Coterra adds to its top-quality drilling prospects

Article Excerpt

We still recommend that most investors maintain exposure to the oil and gas industry as part of a balanced portfolio. To cut risk, focus on producers with positive cash flow even at lower energy prices. Here’s one that meets that requirement—and pays a solid dividend. COTERRA ENERGY, $24.52, is a buy. The company (New York symbol CTRA; TSINetwork Rating: Extra Risk) (www.coterra.com; Shares outstanding: 736.4 million; Market cap: $18.2 billion; Dividend yield: 3.4%) produces and explores for natural gas and oil. Gas makes up 67% of the company’s output; the remaining 33% is oil. Coterra has now entered into two separate definitive agreements to acquire certain assets of Franklin Mountain Energy and Avant Natural Resources for $3.95 billion ($2.95 billion in cash and $1.0 billion in Coterra common stock, issued to one of the sellers). The assets include two high-quality Permian Basin asset packages. These will create an expanded core area for Coterra in New Mexico and add significantly to its oil volumes in 2025. The…