Total capital expenditures for drilling, completion, and other fixed assets increased to $2.1 billion in 2023, compared to $1.7 billion in 2022. This indicates a strategic focus on increasing production through investment in existing assets.

The 2024 capital program is expected to be approximately $1.75 billion to $1.95 billion, with approximately 60 percent invested in the Permian Basin, 23 percent in the Marcellus Shale, and 17 percent in the Anadarko Basin. This demonstrates a diversified approach to capital allocation across different geographic regions.

The merger with Cimarex in October 2021 significantly increased the company's asset base, particularly in the Permian Basin. Operational information does not include the activity of Cimarex for periods prior to the completion of the Merger.

Coterra highlights its focus on operational excellence, making operations more environmentally and socially sustainable. They actively implement technology to limit methane emissions and flaring activity, and prioritize employee and contractor safety.

The company emphasizes attracting, retaining, and developing high-quality employees. They seek to promote a safe and healthy workplace, foster a results-focused culture, and offer competitive compensation and benefits packages.

The company is managing its supply chain effectively, as evidenced by the fact that they have not experienced significant difficulty in transporting or marketing their production as it becomes available.

The company's revenues, operating results, financial condition, and ability to borrow depend substantially on the prices received for oil, natural gas, and NGLs. Lower commodity prices could have a material adverse effect on the business.

The company's growth is materially dependent upon the success of its drilling program. Drilling for oil and natural gas involves numerous risks, including the risk that no commercially productive reservoirs will be encountered.

Cyber-attacks targeting the company's systems, the oil and gas industry systems and infrastructure or the systems of the third-party service providers could adversely affect our business.

The oil and gas industry is highly competitive, and the company experiences strong competition where it operates. Many competitors have greater financial, technical and personnel resources.

Price, contract terms, availability of rigs and related equipment and quality of service, including infrastructure availability and distribution efficiencies affect competition. The company believes that its concentrated acreage positions and access to infrastructure enhance its competitive position.

During the year ended December 31, 2023, two customers accounted for approximately 19 percent and 17 percent of our total sales. If any one of our major customers were to stop purchasing our production, we believe there are other purchasers to whom we could sell our production.

Lease operating expense increased primarily due to higher production levels. Additionally, lease operating expense on a per Boe basis generally increased due to increasing costs of equipment and field services, which began to stabilize in late 2023, and higher contract labor and employee-related costs.

Gathering, processing and transportation increased $20 million primarily due to higher production levels, partially offset by lower costs in the Permian Basin and Anadarko Basin due to lower gathering and transportation rates which were driven by lower commodity prices during 2023 compared to the same period in 2022.

Due to the cyclical nature of our business and the fluctuations in activity that can occur, we manage our headcount carefully. We provide employees with opportunities to learn new roles and develop the breadth and depth of their skills to ensure a collaborative environment, strong talent and future leadership.

Coterra actively implements technology across its operations from the design phase to equipment improvements to limit methane emissions and flaring activity. This demonstrates a commitment to innovation and efficiency.

We maintain a cybersecurity Incident Response Plan (“IRP”) designed to identify, assess, manage, mitigate, and respond to cybersecurity risks, threats and incidents.

Our business, like the oil and gas industry in general, has become increasingly dependent on data, information systems, and digitally connected infrastructure, including technologies managed by third-party providers on whom we rely to help us

Since the consummation of the merger with Cimarex, we have returned $5.2 billion to stockholders through dividends and share repurchases and have retired $874 million of debt. We remain committed to returning 50 percent or more of our annual free cash flow to our stockholders through dividends and our share repurchase program, while maintaining our industry-leading balance sheet.

In February 2024, our Board of Directors approved an increase in our base quarterly dividend from $0.20 per share to $0.21 per share beginning in the first quarter of 2024, and approved a quarterly base dividend of $0.21 per share.

During 2023, we repurchased and retired 17 million shares of our common stock for $418 million under our authorized share repurchase program.

Responsible development of oil and natural gas resources provides opportunity for a bright future, one built through technology and innovation that offers prosperity for communities around the world. Our focus on operational excellence is based on making our operations more environmentally and socially sustainable.

We have published our 2023 Sustainability Report, which includes more information related to our sustainability practices, on our website at www.coterra.com.

Our operations are subject to extensive and stringent federal, state and local laws and regulations governing the protection of the environment. These laws and regulations can change, restrict or otherwise impact our business in many ways, including the handling or disposal of waste material, planning for future activities to avoid or mitigate harm to threatened or endangered species, and requiring the installation and operation of emissions or pollution control equipment.

Our financial results depend on many factors, particularly commodity prices and our ability to find, develop and market our production on economically attractive terms. Commodity prices are affected by many factors outside of our control.

In response to studies suggesting that emissions of carbon dioxide and certain other greenhouse gas (“GHG”), including methane, may be contributing to global climate change, there is increasing focus by local, state, regional, national and international regulatory bodies as well as by investors and the public on GHG emissions and climate change issues.

We are subject to various climate-related risks. 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.