Just over three years ago, Cabot Oil & Gas — Coterra Energy’s corporate predecessor — was focused exclusively on producing natural gas in the Marcellus Shale. But unlike other gas-centric E&Ps like EQT Corp., Chesapeake Energy and Antero Resources, Cabot decided it was time to diversify. In October 2021, it merged with Cimarex Energy, an oil-and-gas producer in the Permian and the Anadarko, to form Coterra. Now, Coterra has doubled down on diversification with a plan to acquire oil-weighted Permian assets from privately held Franklin Mountain Energy and Avant Natural Resources for a total of $3.95 billion in cash and stock. In today’s RBN blog, we discuss the deals and why Cabot/Coterra decided to “go its own way.”
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During a November 13 call, Houston-based Coterra didn’t break out how much it will be spending on each of the transactions, which are expected to close during Q1 2025, but Franklin Mountain Energy is clearly the larger of the two, likely valued at about $3 billion. Back in August, we said that Franklin Mountain — one of the last large, private E&Ps in the Permian that had not yet been gobbled up via M&A — had officially put itself up for sale, hiring Jefferies Financial Group to help it find a buyer for the producer’s prime Lea County, NM, assets in the northern Delaware Basin. We noted then that Paul Foster, the founder and CEO of Franklin Mountain, is no stranger to big deals. Back in 2017, he sold his Western Refining to Tesoro (now part of Marathon Petroleum) for a cool $5.8 billion (see East Bound and Up?). The following year, Foster started up Franklin Mountain through several strategic transactions in central and south-central Lea County.
Avant Natural Resources, in turn, was founded in 2019 and initially focused on building an oil and gas royalty portfolio in the Permian’s Midland Basin. In 2022, it sold its Midland portfolio and shifted its focus to the New Mexico portion of the Delaware Basin, acquiring assets in west-central Lea County and (to a lesser degree) along the eastern edge of neighboring Eddy County, NM.
Figure 1 below shows Coterra’s existing acreage in the region (green-shaded areas) and the northern Delaware Basin assets it will acquire from Franklin Mountain and Avant (black-shaded areas). We should note that Coterra will pay the E&Ps a total of $2.95 billion in cash — again, the cash going to each was not broken out — and one of the companies (presumably Franklin Mountain, given its considerably higher value) also will receive 40.9 million newly issued shares of Coterra valued at about $1 billion.
Coterra Energy’s Existing and To-Be-Acquired Delaware Basin Assets
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About the song
“Go Your Own Way” was written by Lindsey Buckingham and was the fifth cut on side one of Fleetwood Mac’s 11th studio album, Rumours. Released in December 1976 as the first single from the upcoming Rumours album, the song went to #10 on the Billboard Hot 100 Singles chart and became Fleetwood Mac’s first Top 10 single in the U.S. Buckingham wrote the song about his breakup with longtime girlfriend and Fleetwood Mac vocalist Stevie Nicks. Buckingham had drummer Mick Fleetwood go for the unusual drum groove that Rolling Stones drummer Charlie Watts had on their song “Street Fighting Man” for “Go Your Own Way.” Buckingham's guitar solo was pieced together from six different takes by producer Ken Caillat. Personnel on the record were: Lindsey Buckingham (lead and backing vocals, electric and acoustic guitars), Mick Fleetwood (drums, maracas), John McVie (bass), Christine McVie (Hammond organ, backing vocals) and Stevie Nicks (backing vocals).
Rumours was recorded between February and August 1976 at The Record Plant in Sausalito, CA; Wally Heider Studios in Los Angeles; and Criteria Studios in Miami. It was produced by Fleetwood Mac, Richard Dashut and Ken Caillat. The album was released in February 1977 and went to #1 on the Billboard Top 200 Albums chart. It has been certified 2x Diamond by the Recording Industry Association of America and has sold more than 50 million copies worldwide. It won a Grammy Award for Best Album of the Year in 1978.
Fleetwood Mac is an English-American rock band originally formed in London in 1967. Starting out as a British Blues band, there have been three different versions of the band over the years, with 18 different members passing through its ranks. The band has released 18 studio albums, nine live albums, 23 compilation albums, one EP and 62 singles. They have won four American Music Awards, two Brit Awards and three Grammy Awards, and were inducted into the Rock and Roll Hall of Fame in 1998. The band last toured in 2019 with long-time members Mick Fleetwood, Christine McVie, and Stevie Nicks. They were joined for the tour by Neil Finn (Crowded House) and Mike Campbell (Tom Petty and the Heartbreakers, Dirty Knobs). After the death of Christine McVie in November 2022, the band’s future is unknown.
