I have worked up a new forecast/valuation model for Coterra Energy, the new company created by the merger of Cimarex Energy and Cabot Oil & Gas that closed on October 1st.
TipRanks: "In the last 3 months, 7 ranked analysts set 12-month price targets for CTRA. The average price target among the analysts is $24.00." The 7 price targets range from $21 to $28. Three of the seven price target are from reports dated before August, based on the merger details and much lower commodity prices than we have today.
The merger was an all-stock transaction, so Coterra has a very strong balance sheet and it will be generating over $1 Billion of operating cash flow per quarter, which compares to the XEC + COG combined capex budgets of $1.1 Billion for the full year 2021. Based on my 2022 forecast, Coterra should generate free cash flow from operations next year of $3.0 to $3.5 Billion. That is a BIG NUMBER for a company with a market-cap of $18.5 Billion.
The most recent analyst price target is from Wolfe Research analyst Josh Silverstein (TipRanks rating of 4 out of 5 Stars) on 9/30/2021 who upgraded Cabot Oil & Gas to Outperform from Peer Perform with a price target of $28, up from $25. Cabot Oil & Gas = Conterra Energy immediately before the company name change. Cimarex merged into Cabot and the next day it was renamed.
My current valuation of CTRA is $32.00, which is higher because the Wall Street Gang is still using low natural gas and NGL prices than I am for 2022.
Conterra's 2021 production exit rate should be approximately 680,000 Boepd and my 2022 forecast assumes production of 700,000 Boepd.
The Company's product mix in 2022 should be approximately 75% natural gas, 13% crude oil and 12% NGLs
Very little of the Company's natural gas and NGLS are hedged beyond October and they will be able to harvest some very large spot market gas prices this winter.
CTRA replaces XEC in the Sweet 16.
Coterra Energy (NYSE: CTRA) Update - Oct 5
Coterra Energy (NYSE: CTRA) Update - Oct 5
Last edited by dan_s on Tue Oct 05, 2021 3:58 pm, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Coterra Energy (NYSE: CTRA) Update - Oct 5
Closing Commodity Prices 10/5/2021:
> WTI prompt month (NOV 21) was up $1.31 on the day, to settle at $78.93/Bbl.
> NG prompt month (NOV 21) was up $0.546 on the day, to settle at $6.312/MMBtu.
2022 Realized Commodity Prices used in my 2022 CTRA model
$3.50/mcf for natural gas
$64.00/bbl for crude oil
$25.00/bbl for NGLs
> WTI prompt month (NOV 21) was up $1.31 on the day, to settle at $78.93/Bbl.
> NG prompt month (NOV 21) was up $0.546 on the day, to settle at $6.312/MMBtu.
2022 Realized Commodity Prices used in my 2022 CTRA model
$3.50/mcf for natural gas
$64.00/bbl for crude oil
$25.00/bbl for NGLs
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group