Coterra Energy is dropping three of its 10 Permian Basin rigs and is “prepared for this to last a while,” executives told investors as OPEC+ aims to push an extra 800,000 bbl/d into the market and fear is mounting of a global recession.

“We were built for this. Coterra is an ark, not a party boat,” Tom Jorden, chairman, president and CEO, said in a May 6 call, citing a “pristine balance sheet” and the E&P’s $2.1 billion of 2025 estimated free cash flow at $60 oil and $4 gas.

At what price might Coterra cut oily drilling and completions (D&C) further, though? “If we were seriously looking at a price below $50, you'd see our tipping point,” Jorden said.

Coterra is already “concerned that oil prices could further weaken,” he added.

“I hope we're wrong on that. But our experience tells us that, when you see these events and you see the possibility, be prepared for the worst-case scenario.”

Formerly known as Cabot Oil & Gas, it was the E&P unit of Cabot Corp., which was formed in 1891, and spun out in an IPO in 1990.

“I hope we're overreacting on several of these issues,” Jorden added.

If WTI were $50, “the returns are not bad. I mean, they're certainly better than if we rewind to not too many years ago with anything we were experiencing” with $20 oil and unwanted tankers full of LNG during COVID-19.

“But we're making these steps because we're concerned about future weakening in oil prices,” he said.

‘Good Lord’

A securities analyst noted that President Trump’s platform included calling for “Drill, baby, drill.”

“How long do you think this weak environment could continue between the demand that has been destroyed a little bit and then the supply that's coming on?” he asked.

Jorden paused. “Is that all?” he replied, drawing laughter from the analyst and Coterra team members.

“We're a little over 100 days into this new administration,” he said, “and good Lord, there's been a tremendous amount of volatility introduced.

“Whether we're talking about in the oil markets or tariffs and in our relations around the world, all of these converge on forecast for our oil price.”

Jorden said he understands what Trump wants to achieve, “trying to do a lot of difficult things upfront.” There is a “hurry and we have some sympathy for that sense of urgency.”

But Trump has consistently said he wanted lower oil prices as “a bit of a turbocharge to the economy,” Jorden said, adding that he doesn’t think that will change.

Meanwhile, OPEC’s decision is perhaps tied to “what's happening in the Middle East broadly in some of these conflicts. And so we are prepared for this to last a while.”

Hopefully, the tariff matter is resolved and the threat of recession is lifted, he added.

“But our experience tells us that we can't run our program on hope. … So we are battening down the hatches, expecting this to last for a while.”

Adding gas rigs

With the pullback in the Permian, Coterra is looking to the Appalachian Basin, where it had halted all D&C in its 186,000 net acres last year. The company put two rigs back at work there in April and plans to add a frac spread later this year.

It may add another $50 million to its $300 million Marcellus Shale capex plan, if the gas strip, which is about $4, continues to hold up, said Blake Sirgo, senior vice president of operations at Coterra.

In 2024, well costs there were $1,020 per lateral foot. Coterra estimates it will lower costs to about $800 per foot this year with 4-mile laterals and through other efficiencies.

Its production is some 2.2 Bcfe/d from Susquehanna County, Pennsylvania.

Jorden said, “It’s a remarkable position to be able to say, ‘Look, we can invest in oil. We can invest in gas.’ … Everywhere we look in our portfolio, we have opportunity and not barriers.

“We're just trying to adjust to the macro-condition as we think is appropriate.”

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