US-based exploration and production company Coterra Energy has signed two definitive agreements to acquire assets in the Permian Basin from Franklin Mountain Energy and Avant Natural Resources and its affiliates in a deal worth $3.95bn.
Under the terms of the agreements, the consideration includes $2.95bn in cash and $1bn in Coterra Energy common stock to be issued to one of the sellers, with adjustments based on the purchase price.
The assets include 400-550 net locations in the Permian Basin, targeting prolific formations such as the Bone Spring, Avalon, and Lower Wolfcamp/Penn Shale.
Through the acquisitions, Coterra Energy aims to establish an additional oil-weighted focus area in New Mexico, with acreage adjacent to its existing footprint.
The company’s core operations in the northern Delaware Basin will increase by around 49,000 net acres concentrated in Lea County, New Mexico. This will add a total footprint of around 83,000 net acres.
The sites, featuring an average lateral length of 9,500ft, are projected to produce between 40,000–50,000 barrels of oil per day (bopd) and 60,000–70,000 barrels of oil equivalent per day (boepd) in 2025.
Coterra Energy’s proposed acquisition also includes about 201km of pipeline and other infrastructure. This is expected to enhance operational efficiency and increase netbacks across both existing and new acreage.
In addition, the expansion is projected to enable the company to achieve 150,000–170,000bopd oil production in 2025, marking a 49% increase over 2024 levels.
Coterra Energy anticipates total equivalent production to rise by approximately 11%, reaching 720,000–760,000boepd.
The company’s capital expenditure for 2025 is estimated between $2.1bn and $2.4bn, with 75% allocated to Permian Basin operations.
Coterra Energy chairman, CEO and president Tom Jorden said: “We are thrilled to announce the pending acquisition of two high-quality Permian Basin asset packages.
“These highly accretive acquisitions create an expanded core area in New Mexico that plays to Coterra’s organisational strengths. In addition to adding significant oil volumes in 2025, the acquired assets provide inventory upside to established and emerging oil-weighted formations.”
Coterra Energy plans to finance the cash portion of the transaction through a combination of on-hand funds and new debt.
Subject to customary terms and conditions, the deals are expected to be completed in Q1 2025, with an effective date of 1 October 2024.
For the transaction, Gibson, Dunn & Crutcher acts as legal adviser to Coterra Energy. Jefferies is the financial adviser to Franklin Mountain Energy while Kirkland & Ellis serves as its legal adviser.
TPH&Co and Petrie Partners are acting as financial advisers to Avant Natural Resources and Kirkland & Ellis is a legal adviser to the company.
