Coterra Energy (CTRA) M&A Announcement summary

Deal rationale and strategic fit

• Acquisitions of Franklin Mountain Energy and Avant Natural Resources for $3.95B expand a contiguous footprint in New Mexico's Delaware Basin, leveraging operational expertise and creating a new oil-weighted focus area.

• Adds approximately 49,000 net contiguous acres and 400-550 high-quality net well locations, increasing Permian net locations by 25% and New Mexico net locations by 75%.

• Increases oil production by 49%-50% in 2025, shifting revenue mix to 55%-60% oil and improving margins and free cash flow.

• Highly contiguous assets align with operational strengths, enabling pad optimization, simul-frac, and row development.

• Acquisitions meet strict criteria for capital competitiveness, financial accretion, and leverage of operational strengths.

Financial terms and conditions

• Total consideration is $3.95B: $2.95B cash, $1.0B equity (approx. 40.9M shares), funded by cash on hand, new borrowings, and committed financing.

• Acquisition cost is just under $3 million per undeveloped location, with $2.6 billion of PDP value at a $70/$3 price deck.

• Pro forma net leverage expected at 0.6x by YE25, remaining below 1.0x at $55 WTI/$2.50 HH.

• 2025e FCF yield of 13% and 3.8x EBITDAX valuation for acquired assets.

• Plan to reduce pro forma leverage by at least $1 billion over several years.

Synergies and expected cost savings

• Large, contiguous acreage and 125 miles of acquired pipeline and infrastructure enable operational efficiencies, enhance netbacks, and reduce costs.

• Multiple horizons and contiguous drilling units maximize wells per pad and lower facilities/infrastructure costs.

• No immediate cost reductions included in 2025 CapEx, but historical playbook suggests up to 15% cost savings over time.