Coterra Energy (CTRA) Q4 Results - Apr 11

[dan_s]

At the time of this post CTRA was trading at $27.77.

I have updated my forecast/valuation model based on my current oil & gas price deck.
My valuation goes down by just $0.50 to $30.00, so I rate it a HOLD only for those of you who have a long-term investment horizon and are bullish on natural gas prices bouncing back strong in 2025.

Coterra is a rock-solid company, but it is "gassy".
> 2024 production mix is expected to be 70% natural gas, 15.5% crude oil, and 14.5% NGLs.
> This year's drilling program is going to focus on oil prone areas, so it should be "less gassy" heading into 2025.
> I expect their quarterly dividends to stay at $0.21 until Q4 when they should start slowly ramping up.
> The Company should generate close to $1.2 billion of free cash flow this year based on a realized natural gas price of $1.77/mcf, so no financial risk.

TipRanks: "In the last 3 months, 16 ranked analysts set 12-month price targets for CTRA. The average price target among the analysts is $32.65. The 16 price targets range from $26 to $39." < IMO the risk is the downside until the U.S. natural gas market is rebalanced.

Watch the replay of the AEGIS April 9th webcast to get an understanding of what's being done to rebalance the U.S. natural gas market.