两年前，盆地整合风潮席卷美国本土 48 个州，包括Diamondback Energy与Endeavor Natural Resources、Chesapeake Energy与Southwestern Energy 的合并，以及创纪录的盆地特定资产交易清单，而Cimarex Energy和Cabot Oil & Gas的领导层所寻求的不仅仅是石油和天然气规模。

他们也想要有发展空间。他们不想依赖一种商品的命运而忽视另一种商品的命运。

两家公司找到了彼此，并于 2021 年在纽约证券交易所以Coterra Energy 的名称和“TRA”股票代码完成了全股票“平等合并”。

Coterra 在成立之初就实现了规模化和多元化：企业价值 170 亿美元，在马塞勒斯页岩、二叠纪和阿纳达科盆地拥有 664,000 净英亩的顶级资产基础，基础产量为 605,000 桶油当量/天。

如今，Coterra 已接近成立三周年，其企业价值接近 220 亿美元，增长近 30%。该公司的季度业绩经常超过华尔街的预期，其与大宗商品无关的理念也为股东带来了好处。由于价格相对疲软，该公司已缩减了天然气业务；与此同时，Truist Securities 分析师表示，明年该公司的石油业务可能会重现目前 10% 的同比增长率。

确实，这一切都是好事。Coterra 有望在 2025 年产生超过 25 亿美元的自由现金流。

Coterra 首席执行官汤姆·乔登 (Tom Jorden) 告诉《石油和天然气投资者》(OGI)：“我们确实相信分散化，既要涉足多个盆地，又要拥有多样化的收入来源。如果你能告诉我从长远来看哪种商品是最好的，那么我会选择它，这样我们就可以成为一家单一商品公司。但我们在选择方面从来都不是很精明。我不知道有谁这样做过。因此，我们决定尝试在天然气和石油之间实现收入来源多元化，然后寻求在两种商品上都降低供应成本。”

Cimarex 总部位于丹佛，主要在德克萨斯州和新墨西哥州的二叠纪盆地以及阿纳达科盆地生产石油。Cabot 利用了马塞勒斯页岩约 173,000 英亩的含气量土地组合。   

显然，Coterra 的前辈们已经意识到了超级巨头和大型综合公司早已明白的道理：多元化很重要。自 Coterra 收盘以来，SM Energy准备通过收购XCL Resources进入 Uinta Basin ；Civitas Resources 则在 2023 年收购了Vencer Energy、Hibernia Energy IUII 和Tap Rock Resources ，从而走出了丹佛-朱尔斯堡基地。

大陆资源公司在一项同时体现多元化和纯粹业务战略的交易中，于 2021 年底收购了先锋自然资源公司在特拉华州的全部资产组合，从而使先锋公司成为米德兰盆地的纯粹业务公司，从而在二叠纪盆地首次亮相。先锋公司后来被埃克森美孚收购。

Coterra 的创立考虑了很多方面：收入和地域多样性；低成本供应和高价值资产；以及低债务。

“将两家公司合并实际上是围绕这一理念进行的：资产多元化、收入多元化和供应成本低廉。这当然是市场所未预料到的，而且我认为当时有点与众不同，”乔登说。“但我们对合并后目前的状况感到非常满意。”

OGI 于 6 月份拜访了 Jorden 在 Coterra 位于休斯顿的总部，并在那里度过了一个下午的讨论，讨论了公司的战略和文化。

Deon Daugherty：2021 年，您是如何找到与其他人并购行为背道而驰的必要条件的？
Tom Jorden：我们有信念。我们的管理团队是北极星。我们真的相信，经营一家公司的方式首先是通过投资资本的回报来管理公司。因此，无论商品类型如何，我们都力求获得最高的回报。这是我们的指导原则，两家公司的合并无疑为我们提供了这一原则。

我们对大宗商品持怀疑态度，有时，这种态度并不容易保持。但我们的经验告诉我们，天然气和石油可以循环。有时它们会耦合，有时又会分离。但我们在成立 Coterra 时看到的是，有机会获得非常稳定的收入流，这样我们就不会受到这些周期变化的影响。

如果回顾过去几个季度，你会发现天然气是我们的主要收入来源。而在过去四五个季度，石油一直是我们的主要收入来源。但如果你展望未来，看看人们对 2025 年的预测，你会发现石油和天然气的收入来源将大致相同。这正是我们想要建立的：一个平衡的收入流，让我们能够以更高的可预测性和一致性来管理我们的业务。就这么简单。

DD：Coterra 取得了非凡的成功，自收购以来几乎每个季度都超出预期。请详细介绍一下您的管理理念、“北极星”以及它如何指导您的团队。TJ
：嗯，它有几个要素。首先，我们认为，对一家勘探与生产公司进行适当的管理是围绕投资资本的分配。我们不按商品类型进行管理。我们不按生产增长目标进行管理。我们关注的是要投资多少资本，我们真正寻求的是找到这些资本的最高回报。

现在，这也有几个要素。首先，你必须有一个价格预测。无论我们期望在哪个价格区间获得高回报，无论是条形图、平价图还是周期中期价格区间，我们都会运行它们。第二个关键要素是你预测的价格与你认为价格可能跌到多低之间的偏差有多大。这为你提供了保险，为你提供了保护。如果你进行了这项投资，你就不会在这些周期中损失资本，因为我们在我们的业务中已经看到了这一点。

我们看到，当价格和成本都很高时，公司会全力以赴。他们进行大规模投资，然后价格下跌，这些投资最终导致资本损失。

第三个要素是可重复性。你真的认为你的可重复性很高。所以这些确实是我们资本配置决策的基础要素。

但我会更进一步回答你的问题。我们真的相信技术的作用。我们真的相信当与志同道合甚至不同思想的人合作时，人类智慧的力量。所以，在 Coterra，我们坚信一种非常开放的文化。我们坚信这样一种文化，在这种文化中，人们不仅被欢迎表达不同意见，而且被期望表达不同意见。

DD：在一个专家云集的房间里，如何做到这一点？
TJ：如果人们有相反的观点，我们希望实时听到。当我们所有人都在房间里时，我们通过眼神交流来管理。我们确保人们感到相互联系，从而获得授权，并相信，如果他们不同意，这种观点是受欢迎的。

我们确实容忍高度的技术辩论。这是我们公司的基础。我们的北极星之一是，如果人们有基于数据的观点，就应该提出来。我不在乎这个人是 30 年的职业人士，还是刚从学校毕业三周的人。如果他们在房间里，并且有基于数据的观点，我们真的想听听。我们努力工作，共同的信念是，我们的公司是一个真正的精英思想社会，我们尽可能减少阻碍真正聪明的人分享他们的观点的障碍。

DD：这听起来很不寻常。TJ
：嗯，它并不适合所有人。

这可能会让人非常不舒服。根据我的经验，生活中你想实现的任何事情——无论是事业、身体健康、精神、人际关系还是教育——最终都归结为一个非常简单的选择：进步还是舒适。

如果你想取得进步，你就必须做好非常不舒服的准备。我们并不力求让 Coterra 成为一个舒适的工作场所。我们毫无歉意地说，但我们不会因为政治原因而感到不舒服，因为我们不容忍政治。

一切都在桌面上。我们进行眼神交流，我们承诺说最糟糕的话就是当我们进行眼神交流时，而且是面对面时，而且这样做很有效。

DD：那么，请举个例子，说明这些对话可能会如何展开。TJ
：我们告诉董事会和组织，我们非常成功，我们对此非常担忧。我们绝不希望成功妨碍未来的创新。好永远不够好。总有办法突破极限。你必须有一定的自豪感，但也要谦虚，因为我们所在的行业有一些非常聪明的人和一些伟大的组织。我们观察竞争对手，并试图向他们学习。

我们努力不断改变想法，以找到更好的做事方式。我们有很多这样的例子。我们目前正在改变位于德克萨斯州卡尔伯森县的 Windham [Row] 项目的间距。我们在最近的收益电话会议上谈到，我们之前的大部分经验告诉我们，在特拉华盆地，我们有多个目标区域相互堆叠，根据这些区域之间的垂直距离，我们可以一次开发一个，然后再回来开发上面或下面的区域。

但这并不适用于特拉华盆地的所有地方。我们最近看到的一些数据表明这可能并不完全正确，所以我们正在重新考虑这个问题，并重新研究一些烟囱测试。

我们在采用人工智能或机器学习方面也非常先进。这可以帮助我们保持客观。我不会说它没有偏见，但我会说它的偏见非常容易控制，而对于人类来说，控制我们的偏见更难。

DD：您使用人工智能的方式有哪些？
TJ：我们首先将其应用于地下建模。然后我们对自己说，如果我们能让人工智能很好地进行井预测，那么这将是我们的终极目标。钻井时可能会有 15 或 20 个不同的参数来控制生产响应深度、水平段长度、完井类型、地质参数、间距等参数。

一般来说，它们分为三大类：地质、完井和间距以及几何形状。但在这三大类中，可能有 15 个影响深远的参数，这些都是非常昂贵的实验。如果你在现场进行这些实验，你可能会渗透其中的一个或另一个，但你会在经济上耗尽自己去尝试所有不同的迭代。

机器学习可以让你说出“呃，这是 15 个参数的组合；它在实践中实际上表现如何？”我们有很多使用机器学习的不同油井，我们可以查看每个油井的地质情况、完井情况和间距，看看我们在预测结果方面能做得多好。

因为如果你能做到这一点，你就可以给我 15 个参数，这些参数可以很好地控制它，我就可以非常有效地预测它应该生产什么。如果这真的与它实际生产的结果相匹配，那么我就可以开始比赛了。我不必在这些参数的每次迭代上花费 1000 万美元或 1500 万美元。我可以让机器去做这件事，我可以找到最佳解决方案，不仅可以优化我的生产，还可以优化我的资本回报率。

我们确实在这里大力推行了这项计划。它彻底改变了我们的思维方式。我们把机器学习从人们最初有点怀疑的东西中解放出来，并将其转变为一种技术，在 Coterra 这里，没有一场有意义的运营会议没有机器学习的参与。我们的运营人员坚持使用它，因为他们已经看到了它为任何有意义的问题集带来的价值和启发。

瞧，我们一开始并没有完全成功。我们经历了一些失败，但我们确实找到了一种节奏，今天，我们的机器学习在预测油井性能方面的表现优于我们最优秀、最聪明的油藏工程师。

DD: 这适用于你们的所有资产吗？
TJ:是的，适用于所有资产。

DD：这对您的增长计划有什么影响？
TJ：这有助于我们更有效地完成钻井。这有助于我们提高单井产量。我们讨论过一些间隔问题。几年前，我们在二叠纪盆地和特拉华盆地详细讨论了这个问题。我们认为——再次强调，不是所有地方，但在许多地方——在某些情况下，我们可以钻更少的井，比我们的竞争对手钻更少的井，并回收相同的产量。我们一次又一次地证明了这一点，我们隔壁的运营商可能正在钻一两口额外的井，但我们的钻井间隔单元的产量与隔壁的相当。我们的投资减少了 1500 万至 2000 万美元。

当然，这种情况并不普遍。但我要说的是，机器学习的应用确实让我们对间隔和完成效率有了更深入的理解。

DD：我想进一步深入探讨一下 Coterra 如何在每个季度几乎在所有指标上都表现出色。TJ
：当然，这是通过拥有一个开放的组织来实现的；这种组织的力量是惊人的。现在，每家公司都有自己的文化，每家公司都相信自己的文化。或者，如果他们不相信，他们就应该改革自己的文化。

我多年前就听人说过这样的话，而且很多人都这么说，“但其中的原话是，“从长远来看，公司唯一的竞争优势来源是其文化。”

这是我的经验。资产会来来去去，尽管我不愿意这么说，但人也会来来去去。但如果一种文化能够经受住考验并保持有机，那么它就可以成为一家公司的命脉。我认为 Coterra 是精英管理。我们非常鼓励员工之间进行开放式合作，无论是跨业务部门还是垂直部门。我们不孤立员工，也不认为管理就是命令和控制。

如果你将这一理念与多盆地方法结合起来，你就会突然发现，好主意会像野火一样传播开来。马塞勒斯的创新可以很快传播到阿纳达科或二叠纪，反之亦然。我们的业务部门之间每天都在进行大量合作，分享最佳实践，相互询问问题解决方案，这带来了真正的回报。

当然，我们拥有一支优秀的实地工作人员队伍，他们都非常敬业，但我们的组织确实非常专注，为彼此树立了卓越的标准。这听起来可能有些陈词滥调，也可能有些傲慢。但我们对彼此的期望确实基于对卓越的共同承诺。

DD：那么，采用这种方法，Coterra 在第一季度就返还了 90% 的自由现金吗？这种规模的回报可持续吗？

TJ：嗯，我们承诺的是50%以上，但我们拒绝卷入现金回报承诺的“军备竞赛”。

我们看到有些公司说 50%，有些公司说 75%，有些公司说 90%。我们拒绝做出这些承诺，因为简单地说，我们真的相信承诺，这就是为什么我们很少做出承诺。我们不想做出无法兑现的承诺。因此，我们提前兑现了承诺，但我们很乐意这样做。我们拥有出色的资产负债表、良好的现金流、低供应成本，坦率地说，过去几年是我们业务的良好年份。

DD：在第一季度电话会议上，您谈到了对天然气的乐观态度。天然气市场波动特别大，您如何保持这种心态？
TJ：展望未来，很难不对天然气持乐观态度。我们在这个行业中都是天生的乐观主义者，因为我们在这个行业中可以做任何事情，但事情也可能变得很糟糕。商品价格可能突然暴跌，而且没有任何预兆。或者您可能会遇到严重的机械故障，导致超支或损失，或者我们遇到天气事件。在这个行业中，很多事情都可能出错。

我们的心理防御机制就是乐观，我们这个行业总体上是一个乐观的群体。有时，当你发现乐观时，它只是人们对现实的顽固反应。但说到天然气，我要说的是，无论是从美国还是全球能源的基本面来看，都很难不看到天然气的真正强大作用。

DD：关于逐步淘汰化石燃料的讨论在你的考量中占了什么比重？
TJ：这取决于谁在谈论。是非政府组织或环保组织在谈论吗？是政府官员和监管机构在谈论吗？还是消费者在谈论？因为这些都是非常不同的声音。

当我们观察消费者的行为和市场时，我们看到我们的产品（包括石油和天然气）有着非常强劲的未来，尤其是围绕发电的讨论日益增多，关于数据中心增长和人工智能采用所产生的需求，以及这对美国电力需求意味着什么以及天然气在满足这种需求方面的作用。

所以，如果让我在所有这些声音中做出选择，我会选择市场，我认为市场向我们发出了非常明确的信号，即我们的产品在未来几十年内都会被需要。这将是一个健康的企业，在一定的行为范围内，负责任，努力提供尽可能零排放的产品，并且不会对能源转型充耳不闻。我的意思是，所有这些都是同时存在的。

Two years before basin consolidation swept across the Lower 48 with mergers including Diamondback Energy and Endeavor Natural Resources, Chesapeake Energy and Southwestern Energy, and a record-setting list of basin-specific asset deals, leadership at Cimarex Energy and Cabot Oil & Gas were looking for more than oil and gas scale.

They wanted scope, too. And they didn’t want to rely on the fortunes of one commodity over the other.

The firms found each other and, in 2021, completed an all-stock “merger of equals” under the Coterra Energy name and “CTRA” ticker symbol on the New York Stock Exchange.

Coterra achieved scale and diversity at its onset: an enterprise value of $17 billion, a top tier asset base of 664,000 net acres across the Marcellus Shale, Permian and Anadarko basins and base production of 605,000 boe/d.

Now nearing its third anniversary, Coterra’s enterprise value is close to $22 billion—an increase of almost 30%. The firm routinely beats Wall Street’s quarterly expectations and its commodity-agnostic philosophy is working in its shareholders’ favor. The company has scaled down its natural gas activity with the relative weakness in prices; meanwhile, Truist Securities analysts say that next year could see a repeat of its current 10% year-over-year oil growth.

It’s all upside, really. Coterra is on track to generate more than $2.5 billion in free cash flow for 2025.

“We really do believe in decentralization, being in multiple basins, but also having a diverse revenue stream,” Coterra CEO Tom Jorden told Oil and Gas Investor (OGI). “If you can tell me which commodity will be the best one in the long run, then I’ll pick that and we can be a one commodity company. But we’ve never been very astute at picking. I don’t know that anybody has. So, we made the decision to try to diversify our revenue stream between gas and oil and then seek to have very low cost of supply in both commodities.”

Headquartered in Denver, Cimarex had mostly produced from Permian Basin operations in both Texas and New Mexico, as well as in the Anadarko Basin. Cabot leveraged a portfolio of some 173,000 gas-weighted acres in the Marcellus Shale.   

Clearly, Coterra’s forbearers were onto something that the supermajors and large integrated firms have long understood: diversification matters. Since the Coterra closing, SM Energy is poised to enter the Uinta Basin with its acquisition of XCL Resources; Civitas Resources took a few steps outside its Denver-Julesburg base with its 2023 buys of Vencer Energy, Hibernia Energy IUII and Tap Rock Resources.

And in a deal that captures both the diversification and pure-play strategies, Continental Resources made a splashy debut in the Permian Basin when it bought Pioneer Natural Resources’ entire Delaware portfolio, leaving Pioneer a Midland Basin pure play, in late 2021. Pioneer has since been absorbed by Exxon Mobil.

The making of Coterra checked a lot of boxes: revenue and geographic diversity; low cost supply and high value assets; and low debt.

“Putting the two companies together was really structured around that philosophy: diversity of assets, diversity of revenue and low cost of supply. It was certainly unanticipated [by the market], and I’ll say a bit of a breaking from the herd at that point in time,” Jorden said. “But we’re really pleased with where we sit right now as a consequence of that merger.”

OGI visited Jorden at Coterra’s Houston headquarters in June for an afternoon discussion about the company’s strategy and culture.

Deon Daugherty: How did you find the wherewithal to go against the grain of what everyone else was doing with regard to M&A back in 2021?
Tom Jorden: We have convictions. We have a North Star as a management team. We really believe that the way to run a company is to first and foremost manage a company by return of invested capital. And so, we seek to have the highest returns we can, irrespective of commodity type. That was our guiding principle and the merger of the two companies certainly offered that to us.

We are agnostic on commodity and, from time to time, that’s not an easy discipline to maintain. But our experience tells us that gas and oil can cycle. At times it’s coupled and at times it’s decoupled. But what we saw in forming Coterra was the opportunity to have a very consistent revenue stream so that we weren’t subject to the vicissitudes of these cycles.

If you go back [several] quarters, natural gas was our dominant revenue source. And then over the last four or five quarters, oil’s been our dominant revenue source. But if you look ahead to the strip and look at what people are projecting for ’25, oil and natural gas will be about equal as revenue sources. And that’s exactly what we wanted to establish: a balanced revenue stream that would allow us to manage our business with greater predictability and greater consistency. It’s as simple as that.

DD: Coterra has produced extraordinary success, outpacing expectations just about every quarter since closing. Tell me more about your management philosophy, this “North Star” and how it guides your team.
TJ: Well, there are several elements to it. First and foremost, we believe that proper management of an E&P company is [based] around allocation of invested capital. We don’t manage by commodity type. We don’t manage by production growth targets. We look to see how much capital we’re going to invest and we really seek to find the highest returns on that capital.

Now, that also has several elements. First and foremost, you have to have a price file prediction. At whatever price file we look to see high returns, whether it’s the strip or a flat price file or a mid-cycle price file, we run them all. The second critical element is how much windage do you have between whatever price you forecast and how low you think the price could fall. That … provides your insurance, that provides your protection. If you make that investment, you will not destroy capital over those cycles because we’ve seen that in our business.

We’ve seen companies pull out the stops when prices are high and costs are high. They make massive investments and then the price falls and those investments end up destroying capital.

Then the third element is repeatability. You really think you have great repeatability. So those are really foundational elements of our capital allocation decisions.

But I’ll go further in answering your question. We really believe in the role of technology. We really believe in the power of human intellect when teamed with like minds or even unlike minds. So, at Coterra, we’re strong believers in a very open culture. We’re strong believers in a culture where people are not only welcome to disagree, but expected to disagree.

DD: How does that work in a room filled with experts?
TJ: If people have a contrarian viewpoint, we want to hear it—in real time. When we’re all in the room, we manage by eye contact. We make sure that people feel connected and therefore are empowered and trust that, if they disagree, that viewpoint’s welcomed.

We really do tolerate a high degree of technical debate. It’s foundational to our company. One of our North Stars is that people are expected, if they have a viewpoint based on the data, [to] bring it on. And I don’t care whether it’s somebody that’s a 30-year career person or somebody that’s three weeks out of school. If they’re in the room and they have a viewpoint based on data, we really want to hear that. We work hard with a shared conviction that our company be a true meritocracy of ideas, and that there are as few barriers to really bright people sharing their viewpoints as we can possibly muster.

DD: That sounds very unusual.
TJ: Well, it’s not for everybody.

It can be very uncomfortable. In my experience, anything in life that you want to accomplish—be it business, physical fitness, spirituality, relationships, education—ultimately it comes down to a very simple choice between progress or comfort.

If you want to make progress, you have to be prepared to be very uncomfortable. And we do not strive for Coterra to be a comfortable place to work. And we say that unapologetically, but not uncomfortable politically because we don’t tolerate politics.

It’s all on the tabletop. We make eye contact, we have a commitment that the worst thing we’re going to say is when we’re making eye contact and in person and it works.

DD: So, give me an example of how one of those conversations might play out.
TJ: We tell our board and our organization that we’ve been very successful—and we’re worried sick over it. We never want success to get in the way of future innovation. Good is never good enough. There are always ways you can push the envelope. You have to have a certain amount of pride, but also humility because we work in an industry with some really bright people and some great organizations. We look at our competitors and we try to learn from them.

We try to be willing to change our minds constantly on better ways to do things. And we have a lot of examples of that. We’re altering our spacing right now in the Windham [Row] project, which is in Culberson County [Texas]. We talked on our recent earnings call that most of our prior experience tells us that in the Delaware Basin, where we have multiple target zones stacked on top of one another, depending on the vertical distance between these zones, that we can develop them one at a time and come back later and get the zones above or below.

But this isn’t true for everywhere in the Delaware Basin. We recently saw some data that suggested that that may not be wholly true, so we’re rethinking it and going back to looking at some stack tests.

We’ve also been very forward in the adoption of artificial intelligence or machine learning. That can help one be objective. I won’t say it doesn’t have bias, but I’ll say it has very manageable bias, whereas with humans, it’s harder to manage our biases.

DD: What are some of the ways that you’re using artificial intelligence?
TJ: We started by applying it to subsurface modeling. Then we said to ourselves, if we could get artificial intelligence to do a good job at well prediction, then that would be the Holy Grail. There may be 15 or 20 different parameters when you drill a well that govern the production response depth, lateral length, completion type, geological parameters, spacing, parameters.

Generally, they fall into three main categories: geological; completion and spacing; and geometry. But within those three major buckets, there may be 15 impactful parameters, and these are very expensive experiments. If you’re doing them in the field, you may permeate one or another, but you will exhaust yourself financially to try all different iterations.

Machine learning gives you the ability to say, “Well, here’s this combination of the 15 parameters; how well did it actually do in practice?” We have a lot of different wells with machine learning, we can look at how each one of them had the geology, the completion, and the spacing, and see how good a job we can do at predicting that outcome.

Because if you can nail that, you get to the point where you give me the 15 parameters that govern that well, and I can do a very effective job of predicting what it should have produced. And if that is truly a good match over what it did produce, then I’m off to the races. I don’t have to spend $10 or $15 million on every iteration of those parameters. I can let the machine do it and I can find the optimum solution, not only optimize my production, but optimize my return on capital.

We’ve really instituted that heavily here. It’s changed our thinking across the board. We’ve taken machine learning from something that people were initially a little suspicious about, and we’ve turned it into a technology where, here at Coterra, there’s no meaningful operational meeting where machine learning isn’t at the table. And our operations people insist on it because they’ve seen the value and the illumination it brings to any meaningful problem set.

Look, we didn’t get it right straight out of the chute. We had some false starts, but we really found a rhythm where today our machine learning on predicting well performance is outperforming our best and brightest reservoir engineers.

DD: And this is being applied across your assets?
TJ: Yes, across the assets.

DD: What has that done to your growth plans?
TJ: It helps us more effectively complete our wells. It helps us get more per well. We’ve talked about some of our spacing. In the Permian and the Delaware Basin a couple of years ago, we talked at length about that. We thought—and again, not everywhere, but in many places—we thought we were able to drill fewer wells in some cases, fewer wells than our competitors, and recover the same volumes. And we’ve demonstrated that time and time again where we’ll be next door to an operator that may be drilling one or two additional wells, and yet our drilling spacing unit is producing equivalent volumes to the one next door. We’re doing it with $15-$20 million less investment.

Now, that’s not true everywhere. But I will say that the application of machine learning has really given us a more sophisticated understanding of spacing and completion efficiency.

DD: I want to dig in a bit more on how Coterra has managed to outperform by almost every metric during every quarter.
TJ: Certainly by having an open organization; the power of that is remarkable. Now, every company has their own culture and every company believes in their own culture. Or if they don’t, they should reform their culture.

I heard it said years ago, and it’s been attributed to many, … but the quote is, “In the long run, the only source of competitive advantage a company has is its culture.”

And that has absolutely been my experience. Assets will come and go, and much as I hate to say it, people will come and go. But if a culture can survive that and be organic, then that can be the heartbeat of a company. I think Coterra is a meritocracy. We really encourage open collaboration amongst our people, either across business units or vertically. We don’t silo people, nor do we have a viewpoint that says management is command and control.

You put that philosophy in with a multi-basin approach and all of a sudden you have a place where good ideas spread like wildfire. An innovation in the Marcellus can quickly find its way to the Anadarko or the Permian, or vice versa. We have a lot of collaboration going on every day between our business units, sharing best practices, querying one another on problem solutions, and it’s given real dividends.

Certainly, we have a great field staff, very dedicated field staff, but we really have a very focused organization that sets a standard of excellence for one another. That may sound trite, it may sound arrogant. But we really do have an expectation of one another that is based upon a shared commitment to excellence.

DD: So, taking that approach is how Coterra returned 90% of its free cash during the first quarter? Is that size of return sustainable?

TJ: Well, we’ve committed to 50% plus, but we’ve refused to get into an arms race on cash return promises.

We’ve seen that companies will say 50%, then another company will say 75% and another company will say 90%. And we’ve just refused to make those promises because, simply put, we really believe in commitments and that’s why we make so few of them. We don’t want to make commitments that we’re not going to honor. And so, we’ve returned in advance of what we’ve telegraphed, but we’re happy to do that. We have a tremendous balance sheet, great cash flow, low cost of supply, and quite frankly, the last few years have been really good years in our business.

DD: During the first-quarter call, you discussed being optimistic about natural gas. It’s been especially volatile, so how do you hold that disposition?
TJ: Well, it’s hard not to be optimistic about natural gas as you look ahead in the future. We’re kind of all born optimists in this business because we’re in a business where you can do everything, and yet it can go really badly. The commodity price can fall out from underneath you suddenly and without warning. Or you can have terrible mechanical problems and overexpend or lose holes, or we have weather events. Just a lot can go wrong in this business.

Our psychological defense against that is our optimism, and we’re an optimistic group generally in our business. Sometimes, when you find optimism, it’s just kind of people’s stubborn reaction to reality. But when it comes to natural gas, I will say it’s very difficult to look at the fundamentals of either U.S. or global energy and not see a really strong role for natural gas.

DD: How do conversations about phasing out fossil fuels figure into your calculus?
TJ: It depends on who’s doing the talking. Are there NGOs [non-governmental organizations] or environmental groups doing that talking? Are there government officials and regulators doing that talking? Or is the consumer doing that talking? Because those are all very different voices.

When we look at the consumer’s behavior and the marketplace, we see very strong future for our products, both oil and natural gas, particularly hardened by the growing conversation around electricity generation, about the need generated by data center growth and artificial intelligence adoption and what that’ll mean for U.S. power demand and the role of natural gas in satisfying that demand.

So, you give me the choice between all of those voices, I’m going to take the marketplace, and I think the marketplace is sending us pretty clear signals that our products will be needed for many decades to come. And it will be a healthy business within a certain behavior set that is responsible, that attempts to deliver our products as emissions-free as we can, and that is not tone deaf to the energy transition. I mean, all of that is true simultaneously.