Coterra Energy (CTRA) Valuation Update - Feb 24

[dan_s]

CTRA was trading at $25.15 when this was posted.

I have updated my forecast/valuation model for the company's strong Q4 2022 results and guidance for 2023.
I am lowering my valuation by $3 to $30 per share.

Why?
> Coterra's production mix is approximately 73.5% natural gas, 12.5% NGLs and 14.0% crude oil.
> Lower natural gas and NGL realized prices in 2023, net of differentials and cash settlements on hedges, will lower operating cash flow from $5,642 million in 2022 to approximately $3,984 million in 2023 per my forecast.
> Coterra's 2023 capital expenditures should be approximately $2.1 billion, so the company is still going to generate lots of free cash flow this year.
> Obviously if natural gas prices do rebound this stock has a lot of upside for us. It has several decades of low-risk / high-return development drilling inventory.
> The balance sheet is in GREAT SHAPE.
> Based on my forecast, the fixed + varable dividends should be $1.59 for 2023 and $1.91 for 2024. After 2024, FCF and dividends should go a lot higher.

My forecast model for Coterra has been posted to the EPG website.

TipRanks: "In the last 3 months, 14 ranked analysts set 12-month price targets for CTRA. The average price target among the analysts is $30.67. The 14 price targets range from $23 to $41."