Long-Term Debt and Credit Agreements

12 Months Ended

Dec. 31, 2022

The following table includes a summary of the Company’s long-term debt.


	December 31,
(In millions)	2022		2021
Total debt
6.51% weighted-average private placement senior notes	$	—	$	37
5.58% weighted-average private placement senior notes	—		87
3.65% weighted-average private placement senior notes(1)	825		825
4.375% senior notes due June 1, 2024 (2)	—		750
3.90% senior notes due May 15, 2027 (2)	750		750
4.375% senior notes due March 15, 2029 (2)	500		500
Revolving credit facility	—		—
Total	2,075		2,949
Net premium	111		185
Unamortized debt issuance costs	(5)		(9)
Long-term debt	$	2,181	$	3,125

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(1)The 3.65% weighted-average senior notes have bullet maturities of $575 million and $250 million due in September 2024 and 2026, respectively.

(2)These notes were assumed by the Company in October 2021 in connection with the Merger. Subsequent to an exchange transaction completed in October 2021, approximately $130 million of these notes remain the unsecured and unsubordinated obligation of Cimarex, a subsidiary of the Company, at December 31, 2022.

The following table includes a summary of Cimarex debt that was outstanding as of the consummation of the Merger on October 1, 2021:


(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

Private Placement Senior Notes

The Company has various issuances of senior unsecured 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.

During 2022, the Company repaid $37.0 million of its 6.51% weighted-average senior notes for $38 million and $87 million of its 5.58% weighted-average senior notes for $92 million prior to their original maturity dates, and recognized a net loss on debt extinguishment of $7 million.

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. As of December 31, 2022, the Company was in compliance with its financial covenants under the private placement senior notes.

Senior Notes

In connection with the Merger in 2021, the Company assumed $2.0 billion of Cimarex debt (“Existing Cimarex Notes”) and completed a private exchange offer of $1.8 billion of the Existing Cimarex Notes for new Company notes (“Coterra Notes”

and, together with the Existing Cimarex Notes, the “Senior Notes”). The Coterra Notes have the same interest rate and payment and maturity dates as the Existing Cimarex Notes for which they were exchanged.

The Senior Notes are general, unsecured obligations of the Company. Interest on each series of Senior Notes is payable semi-annually. Under the terms of the indenture documents governing the Senior Notes, the Company may redeem all or any portion of the Senior Notes of each series on any date at a price equal to the principal amount thereof plus applicable redemption prices described in the governing indentures. The Company is also subject to various covenants and events of default customarily found in such debt instruments.

In 2022, the Company redeemed the $750 million principal amount of its 4.375% Senior Notes for approximately $750 million and recognized a net gain on debt extinguishment of $35 million primarily due to the write off of the associated debt premiums and debt issuance costs.

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. As of December 31, 2022, the Company was in compliance with its financial covenants under the revolving credit agreement.

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, 2022, there were no borrowings outstanding under the Company’s revolving credit facility and unused commitments were $1.5 billion.