Coterra Solidifies Permian Position With $3.95B New Mexico Deal

Core Viewpoint - Coterra Energy Inc. (CTRA) is set to acquire Permian Basin assets from Franklin Mountain Energy and Avant Natural Resources for $3.95 billion, financed through a combination of cash and stock [1][2]. Acquisition Details - The acquisition will be completed via a cash and stock deal, consisting of$2.95 billion in cash and $1 billion in Coterra stock, with 40.9 million shares issued [1]. - The deal is expected to close by early 2025 and will enhance Coterra's portfolio with high-quality assets [2]. Post-Acquisition Benefits - CTRA will acquire 49,000 net acres, increasing its net locations in New Mexico by 75% and in the Permian by 25% [3]. - The acquisition is projected to boost oil production capacity by approximately 60,000 to 70,000 barrels of oil equivalent per day [3]. Production and Infrastructure - Following the acquisition, the pro forma production capacity is anticipated to reach around 160,000 barrels per day by 2025, with a reinvestment rate of about 50% [4]. - The addition of 125 miles of pipeline and other infrastructure will improve netbacks and operational economics [4]. Financial Outlook - The acquisition is expected to enhance cash flow and net asset value, with estimated oil production in 2025 projected to increase by 49% compared to 2024 [5]. - CTRA aims to maintain a strong balance sheet and high liquidity ratio by the end of 2025, planning to return at least 50% of free cash flow through dividends and buybacks [5]. Company Overview - Coterra Energy is an independent upstream operator involved in the exploration, development, and production of natural gas, crude oil, and natural gas liquids, currently holding a Zacks Rank 3 (Hold) [6].