Coterra Energy has announced definitive agreements to acquire assets from Franklin Mountain Energy and Avant Natural Resources for a total consideration of $3.95bn.
The acquisitions are independent of each other and aim to bolster Coterra's position in the Permian Basin.
The $3.95bn consideration comprises $2.95bn in cash and $1bn in Coterra common stock.
The acquisitions are expected to close in the first quarter of 2025, subject to the fulfilment of customary terms and conditions.
Coterra 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.
“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 company will issue approximately 40.9 million shares of its common stock, valued at $1bn, to certain sellers.
The company will finance the cash portion with a mix of cash reserves and new borrowings, with JPMorgan Chase Bank, PNC Capital Markets and TD Securities providing committed financing.
Legal and advisory support includes Gibson, Dunn & Crutcher as Coterra's legal advisor, with Veriten as an independent advisor.
Jefferies serves as Franklin Mountain Energy's financial advisor, with Kirkland & Ellis as legal advisor.
TPH&Co and Petrie Partners are financial advisors to Avant Natural Resources, with Kirkland & Ellis as legal advisor.
The acquisition will expand Coterra's holdings in the northern Delaware Basin by approximately 49,000 net acres in Lea County, New Mexico.
This creates a new 83,000 net acre focus area within Coterra's portfolio and the assets include 400–550 net Permian locations, targeting multiple formations.
Coterra's New Mexico net locations will increase by approximately 75%, and its Permian net locations by around 25%.
The acquired assets are expected to produce an estimated 60–70mboe/d, enhancing Coterra's production capabilities in the region.
