Coterra acquires Permian assets, boosts production by 60,000-70,000 boe/d
Coterra Energy Inc. has agreed to acquire certain Permian basin assets of Franklin Mountain Energy and Avant Natural Resources and its affiliates. The company said the acquisitions would create an additional oil-weighted focus area in New Mexico, with acreage adjacent to its existing footprint, and add 60,000-70,000 boe/d to its production by 2025.
Coterra also emphasized the deals’ deep pro forma inventory, with more than 15 years of anticipated Permian basin runway. Tom Jorden, chairman, chief executive officer, and president of Coterra, noted, “In addition to adding significant oil volumes in 2025, the acquired assets provide inventory upside to established and emerging oil-weighted formations.”
Jorden continued, “We have been drilling horizontal wells in Lea County, New Mexico since 2010 and are extremely excited with the recent results and future opportunity across the area.”
The acquisitions cost $3.95 billion, consisting of $2.95 billion of cash and $1.0 billion of Coterra common stock, issued to one of the sellers, subject to certain purchase price adjustments. The cash portion of the consideration is expected to be funded through a combination of cash on hand and borrowings. The transactions are each subject to satisfaction of customary terms and conditions and are expected to close first-quarter 2025, with effective dates as of Oct. 1, 2024. Neither acquisition is conditioned on the closing of the other acquisition.
“These companies are two of the top remaining private company acquisition targets left in an increasingly consolidated Permian basin and potentially one of the last chances in this consolidation cycle for Coterra to materially increase its Delaware footprint outside of public company corporate M&A,” commented Andrew Dittmar, principal analyst at Enverus Intelligence Research.
“In the scramble for dwindling high-quality resource, it is important for companies to continue to build scale when they can find a deal that fits all acquisition criteria. By combining these two companies into concurrently announced deals, Coterra was able to maintain its inventory duration in the Delaware, keep quality consistent and improve its free cash flow profile,” Dittmar said.
Coterra formed via the combination of Cabot Oil & Gas Corp. and Cimarex Energy Co. (OGJ Online, Oct. 1, 2021).
Christopher E. Smith | Editor in Chief
Christopher brings 27 years of experience in a variety of oil and gas industry analysis and reporting roles to his work as Editor-in-Chief, specializing for the last 15 of them in midstream and transportation sectors.
