future acquire could be difficult and may divert management’s attention away from our existing operations.
In addition, significant acquisitions can change the nature of our operations and business if the acquired properties have substantially different operating and geological characteristics or are in different geographic locations than our existing properties. 26 Table of Contents The integration of the businesses and properties we have acquired or may in the future acquire could be difficult and may divert management’s attention away from our existing operations.
As of December 31, 2024, less than one percent of our net undeveloped acreage in our core operating areas will expire over the next three years. Our actual drilling activities may materially differ from those presently identified, which could adversely affect our business.
As of December 31, 2025, less than one percent of our net undeveloped acreage in our core operating areas will expire over the next three years. Our actual drilling activities may materially differ from those presently identified, which could adversely affect our business.
While there are many different types of derivatives available, we generally utilize collar, swap and basis swap agreements to manage price risk more effectively. 26 Table of Contents While these derivatives reduce the impact of declines in commodity prices, these derivatives conversely limit the benefit to us of increases in prices.
While there are many different types of derivatives available, we generally utilize collar, swap and basis swap agreements to manage price risk more effectively. 29 Table of Contents While these derivatives reduce the impact of declines in commodity prices, these derivatives conversely limit the benefit to us of increases in prices.
In addition, the government also may impose new restrictions and regulations affecting our ability to drill, conduct hydraulic fracturing operations, and obtain necessary rights-of-way on federal lands, which could, in turn, result in the loss of federal 24 Table of Contents leases.
In addition, the government also may impose new restrictions and regulations affecting our ability to drill, conduct hydraulic fracturing operations, and obtain necessary rights-of-way on federal lands, which could, in turn, result in the loss of federal 27 Table of Contents leases.
As a result, these provisions may make it more difficult for our stockholders to benefit from transactions that are opposed by an incumbent Board of Directors. The personal liability of our directors and officers for monetary damages for breach of their fiduciary duty of care is limited by the Delaware General Corporation Law and by our charter.
As a result, these provisions may make it more difficult for our stockholders to benefit from transactions that are opposed by an incumbent Board of Directors. 32 Table of Contents The personal liability of our directors and officers for monetary damages for breach of their fiduciary duty of care is limited by the Delaware General Corporation Law and by our charter.
Our future drilling activities may not be successful and, if unsuccessful, such failure will have an adverse effect on our future results of operations and financial condition. 21 Table of Contents Our operations present hazards and risks that require significant oversight and are subject to numerous possible disruptions from unexpected events.
Our future drilling activities may not be successful and, if unsuccessful, such failure will have an adverse effect on our future results of operations and financial condition. Our operations present hazards and risks that require significant oversight and are subject to numerous possible disruptions from unexpected events.
Notwithstanding the determinations made in the development of our 2025 plan, business opportunities not previously identified periodically may come to our attention, including possible acquisitions and dispositions.
Notwithstanding the determinations made in the development of our 2026 plan, business opportunities not previously identified periodically may come to our attention, including possible acquisitions and dispositions.
Moreover, economic or other circumstances may change from those contemplated by our 2025 plan, and our failure to recognize or respond to those changes may limit our ability to achieve our objectives.
Moreover, economic or other circumstances may change from those contemplated by our 2026 plan, and our failure to recognize or respond to those changes may limit our ability to achieve our objectives.
Competition for experienced geologists, engineers and some other professionals is extremely intense and can be exacerbated following a downturn in which talented professionals leave the industry or when potential new entrants to the industry decide not to undertake the professional training to enter the industry.
Competition for experienced geologists, engineers and some other professionals is extremely intense and can be exacerbated following a downturn in which talented professionals leave the industry or when potential new entrants to the industry decide not to 33 Table of Contents undertake the professional training to enter the industry.
Such hazards and risks could impact our business in the areas in which we operate, and our business and operations may be disrupted if we fail to respond in an appropriate manner to such hazards and risks or if we are unable to efficiently restore or replace affected operational components and capacity.
Such hazards and risks could impact our business in the areas in which we operate, and our business and operations may be disrupted if we fail to respond in an appropriate manner to such hazards and risks or if we are 24 Table of Contents unable to efficiently restore or replace affected operational components and capacity.
These factors could also cause the permits we need to 27 Table of Contents conduct our operations to be challenged, withheld, delayed, or burdened by requirements that restrict our ability to profitably conduct our business.
These factors could also cause the permits we need to conduct our operations to be challenged, withheld, delayed, or burdened by requirements that restrict our ability to profitably conduct our business.
The development and use of emerging technologies in renewable energy, battery storage, and energy efficiency may lower demand for oil and gas, resulting in lower prices and revenues, and higher costs.
The development and use of emerging technologies in renewable energy, battery storage, and energy efficiency may lower demand for oil and gas, resulting in lower prices and revenues, and higher costs. 31 Table of Contents Reputation Risk.
Other companies operate some of the properties in which we have an interest. As of December 31, 2024, non-operated wells represented approximately 50 percent of our total owned gross wells, or 12 percent of our owned net wells.
Other companies operate some of the properties in which we have an interest. As of December 31, 2025, non-operated wells represented approximately 49 percent of our total owned gross wells, or 11 percent of our owned net wells.
These factors include estimates of recoverable reserves, exploration and development potential, future commodity prices, operating costs, production taxes and potential environmental and other liabilities. These assessments are complex and inherently imprecise. Our review of the properties we acquire may not reveal all existing or potential problems.
Successful property acquisitions require an assessment of a number of factors beyond our control. These factors include estimates of recoverable reserves, exploration and development potential, future commodity prices, operating costs, production taxes and potential environmental and other liabilities. These assessments are complex and inherently imprecise. Our review of the properties we acquire may not reveal all existing or potential problems.
These changes, as in effect and as continuing to be implemented, as well as a reduced liquidity in oil and gas derivative market, could increase the cost of derivative contracts, limit the availability of derivatives to protect against risks that we encounter, reduce our ability to monetize or restructure our existing derivative contracts and increase our exposure to less creditworthy counterparties.
Reduced liquidity in the oil and gas derivative market could increase the cost of derivative contracts, limit the availability of derivatives to protect against risks that we encounter, reduce our ability to monetize or restructure our existing derivative contracts and increase our exposure to less creditworthy counterparties.
Failure to comply with applicable environmental and safety laws and regulations also may result in the suspension or termination of our operations and subject us to administrative, civil and criminal penalties as well as the imposition of corrective action requirements and orders. In addition, applicable laws and regulations require us to obtain many permits for the operation of various facilities.
Failure to comply with applicable environmental and safety laws and regulations also may result in the suspension or termination of our operations and subject us to administrative, civil and criminal penalties as well as the imposition of corrective action requirements and orders.
In developing our business plans, we considered allocating capital and other resources to various aspects of our business including well-development (primarily drilling and completion), reserve acquisitions, exploratory activity, corporate items and other alternatives. We also consider our likely sources of capital.
Our future growth prospects depend on our ability to identify optimal strategies for our business. In developing our business plans, we considered allocating capital and other resources to various aspects of our business including well-development (primarily drilling and completion), reserve acquisitions, exploratory activity, corporate items and other alternatives. We also consider our likely sources of capital.
Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prices we receive for the oil, natural gas and NGLs that we sell.
Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prices we receive for the oil, natural gas and NGLs that we sell. Lower commodity prices may reduce the amount of oil, natural gas and NGLs that we can produce economically.
In remote areas, vendors also can charge higher rates due to the inability to attract employees to those areas and the vendors’ ability to deploy their resources in easier-to-access areas.
In remote areas, vendors also can charge higher rates due to the inability to attract employees to those areas and the vendors’ ability to deploy their resources in easier-to-access areas. The effect of these competitive factors cannot be predicted.
Businesses across all industries are facing increasing scrutiny from investors, governmental authorities, regulatory agencies and the public related to their ESG practices, including practices and disclosures related to climate change, sustainability, diversity, equity and inclusion initiatives, and heightened governance standards.
Businesses across all industries are facing increasing scrutiny from investors, governmental authorities, regulatory agencies and the public related to their ESG practices, including practices and disclosures related to climate change, among others.
Our ability to access the capital markets may be restricted at a time when we want or need to raise capital, which could have an impact on our flexibility to react to changing economic and business conditions.
Our ability to access such sources of liquidity may be restricted at a time when we want or need to raise capital, which could have an impact on our flexibility to react to changing economic and business conditions and may cause us to curtail our exploration and development activity.
As noted above, we are also subject to the possibility of security and privacy breaches, which themselves may result in a violation of these laws.
As noted above, we are also subject to the possibility of security and privacy breaches, which themselves may result in a violation of these laws. Additionally, the acquisition of a company that is not in compliance with applicable data protection laws may result in a violation of these laws.
We make and expect to make substantial capital expenditures in connection with our development and production projects, as well as to finance our acquisitions. We rely on access to both our revolving credit agreement and longer-term capital markets as sources of liquidity for any capital requirements not satisfied by cash flow from operations or other sources.
We may need to rely on access to both our revolving credit agreement and longer-term capital markets as sources of liquidity for any capital requirements not satisfied by cash flow from operations or other sources.
Periodically U.S. legislators propose substantive changes to existing federal income tax laws that would repeal many tax incentives and deductions that are currently used by U.S. oil and gas companies and would impose new taxes.
Tax law changes could have an adverse effect on our financial position, results of operations and cash flows. Periodically U.S. legislators propose substantive changes to existing federal income tax laws that would repeal many tax incentives and deductions that are currently used by U.S. oil and gas companies and would impose new taxes.
The effect of these competitive factors cannot be predicted. 31 Table of Contents The declaration, payment and amounts of future dividends distributed to our stockholders and the repurchase of our common stock will be uncertain.
The declaration, payment and amounts of future dividends distributed to our stockholders and the repurchase of our common stock will be uncertain.
Developing PUD reserves requires significant capital expenditures, the estimated future development costs associated with our PUD reserves may not equal our actual costs, development may not occur as scheduled and results of our development 22 Table of Contents activities may not be as estimated.
As of December 31, 2025, approximately 17 percent of our estimated proved reserves (by volume) were undeveloped. Developing PUD reserves requires significant capital expenditures, the estimated future development costs associated with our PUD reserves may not equal our actual costs, development may not occur as scheduled and results of our development activities may not be as estimated.
For additional information, please read “Business and Properties—Other Business Matters—Regulation of Oil and Natural Gas Exploration and Production,” “—Regulation of Natural Gas Marketing, Gathering and Transportation,” and “—Environmental and Safety Regulations” in Items 1 and 2.
Failure to comply with applicable laws and regulations can result in fines and penalties or require us to incur substantial costs to remedy violations. For additional information, please read “Business and Properties—Other Business Matters—Regulation of Oil and Natural Gas Exploration and Production,” “—Regulation of Natural Gas Marketing, Gathering and Transportation,” and “—Environmental and Safety Regulations” in Items 1 and 2.
Policy actions also may include restrictions or bans on oil and gas activities, which could lead to write-downs or impairments of our assets or may incentivize the use of alternative or renewable sources of energy that could reduce the demand for our products.
Examples of policy actions that would increase the costs of our operations or lower demand for our oil and gas include shifting energy use toward lower emission sources or subsidizing or encouraging through regulatory shifts energy-efficiency solutions. Policy actions also may include restrictions or bans on oil and gas activities, which could lead to write-downs or impairments of our assets.
Such availability and capacity issues may result in increased basis differentials, which became more divergent in 2024 in part due to constrained pipeline capacity and oversupply in certain geographic areas. At times, such basis differentials have been significant enough to result in negative spot market pricing in certain areas, such as the Waha Hub in the Permian Basin during 2024.
Such availability and capacity issues may result in increased basis differentials, which became more divergent beginning in 2024 in part due to constrained pipeline capacity and oversupply in certain geographic areas.
Delays in the development of our PUD reserves, decreases in commodity prices and increases in costs to drill and develop such reserves may also result in some projects becoming uneconomic.
Delays in the development of our PUD reserves, decreases in commodity prices and increases in costs to drill and develop such reserves may also result in some projects becoming uneconomic. 25 Table of Contents Strategic determinations, including the allocation of capital and other resources to strategic opportunities, are challenging, and our failure to appropriately allocate capital and resources among our strategic opportunities may adversely affect our financial condition and reduce our growth rate.
Each of these risk factors could adversely affect our business, financial condition, results of operations and cash flows, as well as adversely affect the value of an investment in our common stock, debt securities, or preferred stock. Commodity prices fluctuate widely, and low prices for an extended period would likely have a material adverse impact on our business.
ITEM 1A. RISK FACTORS You should carefully consider the following risk factors in addition to the other information included in this report. Each of these risk factors could adversely affect our business, financial condition, results of operations and cash flows, as well as adversely affect the value of an investment in our common stock, debt securities, or preferred stock.
Acquired properties may not be worth what we pay to acquire them, due to uncertainties in evaluating recoverable reserves and other expected benefits, as well as potential liabilities. Successful property acquisitions require an assessment of a number of factors beyond our control.
This could result in wells being shut in or awaiting a pipeline connection or capacity, which would adversely affect our results of operations and cash flows. Acquired properties may not be worth what we pay to acquire them, due to uncertainties in evaluating recoverable reserves and other expected benefits, as well as potential liabilities.
The issuance of required permits is not guaranteed and, once issued, permits are subject to revocation, modification and renewal. Failure to comply with applicable laws and regulations can result in fines and penalties or require us to incur substantial costs to remedy violations.
In addition, 30 Table of Contents applicable laws and regulations require us to obtain many permits for the operation of various facilities. The issuance of required permits is not guaranteed and, once issued, permits are subject to revocation, modification and renewal.
Private individuals or public entities also could attempt to enforce environmental laws and regulations against us and could seek personal injury and property damages or other remedies.
Claims have been made against certain energy companies alleging that GHG emissions from oil, gas and NGL operations constitute a public nuisance under federal and state law. Private individuals or public entities also could attempt to enforce environmental laws and regulations against us and could seek personal injury and property damages or other remedies.
Legal risks include potential lawsuits or regulations regarding the impacts of climate change, failure to adapt to climate change, and the insufficiency of disclosure around material financial risks. For example, in September of 2023, California passed climate-related disclosure mandates.
Legal risks include potential lawsuits or regulations regarding the impacts of climate change, failure to adapt to climate change, and the insufficiency of disclosure around material financial risks. Furthermore, we could also face an increased risk of climate‐related litigation or “greenwashing” suits with respect to our operations, disclosures, or products.
The following is a summary of potential climate-related risks that could adversely affect us: Transition Risks. Transition risks are related to the transition to a lower-carbon economy and include policy and legal, technology, and market risks. Policy and Legal Risks.
The following is a summary of potential climate-related risks that could adversely affect us: Market Transition Risks. Increased transition to renewable or other alternative energy sources could adversely affect our business, results of operations and cash flows.
In addition, the CFTC has promulgated regulations to implement statutory requirements for derivatives transactions, including swaps. Although we believe that our use of swap transactions exempts us from certain regulatory requirements, the changes to the derivatives market regulation affect us directly and indirectly.
In addition, the CFTC has promulgated regulations to implement statutory requirements for derivatives transactions, including swaps.
Lower commodity prices may reduce the amount of oil, natural gas and NGLs that we can produce economically, while higher commodity prices could cause us to experience periods of higher costs. Historically, commodity prices have been volatile, with prices fluctuating widely, and they are likely to continue to be volatile.
Historically, commodity prices have been volatile, with prices fluctuating widely, and they are likely to continue to be volatile.
Removed
ITEM 1A. RISK FACTORS Business and Operational Risks You should carefully consider the following risk factors in addition to the other information included in this report.
Added
Risks Related to the Proposed Merger The Merger may not be completed and the Merger Agreement may be terminated in accordance with its terms. On February 1, 2026, we entered into the Merger Agreement with Devon to combine via an all-stock merger transaction.
Removed
As of December 31, 2024, approximately 18 percent of our estimated proved reserves (by volume) were undeveloped.
Added
The Merger is subject to a number of conditions to the closing, as specified in the Merger Agreement.
Removed
Strategic determinations, including the allocation of capital and other resources to strategic opportunities, are challenging, and our failure to appropriately allocate capital and resources among our strategic opportunities may adversely affect our financial condition and reduce our growth rate. Our future growth prospects depend on our ability to identify optimal strategies for our business.
Added
These closing conditions include, among others, (1) the receipt of the required approvals from Coterra stockholders and Devon stockholders, (2) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and (3) the absence of any governmental order or law that makes consummation of the Merger illegal or otherwise prohibited.
Removed
Any of these availability or capacity issues could negatively affect our operations, revenues and expenses. This could result in wells being shut in or awaiting a pipeline connection or capacity, which would adversely affect our results of operations and cash flows.
Added
We can provide no assurance that the required stockholder approvals will be obtained or that the required conditions to the closing will be satisfied.
Removed
Adverse economic and market conditions could adversely affect our ability to access such sources of liquidity. Future challenges in the global financial system may adversely affect the terms on which we are able to obtain financing, which could impact our business, financial condition and access to capital.
Added
These conditions to the completion of the Merger, some of which are beyond our control, may not be satisfied or waived in a timely manner or at all, and, accordingly, the Merger may be delayed or may not be completed at all.
Removed
In addition, organizations that provide ESG information to investors have developed ratings processes for evaluating a business entity’s approach to ESG matters. Although currently no universal rating standards exist, the importance of sustainability evaluations is becoming more broadly accepted by investors and stockholders, with some using these ratings to inform investment and voting decisions.
Added
Any delay in completing the Merger could cause the combined business not to realize, or to be delayed in realizing, some or all of the benefits that we expect to achieve if the Merger is successfully completed within its expected time frame. The termination of the Merger Agreement could negatively impact our business.
Removed
Additionally, certain investors use these scores to benchmark businesses against their peers and, if a business entity is perceived as lagging, these investors may engage with the entity to demand improved ESG disclosure or performance.
Added
If the Merger is not completed for any reason, including as a result of a failure to obtain the required approvals from our stockholders or Devon’s stockholders, our ongoing business may be adversely affected and, without realizing any of the expected benefits or having completed the Merger, we would be subject to a number of risks, including the following: • we may experience negative reactions from the financial markets, including negative impacts on our stock price; • we may experience negative reactions from our customers, distributors, suppliers, vendors, landlords, joint venture participants and other third parties with whom we do business, as well as our employees; • we will be required, in certain terminations, to pay Devon a termination fee of $865 million and up to $40 million as reimbursement for Devon’s reasonable and documented fees and expenses in connection with the Merger; and • we will required to pay our costs relating to the Merger, including financial advisory, legal and accounting fees and expenses, regardless of whether the Merger is completed.
Removed
Moreover, certain members of the broader investment community may consider a business entity’s sustainability score as a reputational or other factor in making an investment decision.
Added
The business relationships of Coterra and Devon may be subject to disruption and uncertainty associated with the Merger, which could have a material adverse effect on the business, financial condition, cash flows and results of operations of Coterra or Devon pending and following the Merger.
Removed
Consequently, a low sustainability score could result in exclusion of our securities from consideration by certain investment funds, engagement by investors seeking to improve such scores and a negative perception of our operations by certain investors.
Added
Regardless of whether the Merger is completed, the announcement and pendency of the Merger could cause disruptions to our business and financial results, including as follows: • our and Devon’s current and prospective employees may experience uncertainty about their future roles with the combined business or the operations of the combined business following the Merger, which might adversely affect the two companies’ abilities to retain key management and other personnel; • uncertainty regarding the completion of the Merger may cause parties with which we or Devon do business, including customers, distributors, suppliers, vendors, landlords, joint venture participants and other third parties, to delay or defer certain business decisions or to decide to seek to terminate, change or renegotiate their relationships with us or Devon; and • the Merger Agreement restricts us from pursuing attractive business opportunities or strategic transactions that may arise prior to completion of the Merger.
Removed
In addition, efforts in recent years aimed at the investment community to generally promote the divestment of fossil fuel equities and to limit or curtail activities with companies engaged in the extraction of fossil fuel reserves could limit our ability to access capital markets.
Added
These disruptions could have a material and adverse effect on the business, financial condition, cash flows and results of operations, Coterra or Devon, regardless of whether the Merger is completed, as well as a material and adverse effect on our ability to realize the expected cost savings and other benefits of the Merger.
Removed
These initiatives by activists and banks, including certain banks who are parties to the credit agreement providing for our revolving credit agreement, could interfere with our business activities, operations and ability to access capital.
Added
The risk, and adverse effects, of any disruption could be exacerbated by a delay in completion of the Merger or termination of the Merger Agreement. 21 Table of Contents In addition, we have and will continue to divert significant management resources in an effort to complete the Merger.
Removed
Examples of policy actions that would increase the costs of our operations or lower demand for our oil and gas include implementing carbon-pricing mechanisms, shifting energy use toward lower emission sources, adopting energy-efficiency solutions, encouraging greater water efficiency measures, and promoting more sustainable land-use practices.
Added
If the Merger is not completed, we will have incurred significant costs, including the diversion of management resources, for which we will have received little or no benefit.
Removed
For example, the IRA contains tax inducements and other provisions that incentivize investment, development and deployment of alternative energy sources and technologies, and at COP28 in December 2023, more than 190 governments reached a non-binding agreement to transition away from fossil fuels and encourage the growth and expansion of renewable energy.
Added
Because the market price of Devon common stock has fluctuated and will continue to fluctuate, our stockholders cannot be sure of the value of the consideration they will receive in the Merger, if completed.
Removed
Furthermore, we could also face an increased risk of climate‐related litigation or “greenwashing” suits with respect to our operations, disclosures, or products. Claims have been made against certain energy companies alleging that GHG emissions 28 Table of Contents from oil, gas and NGL operations constitute a public nuisance under federal and state law.
Added
If the Merger is completed, each eligible share of the Coterra common stock outstanding immediately prior to the Merger will automatically be converted into the right to receive 0.70 shares of Devon common stock. The value of the Devon common stock will depend on the market price at the time the Merger is completed.
Removed
In addition, many automobile manufacturers have announced plans to shift production from internal combustion engine to electric powered vehicles, and states and foreign countries have announced bans on sales of internal combustion engine vehicles beginning as early as 2025, which would reduce demand for oil. Market Risks.
Added
Prior to completion of the Merger, the market price of Devon common stock is also expected to impact the market price of Coterra common stock. The value of Devon common stock has fluctuated since the date of the announcement of the Merger agreement and will continue to fluctuate.
Removed
Markets could be affected by climate change through shifts in supply and demand for certain commodities, especially carbon-intensive commodities such as oil and gas and other products dependent on oil and gas. Lower demand for our oil and gas production could result in lower prices and lower revenues.
Added
Accordingly, our stockholders will not know or be able to determine the market value of the merger consideration that they would receive upon completion of the Merger.
Removed
Market risk also may take the form of limited access to capital as investors shift investments to less carbon-intensive industries and alternative energy industries.
Added
Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Devon’s and our respective businesses, operations and prospects, market assessments of the likelihood that the Merger will be completed and the timing of the Merger and regulatory considerations. Many of these factors and beyond Devon’s and our control.
Removed
In addition, investment advisers, banks, and certain sovereign wealth, pension and endowment funds recently have been promoting divestment of investments in fossil fuel companies and pressuring lenders to limit funding to companies engaged in the extraction, production and sale of oil and gas.
Added
The Merger Agreement subjects us to restrictions on our business activities prior to the effective time of the Merger, limits our ability to pursue alternatives to the Merger and may discourage other companies from making a favorable alternative transaction proposal.
Removed
For additional information, please read “—Risks Related to our Indebtedness, Hedging Activities and Financial Position—We have substantial capital requirements, and we may not be able to obtain needed financing on satisfactory terms, if at all.” in this Item 1A. Reputation Risk.

… 34 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−0 removed8 unchanged
Biggest changeAmong our CIMT, our VP - IT holds the highest level of executive responsibility for assessing and managing cybersecurity threats, incidents, and risks, as well as developing and implementing all cybersecurity risk management, strategy, and governance recommendations. Our VP - IT leads all components of our information technology functions and reports to our Executive Vice President and Chief Financial Officer.
Biggest changeAmong our CIMT, our Executive Vice President and Chief Financial Officer holds the highest level of executive responsibility for assessing and managing cybersecurity threats, incidents, and risks. Our Director - IT Security is responsible for developing and implementing all cybersecurity risk management, strategy, and governance recommendations, and reports to our Executive Vice President and Chief Financial Officer.
In particular, our VP - IT has over 29 years of experience in the field of information systems and cybersecurity and leads an experienced security and networking team with 71 years of additional combined experience in developing and executing cybersecurity strategies.
In particular, our Director - IT Security has over 29 years of experience in the field of information systems and cybersecurity and leads an experienced security and networking team with 71 years of additional combined experience in developing and executing cybersecurity strategies.
The Audit Committee relies in large part on such periodic updates and presentations from our management team in developing its reports to the Board of Directors. Risk Management and Strategy We maintain a cybersecurity Incident Response Plan (“IRP”) designed to identify, assess, manage, mitigate, and respond to cybersecurity risks, threats and incidents.
The Audit Committee relies in large part on such periodic updates and presentations from our management team in developing its reports to the Board of Directors. 34 Table of Contents Risk Management and Strategy We maintain a cybersecurity Incident Response Plan (“IRP”) designed to identify, assess, manage, mitigate, and respond to cybersecurity risks, threats and incidents.
Our CIRT is supported by dedicated Information Technology (“IT”) and Operational Technology (“OT”) security resources, and further supported by various external parties, including but not limited to, cybersecurity service providers, assessors, consultants, auditors, and other third parties engaged on an as-needed basis. 32 Table of Contents The CIRT determines whether a cybersecurity incident warrants escalation to the CIMT.
Our CIRT is supported by dedicated Information Technology (“IT”) and Operational Technology (“OT”) security resources, and further supported by various external parties, including but not limited to, cybersecurity service providers, assessors, consultants, auditors, and other third parties engaged on an as-needed basis. The CIRT determines whether a cybersecurity incident warrants escalation to the CIMT.
However, the nature of potential cybersecurity risks and threats are uncertain, and any future incidents, outages or breaches could have a material adverse effect on our reputation, business strategy, results of operations or financial condition.
However, the nature of potential cybersecurity risks and threats are 35 Table of Contents uncertain, and any future incidents, outages or breaches could have a material adverse effect on our reputation, business strategy, results of operations or financial condition.
ITEM 1C. CYBERSECURITY Governance Our Board of Directors, with assistance from our Audit Committee and Cybersecurity Steering Committee, oversees our risk management program, which includes technology and cybersecurity risks. Our management team, including our Vice President - Information Technology (“VP - IT”), provides periodic updates on risk management to the Audit Committee and to the Board of Directors.
ITEM 1C. CYBERSECURITY Governance Our Board of Directors, with assistance from our Audit Committee and Cybersecurity Steering Committee, oversees our risk management program, which includes technology and cybersecurity risks.
Added
Our management team, including our Director - IT Security who reports to our Executive Vice President and Chief Financial Officer, provides periodic updates on risk management, including technology and cybersecurity risk management, to the Audit Committee and to the Board of Directors.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+1 added−1 removed5 unchanged
Biggest changeWe believe that any fines, penalties, or corrective actions that may result from these matters will not have a material effect on our financial position, results of operations, or cash flows. 33 Table of Contents
Biggest changeHowever, any enforcement action related to these NOVOCs will likely result in fines or penalties, or both, and corrective actions, which may increase our development costs or operating costs. We believe that any fines, penalties, or corrective actions that may result from these matters will not have a material effect on our financial position, results of operations, or cash flows.
While we cannot predict with certainty whether these notices of violation will result in fines, penalties or both, if fines or penalties are imposed, they may result in monetary sanctions, individually or in the aggregate, in excess of $300,000. In June 2023, we received a Notice of Violation and Opportunity to Confer (“NOVOC”) from the U.S.
While we cannot predict with certainty whether these notices of violation will result in fines, penalties or both, if fines or penalties are imposed, they may result in monetary sanctions, individually or in the aggregate, in excess of a specified threshold. We have elected to use a $1 million threshold for disclosing governmental proceedings of this nature.
Removed
However, any enforcement action related to these NOVOCs will likely result in fines or penalties, or both, and corrective actions, which may increase our development costs or operating costs.
Added
We believe proceedings under this threshold are not material to our business and financial condition. In June 2023, we received a Notice of Violation and Opportunity to Confer (“NOVOC”) from the U.S.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

16 edited+3 added−2 removed0 unchanged
Biggest changeMs. Alexander was appointed Senior Vice President and Chief Human Resources Officer in July 2023. Ms. Alexander served as Chief People Officer at Rent the Runway from June 2021 to July 2023. Ms. Alexander served in various roles of increasing responsibility, including Associate Partner and Professional Development Manager, at McKinsey & Company, a management consulting company, from 2009 to 2021.
Biggest changeAlexander served in various roles of increasing responsibility, including Associate Partner and Professional Development Manager, at McKinsey & Company, a management consulting company, from 2009 to 2021. Mr. Smith was appointed Senior Vice President and Chief Technology Officer in May 2024. Mr. Smith previously served as Vice President and Chief Technology Officer following the merger with Cimarex in October 2021.
Smith began his career with Cimarex in 2007, serving in a number of technical and leadership roles, including Director of Technology and Anadarko Exploration Region Manager. In September 2020, Mr. Smith assumed the role of Chief Engineer for Cimarex. Mr. Vela was appointed Senior Vice President and General Counsel in August 2023. Mr.
Mr. Smith began his career with Cimarex in 2007, serving in a number of technical and leadership roles, including Director of Technology and Anadarko Exploration Region Manager. In September 2020, Mr. Smith assumed the role of Chief Engineer for Cimarex. Mr. Vela was appointed Senior Vice President and General Counsel in August 2023. Mr.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table shows certain information as of February 25, 2025 about our executive officers, as such term is defined in Rule 3b-7 of the Securities Exchange Act of 1934. All officers are elected annually by our Board of Directors. Name Age Position Thomas E.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table shows certain information as of February 13, 2026 about our executive officers, as such term is defined in Rule 3b-7 of the Securities Exchange Act of 1934. All officers are elected annually by our Board of Directors. Name Age Position Thomas E.
Sirgo served in a number of technical and leadership roles since joining Cimarex in 2008, including Vice President of Operations from February 2020 to October 2021, Vice President of Operation Resources from November 2018 to February 2020, Permian Division Production Manager from June 2016 to November 2018, and in various engineering and production manager positions. Before joining Cimarex, Mr.
Sirgo joined Cimarex in 2008, serving in a number of technical and leadership roles, including Vice President of Operations from February 2020 to October 2021, Vice President of Operation Resources from November 2018 to February 2020, Permian Division Production Manager from June 2016 to November 2018, and in various engineering and production manager positions. Before joining Cimarex, Mr.
DeShazer joined Cimarex in 2007, serving in various engineering and reservoir manager positions, as well as multiple leadership roles, including Technology Group Manager from 2016 to 2018, Asset Evaluation Team Manager from 2018 to 2019 and Vice President of the Permian Business Unit in 2019. Mr. Sirgo was appointed Senior Vice President of Operations in October 2022. Mr.
DeShazer joined Cimarex in 2007, serving in various engineering and reservoir manager positions, as well as multiple leadership roles, including Technology Group Manager from 2016 to 2018, Asset Evaluation Team Manager from 2018 to 2019 and Vice President of the Permian Business Unit in 2019. Mr.
Roemer is a Certified Public Accountant in the state of Texas. 35 Table of Contents PART II
Conaway is a Certified Public Accountant in the state of Texas. 37 Table of Contents PART II
Young was appointed Executive Vice President and Chief Financial Officer in July 2023. From 2019 to 2023, Mr. Young served as Executive Vice President and Chief Financial Officer of Talos Energy Inc. Prior to joining Talos Energy Inc., Mr. Young served in similar positions with Sheridan Production Company, LLC, Cobalt International Energy, Inc. and Talos Energy LLC. Mr.
Young served as Executive Vice President and Chief Financial Officer of Talos Energy Inc. Prior to joining Talos Energy Inc., Mr. Young served in similar positions for Sheridan Production Company, LLC, Cobalt International Energy, Inc. and Talos Energy LLC. Mr.
Jorden 67 Chairman, Chief Executive Officer and President Shannon E. Young III 54 Executive Vice President and Chief Financial Officer Stephen P. Bell 70 Executive Vice President, Business Development Andrea M. Alexander 43 Senior Vice President and Chief Human Resources Officer Michael D. DeShazer 39 Senior Vice President, Business Units Blake A. Sirgo 42 Senior Vice President, Operations Kevin W.
Jorden 68 Chairman, Chief Executive Officer and President Shannon E. Young III 54 Executive Vice President and Chief Financial Officer Michael D. DeShazer 40 Executive Vice President — Operations Blake A. Sirgo 43 Executive Vice President — Business Units Andrea M. Alexander 43 Senior Vice President and Chief Human Resources Officer Kevin W.
Young served as a Managing Director for the Global Energy Group at Goldman, Sachs & Co. from 2010 to 2014 and was an investment banker at Morgan Stanley from 1998 to 2010. Mr. Bell was appointed Executive Vice President of Business Development following the Merger in October 2021. At Cimarex, Mr.
Young served as a Managing Director for the Global Energy Group at Goldman, Sachs & Co. from 2010 to 2014 and was an investment banker at Morgan Stanley from 1998 to 2010. Mr. DeShazer was appointed Executive Vice President — Operations in August 2025, having previously served as Executive Vice President — Business Units since April 2025. Mr.
Jorden held multiple leadership roles at Key Production Company, Inc. (“Key”), which was acquired by Cimarex in 2002. He joined Key in 1993 as Chief Geophysicist and subsequently became Executive Vice President of Exploration. Before joining Key, Mr. Jorden served at Union Pacific Resources and Superior Oil Company. Mr.
He joined Key in 36 Table of Contents 1993 as Chief Geophysicist and subsequently became Executive Vice President of Exploration. Before joining Key, Mr. Jorden served at Union Pacific Resources and Superior Oil Company. Mr. Young was appointed Executive Vice President and Chief Financial Officer in July 2023. From 2019 to 2023, Mr.
Smith 39 Senior Vice President and Chief Technology Officer Adam M. Vela 51 Senior Vice President, General Counsel Todd M. Roemer 54 Vice President and Chief Accounting Officer Mr. Jorden was appointed Chief Executive Officer and President of Coterra following the Merger in October 2021 and Chairman of the Board of Coterra in November 2022. Mr.
Smith 40 Senior Vice President and Chief Technology Officer Adam M. Vela 52 Senior Vice President and General Counsel Gregory F. Conaway 50 Vice President and Chief Accounting Officer Mr. Jorden was appointed Chief Executive Officer and President of Coterra following the merger with Cimarex Energy Co.
Mr. DeShazer was appointed Senior Vice President of Business Units in May 2024. Mr. DeShazer previously served as Vice President of Business Units following the Merger in October 2021. Mr.
DeShazer also served as Senior Vice President of Business Units from May 2024 to April 2025 and Vice President of Business Units from October 2021 to May 2024. Mr.
Vela previously served in various capacities at Coterra and Cimarex beginning in 2005, including Vice President, Assistant General Counsel, Chief Litigation Counsel and Corporate Counsel. Mr. Vela is a member of the Texas, Colorado, American and Houston Hispanic Bar associations, as well as the Foundation for Natural Resources and Energy Law. Mr.
Vela is a member of the Texas, Colorado, American and Houston Hispanic Bar associations, as well as the Foundation for Natural Resources and Energy Law. Mr. Conaway was appointed Vice President and Chief Accounting Officer in September 2025 after joining Coterra in August 2025 as Vice President - Accounting. Prior to joining Coterra in 2025, Mr.
Jorden previously served as the Chief Executive Officer and President of Cimarex beginning September 2011 and as Chairman of the Board of Directors of Cimarex beginning August 2012. At Cimarex, he began serving as Executive Vice President of Exploration when the company formed in 2002. Prior to the formation of Cimarex, Mr.
(now known as Coterra Energy Operating Co, or “Cimarex”) in October 2021 and Chairman of the Board of Coterra in November 2022. Mr. Jorden previously served as the Chief Executive Officer and President of Cimarex beginning September 2011 and as Chairman of the Board of Directors of Cimarex beginning August 2012.
Sirgo previously served as Vice President of Operations at Coterra from October 1, 2021 to October 1, 2022. Prior to the Merger in October 2021, Mr.
Sirgo was appointed Executive Vice President — Business Units in August 2025, having previously served as Executive Vice President — Operations since April 2025. Mr. Sirgo also served as Senior Vice President of Operations from October 2022 to April 2025 and as Vice President of Operations from October 2021 to October 2022. Mr.
Sirgo worked at Occidental Petroleum. 34 Table of Contents Mr. Smith was appointed Senior Vice President and Chief Technology Officer in May 2024. Mr. Smith previously served as Vice President and Chief Technology Officer following the Merger in October 2021. Mr.
Sirgo worked at Occidental Petroleum. Ms. Alexander was appointed Senior Vice President and Chief Human Resources Officer in July 2023. Ms. Alexander served as Chief People Officer at Rent the Runway from June 2021 to July 2023. Ms.
Removed
Bell was appointed Senior Vice President of Business Development and Land in September 2002 and was named Executive Vice President of Business Development in September 2012. Mr. Bell served at Key prior to its acquisition by Cimarex. He joined Key in 1994 as Vice President of Land and was appointed Senior Vice President of Business Development and Land in 1999.
Added
At Cimarex, he began serving as Executive Vice President of Exploration when the company formed in 2002. Prior to the formation of Cimarex, Mr. Jorden held multiple leadership roles at Key Production Company, Inc. (“Key”), which was acquired by Cimarex in 2002.
Removed
Roemer was appointed Vice President and Chief Accounting Officer in July 2019. Mr. Roemer previously served as Vice President and Controller from February 2017 to July 2019 and Controller from March 2010 to February 2017. Prior to joining Coterra in 2010, Mr. Roemer was a Senior Manager in the energy practice of PricewaterhouseCoopers LLP. Mr.
Added
Vela previously served as Vice President and General Counsel since October 2022. Mr. Vela previously served in various capacities at Coterra and Cimarex beginning in 2005, including Vice President, Assistant General Counsel, Chief Litigation Counsel and Corporate Counsel. Mr.
Added
Conaway was the Chief Accounting Officer of Acuren Corporation, a global inspection, certification and compliance engineering services firm, from November 2024 to April 2025, and as Vice President and Chief Accounting officer of Callon Petroleum Operating Co., an independent oil and natural gas company from January 2020 to March 2024. Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed1 unchanged
Biggest changeThe share repurchase program does not have an expiration date. Purchases were made under terms intended to qualify for exemption under Rules 10b-18 and 10b5-1. (2) In October 2024, we purchased 351,791 shares of common stock delivered to us by employees to satisfy withholding taxes on the vesting of restricted stock awards.
Biggest changeThe share repurchase program does not have an expiration date. Purchases were made under terms intended to qualify for exemption under Rules 10b-18 and 10b5-1. (2) Includes 114,256 shares that were repurchased prior to December 31, 2025 and settled in January 2026.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our $0.10 par value common stock is listed and principally traded on the NYSE under the ticker symbol “CTRA.” Cash dividends were paid to our common stockholders in each quarter of 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our $0.10 par value common stock is listed and principally traded on the NYSE under the ticker symbol “CTRA.” Cash dividends were paid to our common stockholders in each quarter of 2025.
The following table sets forth information regarding repurchases of our common stock during the quarter ended December 31, 2024.
The following table sets forth information regarding repurchases of our common stock during the quarter ended December 31, 2025.
Future dividend payments will depend on the Company’s level of earnings, financial requirements and other factors considered relevant by our Board of Directors. As of February 14, 2025, there were 884 registered holders of our common stock.
Future dividend payments will depend on the Company’s level of earnings, financial requirements and other factors considered relevant by our Board of Directors. As of February 13, 2026, there were 834 registered holders of our common stock.
During the quarter ended December 31, 2024, we purchased 2 million shares of common stock for $58 million, bringing our total repurchases in 2024 to 17 million shares of common stock at a total cost of $464 million. As of December 31, 2024, we were authorized to repurchase up to approximately an additional $1.1 billion of our outstanding common stock.
During the quarter ended December 31, 2025, we purchased 4 million shares of common stock for $93 million, bringing our total repurchases in 2025 to 6 million shares of common stock at a total cost of $140 million. As of December 31, 2025, we were authorized to repurchase up to approximately an additional $1.0 billion of our outstanding common stock.
Period (1) Total Number of Shares Purchased (In thousands) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (In thousands) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (In millions) October 2024 (2) 352 $ 24.15 352 $ 1,175 November 2024 443 $ 24.80 443 $ 1,164 December 2024 1,617 $ 24.12 1,617 $ 1,125 Total 2,412 2,412 _______________________________________________________________________________ (1) All purchases during the covered periods were made under the share repurchase program, which was approved by our Board of Directors in February 2023 and which authorized the repurchase of up to $2.0 billion of our common stock.
Period (1) Total Number of Shares Purchased (In thousands) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (In thousands) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (In millions) October 2025 2,316 $ 23.39 2,316 $ 1,024 November 2025 — — — $ 1,024 December 2025 (2) 1,506 $ 25.88 1,506 $ 985 Total 3,822 3,822 _______________________________________________________________________________ (1) All purchases during the covered periods were made under the share repurchase program, which was approved by our Board of Directors in February 2023 and which authorized the repurchase of up to $2.0 billion of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

76 edited+32 added−39 removed54 unchanged
Biggest changeThis decrease was partially offset by higher production in the Permian and Anadarko Basins. 43 Table of Contents NGL Revenues Year Ended December 31, Variance Increase (Decrease) (In millions) 2024 2023 Amount Percent Volume (MMBbl) 37.0 32.9 4.1 12 % $ 80 Price ($/Bbl) $ 19.95 $ 19.56 $ 0.39 2 % 14 Total $ 94 NGL revenues increased $94 million primarily due to higher NGL volumes in the Permian Basin and Anadarko Basin and slightly higher NGL prices.
Biggest changeNGL Revenues Year Ended December 31, Variance Increase (Decrease) (In millions) 2025 2024 Amount Percent Volume (MMBbl) 46.2 37.0 9.2 25 % $ 185 Price ($/Bbl) $ 18.24 $ 19.95 $ (1.71) (9) % (79) Total $ 106 NGL revenues increased $106 million primarily due to higher NGL volumes in the Permian Basin and Anadarko Basin, partially offset by lower NGL prices. 45 Table of Contents Gain (Loss) on Derivative Instruments, Net Net gains and losses on our derivative instruments are a function of fluctuations in the underlying commodity index prices as compared to the contracted prices and the monthly cash settlements (if any) of the derivative instruments.
For more on the impact of credit ratings on our interest rates and fees for unused commitments under our revolving credit agreement, see Note 4 of the Notes to the Consolidated Financial Statements, “Long-Term Debt and Credit Agreements.” We believe that, with operating cash flow, cash on hand and availability under our revolving credit agreement and term loan, we have the ability to finance our spending plans over the next twelve months and, based on current expectations, for the longer term.
For more on the impact of credit ratings on our interest rates and fees for unused commitments under our revolving credit agreement, see Note 4 of the Notes to the Consolidated Financial Statements, “Long-Term Debt and Credit Agreements.” We believe that, with operating cash flow, cash on hand and availability under our revolving credit agreement, we have the ability to finance our spending plans over the next twelve months and, based on current expectations, for the longer term.
Revolving Credit Agreement In September 2024, we entered into Amendment No. 1 (the “Amendment”) relating to our revolving credit agreement with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and certain lenders and issuing banks party thereto (as amended by the Amendment, and further amended, supplemented or otherwise modified from time-to-time, the “Credit Agreement”).
Revolving Credit Agreement In September 2024, we entered into Amendment No. 1 (the “Amendment”) relating to our revolving credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and certain lenders and issuing banks party thereto (as amended by the Amendment, and further amended, supplemented or otherwise modified from time-to-time, the “Credit Agreement”).
In 2024, greater than 90 percent of the total future net revenue discounted at 10 percent attributable to our proved reserves were subject to this evaluation. For more information regarding reserves estimation, including historical reserves revisions, refer to the Supplemental Oil and Gas Information included in Item 8.
In 2025, greater than 90 percent of the total future net revenue discounted at 10 percent attributable to our proved reserves were subject to this evaluation. For more information regarding reserves estimation, including historical reserves revisions, refer to the Supplemental Oil and Gas Information included in Item 8.
For information on the comparison of operating, investing, and financing cash flows for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Financial Condition (Cash Flows) included in the Coterra Energy Inc. Annual Report on Form 10-K for the year ended December 31, 2023, which information in incorporated by reference herein.
For information on the comparison of operating, investing, and financing cash flows for the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Financial Condition (Cash Flows) included in the Coterra Energy Inc. Annual Report on Form 10-K for the year ended December 31, 2024, which information in incorporated by reference herein.
In addition, changes in estimates of reserve quantities, estimates of operating and future development costs, reclassifications of properties from unproved to proved and impairments of oil and gas properties will also impact depletion expense. Our depletion expense increased $198 million primarily due to a higher depletion rate and an increase in production.
In addition, changes in estimates of reserve quantities, estimates of operating and future development costs, reclassifications of properties from unproved to proved and impairments of oil and gas properties will also impact depletion expense. Our depletion expense increased $495 million primarily due to a higher depletion rate and an increase in production.
Our revolving credit agreement and term loan include a covenant potentially limiting our borrowing capacity as determined by our leverage ratio. As of December 31, 2024, we were in compliance with all financial covenants applicable to our revolving credit agreement, term loan and private placement senior notes.
Our revolving credit agreement and term loan include a covenant potentially limiting our borrowing capacity as determined by our leverage ratio. As of December 31, 2025, we were in compliance with all financial covenants applicable to our revolving credit agreement, term loan and private placement senior notes.
While there are no “rating triggers” in any of our debt agreements that 38 Table of Contents would accelerate the scheduled maturities should our debt rating fall below a certain level, a change in our debt rating could adversely impact our interest rate on any borrowings under our revolving credit agreement and our ability to economically access debt markets and could trigger the requirement to post credit support under various agreements, which could reduce the borrowing capacity under our revolving credit agreement.
While there are no “rating triggers” in any of our debt agreements that would accelerate the scheduled maturities should our debt rating fall below a certain level, a change in our debt rating could adversely impact our interest rate on any borrowings under our revolving credit agreement and our ability to economically access debt markets and could trigger the requirement to post credit support under various agreements, which could reduce the borrowing capacity under our revolving credit agreement.
Our financial condition, results of operations and liquidity can be significantly impacted by changes in the market value of our derivative instruments due to volatility of commodity prices, including changes in both index prices (such as NYMEX) and basis differentials. Income Taxes We make certain estimates and judgments in determining our income tax expense for financial reporting purposes.
Our financial condition, results of operations and liquidity can be significantly impacted by changes in the market value of our derivative instruments due to volatility of commodity prices, including changes in both index prices (such as NYMEX) and basis differentials. 51 Table of Contents Income Taxes We make certain estimates and judgments in determining our income tax expense for financial reporting purposes.
Our liquidity requirements are generally funded with cash flows provided by operating activities, together with cash on hand. However, from time-to-time, our investments may be funded by bank borrowings (including draws under our revolving credit agreement), sales of assets, and private or public financing based on our monitoring of capital markets and our balance sheet.
Our liquidity requirements are generally funded with cash flows provided by operating activities, together with cash on hand and draws under our revolving credit agreement. However, from time-to-time, our investments may be funded by sales of assets and private or public financing based on our monitoring of capital markets and our balance sheet.
The Term Loan includes certain customary covenants, including the maintenance of a maximum leverage ratio of no more than 3.0 to 1.0 as of the last day of any fiscal quarter until such time as we have no other debt (other than our Credit Agreement) in a principal amount in excess of $75 million outstanding that has a financial maintenance covenant based on a leverage ratio, at which time the Term Loan requires maintenance of a ratio of total net debt to capitalization of no more than 65 percent (with all calculations based on definitions contained in the Term Loan).
The Term Loan contains customary covenants, including the maintenance of a maximum leverage ratio of no more than 3.0 to 1.0 as of the last day of any fiscal quarter until such time as we have no other debt (other than our Credit Agreement as defined below) in a principal amount in excess of $75 million outstanding that has a financial maintenance covenant based on a leverage ratio, at which time the Term Loan requires maintenance of a ratio of total net debt to total capitalization of no more than 65 percent (with all calculations based on definitions contained in the Term Loan).
We have considered these impacts when determining the amortization of our unproved acreage. If the average unproved property life decreases or increases by one year, the amortization would increase by approximately $12 million or decrease by $8 million, respectively, per year. As these properties are developed and reserves are proved, the remaining capitalized costs are subject to depreciation and depletion.
We have considered these impacts when determining the amortization of our unproved acreage. If the average unproved property life decreases or increases by one year, the amortization would increase by approximately $15 million or decrease by $10 million, respectively, per year. As these properties are developed and reserves are proved, the remaining capitalized costs are subject to depreciation and depletion.
Annual Report on Form 10-K for the year ended December 31, 2023, which information is incorporated by reference herein.
Annual Report on Form 10-K for the year ended December 31, 2024, which information is incorporated by reference herein.
Borrowings under the Term Loan bear interest at a rate per annum equal to, at our option, either (i) a term SOFR plus a 0.10 percent credit spread adjustment for all tenors or (ii) a base rate, plus an interest rate margin which ranges from 0 to 75 basis points for base rate loans, 100 to 175 basis points for Tranche A SOFR Term Loans and 112.5 to 187.5 basis points for Tranche B SOFR Term Loans based on our credit rating.
Borrowings under the Term Loan bear interest at a rate per annum equal to, at our option, either a term secured overnight financing rate (“SOFR”) plus a 0.10 percent credit spread adjustment for all tenors or a base rate, plus an interest rate margin which ranges from 0 to 75 basis points for base rate loans, 100 to 175 basis points for Tranche A SOFR Term Loans and 112.5 to 187.5 basis points for Tranche B SOFR Term Loans based on our credit rating.
At December 31, 2024, we were in compliance with all financial covenants in our private placement senior notes.
At December 31, 2025, we were in compliance with all financial covenants in our private placement senior notes.
We measure the non-performance risk of our counterparties by reviewing credit default swap spreads for the various financial institutions with which we have derivative transactions, while our non-performance risk is evaluated by using credit default swap spreads for various similarly rated companies in our sector.
The non-performance risk of our counterparties is measured by reviewing credit default swap spreads for the various financial institutions with which we have derivative contracts, while our non-performance risk is evaluated by using credit default swap spreads for various similarly rated companies in our sector.
Market Conditions and Commodity Prices Our financial results depend on many factors, particularly commodity prices and our ability to find, develop and market our production on economically attractive terms.
Market Conditions and Commodity Prices Our financial results depend on many factors, particularly commodity prices and our ability to find and develop oil and gas reserves and market our production on economically attractive terms.
Such a reduction in reserves may result from lower market prices, which may make it uneconomic to drill and produce higher cost fields. A five percent positive or negative revision to proved reserves would result in a decrease of $0.33 per Boe and an increase of $0.37 per Boe, respectively, on our DD&A rate.
Such a reduction in reserves may result from lower market prices, which may make it uneconomic to drill and produce higher cost fields. A five percent positive or negative revision to proved 50 Table of Contents reserves would result in a decrease of $0.40 per Boe and an increase of $0.44 per Boe, respectively, on our DD&A rate.
The effective tax rate decreased due to differences in the non-recurring discrete items recorded during 2024 compared to 2023. 47 Table of Contents 2023 and 2022 Compared For information on the comparison of the results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Coterra Energy Inc.
The effective tax rate increased due to differences in the non-recurring discrete items recorded during 2025 compared to 2024. 2024 and 2023 Compared For information on the comparison of the results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Coterra Energy Inc.
The change in fair value of derivatives not designated as hedges is recorded as a component of operating revenues in gain (loss) on derivative instruments in the Consolidated Statement of Operations. Our derivative contracts are measured based on quotes from our counterparties.
The change in fair value of derivatives not designated as hedges is recorded as a component of operating revenues in gain (loss) on derivative instruments in the Consolidated Statement of Operations. Our derivative contracts are measured based on quotes from a third-party valuation service provider.
These estimates are derived from or verified using relevant NYMEX futures contracts or are compared to multiple quotes obtained from counterparties or third-party valuation services, or a combination of the foregoing, for reasonableness. The determination of fair value also incorporates a credit adjustment for non-performance risk.
These estimates are derived from or verified using relevant NYMEX futures contracts or are compared to multiple quotes obtained from counterparties. The determination of fair value also incorporates a credit adjustment for non-performance risk.
Operating cash flow fluctuations are substantially driven by changes in commodity prices, production volumes and operating expenses. As discussed above, commodity prices have historically been volatile. Fluctuations in cash flow may result in an increase or decrease in our planned capital expenditures. Net cash provided by operating activities decreased by $863 million in 2024 compared to 2023.
Operating cash flow fluctuations are substantially driven by changes in commodity prices, production volumes and operating expenses. As discussed above, commodity prices have historically been volatile. Fluctuations in cash flow may result in an increase or decrease in our planned capital expenditures. Net cash provided by operating activities increased by $1.2 billion in 2025 compared to 2024.
Dividends. In February 2023 and 2024, our Board of Directors approved an increase in the base quarterly dividend from $0.15 per share to $0.20 per share beginning in the first quarter of 2023 and from $0.20 per share to $0.21 per share beginning in the first quarter of 2024, respectively.
In February 2024 and 2025, our Board of Directors approved an increase in the quarterly dividend from $0.20 per share to $0.21 per share beginning in the first quarter of 2024 and from $0.21 per share to $0.22 per share beginning in the first quarter of 2025, respectively.
Commodity prices are affected by many factors outside of our control, 37 including changes in market supply and demand, which can be impacted by pipeline capacity constraints, inventory storage levels, basis differentials, weather conditions, and geopolitical, economic and other factors. Oil prices were relatively steady in 2024 compared to 2023 as demand has continued for oil supply.
Commodity prices are affected by many factors outside of our control, including changes in market supply and demand, which can be impacted by pipeline capacity constraints, inventory storage levels, basis differentials, weather conditions, and geopolitical, economic and other factors. While oil prices were relatively steady throughout 2024, prices declined in 2025 overall compared to 2024.
Although the current outlook on oil and natural gas prices is generally favorable and our operations have not been significantly impacted in the short-term, in the event further disruptions occur and continue for an extended period of time, our operations could be adversely impacted, commodity prices could decline, and our costs may increase.
Although the current outlook on oil and natural gas prices is generally favorable, and our operations have not been significantly impacted in the short-term, in the event further disruptions occur or the current market volatility and U.S. and international economic policy uncertainty continues for an extended period of time, our operations could be adversely impacted, commodity prices could decline and our costs may increase.
In January 2025, we borrowed $500 million under the Tranche A Term Loan to partially fund the closing of the FME acquisition and $500 million under the Tranche B Term Loan to partially fund the closing of the Avant acquisition.
In January 2025, we borrowed $500 million under the Tranche A Term Loan to partially fund the acquisition of the FME Interests 41 Table of Contents and $500 million of the Tranche B Term Loan to partially fund the acquisition of the Avant assets.
Readers are cautioned that such forward-looking statements are based on current expectations and assumptions that involve a number of risks and uncertainties, including those described under “Forward-Looking Statements” in Part I of this report and “Risk Factors” in Part I, Item 1A of this report, which could cause actual results to differ materially from those included in this report. 36 Table of Contents OVERVIEW Financial and Operating Overview Financial and operating results for the year ended December 31, 2024 compared to the year ended December 31, 2023 reflect the following: • Net income decreased $504 million from $1.6 billion, or $2.14 per share, in 2023 to $1.1 billion, or $1.51 per share, in 2024. • Net cash provided by operating activities decreased $863 million, from $3.7 billion, in 2023 to $2.8 billion in 2024. • Equivalent production increased 4.1 MMBoe from 243.5 MMBoe, or 667.1 MBoe per day, in 2023 to 247.6 MMBoe, or 676.5 MBoe per day, in 2024. ◦ Oil production increased 4.7 MMBbl from 35.1 MMBbl, or 96 MBbl per day, in 2023 to 39.8 MMBbl, or 109 MBbl per day, in 2024. ◦ Natural gas production decreased 28.0 Bcf from 1,052.7 Bcf, or 2,884 MMcf per day, in 2023 to 1,024.7 Bcf, or 2,800 MMcf per day, in 2024. ◦ NGL volumes increased 4.1 MMBbl from 32.9 MMBbl, or 90 MBbl per day, in 2023 to 37.0 MMBbl, or 101 MBbl per day, in 2024. • Average realized prices (including impact of derivatives): ◦ Oil was $74.22 per Bbl in 2024, 2 percent lower than the $76.07 per Bbl price realized in 2023. ◦ Natural gas was $1.75 per Mcf in 2024, 28 percent lower than the $2.44 per Mcf price realized in 2023. ◦ NGL price for 2024 was $19.95 per Bbl, 2 percent higher than the $19.56 per Bbl price realized in 2023. • Total capital expenditures for drilling, completion and other fixed assets were $1.8 billion in 2024 compared to $2.1 billion in 2023.
Readers are cautioned that such forward-looking statements are based on current expectations and assumptions that involve a number of risks and uncertainties, including those described under “Forward-Looking Statements” in Part I of this report and “Risk Factors” in Part I, Item 1A of this report, which could cause actual results to differ materially from those included in this report. 38 Table of Contents OVERVIEW Financial and Operating Overview Financial and operating results for the year ended December 31, 2025 compared to the year ended December 31, 2024 reflect the following: • Net income increased $596 million from $1.1 billion, or $1.51 per share, in 2024 to $1.7 billion, or $2.25 per share, in 2025. • Net cash provided by operating activities increased $1.2 billion, from $2.8 billion, in 2024 to $4.0 billion in 2025. • Oil equivalent production increased 38.0 MMBoe from 247.6 MMBoe, or 676.5 MBoe per day, in 2024 to 285.6 MMBoe, or 782.4 MBoe per day, in 2025. ◦ Oil production increased 18.6 MMBbl from 39.8 MMBbl, or 109 MBbl per day, in 2024 to 58.4 MMBbl, or 160 MBbl per day, in 2025. ◦ Natural gas production increased 61.1 Bcf from 1,024.7 Bcf, or 2,800 MMcf per day, in 2024 to 1,085.8 Bcf, or 2,975 MMcf per day, in 2025. ◦ NGL volumes increased 9.2 MMBbl from 37.0 MMBbl, or 101 MBbl per day, in 2024 to 46.2 MMBbl, or 127 MBbl per day, in 2025. • Average realized prices (including impact of derivatives): ◦ Oil was $64.35 per Bbl in 2025, 13 percent lower than the $74.22 per Bbl price realized in 2024. ◦ Natural gas was $2.47 per Mcf in 2025, 41 percent higher than the $1.75 per Mcf price realized in 2024. ◦ NGL price for 2025 was $18.24 per Bbl, 9 percent lower than the $19.95 per Bbl price realized in 2024. • Total capital expenditures for drilling, completion and other fixed assets were $2.3 billion in 2025 compared to $1.8 billion in 2024.
Rate per share Base Variable Total Total Dividends Paid (In millions) 2024 $ 0.84 $ — $ 0.84 $ 630 2023 $ 0.80 $ 0.37 $ 1.17 $ 895 Capital and Exploration Expenditures On an annual basis, we generally fund most of our capital expenditures, excluding any significant property acquisitions, with cash generated from operations and, if required, borrowings under our revolving credit agreement.
Rate per share Total Dividends (In millions) 2025 $ 0.88 $ 680 2024 $ 0.84 $ 630 Capital and Exploration Expenditures On an annual basis, we generally fund most of our capital expenditures, excluding any significant property acquisitions, with cash generated from operations and, if required, borrowings under our revolving credit agreement.
Our 2025 full year capital program is expected to be in the range of approximately $2.1 billion to $2.4 billion. We expect to turn-in-line 175 to 205 total net wells in 2025 across our three operating regions.
Our 2026 full year capital program is expected to be in the range of approximately $2.175 billion to $2.325 billion. We expect to turn-in-line 174 to 208 total net wells in 2026 across our three operating regions.
The following table presents the components of “Gain (loss) on derivative instruments” for the years indicated: Year Ended December 31, (In millions) 2024 2023 Cash received on settlement of derivative instruments Gas contracts $ 96 $ 280 Oil contracts 2 4 Non-cash gain (loss) on derivative instruments Gas contracts (80) (72) Oil contracts (21) 18 $ (3) $ 230 Operating Costs and Expenses Costs associated with producing oil and natural gas are substantial.
The following table presents the components of “Gain (loss) on derivative instruments, net” for the years indicated: Year Ended December 31, (In millions) 2025 2024 Cash received on settlement of derivative instruments Oil contracts $ 57 $ 2 Gas contracts 49 96 Non-cash gain (loss) on derivative instruments Oil contracts 82 (21) Gas contracts 163 (80) $ 351 $ (3) Operating Costs and Expenses Costs associated with producing oil and natural gas are substantial.
Cash Flows Our cash flows from operating activities, investing activities and financing activities are as follows: Year Ended December 31, (In millions) 2024 2023 2022 Cash flows provided by operating activities $ 2,795 $ 3,658 $ 5,456 Cash flows used in investing activities (1,762) (2,059) (1,674) Cash flows provided by (used in) financing activities 279 (1,317) (4,145) 39 Table of Contents 2024 and 2023 Compared Operating Activities.
Cash Flows Our cash flows from operating activities, investing activities and financing activities are as follows: Year Ended December 31, (In millions) 2025 2024 2023 Cash flows provided by operating activities $ 4,021 $ 2,795 $ 3,658 Cash flows used in investing activities (5,628) (1,762) (2,059) Cash flows (used in) provided by financing activities (551) 279 (1,317) 2025 and 2024 Compared Operating Activities.
As of December 31, 2024, the material off-balance sheet arrangements we had entered into included certain firm gathering, processing and transportation commitments and operating lease agreements with terms at commencement of less than 12 months for equipment used in our exploration and development activities. We have no other off-balance sheet debt or other similar unrecorded obligations.
We enter into arrangements that can give rise to material off-balance sheet obligations. As of December 31, 2025, the material off-balance sheet arrangements we had entered into included certain firm gathering, processing and transportation commitments and operating lease agreements with terms at commencement of less than 12 months for equipment used in our exploration and development activities.
We repurchased and retired 17 million shares of common stock for $418 million during the year ended December 31, 2023. During the years ended December 31, 2024 and 2023, 351,791 and 332,634 shares of common stock, respectively, were recorded as treasury stock and retired related to common shares that were retained from vested restricted stock awards for withholding of taxes.
During the year ended December 31, 2024, 351,791 shares of common stock were recorded as treasury stock and retired related to common shares that were retained from vested restricted stock awards for withholding of taxes. Dividends.
Our effective tax rate is affected by changes in the allocation of property, payroll and revenues among states in which we operate. A small change in our estimated future tax rate could have a material effect on current period earnings. Contingency Reserves A provision for contingencies is charged to expense when the loss is probable and the cost is estimable.
A small change in our estimated future tax rate could have a material effect on current period earnings. Contingency Reserves A provision for contingencies is charged to expense when the loss is probable and the cost is estimable.
However, in the event that commodity prices significantly decline or costs significantly increase from current levels, our management would evaluate the recoverability of the carrying value of our oil and gas properties.
However, in the event that commodity prices significantly decline or costs significantly increase from current levels, our management would evaluate the recoverability of the carrying value of our oil and gas properties. For information about the impact of realized commodity prices on our revenues, refer to “Results of Operations” below.
Commodity pricing is 48 Table of Contents estimated by using a combination of assumptions management uses in its budgeting and forecasting process, historical and current prices adjusted for geographical location and quality differentials, as well as other factors that we believe will impact realizable prices.
Commodity pricing is estimated by using a combination of assumptions management uses in its budgeting and forecasting process, historical and current prices adjusted for geographical location and quality differentials, as well as other factors that we believe will impact realizable prices. Given the significant volatility in oil, natural gas and NGLs prices, estimates of such future prices are inherently imprecise.
Gathering costs also include costs associated with operating our gas gathering infrastructure, including operating and maintenance expenses. Costs vary by operating area and will fluctuate with increases or decreases in production volumes, contractual fees, and changes in fuel and compression costs.
Costs vary by operating area and will fluctuate with increases or decreases in production volumes, contractual fees, and changes in fuel and compression costs.
At December 31, 2024, we were in compliance with all financial covenants and had $2.0 billion of borrowing capacity under our Credit Agreement. 40 Table of Contents Term Loan In December 2024, we entered into a $1.0 billion delayed draw term loan credit agreement with Toronto Dominion (Texas) LLC, as administrative agent, and certain other lenders and issuing banks (the “Term Loan”), which consists of a $500 million Tranche A Term Loan and a $500 million Tranche B Term Loan.
Term Loan In December 2024, we entered into a delayed draw term loan credit agreement with Toronto Dominion (Texas), LLC, as administrative agent, and certain other lenders and issuing banks (the “Term Loan”), which consists of a $500 million Tranche A Term Loan and a $500 million Tranche B Term Loan.
There were no exploratory dry hole costs in 2023 and 2022. In 2024, our capital program focused on the Permian Basin, Anadarko Basin, and Marcellus Shale, where we drilled 313 gross wells (159.4 net) and completed 290 gross wells (143.8 net), of which 92 gross wells (62.8 net) were drilled but uncompleted in prior years.
There were no exploratory dry hole costs in 2025 and 2023. In 2025, our capital program focused on the Permian Basin, Marcellus Shale, and Anadarko Basin, where we drilled 384 gross wells (203.3 net) and completed 399 gross wells (198.3 net), of which 90 gross wells (57.6 net) were drilled but uncompleted in prior years.
Workover expense increased primarily due to an increase in workover activity in the Permian Basin. Gathering, Processing and Transportation Gathering, processing and transportation costs principally consist of expenditures to prepare and transport production downstream from the wellhead, including gathering, fuel, and compression, along with processing costs, which are incurred to extract NGLs from the raw natural gas stream.
Gathering, Processing and Transportation Gathering, processing and transportation costs principally consist of expenditures to prepare and transport production downstream from the wellhead, including gathering, fuel, and compression, along with processing costs, which are incurred to extract NGLs from the raw natural gas stream. Gathering costs also include costs associated with operating our gas gathering infrastructure, including operating and maintenance expenses.
Year Ended December 31, Variance Per Boe (In millions, except per Boe) 2024 2023 Amount Percent 2024 2023 Operating Expenses Direct operations $ 658 $ 562 $ 96 17 % $ 2.66 $ 2.31 Gathering, processing and transportation 976 975 1 — % 3.94 4.00 Taxes other than income 271 283 (12) (4) % 1.09 1.16 Exploration 25 20 5 25 % 0.10 0.08 Depreciation, depletion and amortization 1,840 1,641 199 12 % 7.43 6.74 General and administrative 302 291 11 4 % 1.22 1.20 $ 4,072 $ 3,772 $ 300 8 % 44 Table of Contents Direct Operations Direct operations generally consist of costs for labor, equipment, maintenance, saltwater disposal, compression, power, treating and miscellaneous other costs (collectively, “lease operating expense”).
Year Ended December 31, Variance Per Boe (In millions, except per Boe) 2025 2024 Amount Percent 2025 2024 Operating Expenses Direct operations $ 1,023 $ 658 $ 365 55 % $ 3.58 $ 2.66 Gathering, processing and transportation 1,089 976 113 12 % 3.81 3.94 Taxes other than income 366 271 95 35 % 1.28 1.09 Exploration 27 25 2 8 % 0.09 0.10 Depreciation, depletion and amortization 2,370 1,840 530 29 % 8.30 7.43 General and administrative 323 302 21 7 % 1.13 1.22 $ 5,198 $ 4,072 $ 1,126 28 % Direct Operations Direct operations generally consist of costs for labor, equipment, maintenance, saltwater disposal, compression, power, treating and miscellaneous other costs (collectively, “lease operating expense”).
Oil Revenues Year Ended December 31, Variance Increase (Decrease) (In millions) 2024 2023 Amount Percent Volume (MMBbl) 39.8 35.1 4.7 13% $ 357 Price ($/Bbl) $ 74.18 $ 75.97 $ (1.79) (2)% (71) Total $ 286 Oil revenues increased $286 million primarily due to higher production in the Permian Basin partially offset by lower oil prices.
Oil Revenues Year Ended December 31, Variance Increase (Decrease) (In millions) 2025 2024 Amount Percent Volume (MMBbl) 58.4 39.8 18.6 47% $ 1,377 Price ($/Bbl) $ 63.36 $ 74.18 $ (10.82) (15)% (631) Total $ 746 Oil revenues increased $746 million primarily due to increased production in the Permian Basin, partially offset by lower oil prices.
From time-to-time, our working capital will reflect a deficit, while at other times it will reflect a surplus. This fluctuation is not unusual. At December 31, 2024 and 2023, we had a working capital surplus of $2.2 billion and $355 million, respectively.
From time-to-time, our working capital will reflect a deficit, while at other times it will reflect a surplus. This fluctuation is not unusual.
Refer to “Results of Operations” for additional information relative to commodity price, production and operating expense fluctuations. We are unable to predict future commodity prices and, as a result, cannot provide any assurance about future levels of net cash provided by operating activities. Investing Activities. Cash flows used in investing activities decreased by $297 million in 2024 compared to 2023.
We are unable to predict future commodity prices and, as a result, cannot provide any assurance about future levels of net cash provided by operating activities. Investing Activities. Cash flows used in investing activities increased by $3.9 billion in 2025 compared to 2024.
Natural Gas Revenues Year Ended December 31, Variance Increase (Decrease) (In millions) 2024 2023 Amount Percent Volume (Bcf) 1,024.7 1,052.7 (28.0) (3) % $ (61) Price ($/Mcf) $ 1.65 $ 2.18 $ (0.53) (24) % (538) Total $ (599) Natural gas revenues decreased $599 million primarily due to significantly lower natural gas prices and lower production.
Natural Gas Revenues Year Ended December 31, Variance Increase (Decrease) (In millions) 2025 2024 Amount Percent Volume (Bcf) 1,085.8 1,024.7 61.1 6 % $ 101 Price ($/Mcf) $ 2.43 $ 1.65 $ 0.78 47 % 839 Total $ 940 Natural gas revenues increased $940 million primarily due to significantly higher natural gas prices and higher production.
We expect commodity price volatility to continue, including as a result of conflicts in the Middle East, actions of OPEC+ (including the ability of OPEC+ to successfully coordinate production quotas), and potentially swift near- and medium-term fluctuations in supply and demand.
We expect commodity price volatility to continue, including as a result of U.S. and international economic policy (such as tariffs or retaliatory tariffs), actions of OPEC+ (including the ability of OPEC+ to successfully coordinate production quotas) and potentially swift near- and medium-term fluctuations in supply and demand, such as potential changes to drilling and capital programs in the short-term by U.S. producers.
The following table presents major components of our capital and exploration expenditures: Year Ended December 31, (In millions) 2024 2023 2022 Capital expenditures Drilling and completion $ 1,645 $ 1,979 $ 1,617 Pipeline and gathering 103 91 56 Other 14 34 54 Capital expenditures for drilling, completion and other fixed asset additions 1,762 2,104 1,727 Capital expenditures for leasehold and property acquisitions 19 10 10 Exploration expenditures (1) 25 20 29 Total $ 1,806 $ 2,134 $ 1,766 _______________________________________________________________________________ (1) Exploration expenditures include $5 million of exploratory dry hole costs in 2024.
We budget these expenditures based on our projected cash flows for the year. 43 Table of Contents The following table presents major components of our capital and exploration expenditures: Year Ended December 31, (In millions) 2025 2024 2023 Acquisitions (business combinations) Proved oil and gas properties $ 2,473 $ — $ — Unproved oil and gas properties 1,286 — — Gathering and pipeline systems 333 — — Total $ 4,092 $ — $ — Capital expenditures Drilling and facilities $ 2,151 $ 1,645 $ 1,979 Pipeline and gathering 124 103 91 Other 43 14 34 Capital expenditures for drilling, completion and other fixed asset additions 2,318 1,762 2,104 Capital expenditures for leasehold and property acquisitions 99 19 10 Exploration expenditures (1) 27 25 20 Total $ 2,444 $ 1,806 $ 2,134 _______________________________________________________________________________ (1) Exploration expenditures include $5 million of exploratory dry hole costs in 2024.
These decreases were partially offset by an increase in our production taxes, which increased primarily due to higher oil and NGL production compared to 2023. 45 Table of Contents Depreciation, Depletion and Amortization DD&A expense consisted of the following for the periods indicated: Year Ended December 31, Per Boe (In millions, except per Boe) 2024 2023 Variance 2024 2023 DD&A Expense Depletion $ 1,707 $ 1,509 $ 198 $ 6.89 $ 6.20 Depreciation 73 74 (1) 0.30 0.30 Amortization of unproved properties 49 48 1 0.20 0.20 Accretion of ARO 11 10 1 0.04 0.04 $ 1,840 $ 1,641 $ 199 $ 7.43 $ 6.74 Depletion of our producing properties is computed on a field basis using the unit-of-production method under the successful efforts method of accounting.
Additionally, drilling impact fees increased primarily due to increased drilling activity in the Marcellus Shale and higher natural gas prices during 2025 compared to 2024. 47 Table of Contents Depreciation, Depletion and Amortization DD&A expense consisted of the following for the periods indicated: Year Ended December 31, Per Boe (In millions, except per Boe) 2025 2024 Variance 2025 2024 DD&A Expense Depletion $ 2,202 $ 1,707 $ 495 $ 7.71 $ 6.89 Depreciation 93 73 20 0.31 0.30 Amortization of unproved properties 62 49 13 0.23 0.20 Accretion of ARO 13 11 2 0.05 0.04 $ 2,370 $ 1,840 $ 530 $ 8.30 $ 7.43 Depletion of our producing properties is computed on a field basis using the unit-of-production method under the successful efforts method of accounting.
The Tranche A Term Loan matures two years after funding, and the Tranche B Term Loan matures three years after funding. Borrowings under the Term Loan can be prepaid without penalty. As of December 31, 2024, we had no borrowings outstanding under the Term Loan and $1.0 billion of available commitments.
The Tranche A Term Loan matures two years after funding, and the Tranche B Term Loan matures three years after funding. Borrowings under the Term Loan can be prepaid without penalty.
If our estimates and judgments change regarding our ability to realize our deferred tax assets, our tax provision could increase in the period it is determined that it is more likely than not it will not be realized. 49 Table of Contents Our effective tax rate is subject to variability as a result of factors other than changes in federal and state tax rates and changes in tax laws which could affect us.
If our estimates and judgments change regarding our ability to realize our deferred tax assets, our tax provision could increase in the period it is determined that it is more likely than not it will not be realized.
Income Tax Expense Year Ended December 31, (In millions) 2024 2023 Variance Income Tax Expense Current tax expense $ 369 $ 429 $ (60) Deferred tax (benefit) expense (145) 74 (219) $ 224 $ 503 $ (279) Combined federal and state effective income tax rate 16.7 % 23.6 % Income tax expense decreased $279 million primarily due to lower pre-tax income and a lower effective tax rate.
Income Tax Expense Year Ended December 31, (In millions) 2025 2024 Variance Income Tax Expense Current tax expense $ 111 $ 369 $ (258) Deferred tax expense (benefit) 435 (145) 580 $ 546 $ 224 $ 322 Combined federal and state effective income tax rate 24.1 % 16.7 % Income tax expense increased $322 million primarily due to higher pre-tax income and a higher effective tax rate.
Interest Expense The table below reflects our interest expense, net for the periods indicated: Year Ended December 31, (In millions) 2024 2023 Variance Interest Expense Interest expense $ 101 $ 82 $ 19 Debt premium and discount amortization, net (21) (21) — Debt issuance cost amortization 9 3 6 Other 17 9 8 $ 106 $ 73 $ 33 Interest expense increased $19 million due to higher debt balances primarily related to the issuance of $500 million of 5.60% senior notes in March 2024 partially offset by the repayment of $575 million related to the 3.65% weighted-average private placement senior notes in September 2024.
Interest Expense The table below reflects our interest expense, net for the periods indicated: Year Ended December 31, (In millions) 2025 2024 Variance Interest Expense Interest expense $ 211 $ 101 $ 110 Debt premium and discount amortization, net (21) (21) — Debt issuance cost amortization 6 9 (3) Other 9 17 (8) $ 205 $ 106 $ 99 Interest expense increased $99 million primarily due to an increase of $110 million related to interest on debt balances.
Certain Restrictive Covenants Our ability to incur debt, incur liens, enter into mergers, sell assets, enter into transactions with affiliates, and engage in certain other activities are subject to certain restrictive covenants in our various debt instruments.
At December 31, 2025, we were in compliance with all financial covenants and had $2.0 billion of borrowing capacity under our Credit Agreement. Certain Restrictive Covenants Our ability to incur debt, incur liens, enter into mergers, sell assets, enter into transactions with affiliates, and engage in certain other activities are subject to certain restrictive covenants in our various debt instruments.
We expect that our sources of capital will be adequate to fund these obligations. Refer to the Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report for further details. We enter into arrangements that can give rise to material off-balance sheet obligations.
Other joint owners in the properties operated by us could incur a portion of these costs. We expect that our sources of capital will be adequate to fund these obligations. Refer to the Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report for further details.
Interest Income Interest income increased $15 million primarily due to higher interest earned on our higher cash and short-term investment balances during 2024 compared to 2023.
Interest Income Interest income decreased $48 million primarily due to lower cash balances during 2025 compared to 2024 and a decrease in interest earned on our higher interest rate short-term investment balances that matured in September 2024.
Approximately 70 percent of capital expenditures will be invested in the Permian Basin, 11 percent in the Marcellus Shale, 10 percent in the Anadarko Basin and remaining percent for gathering systems infrastructure, saltwater disposal and other spend.
Approximately 68 percent of capital expenditures will be invested in the Permian Basin, 16 percent in the Marcellus Shale, eight percent in the Anadarko Basin and remaining eight percent for gathering systems infrastructure, saltwater disposal and other spend. We will continue to assess the commodity price environment and may increase or decrease our capital expenditures accordingly.
Our liquidity requirements consist primarily of funding our planned acquisitions and capital expenditures, payment of contractual obligations (including debt maturities and interest payments), working capital requirements, dividend payments and share repurchases.
FINANCIAL CONDITION Liquidity and Capital Resources We strive to maintain an adequate liquidity level to address commodity price volatility and risk. Our liquidity requirements consist primarily of our planned capital expenditures, payment of contractual obligations (including debt maturities and interest payments), working capital requirements, dividend payments and share repurchases.
As of December 31, 2024, our material contractual obligations include debt and related interest expense, gathering, processing and transportation agreements, lease obligations, operational agreements, drilling and completion obligations, derivative obligations and asset retirement obligations. Other joint owners in the properties operated by us could incur a portion of these costs.
Contractual Obligations We have various contractual obligations in the normal course of our operations. As of December 31, 2025, our material contractual obligations include debt and related interest expense, gathering, processing and transportation agreements, lease obligations, operational agreements, drilling and completion obligations, derivative obligations and asset retirement obligations.
The rate of amortization depends on the timing and success of our exploration and development program. If development of unproved properties is deemed unsuccessful and the properties are abandoned or surrendered, the capitalized costs are expensed in the period the determination is made. Amortization of unproved properties remained steady in 2024 compared to 2023.
If development of unproved properties is deemed unsuccessful, and the properties are abandoned or surrendered, the capitalized costs are expensed in the period the determination is made. Our amortization of unproved properties increased $13 million due to unproved properties acquired from FME and Avant.
We believe we have adequate liquidity and availability under our revolving credit agreement as outlined above to meet our working capital requirements over the next 12 months.
We believe we have adequate liquidity and availability under our revolving credit agreement as outlined above to meet our working capital requirements and debt repayments over the next 12 months. 40 Table of Contents As of December 31, 2025, we had unrestricted cash on hand of $114 million and unused commitments of $2.0 billion under our revolving credit agreement.
In February 2023, our Board of Directors approved a new share repurchase program which authorizes the purchase of up to $2.0 billion of our common stock in the open market or in negotiated transactions. 41 Table of Contents During the year ended December 31, 2024, we repurchased and retired 17 million shares of our common stock for $464 million.
There were no borrowings outstanding under our Credit Agreement as of December 31, 2025 or December 31, 2024. Share repurchases. In February 2023, our Board of Directors approved a share repurchase program which authorizes the purchase of up to $2.0 billion of our common stock in the open market or in negotiated transactions.
Gathering, processing and transportation increased $1 million primarily due to higher gathering and transportation costs in the Permian Basin related to higher production and higher transportation rates, partially offset by lower gathering charges in the Marcellus Shale related to lower production.
Workover expense increased $92 million primarily due to increased expenses related to higher workover activity in the Permian Basin, partially offset by lower workover activity in the Marcellus Shale due to reduced activity in the basin.
The increase was due to the issuance of the $500 million of 5.60% senior notes in March 2024, $750 million of 5.40% senior notes and $750 million of 5.90% senior notes in December 2024, and $265 million of lower dividend payments.
This increase was primarily due to the issuance of $500 million of 5.60% senior notes in March 2024, $750 million of 5.40% senior notes in December 2024, $750 million of 5.90% senior notes in December 2024 and $1.0 billion of term loans issued in January 2025 to partially fund the FME and Avant acquisitions.
Actual results could differ from those estimates, and changes in our estimates are recorded when known. We consider the following to be our most critical estimates that involve judgement of management. Successful Efforts Method of Accounting We follow the successful efforts method of accounting for our oil and gas producing activities.
Actual results could differ from those estimates, and changes in our estimates are recorded when known. We consider the following to be our most critical estimates that involve judgment of management. 49 Table of Contents Purchase Accounting From time-to-time, we may acquire assets and assume liabilities in transactions accounted for as business combinations, such as the FME and Avant Acquisitions.
The table below reflects our G&A expense for the periods identified: Year Ended December 31, (In millions) 2024 2023 Variance G&A Expense General and administrative expense $ 240 $ 220 $ 20 Stock-based compensation expense 62 59 3 Merger-related expense — 12 (12) $ 302 $ 291 $ 11 G&A expense, excluding stock-based compensation, increased $20 million primarily due to higher employee-related costs in 2024 compared to 2023 and the recognition of certain long-term commitments for community outreach and charitable contributions in 2024.
The table below reflects our G&A expense for the periods identified: Year Ended December 31, (In millions) 2025 2024 Variance G&A Expense General and administrative expense $ 260 $ 240 $ 20 Stock-based compensation expense 63 62 1 $ 323 $ 302 $ 21 G&A expense, excluding stock-based compensation, increased $20 million primarily due to an increase in legal and professional expenses and acquisition and transition costs associated with the FME and Avant acquisitions completed in January 2025, partially offset by the recognition of certain long-term commitments for community outreach and charitable contributions in 2024. 48 Table of Contents Stock-based compensation expense will fluctuate based on the grant date fair value of awards, the number of awards, the requisite service period of the awards, estimated employee forfeitures, and the timing of the awards.
Refer to Note 4 of the Notes to the Consolidated Financial Statements, “Long-Term Debt and Credit Agreements,” for further details regarding the interest rate on future borrowings under our Credit Agreement and Term Loan, as well as information regarding our restrictive covenants, including our leverage ratio.
Refer to Note 4 of the Notes to the Consolidated Financial Statements, “Long-Term Debt and Credit Agreements,” for further details regarding the interest rate on future borrowings under our Credit Agreement and Term Loan, as well as information regarding our restrictive covenants, including our leverage ratio. 42 Table of Contents Capitalization Information about our capitalization is as follows: December 31, (Dollars in millions) 2025 2024 Total debt (1) $ 3,818 $ 3,535 Stockholders' equity 14,838 13,122 Total capitalization $ 18,656 $ 16,657 Debt to total capitalization 20% 21% Cash and cash equivalents $ 114 $ 2,038 _______________________________________________________________________________ (1) Includes $250 million of current portion of long-term debt as of December 31, 2025.
The following table presents taxes other than income for the years indicated: Year Ended December 31, (In millions) 2024 2023 Variance Taxes Other than Income Production $ 217 $ 205 $ 12 Drilling impact fees 17 23 (6) Ad valorem 35 53 (18) Other 2 2 — $ 271 $ 283 $ (12) Production taxes as a percentage of revenue (Permian and Anadarko Basins) 5.6 % 5.6 % Taxes other than income decreased $12 million primarily due to lower ad valorem taxes, which was primarily driven by a combination of lower-than-expected property valuations in 2024 resulting in a lower tax obligation and a reduction of prior period accruals in 2024 due to a change in estimated taxes due for the full-year 2023.
The following table presents taxes other than income for the years indicated: Year Ended December 31, (In millions) 2025 2024 Variance Taxes Other than Income Production $ 303 $ 217 $ 86 Drilling impact fees 23 17 6 Ad valorem 39 35 4 Other 1 2 (1) $ 366 $ 271 $ 95 Production taxes as a percentage of revenue (Permian and Anadarko Basins) 6.1 % 5.6 % Taxes other than income increased $95 million primarily due to an increase in our production taxes related to higher production as a result of the FME and Avant acquisitions in the Permian Basin that closed in January 2025 and higher production from our legacy properties in the Permian and Anadarko Basins.
Direct operations consisted of lease operating expense and workover expense as follows: Year Ended December 31, Per Boe (In millions, except per Boe) 2024 2023 Variance 2024 2023 Direct Operations Lease operating expense $ 554 $ 472 $ 82 $ 2.24 $ 1.94 Workover expense 104 90 14 0.42 0.37 $ 658 $ 562 $ 96 $ 2.66 $ 2.31 Lease operating expense increased primarily due to higher production levels and higher operating costs driven by our production mix related to higher production in fields with higher operating costs, primarily in the Permian Basin, and higher equipment and field service costs.
Direct operations also include workover activity necessary to maintain production from existing wells. 46 Table of Contents Direct operations consisted of lease operating expense and workover expense as follows: Year Ended December 31, Per Boe (In millions, except per Boe) 2025 2024 Variance 2025 2024 Direct Operations Lease operating expense $ 827 $ 554 $ 273 $ 2.89 $ 2.24 Workover expense 196 104 92 0.69 0.42 $ 1,023 $ 658 $ 365 $ 3.58 $ 2.66 Lease operating expense increased primarily due to increased production levels and higher costs in the Permian Basin driven in part by the FME and Avant acquisitions in the Permian Basin that closed in January 2025, which have higher lifting costs than our legacy wells.
RESULTS OF OPERATIONS 2024 and 2023 Compared Operating Revenues Year Ended December 31, Variance (In millions) 2024 2023 Amount Percent Oil $ 2,953 $ 2,667 $ 286 11 % Natural gas 1,693 2,292 (599) (26) % NGL 738 644 94 15 % Gain (loss) on derivative instruments (3) 230 (233) (101) % Other 77 81 (4) (5) % $ 5,458 $ 5,914 $ (456) (8) % Production Revenues Our production revenues are derived from sales of our oil, natural gas and NGL production.
We have no other off-balance sheet debt or other similar unrecorded obligations. 44 Table of Contents RESULTS OF OPERATIONS 2025 and 2024 Compared Operating Revenues Year Ended December 31, Variance (In millions) 2025 2024 Amount Percent Oil $ 3,699 $ 2,953 $ 746 25 % Natural gas 2,633 1,693 940 56 % NGL 844 738 106 14 % Gain (loss) on derivative instruments 351 (3) 354 11,800 % Other 118 77 41 53 % $ 7,645 $ 5,458 $ 2,187 40 % Production Revenues Our production revenues are derived from sales of our oil, natural gas and NGL production.
In February 2025, our Board of Directors approved an additional increase in our base quarterly dividend from $0.21 per share to $0.22 per share beginning in the first quarter of 2025. The following table presents our dividends paid on our common stock for the year ended December 31, 2024 and 2023.
The following table presents our dividends paid on our common stock for the year ended December 31, 2025 and 2024.
This decrease was primarily due to $335 million of lower cash paid for capital expenditures, partially offset by $31 million lower proceeds from asset sales. Financing Activities. Cash flows provided by financing activities increased by $1.6 billion in 2024 compared to 2023.
This increase was primarily due to $3.2 billion of net cash consideration paid for business combinations and $616 million of higher cash paid for capital expenditures in 2025 compared to 2024. Financing Activities. Cash flows used in financing activities increased by $830 million in 2025 compared to 2024.
Our depletion rate increased due to lower oil and gas reserve volumes and a shift in our production mix to fields with higher depletion rates. The lower oil and gas reserve volumes were driven by negative price revisions as a result of lower prices in 2023.
Our depletion rate increased primarily due to the increase in value of our oil and gas properties related to assets acquired from FME and Avant, which were recorded at fair value. The depletion rate also increased due to a shift in our production mix to fields with higher depletion rates.
Our costs for services began to stabilize at the end of 2023 despite on-going demand and the latent effects of inflation and supply chain disruptions and continued to remain stable throughout 2024. The following table reflects our operating costs and expenses for the years indicated and a discussion of the operating costs and expenses follows.
The following table reflects our operating costs and expenses for the years indicated and a discussion of the operating costs and expenses follows.
These increases were partially offset by the repayment of $575 million of 3.65% weighted-average senior notes at their maturity in September 2024 and $50 million of higher common stock repurchases during 2024.
This increase was partially offset by decreases related to repayments of $575 million related to the 3.65% weighted-average private placement senior notes in September 2024 and repayments of $700 million of our term loans in 2025.
Also included in our depreciation expense is the depreciation of the right-of-use asset associated with our finance lease gathering system. Depreciation expense remained steady in 2024 compared to 2023. Unproved properties are amortized based on our drilling experience and our expectation of converting our unproved leaseholds to proved properties.
Unproved properties are amortized based on our drilling experience and our expectation of converting our unproved leaseholds to proved properties. The rate of amortization depends on the timing and success of our exploration and development program.
Meanwhile, basis differentials became more divergent in 2024, in part due to constrained pipeline capacity and oversupply in certain geographic areas, and at times have resulted in negative spot market pricing for natural gas during 2024, such as the Waha Hub in the Permian Basin.
While basis differentials have persisted in the U.S., with prices at the Waha Hub in the Permian Basin reaching negative spot pricing at various times throughout 2025 and early 2026 due to oversupply and maintenance, we expect that additional pipeline capacity coming online beginning in late 2026 will alleviate the spread on basis differentials for natural gas.
Removed
Other financial highlights for the year ended December 31, 2024 and subsequent periods include the following: • Issued $500 million aggregate principal amount of 5.60% senior notes due March 15, 2034.
Added
Other financial highlights for the year ended December 31, 2025 include the following: • Closed two acquisitions in January 2025 in the Delaware Basin for total consideration of $3.3 billion in cash and the issuance of 28,190,682 shares of our common stock valued at $785 million based on the closing price of our common stock on the closing date of the transactions. • Increased our quarterly dividend from $0.21 per share to $0.22 per share in February 2025. • Repaid the full $500 million of the Tranche A Term Loan and repaid $200 million of the Tranche B Term Loan.
Removed
We used the net proceeds, and cash on hand, to repay the $575 million of 3.65% weighted-average private placement senior notes that matured in September 2024. • Amended our revolving credit agreement to increase our aggregate commitments from $1.5 billion to $2.0 billion and extend the maturity date from March 2028 to September 2029. • Entered into a $1.0 billion delayed draw term loan agreement consisting of two tranches of $500 million each, which was fully drawn in January 2025 to partially fund the FME and Avant acquisitions that both closed in January 2025. • Issued $750 million aggregate principal amount of 5.40% senior notes due February 15, 2035 and $750 million aggregate principal amount of 5.90% senior notes due February 15, 2055.
Added
In February 2026, we repaid the remaining $300 million of the Tranche B Term Loan. • Repurchased 6 million shares of our common stock during 2025 for $140 million.

… 67 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+6 added−1 removed9 unchanged
Biggest changeAs of December 31, 2024, we had the following outstanding financial commodity derivatives: 50 Table of Contents 2025 2026 Fair Value Asset (Liability) (In millions) Oil First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter Second Quarter Third Quarter Fourth Quarter WTI oil collars $ 7 Volume (MBbl) 5,040 5,096 4,232 4,232 900 910 920 920 Weighted average floor ($/Bbl) $ 61.79 $ 61.79 $ 61.63 $ 61.63 $ — $ — $ — $ — Weighted average ceiling ($/Bbl) $ 79.36 $ 79.36 $ 78.64 $ 78.64 $ — $ — $ — $ — WTI oil swaps $ (4) Volume (MBbl) 1,710 1,729 1,748 1,748 900 910 920 920 Weighted average price ($/Bbl) $ 69.18 $ 69.18 $ 69.18 $ 69.18 $ 66.14 $ 66.14 $ 66.14 $ 66.14 WTI Midland oil basis swaps $ 2 Volume (MBbl) 6,300 6,370 5,520 5,520 1,800 1,820 1,840 1,840 Weighted average differential ($/Bbl) $ 1.07 $ 1.07 $ 1.02 $ 1.02 $ 0.95 $ 0.95 $ 0.95 $ 0.95 $ 5 2025 2026 Fair Value Asset (Liability) (In millions) Natural Gas First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter NYMEX gas collars $ (13) Volume (MMBtu) 45,000,000 45,500,000 46,000,000 46,000,000 27,000,000 Weighted average floor ($/MMBtu) $ 2.85 $ 2.85 $ 2.85 $ 2.85 $ 2.75 Weighted average ceiling ($/MMBtu) $ 4.51 $ 4.07 $ 4.07 $ 5.55 $ 7.66 Transco Leidy gas basis swaps $ — Volume (MMBtu) 18,000,000 18,200,000 18,400,000 18,400,000 — Weighted average differential ($/MMBtu) $ (0.70) $ (0.70) $ (0.70) $ (0.70) $ — Transco Zone 6 Non-NY gas basis swaps $ (1) Volume (MMBtu) 9,000,000 9,100,000 9,200,000 9,200,000 $ — Weighted average differential ($/MMBtu) $ (0.29) $ (0.29) $ (0.29) $ (0.29) $ — $ (14) In January 2025, the Company entered into the following financial commodity derivatives: 2025 2026 Natural Gas First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter Second Quarter Third Quarter Fourth Quarter NYMEX gas collars Volume (MMBtu) 5,900,000 9,100,000 9,200,000 9,200,000 22,500,000 22,750,000 23,000,000 23,000,000 Weighted average floor ($/MMBtu) $ 3.00 $ 3.00 $ 3.00 $ 3.00 $ 3.00 $ 3.00 $ 3.00 $ 3.00 Weighted average ceiling ($/MMBtu) $ 4.46 $ 4.46 $ 4.46 $ 4.46 $ 5.79 $ 5.79 $ 5.79 $ 5.79 51 Table of Contents A significant portion of our production for 2025 and beyond is currently unhedged and directly exposed to the volatility in oil and natural gas prices, whether favorable or unfavorable.
Biggest changeAs of December 31, 2025, we had the following outstanding financial commodity derivatives: 2026 Fair Value Asset (Liability) (In millions) Oil First Quarter Second Quarter Third Quarter Fourth Quarter WTI oil collars $ 49 Volume (MBbl) 3,600 3,640 3,680 3,680 Weighted average floor ($/Bbl) $ 56.25 $ 56.25 $ 56.25 $ 56.25 Weighted average ceiling ($/Bbl) $ 70.81 $ 70.81 $ 70.81 $ 70.81 WTI NYMEX oil swaps $ 33 Volume (MBbl) 900 910 920 920 Weighted average price ($/Bbl) $ 66.14 $ 66.14 $ 66.14 $ 66.14 WTI Midland oil basis swaps $ 4 Volume (MBbl) 4,500 4,550 4,600 4,600 Weighted average differential ($/Bbl) $ 0.97 $ 0.97 $ 0.97 $ 0.97 $ 86 53 Table of Contents 2026 2027 Fair Value Asset (Liability) (In millions) Natural Gas First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter Second Quarter Third Quarter Fourth Quarter NYMEX gas collars $ 85 Volume (MMBtu) 108,000,000 81,900,000 82,800,000 82,800,000 7,200,000 7,280,000 7,360,000 7,360,000 Weighted average floor ($/MMBtu) $ 3.23 $ 3.39 $ 3.39 $ 3.39 $ 3.40 $ 3.40 $ 3.40 $ 3.40 Weighted average ceiling ($/MMBtu) $ 6.12 $ 5.61 $ 5.61 $ 5.61 $ 5.17 $ 5.17 $ 5.17 $ 5.17 Transco Leidy gas basis swaps $ 1 Volume (MMBtu) 13,500,000 13,650,000 13,800,000 13,800,000 — — — — Weighted average differential ($/ MMBtu) $ (0.78) $ (0.78) $ (0.78) $ (0.78) $ — $ — $ — $ — Transco Zone 6 Non-NY gas basis swaps $ (2) Volume (MMBtu) 22,500,000 22,750,000 23,000,000 23,000,000 — — — — Weighted average differential ($/ MMBtu) $ (0.16) $ (0.16) $ (0.16) $ (0.16) $ — $ — $ — $ — Waha gas basis swaps $ 66 Volume (MMBtu) 18,000,000 18,200,000 18,400,000 18,400,000 — — — — Weighted average differential ($/ MMBtu) $ (1.92) $ (1.92) $ (1.92) $ (1.92) $ — $ — $ — $ — $ 150 In January 2026, we entered into the following financial commodity derivatives: 2026 Oil First Quarter Second Quarter Third Quarter Fourth Quarter WTI oil collars Volume (MBbl) 590 910 920 920 Weighted average floor ($/Bbl) $ 55.00 $ 55.00 $ 50.00 $ 50.00 Weighted average ceiling ($/Bbl) $ 67.40 $ 67.40 $ 69.25 $ 69.25 2026 Natural Gas First Quarter Second Quarter Third Quarter Fourth Quarter Transco Leidy gas basis swaps Volume (MMBtu) 5,900,000 9,100,000 9,200,000 9,200,000 Weighted average differential ($/MMBtu) $ (0.79) $ (0.79) $ (0.79) $ (0.79) A significant portion of our production for 2026 and beyond is currently unhedged and directly exposed to the volatility in oil and natural gas prices, whether favorable or unfavorable.
Except as otherwise indicated, the following quantitative and qualitative information is provided for financial instruments to which we were party to as of December 31, 2024 and from which we may incur future gains or losses from changes in commodity prices or interest rates.
Except as otherwise indicated, the following quantitative and qualitative information is provided for financial instruments to which we were party to as of December 31, 2025 and from which we may incur future gains or losses from changes in commodity prices or interest rates.
The fair value of our senior notes is based on quoted market prices. The fair value of our private placement senior notes is based on third-party quotes which are derived from credit spreads for the difference between the issue rate and the period end market rate and other unobservable inputs.
The fair value of our private placement senior notes is based on third-party quotes which are derived from credit spreads for the difference between the issue rate and the period end market rate and other unobservable inputs.
To mitigate the volatility in commodity prices, we may enter into derivative instruments to hedge a portion of our production. Derivative Instruments and Risk Management Activities Our commodity price risk management strategy is designed to reduce the risk of commodity price volatility for our production in the oil and natural gas markets through the use of financial commodity derivatives.
To mitigate the volatility in commodity prices, we may enter into derivative instruments to hedge a portion of our production. 52 Table of Contents Derivative Instruments and Risk Management Activities Our commodity price risk management strategy is designed to reduce the risk of commodity price volatility for our production in the oil and natural gas markets through the use of financial commodity derivatives.
Gas basis swaps covered 1.5 Bcf, or less than one percent of natural gas production at a weighted-average differential of $(0.46) per MMBtu. We are exposed to market risk on financial commodity derivative instruments to the extent of changes in market prices of the related commodity.
Gas basis swaps covered 171.8 Bcf, or 16 percent of natural gas production at a weighted-average differential of $(0.89) per MMBtu. We are exposed to market risk on financial commodity derivative instruments to the extent of changes in market prices of the related commodity.
We have not incurred any losses related to non-performance risk of our counterparties and we do not anticipate any material impact on our financial results due to non-performance by third parties. However, we cannot be certain that we will not experience such losses in the future.
We have not incurred any losses related to non-performance risk of our counterparties and we do not anticipate any material impact on our financial results due to non-performance by third parties. However, we cannot be certain that we will not experience such losses in the future. Interest Rate Risk At December 31, 2025, we had total debt of $3.8 billion.
The carrying amount and estimated fair value of debt is as follows: December 31, 2024 December 31, 2023 (In millions) Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Total debt $ 3,535 $ 3,395 $ 2,161 $ 2,015 Current maturities — — (575) (565) Long-term debt, excluding current maturities $ 3,535 $ 3,395 $ 1,586 $ 1,450 52 Table of Contents
The carrying amount and estimated fair value of debt is as follows: December 31, 2025 December 31, 2024 (In millions) Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Total debt $ 3,818 $ 3,798 $ 3,535 $ 3,395 Current maturities (250) (249) — — Long-term debt, excluding current maturities $ 3,568 $ 3,549 $ 3,535 $ 3,395 55 Table of Contents
During 2024, oil collars with floor prices ranging from $60.00 to $70.00 per Bbl and ceiling prices ranging from $80.55 to $93.65 per Bbl covered 13.5 MMBbls, or 34 percent, of oil production at a weighted-average price of $76.30 per Bbl.
During 2025, oil collars with floor prices ranging from $55.00 to $65.00 per Bbl and ceiling prices ranging from $69.55 to $86.02 per Bbl covered 20.4 MMBbls, or 35 percent, of oil production at a weighted-average price of $65.12 per Bbl.
During 2024, natural gas collars with floor prices ranging from $2.50 to $3.00 per MMBtu and ceiling prices ranging from $2.85 to $5.67 per MMBtu covered 156.5 Bcf, or 15 percent of natural gas production at a weighted-average price of $2.84 per MMBtu.
During 2025, natural gas collars with floor prices ranging from $2.75 to $3.50 per MMBtu and ceiling prices ranging from $3.40 to $8.30 per MMBtu covered 277.2 Bcf, or 26 percent of natural gas production at a weighted-average price of $3.51 per 54 Table of Contents MMBtu.
Oil basis swaps covered 15.5 MMBbls, or 39 percent, of oil production at a weighted-average differential of $1.14 per Bbl.
Oil basis swaps covered 23.7 MMBbls, or 41 percent, of oil production at a weighted-average differential of $1.05 per Bbl. Oil swaps covered 6.9 MMBbls, or 12 percent of oil production at a weighted-average price of $63.30 per Bbl.
Fair Value of Other Financial Instruments The estimated fair value of other financial instruments is the amount at which the instrument could be exchanged currently between willing parties. The carrying amounts reported in the Consolidated Balance Sheet for cash, cash equivalents and restricted cash approximate fair value due to the short-term maturities of these instruments.
The carrying amounts reported in the Consolidated Balance Sheet for cash, cash equivalents and restricted cash approximate fair value due to the short-term maturities of these instruments. The fair value of our senior notes is based on quoted market prices.
Interest Rate Risk At December 31, 2024, we had total debt of $3.5 billion (with a principal amount of $3.5 billion). All of our outstanding debt is based on fixed interest rates and, as a result, we do not have significant exposure to movements in market interest rates with respect to such debt.
At December 31, 2025, we had $3.5 billion outstanding borrowings under fixed-rate debt instruments, which do not carry significant exposure to movements in market interest rates. Fair Value of Other Financial Instruments The estimated fair value of other financial instruments is the amount at which the instrument could be exchanged currently between willing parties.
Removed
Our revolving credit and term loan agreements provide for variable interest rate borrowings; however, we did not have any borrowings outstanding as of December 31, 2024 and, therefore, no related exposure to interest rate risk.
Added
Our debt portfolio includes floating rate debt and fixed-rate debt instruments. Our revolving credit and term loan borrowings are floating rate debt instruments, which exposes us to the risk of earnings or cash flow losses as a result of potential increases in market interest rate.
Added
There are no “rating triggers” in any of our debt agreements that would accelerate the scheduled maturities. Should our credit rating fall below a certain level, a change in our credit rating could adversely impact our interest rate on any borrowings under our revolving credit agreement and term loan.
Added
As of the date hereof, our debt is currently rated as investment grade by the three leading ratings agencies. For more on the impact of credit ratings on our interest rates, see Note 4 of the Notes to the Consolidated Financial Statements, “Long-Term Debt and Credit Agreements”.
Added
At December 31, 2025, we had no outstanding balance under our revolving credit agreement and $300 million outstanding borrowings under our term loan.
Added
Assuming no change in the amount of floating rate debt outstanding, a hypothetical 100 basis point increase in the average interest rate under our term loan borrowings would have increased our annual interest expense by approximately $6 million. Actual results may vary due to changes in the amount of floating rate debt outstanding.
Added
The fair value of the borrowing under our term loan approximates the carrying value as the interest rates are variable and reflective of market rates.

Other CTRA 10-K year-over-year comparisons