Coterra Completes $3.9 Billion Permian Acquisitions

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Coterra Completes $3.9 Billion Permian Acquisitions

Coterra Energy Inc. has completed the purchase of additional stakes in the United States Permian Basin from Avant Natural Resources LLC and Franklin Mountain Energy Holdings LP for a combined price of about $3.9 billion subject to post-closing adjustments. “These assets strengthen the Company’s portfolio in Lea County, New Mexico adding approximately 49,000 highly contiguous […]

“These assets strengthen the Company’s portfolio in Lea County, New Mexico adding approximately 49,000 highly contiguous net acres and 400 to 550 net locations, primarily targeting Bone Spring formations, with additional upside potential”, the Houston, Texas-based company said in an online statement Monday.

Chair, chief executive and president Tom Jorden said, “We expect to immediately hit the ground running and, in coordination with our year-end 2024 earnings release in February, we are excited to share our 2025 formal guidance as well as an updated three-year outlook”.

The exploration and production company, through subsidiary Cimarex Energy Co., acquired all the issued and outstanding equity ownership interests of several affiliates of Franklin Mountain Energy. Coterra owed $1.5 billion in cash and was to issue over 40.89 million shares from its common stock to the Franklin Mountain Energy sellers, according to a regulatory filing November 12, 2024.

Meanwhile Cimarex’s asset acquisitions from Avant involved $1.45 billion in cash.

In a press release November, Coterra placed pro forma output projection post-transaction at 150,000–170,000 barrels per day (bpd) for oil and 720,000–760,000 barrels of oil equivalent a day (boed) for total production.

The company’s projected oil production this year represents a growth of about 49 percent compared to the estimated 2024 mid-point of oil guidance while the projected overall production marks an increase of around 11 percent compared to the estimated 2024 mid-point of guidance for total production.

Coterra expected the new assets to contribute 40,000–50,000 bpd and 60,000–70,000 boed to its 2025 production.

The transactions have also given Coterra approximately 125 miles of pipeline and other infrastructure.

“Multiple horizons and contiguous drilling spacing units help maximize wells per pad, reduce facilities and infrastructure costs”, it added.

Capital expenditure for 2025 was estimated to be $2.1 billion–$2.4 billion, about 75 percent of which is weighted to the Permian.

The acquisitions are over 15 percent accretive to estimated 2025–27 discretionary cash flow and free cash flow, according to the details disclosed November.

The new assets were valued at 3.8x the estimated fourth quarter 2024 annualized EBITDAX and approximately 13 percent of the estimated 2025 free cash flow yield on West Texas Intermediate and Henry Hub price assumptions of $70 per barrel and $3 per million British thermal units respectively.

Coterra said it planned to finance the cash portion of the transactions using cash on hand and borrowings.

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