We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Coterra Solidifies Permian Position With $3.95B New Mexico Deal
Read MoreHide Full Article
According to its latest strategy, Coterra Energy Inc. (CTRA - Free Report) has entered into an accord with two companies whereby it will acquire certain Permian Basin assets from Franklin Mountain Energy and Avant Natural Resources for $3.95 billion. The acquisition will be closed via a cash and stock deal, financed through $2.95 billion in cash and $1 billion in Coterra stock. The cash portion will consist of cash in hand and new borrowings and the company will issue 40.9 million shares of Coterra stock valued at $1 billion.
The deal, expected to close by early 2025, will provide several benefits to the company, like adding two high-quality assets to its portfolio, expanding the company’s core area in New Mexico and adding significant volumes to its oil production.
An Insight Into CTRA’s Post-Acquisition Benefits
CTRA will acquire 49,000 net acres from the two Denver-based companies, expanding its footprint in New Mexico within the Permian Delaware basin. The acquisition will increase Coterra’s net locations in the state by 75% and its net locations in the Permian by 25%.
The newly acquired assets will boost the company’s oil production capacity by an estimated 60,000 to 70,000 barrels of oil equivalent per day.
Following the acquisition, the pro forma reinvestment rate is expected to be around 50% and the pro forma production capacity is likely to be around 160,000 barrels per day in 2025.
125 miles of pipeline and other infrastructure will be added to the company’s portfolio, which will enhance its netbacks and optimize the operational economics.
CTRA’s Cash Flow Outlook and Future Projections
CTRA highlights that these acquisitions will provide a boost to their cash flow and net asset value. The estimated oil production in 2025 will also increase by 49% over 2024 production capacities. The company also expects to maintain a strong balance sheet and high liquidity ratio by the end of 2025. Since the company is committed to providing value to its shareholders, it also plans to return at least 50% of its free cash flow through dividends and buybacks.
CTRA’s Zacks Rank and Key Picks
Houston-based Coterra Energy is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Currently, CTRA has a Zacks Rank #3 (Hold).
Mach Natural Resources LP is an independent upstream oil and gas company that focuses on the acquisition, development and production of oil, natural gas and natural gas liquids reserves. The Zacks Consensus Estimate for AROC’s 2024 earnings indicates 200% year-over-year growth.
Canada-based Enerflex Ltd. provides oilfield services for natural gas and petroleum producers. EFXT’s expected EPS (earnings per share) growth rate for the next quarter is 188.89%, which compares favorably with the industry loss rate of 22.45%.
Flotek Industries develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. The Zacks Consensus Estimate for FTK’s 2024 earnings indicates 125% year-over-year growth.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Coterra Solidifies Permian Position With $3.95B New Mexico Deal
According to its latest strategy, Coterra Energy Inc. (CTRA - Free Report) has entered into an accord with two companies whereby it will acquire certain Permian Basin assets from Franklin Mountain Energy and Avant Natural Resources for $3.95 billion. The acquisition will be closed via a cash and stock deal, financed through $2.95 billion in cash and $1 billion in Coterra stock. The cash portion will consist of cash in hand and new borrowings and the company will issue 40.9 million shares of Coterra stock valued at $1 billion.
The deal, expected to close by early 2025, will provide several benefits to the company, like adding two high-quality assets to its portfolio, expanding the company’s core area in New Mexico and adding significant volumes to its oil production.
An Insight Into CTRA’s Post-Acquisition Benefits
CTRA will acquire 49,000 net acres from the two Denver-based companies, expanding its footprint in New Mexico within the Permian Delaware basin. The acquisition will increase Coterra’s net locations in the state by 75% and its net locations in the Permian by 25%.
The newly acquired assets will boost the company’s oil production capacity by an estimated 60,000 to 70,000 barrels of oil equivalent per day.
Following the acquisition, the pro forma reinvestment rate is expected to be around 50% and the pro forma production capacity is likely to be around 160,000 barrels per day in 2025.
125 miles of pipeline and other infrastructure will be added to the company’s portfolio, which will enhance its netbacks and optimize the operational economics.
CTRA’s Cash Flow Outlook and Future Projections
CTRA highlights that these acquisitions will provide a boost to their cash flow and net asset value. The estimated oil production in 2025 will also increase by 49% over 2024 production capacities. The company also expects to maintain a strong balance sheet and high liquidity ratio by the end of 2025. Since the company is committed to providing value to its shareholders, it also plans to return at least 50% of its free cash flow through dividends and buybacks.
CTRA’s Zacks Rank and Key Picks
Houston-based Coterra Energy is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Currently, CTRA has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Mach Natural Resources LP (MNR - Free Report) , Enerflex Ltd. (EFXT - Free Report) and Flotek Industries, Inc. (FTK - Free Report) .While Mach currently sports a Zacks Rank #1 (Strong Buy), Enerflex and Flotek Industries each carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mach Natural Resources LP is an independent upstream oil and gas company that focuses on the acquisition, development and production of oil, natural gas and natural gas liquids reserves. The Zacks Consensus Estimate for AROC’s 2024 earnings indicates 200% year-over-year growth.
Canada-based Enerflex Ltd. provides oilfield services for natural gas and petroleum producers. EFXT’s expected EPS (earnings per share) growth rate for the next quarter is 188.89%, which compares favorably with the industry loss rate of 22.45%.
Flotek Industries develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. The Zacks Consensus Estimate for FTK’s 2024 earnings indicates 125% year-over-year growth.