Coterra Energy Announces Pricing of Senior Unsecured Notes

Rhea-AI Summary

Coterra Energy Inc. (CTRA) announces a $500 million senior unsecured notes offering due 2034 with an interest rate of 5.60%. The proceeds will fund the repayment of existing debt, and the offering is managed by top financial firms.

Insights

Financial Analyst

The pricing of Coterra Energy Inc.'s $500 million senior unsecured notes offering at a 5.60% interest rate is a strategic financial move aimed at restructuring the company's debt profile. The decision to replace the 3.67% Series L Senior Notes due in September 2024 with higher interest-bearing notes indicates a shift in the company's capital management strategy. This could reflect a proactive stance in managing interest rate risks or a response to changing market conditions that affect the company's creditworthiness.

Investors should consider the implications of this refinancing on Coterra's interest expenses and debt servicing capabilities. The higher interest rate could increase the cost of capital, potentially impacting future profitability. However, the move may also be seen as a way to extend the maturity profile of the debt, which can improve liquidity and financial flexibility. It's essential to analyze Coterra's financial statements to assess how the new debt level aligns with its cash flow generation and overall financial health.

Market Research Analyst

The energy sector is highly sensitive to fluctuations in commodity prices, regulatory changes and macroeconomic factors. Coterra's issuance of senior unsecured notes may be interpreted as an indicator of the company's market outlook and investment strategy. Given the current economic environment, characterized by rising interest rates and inflationary pressures, the fixed interest rate of 5.60% could be advantageous if interest rates continue to climb.

Market participants should evaluate how Coterra's leverage compares to industry peers and whether the increased debt load could affect its competitive position. The company's ability to service its debt amidst volatile energy prices will be crucial for investor confidence. Additionally, the involvement of prominent financial institutions as book-running managers might suggest a vote of confidence in Coterra's creditworthiness and long-term prospects.

Economist

The energy industry is a significant contributor to economic activity and debt issuances within this sector can provide insights into broader economic trends. Coterra's new debt offering at a higher interest rate than its existing debt reflects broader market conditions, where interest rates have been rising as central banks attempt to curb inflation. This has implications for the cost of borrowing across the economy and could signal tightening financial conditions for businesses.

From an economic perspective, the successful placement of these notes could indicate investor confidence in the energy sector and the economy's resilience. However, it also raises questions about the sustainability of higher debt costs if economic growth slows down. Analysts should monitor how such debt issuances may influence capital expenditures in the energy sector and the potential ripple effects on employment, innovation and energy supply.

HOUSTON--(BUSINESS WIRE)-- Coterra Energy Inc. (“Coterra”) (NYSE: CTRA) announced today that it has priced an offering of $500 million aggregate principal amount of senior unsecured notes due 2034, which will carry an interest rate of 5.60%. The offering is expected to close on March 13, 2024, subject to the satisfaction of customary closing conditions. This is Coterra’s first debt offering since transactions completed in connection with the merger of Cabot Oil & Gas Corporation and Cimarex Energy Co.

Coterra intends to use the net proceeds from the offering, together with cash on hand, to fund the repayment at, or prior to, maturity of the $575 million outstanding principal amount (and any other amounts due thereon) of its 3.67% Series L Senior Notes due September 18, 2024.

J.P. Morgan Securities LLC, TD Securities (USA) LLC, Wells Fargo Securities, LLC and BofA Securities, Inc. are acting as book-running managers for the offering. When available, copies of the prospectus supplement and the accompanying base prospectus relating to the offering can be obtained without charge from the Securities and Exchange Commission (“SEC”) at www.sec.gov. Alternatively, copies of these documents can be obtained from J.P. Morgan Securities LLC at 383 Madison Avenue, New York, NY 10179, Attention: Investment Grade Syndicate Desk, 3rd Floor, or via phone at 1-212-834-4533; TD Securities (USA) LLC at 1 Vanderbilt Avenue, 11^th Floor, New York, NY 10017, or via phone at 1-855-495-9846; Wells Fargo Securities, LLC at 608 2nd Avenue South, Suite 1000, Minneapolis, MN 55402, Attention: WF Customer Services, Toll-Free: 1-800-645-3751; or BofA Securities, Inc. at 201 North Tryon Street, NC1-022-02-25, Charlotte, NC 28255-0001, Attention: Prospectus Department, or via phone at 1-800-294-1322.

The notes are being offered and will only be sold pursuant to an effective registration statement that was previously filed with the SEC. This press release does not constitute an offer to sell nor a solicitation of an offer to buy any of the notes described herein, nor shall there be any sale of these notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.

About Coterra Energy

Coterra is a premier exploration and production company based in Houston, Texas with focused operations in the Permian Basin, Marcellus Shale, and Anadarko Basin. We strive to be a leading energy producer, delivering sustainable returns through the efficient and responsible development of our diversified asset base.

Cautionary Statement Regarding Forward-Looking Information

This press release contains certain forward-looking statements within the meaning of federal securities laws. Forward-looking statements are not statements of historical fact and reflect Coterra's current views about future events. Such forward-looking statements include, but are not limited to, statements about the offering and the use of proceeds therefrom and other statements that are not historical facts contained in this press release. The words "expect," "project," "estimate," "believe," "anticipate," "intend," "budget," "plan," "predict," "potential," "possible," "may," "should," "could," "would," "will," "strategy," "outlook" and similar expressions are also intended to identify forward-looking statements. We can provide no assurance that the forward-looking statements contained in this press release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, without limitation, those described in “Risk Factors” in Part I. Item 1A in Coterra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and those identified from time to time in Coterra’s other filings with the SEC.

Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Except to the extent required by applicable law, Coterra does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240228939389/en/

Investor Contact



Daniel Guffey – Vice President of Finance, Planning & Analysis and Investor Relations

281.589.4875



Hannah Stuckey – Investor Relations Manager

281.589.4983

Source: Coterra Energy Inc.

FAQ

What is Coterra Energy Inc.'s (CTRA) recent announcement?

Coterra Energy Inc. (CTRA) announced a $500 million senior unsecured notes offering due 2034 with an interest rate of 5.60%.

When is the expected closing date of the offering?

The offering is expected to close on March 13, 2024, subject to customary closing conditions.

How does Coterra Energy Inc. (CTRA) plan to utilize the net proceeds from the offering?

Coterra Energy Inc. (CTRA) intends to use the net proceeds to fund the repayment of its 3.67% Series L Senior Notes due September 18, 2024.

Who are the book-running managers for the offering?

J.P. Morgan Securities LLC, TD Securities (USA) LLC, Wells Fargo Securities, LLC, and BofA Securities, Inc. are acting as book-running managers for the offering.

Where can one obtain copies of the prospectus supplement and base prospectus related to the offering?

Copies of the prospectus supplement and base prospectus can be obtained from the Securities and Exchange Commission (SEC) website or the respective financial firms involved in the offering.