COTERRA ENERGY INC. The following review of operations for the three and six month periods endedJune 30, 2020 and 2019 should be read in conjunction with our Condensed Consolidated Financial Statements and the Notes included in this Quarterly Report on Form 10-Q (Form 10-Q) and with the Consolidated Financial Statements, Notes and Management's Discussion and Analysis included in theCabot Oil & Gas Corporation Annual Report on Form 10-K for the year endedDecember 31, 2019 (Form 10-K). OVERVIEW Financial and Operating Overview Financial and operating results for the six months endedJune 30, 2020 compared to the six months endedJune 30, 2019 are as follows: • Natural gas production decreased 0.8 Bcf, or less than 1 percent, from
418.6 Bcf, or 2,313 Mmcf per day, in 2019 to 417.8 Bcf, or 2,296 Mmcf per
day, in 2020, as a result of the timing of our drilling and completion
activities in the Marcellus Shale in 2020.
• Average realized natural gas price was $1.62 per Mcf, 42 percent lower
than the $2.80 per Mcf realized in the comparable period of the prior
year.
• Total capital expenditures were
in the comparable period of the prior year.
• Drilled 41 gross wells (36.2 net) with a success rate of 100 percent
compared to 49 gross wells (49.0 net) with a success rate of 100 percent
for the comparable period of the prior year.
• Completed 49 gross wells (44.2 net) in 2020 compared to 42 gross wells
(42.0 net) in 2019.
• Average rig count during 2020 was approximately 2.4 rigs in the Marcellus
Shale, compared to an average rig count of approximately 3.2 rigs during
2019.
Market Conditions and Commodity Prices Our financial results depend on many factors, particularly commodity prices and our ability to market our production on economically attractive terms. Commodity prices are affected by many factors outside of our control, including changes in market supply and demand, which are impacted by pipeline capacity constraints, inventory storage levels, basis differentials, weather conditions and other factors. Our realized prices are also further impacted by our hedging activities. Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prevailing commodity prices, particularly natural gas prices. Since substantially all of our production and reserves are natural gas, significant declines in natural gas prices could have a material adverse effect on our operating results, financial condition, liquidity and ability to obtain financing. Lower natural gas prices also may reduce the amount of natural gas that we can produce economically. Historically, natural gas prices have been volatile, with prices fluctuating widely, and they are likely to continue to be volatile. As a result, we cannot accurately predict future commodity prices and, therefore, cannot determine with any degree of certainty what effect increases or decreases in these prices will have on our capital program, production volumes or revenues. In addition to commodity prices and production volumes, finding and developing sufficient amounts of natural gas reserves at economical costs are critical to our long-term success. We account for our derivative instruments on a mark-to-market basis with changes in fair value recognized in operating revenues in the Condensed Consolidated Statement of Operations. As a result of these mark-to-market adjustments associated with our derivative instruments, we will experience volatility in our earnings due to commodity price volatility. Refer to "Impact of Derivative Instruments on Operating Revenues" below and Note 5 of the Notes to the Condensed Consolidated Financial Statements for more information. Natural gas prices have continued to remain low and have declined compared to 2019. The ongoing coronavirus (COVID-19) outbreak, which theWorld Health Organization (WHO ) declared as a pandemic onMarch 11, 2020 , has reached more than 200 countries and territories and there continues to be considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of governmental and other measures implemented to try to slow the spread of the virus and alleviate strain on the healthcare system, such as quarantines, shelter-in-place orders and business and government shutdowns and the economic impact of such actions. One of the impacts of the COVID-19 pandemic has been a significant reduction in demand for crude oil, and to a lesser extent, natural gas. The supply/demand imbalance driven by the 16
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COVID-19 pandemic, as well as production disagreements among members of theOrganization of Petroleum Exporting Countries and other producer countries (OPEC+), has led to significant global economic contraction generally and is continuing to have disruptive impacts on the oil and gas industry. Subsequent negotiations between members of OPEC+ led to an agreement to reduce production volumes in an effort to stabilize crude oil prices. While crude oil prices have recovered from the lows experienced inApril 2020 , they remain at depressed levels, as the oversupply and lack of demand in the market persist. Meanwhile, NYMEX natural gas futures prices have shown improvements since the implementation of pandemic-related restrictions and OPEC+ price disagreements. The improvements in natural gas futures prices are based on market expectations that declines in future natural gas supplies due to a substantial reduction of associated gas related to the curtailment of operations in oil basins throughoutthe United States will more than offset the lower demand recently experienced with the COVID-19 pandemic. While the current outlook on natural gas prices is favorable and our operations have not been significantly impacted in the short-term, in the event these disruptions continue for an extended period of time, our operations could be adversely impacted, commodity prices could continue to decline further and our costs may increase. While we are unable to predict future commodity prices, at current natural gas price levels, we do not believe that an impairment of our oil and gas properties is reasonably likely to occur in the near future; however, in the event that commodity prices significantly decline from current levels, management would evaluate the recoverability of the carrying value of its oil and gas properties. We have implemented preventative measures and developed response plans intended to minimize unnecessary risk of exposure and prevent infection among our employees and the communities in which we operate. We also have modified certain business practices (including those related to non-operational employee work locations and the cancellation of physical participation in meetings, events and conferences) to conform to government restrictions and best practices encouraged by theCenters for Disease Control and Prevention , theWHO and other governmental and regulatory authorities. In addition, we are continuing to work with our customers and service providers to understand the potential impacts to our operations, including to mitigate any disruptions and to plan for longer-term emergency response protocols. We will continue to monitor developments affecting our workforce, our customers, our service providers and the communities in which we operate, including any resurgence in COVID-19 transmission and infection after the loosening of shelter in place orders, and take additional precautions as we believe are warranted. Our efforts to respond to the challenges presented by the on-going pandemic, as well as certain operational decisions we previously implemented such as our maintenance capital program, have helped to minimize the impact, and any resulting disruptions, of the pandemic to our business and operations. We have not required any funding under any federal or other governmental programs to support our operations, and we do not expect to have to utilize any such funding. As a result, we currently believe that we are well-positioned to manage the challenges presented in a lower commodity pricing environment and can endure the current cyclical downturn in the energy industry and continued volatility in current and future commodity prices by: • Continuing to exercise discipline in our capital program with the
expectation of funding our capital expenditures with cash on hand,
operating cash flows, and if required, borrowings under our revolving
credit facility.
• Continuing to optimize our drilling, completion and operationalefficiencies, resulting in lower operating costs per unit of production.
• Continuing to manage our balance sheet, which we believe provides
sufficient availability under our revolving credit facility and existing
cash balances to meet our capital requirements and maintain compliance
with our debt covenants.
• Continuing to manage price risk by strategically hedging our production.
The impact that COVID-19 will have on our business, cash flows, liquidity, financial condition and results of operations will depend on future developments, including, among others, the ultimate geographic spread and severity of the virus, any resurgence in COVID-19 transmission and infection in affected regions after they have begun to experience an improvement, the consequences of governmental and other measures designed to mitigate the spread of the virus and alleviate strain on the healthcare system, the development of effective treatments, the duration of the outbreak, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability, and the timing and extent to which normal economic and operating conditions resume. For information about the impact of realized commodity prices on our revenues, refer to "Results of Operations" below. Outlook Our 2020 capital program is expected to be approximately$575.0 million , a 27 percent reduction from our 2019 capital program of$783.3 million . At the beginning of 2020, we reduced our planned capital program as a result of the lower natural 17
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gas price environment. We expect to fund these capital expenditures with our cash on hand, operating cash flow and, if required, borrowings under our revolving credit facility. In 2019, we drilled 96 gross wells (94.0 net) and completed 99 gross wells (97.0 net), of which 29 gross wells (29.0 net) were drilled but uncompleted in prior years. For the full year of 2020, our capital program will focus on theMarcellus Shale , where we expect to drill, complete and place on production 60 to 70 net wells. We will continue to assess the natural gas price environment and may increase or decrease our capital expenditures accordingly. Financial Condition Capital Resources and Liquidity Our primary source of cash for the six months endedJune 30, 2020 was from the sale of natural gas production. These cash flows were used to fund our capital expenditures, interest payments on debt and payment of dividends. See below for additional discussion and analysis of cash flow. The borrowing base under the terms of our revolving credit facility is redetermined annually in April. In addition, either we or the banks may request an interim redetermination twice a year or in connection with certain acquisitions or divestitures of oil and gas properties. EffectiveApril 23, 2020 , the borrowing base and available commitments were reaffirmed at$3.2 billion and$1.5 billion , respectively. There were no borrowings outstanding under our revolving credit facility as ofJune 30, 2020 and our unused commitments were$1.5 billion . Refer to Note 4 of the Notes to the Condensed Consolidated Financial Statements for more information. A decline in commodity prices could result in the future reduction of our borrowing base and related commitments under our revolving credit facility. Unless commodity prices decline significantly from current levels, we do not believe that any such reductions would have a significant impact on our ability to service our debt and fund our drilling program and related operations. We strive to manage our debt at a level below the available credit line in order to maintain borrowing capacity. Our revolving credit facility includes a covenant limiting our total debt. We believe that, with operating cash flow, cash on hand and availability under our revolving credit facility, we have the capacity to fund our spending plans. AtJune 30, 2020 , we were in compliance with all restrictive financial covenants for both the revolving credit facility and senior notes. Refer to our Form 10-K for further discussion of our restrictive financial covenants. InJuly 2020 , we repaid$87.0 million of maturities associated with our 6.51% weighted-average senior notes. Cash Flows Our cash flows from operating activities, investing activities and financing activities are as follows: Six Months Ended June 30, (In thousands) 2020 2019 Cash flows provided by operating activities$ 341,333 $
911,937
Cash flows used in investing activities (340,367 ) (423,527 ) Cash flows used in financing activities (86,007 ) (249,303 ) Net (decrease) increase in cash, cash equivalents and restricted cash$ (85,041 ) $
239,107
Operating Activities. Operating cash flow fluctuations are substantially driven by commodity prices, changes in our production volumes and operating expenses. Commodity prices have historically been volatile, primarily as a result of supply and demand for natural gas, pipeline infrastructure constraints, basis differentials, inventory storage levels, seasonal influences and other factors. In addition, fluctuations in cash flow may result in an increase or decrease in our capital expenditures. Our working capital is substantially influenced by the variables discussed above and fluctuates based on the timing and amount of borrowings and repayments under our revolving credit facility, repayments of debt, the timing of cash collections and payments on our trade accounts receivable and payable, respectively, payment of dividends, repurchases of our securities and changes in the fair value of our commodity derivative activity. 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. AtJune 30, 2020 andDecember 31, 2019 , we had a working capital surplus of$82.5 million and$240.2 million , respectively. We believe that we have adequate liquidity and availability under our revolving credit facility to meet our working capital requirements over the next twelve months. 18
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Net cash provided by operating activities in the first six months of 2020 decreased by$570.6 million compared to the first six months of 2019. This decrease was primarily due to lower natural gas revenues, lower derivative settlement gains and unfavorable changes in working capital compared to the prior year. The decrease in natural gas revenues was primarily due to lower realized natural gas prices and marginally lower equivalent production. Average realized natural gas prices decreased by 42 percent for the first six months of 2020 compared to the first six months of 2019. Equivalent production decreased by less than 1 percent for the first six months of 2020 compared to the first six months of 2019 as a result of the timing of our drilling and completion activities in theMarcellus Shale in 2020. 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$83.2 million for the first six months of 2020 compared to the first six months of 2019. The decrease was primarily due to$90.3 million lower capital expenditures as a result of the implementation of our maintenance capital program in 2020. This decrease was partially offset by a decrease in contributions and proceeds of$4.3 million related to the sale of our equity method investments and a decrease in proceeds from the sale of assets of$2.1 million . Financing Activities. Cash flows used in financing activities decreased by$163.3 million for the first six months of 2020 compared to the first six months of 2019. This decrease was primarily due to$156.6 million of lower repurchases of our common stock in 2020 compared to 2019,$7.0 million of lower net repayments of debt,$7.4 million of lower debt issuance costs associated with the amendment of our revolving credit facility in 2019 and$4.2 million of lower tax withholdings on vesting of stock awards. These decreases were partially offset by higher dividend payments of$12.0 million related to an increase in our quarterly dividend rate from$0.16 per share in the first six months of 2019 to$0.20 per share in the first six months of 2020. Share repurchases in 2019 include$31.4 million of share repurchases that were accrued in 2018 and paid in 2019. Capitalization Information about our capitalization is as follows: June 30, December 31, (In thousands) 2020 2019 Debt (1)$ 1,220,495 $ 1,220,025 Stockholders' equity 2,165,979 2,151,487 Total capitalization$ 3,386,474 $ 3,371,512 Debt to total capitalization 36 % 36 % Cash and cash equivalents$ 117,164 $ 200,227
_______________________________________________________________________________
(1) Includes
debt at
borrowings outstanding under our revolving credit facility as of
2020 and
We did not repurchase any shares of our common stock during the first six months of 2020. During the first six months of 2019, we repurchased 5.1 million shares of our common stock for$125.3 million . During the first six months of 2020 and 2019, we paid dividends of$79.7 million ($0.20 per share) and$67.7 million ($0.16 per share), respectively, on our common stock. Capital and Exploration Expenditures On an annual basis, we generally fund most of our capital expenditures, excluding any significant property acquisitions, with cash on hand, cash generated from operations, and if required, borrowings under our revolving credit facility. We budget these expenditures based on our projected cash flows for the year. 19
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The following table presents major components of our capital and exploration
expenditures:
Six Months Ended
June 30,
(In thousands) 2020 2019
Capital expenditures
Drilling and facilities $ 329,843 $ 415,431
Leasehold acquisitions 1,331 3,246
Other 4,395 5,975
335,569 424,652Exploration expenditures(1) 6,769 10,548
$ 342,338 $ 435,200
(1) Exploration expenditures include
for the first six months of 2020. Exploratory dry hole cost for the first
six months of 2019 was not significant.
For the full year of 2020, we plan to allocate substantially all of our capital
to the Marcellus Shale , where we expect to drill, complete and place on
production 60 to 70 net wells. Our 2020 capital program is expected to be
approximately $575.0 million . Refer to "Outlook" for additional information
regarding the current year drilling program. We will continue to assess the
commodity price environment and may increase or decrease our capital
expenditures accordingly.
Contractual Obligations
We have various contractual obligations in the normal course of our operations.
There have been no material changes to our contractual obligations described
under "Transportation and Gathering Agreements" and "Lease Commitments" as
disclosed in Note 9 of the Notes to the Consolidated Financial Statements and
the obligations described under "Contractual Obligations" in Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in our Form 10-K.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations
are based upon our Condensed Consolidated Financial Statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States . The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. Refer to our Form 10-K for further discussion of our
critical accounting policies.
Recently Adopted Accounting Pronouncements
Refer to Note 1 of the Notes to the Condensed Consolidated Financial Statements,
"Financial Statement Presentation," for a discussion of new accounting
pronouncements that affect us.
Results of Operations
Second Quarters of 2020 and 2019 Compared
We reported net income in the second quarter of 2020 of $30.4 million , or $0.08
per share, compared to net income of $181.0 million , or $0.43 per share, in the
second quarter of 2019. The decrease in net income was primarily due to lower
operating revenues, partially offset by lower operating expenses and income tax
expense.
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Revenue, Price and Volume Variances
Our revenues vary from year to year as a result of changes in commodity prices
and production volumes. Below is a discussion of revenue, price and volume
variances.
Three Months Ended June 30, Variance
(In thousands) 2020 2019 Amount Percent
Operating Revenues
Natural gas $ 288,286 $ 470,482 $ (182,196 ) (39 )%
Gain on derivative instruments 43,974 63,649 (19,675 ) (31 )%
Other 88 (14 ) 102 729 %
$ 332,348 $ 534,117 $ (201,769 ) (38 )%
Natural Gas Revenues
Three Months Ended June 30, Variance Increase
(Decrease)
2020 2019 Amount Percent (In thousands)Price variance (Mcf) $ 1.42$ 2.20 $ (0.78 ) (35 )%$ (158,262 ) Volume variance (Bcf) 202.9 213.8 (10.9 ) (5 )% (23,934 ) Total$ (182,196 ) The decrease in natural gas revenues of$182.2 million was due to lower natural gas prices and lower production. The decrease in production was a result of the timing of our drilling and completion activities in theMarcellus Shale in 2020. Impact of Derivative Instruments on Operating Revenues Three Months Ended June 30, (In thousands) 2020 2019
Cash received (paid) on settlement of derivative instruments Gain (loss) on derivative instruments
$ 19,423 $ 15,397 Non-cash gain (loss) on derivative instruments Gain (loss) on derivative instruments 24,551 48,252$ 43,974 $ 63,649 21
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Operating and Other Expenses
Three Months Ended June 30, Variance
(In thousands) 2020 2019 Amount Percent
Operating and Other Expenses
Direct operations $ 17,423 $ 18,093 $ (670 ) (4 )%
Transportation and gathering 135,249 141,689 (6,440 ) (5 )%
Taxes other than income 3,352 3,640 (288 ) (8 )%
Exploration 4,579 4,504 75 2 %
Depreciation, depletion and
amortization 94,622 96,147 (1,525 ) (2 )%
General and administrative 23,166 22,889 277 1 %
$ 278,391 $ 286,962 $ (8,571 ) (3 )%
Earnings on equity method
investments $ - $ 3,650 $ (3,650 ) (100 )%
Loss on sale of assets (241 ) - 241 100 %
Interest expense, net 14,543 14,567 (24 ) - %
Other expense 48 143 (95 ) (66 )%
Income tax expense 8,751 55,086 (46,335 ) (84 )%
Total costs and expenses from operations decreased by $8.6 million in the second
quarter of 2020 compared to the same period of 2019. The primary reasons for
this fluctuation are as follows:
• Direct operations decreased $0.7 million primarily driven by lower
Marcellus Shale production.
• Transportation and gathering decreased $6.4 million due to lower
Marcellus Shale production.
• Depreciation, depletion and amortization decreased $1.5 million
primarily due to lower amortization of unproved properties of $2.1
million , partially offset by higher DD&A of $0.2 million in the secondquarter of 2020 compared to 2019. The increase in DD&A was primarily
due to an increase of $4.8 million due to a higher DD&A rate of $0.44
per Mcfe in the second quarter of 2020 compared to $0.42 per Mcfe for
the second quarter of 2019, partially offset by
lower production volumes in the Marcellus Shale . The higher DD&A rate
was due to higher cost reserve additions.
• General and administrative increased
million higher stock-based compensation expense associated with certain
of our market-based performance awards and a
hardware and software costs. These increases were partially offset by
The remaining changes in other general and administrative expenses were
not individually significant.
Earnings on Equity Method Investments Earnings on equity method investments decreased$3.7 million primarily due to the sale of our investments inMeade Pipeline Co LLC (Meade) inNovember 2019 andConstitution Pipeline Company, LLC (Constitution ) inFebruary 2020 . Income Tax Expense Income tax expense decreased$46.3 million due to lower pre-tax income and a lower effective tax rate. The effective tax rates for the second quarter of 2020 and 2019 were 22.4 percent and 23.3 percent, respectively. The effective tax rate was lower for the second quarter of 2020 compared to the second quarter of 2019 due to the reimbursement of sequestration charges on AMT credits refunded in prior years that was recorded in the second quarter of 2020. First Six Months of 2020 and 2019 Compared We reported net income in the first six months of 2020 of$84.3 million , or$0.21 per share, compared to net income of$443.8 million , or$1.05 per share, in the first six months of 2019. The decrease in net income was primarily due to lower operating revenues and earnings on equity method investments, partially offset by lower income tax expense. 22
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Revenue, Price and Volume Variances
Our revenues vary from year to year as a result of changes in commodity prices
and production volumes. Below is a discussion of revenue, price and volume
variances.
Six Months Ended June 30, Variance
(In thousands) 2020 2019 Amount Percent
Operating Revenues
Natural gas $ 658,626 $ 1,103,656 $ (445,030 ) (40 )%
Gain on derivative instruments 60,036 71,906 (11,870 ) (17 )%
Other 143 236 (93 ) (39 )%
$ 718,805 $ 1,175,798 $ (456,993 ) (39 )%
Natural Gas Revenues
Six Months Ended June 30, Variance Increase
(Decrease)
2020 2019 Amount Percent (In thousands)
Price variance (Mcf) $ 1.58 $ 2.64 $ (1.06 ) (40 )% $ (443,115 )
Volume variance (Bcf) 417.8 418.6 (0.8 ) - % (1,915 )
Total $ (445,030 )
The decrease in natural gas revenues of $445.0 million was due to lower natural
gas prices coupled with a decrease in production. The decrease in production was
a result of the timing of our drilling and completion activities in the
Marcellus Shale in 2020.
Impact of Derivative Instruments on Operating Revenues
Six Months Ended
June 30,
(In thousands) 2020 2019Cash received (paid) on settlement of derivative instruments Gain (loss) on derivative instruments
$ 19,423 $ 68,377 Non-cash gain (loss) on derivative instruments Gain (loss) on derivative instruments 40,613 3,529$ 60,036 $ 71,906 Operating and Other Expenses Six Months Ended June 30, Variance (In thousands) 2020 2019 Amount Percent Operating and Other Expenses Direct operations$ 34,667 $ 36,427 $ (1,760 ) (5 )% Transportation and gathering 278,581 279,022 (441 ) - % Taxes other than income 7,090 9,487 (2,397 ) (25 )% Exploration 6,769 10,548 (3,779 ) (36 )% Depreciation, depletion and amortization 194,757 188,405 6,352 3 % General and administrative 56,595 53,979 2,616 5 %$ 578,459 $ 577,868 $ 591 - % (Loss) earnings on equity method investments $ (59 )$ 7,334 $ (7,393 ) (101 )% Loss on sale of assets (170 ) (1,500 ) (1,330 ) (89 )% Interest expense, net 28,754 26,748 2,006 7 % Other expense 114 287 (173 ) (60 )% Income tax expense 26,965 132,957 (105,992 ) (80 )% 23
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Total costs and expenses from operations increased by$0.6 million in the first six months of 2020 compared to the same period of 2019. The primary reasons for this fluctuation are as follows: • Direct operations decreased$1.8 million due to a decrease in production
and continued efficiencies in our operations in the
• Transportation and gathering decreased
Shale production.
• Taxes other than income decreased $2.4 million due to $2.2 million lower
drilling impact fees driven by a decrease in rates associated with lower
natural gas prices.
• Exploration decreased $3.8 million due to a $3.1 million decrease in
geological and geophysical expenses and a $1.4 million decrease in
employee costs, partially offset by an increase in exploratory dry hole
costs of $2.0 million .
• Depreciation, depletion and amortization increased
due to higher DD&A of
of unproved properties of
increase of
the first six months of 2020 compared to
months of 2019. The higher DD&A rate was due to higher cost reserve
additions. Amortization of unproved properties decreased due to lower
amortization rates.
• General and administrative increased
stock-based compensation expense of
of our market-based performance awards, a
expenses and a
increases were partially offset by $2.1 million of severance costs
incurred in the second quarter of 2019 and a $1.4 million decrease in
employee-related expenses. The remaining changes in other general and
administrative expenses were not individually significant.
(Loss) Earnings on Equity Method Investments
Earnings on equity method investments decreased $7.4 million primarily due to
the sale of our investments in Meade in November 2019 and Constitution in
February 2020 .
Interest Expense, net
Interest expense, net increased $2.0 million primarily due to the reversal of
interest expense in 2019 related to certain income tax reserves recorded in
prior periods.
Income Tax Expense
Income tax expense decreased $106.0 million due to lower pre-tax income,
partially offset by a higher effective tax rate. The effective tax rates for the
first six months of 2020 and 2019 were 24.2 percent and 23.1 percent,
respectively. The effective tax rate was higher for the first six months of 2020
compared to the first six months of 2019 due to an increase in tax expense as a
result of book compensation expense exceeding the federal and state tax
deductions for employee stock-based compensation awards that vested during the
period.
Forward-Looking Information
The statements regarding future financial and operating performance and results,
strategic pursuits and goals, market prices, future hedging and risk management
activities, and other statements that are not historical facts contained in this
report are forward-looking statements. The words "expect," "project,"
"estimate," "believe," "anticipate," "intend," "budget," "plan," "forecast,"
"target," "predict," "may," "should," "could," "will" and similar expressions
are also intended to identify forward-looking statements. Such statements
involve risks and uncertainties, including, but not limited to, the continuing
effects of the COVID-19 pandemic and the impact thereof on our business,
financial condition and results of operations, the availability of cash on hand
and other sources of liquidity to fund our capital expenditures, actions by, or
disputes among or between, members of OPEC+, market factors, market prices
(including geographic basis differentials) of natural gas, results of future
drilling and marketing activity, future production and costs, legislative and
regulatory initiatives, electronic, cyber or physical security breaches and
other factors detailed herein and in our other Securities and Exchange
Commission filings. Refer to "Risk Factors" in Item 1A of the Form 10-K, in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in this
Quarterly Report on Form 10-Q for additional information about these risks and
uncertainties. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual outcomes may vary
materially from those indicated.
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