Analyst Note| Dave Meats, CFA |
We are reducing our fair value estimate slightly for Coterra, from $33 to $32, after taking a second look at the firm's first-quarter financial and operating results. Incremental inflation was the main driver of the decrease. While we were already anticipating higher well costs, our previous estimates still look generous, especially in the Marcellus region (where the firm is now guiding to $875-$950 per lateral foot for well costs, which is about 20% higher than what we were previously modeling). Management elected to hold its full-year budget flat at $1.4 billion-$1.5 billion but acknowledged the full-year spend is likely to be in the top half of the range.