Debt and Credit Agreements

12 Months Ended

Dec. 31, 2021

The Company's debt and credit agreements consisted of the following:


	December 31,
(In millions)	2021		2020
Total debt
6.51% weighted-average private placement senior notes	$	37	$	37
5.58% weighted-average private placement senior notes (1)	87		175
3.65% weighted-average private placement senior notes (2)	825		925
4.375% senior notes due June 1, 2024	750		—
3.90% senior notes due May 15, 2027	750		—
4.375% senior notes due March 15, 2029	500		—
Revolving credit facility	—		—
Net premium (discount)	185		—
Unamortized debt issuance costs	(9)		(3)
	$	3,125	$	1,134

_______________________________________________________________________________

(1)Includes $88 million of current portion of long-term debt at December 31, 2020, which the Company repaid in January 2021.

(2)Includes $100 million of current portion of long-term debt at December 31, 2020, which the Company repaid in September 2021.

The Company has debt maturities in the next five years as follows:


(in millions)	2022		2023		2024		2025		2026		Thereafter
Debt maturities	$	—	$	62	$	1,325	$	—	$	312	$	1,250

At December 31, 2021, the Company was in compliance with all financial covenants for both its revolving credit facility and senior notes.

Private Placement Senior Notes

The Company has various issuances of senior notes that were issued in separate private placements (the “private placement senior notes”). Interest on each of such series of private placement senior notes is payable semi-annually. Under the terms of the various note purchase agreements, the Company may prepay all or any portion of the notes of each series on any date at a price equal to the principal amount thereof plus accrued and unpaid interest plus a make-whole premium.

The note purchase agreements provide that the Company must maintain a minimum annual coverage ratio of consolidated cash flow to interest expense for the trailing four quarters of 2.8 to 1.0 and require a maximum ratio of total debt to consolidated EBITDA for the trailing four quarters of not more than 3.0 to 1.0. There are also various other covenants and events of default customarily found in such debt instruments.

6.51% Weighted-Average Senior Notes

In July 2008, the Company issued $425 million of senior unsecured notes to a group of 41 institutional investors in a private placement. The notes have bullet maturities and were issued in three separate tranches as follows:


	Principal (In millions)		Term	Maturity Date	Coupon
Tranche 1	$	245	10 years	July 2018	6.44	%
Tranche 2	$	100	12 years	July 2020	6.54	%
Tranche 3	$	80	15 years	July 2023	6.69	%

In May 2016, the Company repurchased $8 million of Tranche 1, $13 million of Tranche 2 and $43 million of Tranche 3 for a total of $64 million for $68 million.

As of December 31, 2021, the Company has repaid $388 million of aggregate principal amount associated with the 6.51% weighted-average private placement senior notes.

5.58% Weighted-Average Senior Notes

In December 2010, the Company issued $175 million of senior unsecured notes to a group of eight institutional investors in a private placement. The notes have bullet maturities and were issued in three separate tranches as follows:


	Principal (In millions)		Term	Maturity Date	Coupon
Tranche 1	$	88	10 years	January 2021	5.42	%
Tranche 2	$	25	12 years	January 2023	5.59	%
Tranche 3	$	62	15 years	January 2026	5.80	%

As of December 31, 2021, the Company has repaid $88 million of aggregate principal amount associated with the 5.58% weighted-average private placement senior notes.

3.65% Weighted‑Average Senior Notes

In September 2014, the Company issued $925 million of senior unsecured notes to a group of 24 institutional investors in a private placement. The notes have bullet maturities and were issued in three separate tranches as follows:


	Principal (In millions)		Term	Maturity Date	Coupon
Tranche 1	$	100	7 years	September 2021	3.24	%
Tranche 2	$	575	10 years	September 2024	3.67	%
Tranche 3	$	250	12 years	September 2026	3.77	%

As of December 31, 2021, the Company has repaid $100 million of aggregate principal amount associated with the 3.65% weighted-average private placement senior notes.

Cimarex Senior Notes

The following table includes the summary of the Cimarex debt that was outstanding as of the consummation of the Merger on October 1, 2021 (the “Existing Cimarex Notes”):


(In millions)	Face Value		Fair Value
4.375% senior notes due June 1, 2024	$	750	$	809
3.90% senior notes due May 15, 2027	750		823
4.375% senior notes due March 15, 2029	500		564
	$	2,000	$	2,196

Exchange Offers

On October 7, 2021 and after the completion of the Merger, the Company completed private offers to eligible holders to exchange (collectively, the “Exchange Offers”) $1.8 billion in aggregate principal of Existing Cimarex Notes for $1.8 billion in aggregate principal of new notes issued by Coterra (the “New Coterra Notes”) and $2 million of cash consideration. In connection with the Exchange Offers, Cimarex obtained consents to adopt certain amendments to each of the indentures governing the Existing Cimarex Notes to eliminate certain of the covenants, restrictive provisions and events of default from such indentures. The New Coterra Notes are general, unsecured, senior obligations of the Company and have substantially identical terms and covenants to the Existing Cimarex Notes (before giving effect to the amendments referred to in the immediately preceding sentence). The aggregate principal amount of Existing Cimarex Notes not exchanged, approximately $174 million, remained outstanding across the three series of Existing Cimarex Notes. The New Coterra Notes consist of $706 million aggregate principal amount of 4.375% Senior Notes due 2024, $687 million aggregate principal amount of 3.90% Senior Notes due 2027 and $433 million aggregate principal amount of 4.375% Senior Notes due 2029.

Revolving Credit Agreement

On April 22, 2019, the Company entered into a second amended and restated credit agreement (the “revolving credit agreement”). The revolving credit agreement is unsecured. The revolving credit agreement was subsequently amended on July 17, 2021 to address certain matters precedent to the Merger with Cimarex and on September 16, 2021 to among other things: (1) remove the provisions which limited borrowings thereunder to an amount not to exceed the borrowing base and certain related provisions; (2) replace the then-existing financial maintenance covenants with a covenant requiring maintenance of a leverage ratio not more than 3.0 to 1.0; (3) provide that if, in the future, the Company no longer has any other indebtedness subject to a leverage-based financial maintenance covenant, then the leverage covenant shall be replaced by a covenant requiring maintenance of a ratio of total debt to total capitalization not to exceed 65 percent at any time; and (4) provide for changes to certain exceptions to the negative covenants to reflect the completion of the Merger. This amendment became effective upon completion of the Merger and closing of the debt exchange described above. The Company's revolving credit facility matures in April 2024 and can be extended by one year upon the agreement of the Company and lenders holding at least 50 percent of the commitments under the revolving credit facility.

Interest rates under the revolving credit facility are based on LIBOR or ABR indications, plus a margin which ranges from 112.5 to 175 basis points for LIBOR loans and from 12.5 to 75 basis points for ABR loans. The revolving credit facility also provides for a commitment fee on the unused available balance and is calculated at annual rates ranging from 12.5 to 27.5 basis points.

From time to time, the Company uses the LIBOR benchmark rate for borrowings under its revolving credit facility. In July 2017, the U.K. Financial Conduct Authority (“FCA”) announced that it will no longer compel banks to submit rates that are currently used to calculate LIBOR after 2021. Subsequently in March 2021, the FCA announced some U.S. Dollar LIBOR tenors (overnight, 1 month, 3 month, 6 month and 12 month) will continue to be published until June 30, 2023. Regulators in the U.S. and other jurisdictions have been working to replace these rates with alternative reference interest rates that are supported by transactions in liquid and observable markets, such as the Secured Overnight Financing Rate (SOFR) for U.S. Dollar LIBOR. The Company’s revolving credit facility has a term that extends beyond June 30, 2023. The Company’s revolving credit facility also provides that in the event that the LIBOR benchmark rate is no longer available, the Company and its lenders will endeavor to establish an alternative interest rate based on the then prevailing market convention for purposes of LIBOR borrowings. The Company currently has no borrowings outstanding under its revolving credit facility and does not expect the transition to an alternative rate to have a material impact on its results of operations or cash flows.

At December 31, 2021, there were no borrowings outstanding under the Company's revolving credit facility and unused commitments were $1.5 billion.