Coterra Energy Inc. yesterday reported third-quarter 2025 net income of $322 million up sharply from $252 million from the year-earlier quarter. Year-to-date net income was nearly $1.35 billion, a 64% increase from the first 9 months of 2024.
For third-quarter 2025, total barrels of oil equivalent (boe), natural gas production, and oil production were all near the high-end of the company’s guidance ranges, beating their respective mid-points by roughly 2.5%. Incurred capital expenditures from drilling, completion, and other fixed asset additions (non-GAAP) totaled $658 million, near the mid-point of Coterra’s guidance range of $625-675 million.
The company turned in-line 48 net wells during the quarter. In the Permian, 38 net wells were turned in-line, below guidance of 40-50 net wells. Anadarko and Marcellus turned in-line six and four net wells, respectively, in line with guidance.
Total equivalent production averaged 785,000 boe/d, near the high end of guidance (740,000-790,000 boe/d).
But private investment firm Kimmeridge, describing itself as a significant Coterra shareholder, today released an open letter to Coterra's board calling for “decisive action to address the company's failures of governance and lack of strategic focus following the failed merger of Cabot Oil & Gas and Cimarex Energy,” up to and including a change of leadership. Coterra was created by the 2021 merger of these two companies.
"Coterra's history has been tainted by a boardroom unwilling to acknowledge its own missteps," said Mark Viviano, managing partner at Kimmeridge. "Coterra now trades at a significant discount to both Permian and gas-focused peers, underscoring the market's rejection of a merger that prioritized self-preservation over strategic merit. Kimmeridge maintains that Coterra's path forward hinges on new leadership and a renewed focus on the Delaware basin. The Board should immediately appoint a non-executive chair who is independent and unassociated with the merger to restore objectivity and credibility."
Open letter
The full text of the open letter is below:
“We are writing to express our deep concern over the Company's loss of strategic direction and failures of governance, which have contributed to an erosion of shareholder value. As long-term investors in the energy sector we have emphasized the importance of boardroom accountability, something notably absent at Coterra.
The 2021 merger of Cabot Oil & Gas and Cimarex Energy was promoted as creating a "balanced, resilient energy company." Four years later, the results are clear: the merger has failed. Coterra now manages mismatched assets – dry gas in the Marcellus and oil-weighted production in the Permian – with no coherent strategic or capital-allocation framework integrating them. The alleged diversification has instead produced complexity, inefficiency, and valuation compression. Despite maintaining a substantial footprint in the core of the Delaware Basin, Coterra has underperformed the XLE index and its self-selected peer group.
Coterra's weak performance is compounded by failures of governance. Nearly 65% of S&P 500 Energy companies separate the CEO and Chair roles. Deviating from peers, Coterra has consolidated the roles of CEO, President and Chairman into one, effectively concentrating power and diminishing accountability. Long-term underperformance, a widening valuation gap, and a material reserve write-down reflect a governance model that lacks true oversight. The Board must reassess its leadership structure and appoint an independent, non-executive Chair.
The Magnitude of the Marcellus Write-Down: A Case Study in Failed Oversight
Coterra wrote down Cabot's Marcellus proved reserves by a stunning 32% within thirteen months of the merger. The magnitude of the impairment reveals fundamental flaws in capital allocation, technical oversight, and board-level risk management. Eight of the ten current directors voted in favor of the merger, further validating Kimmeridge's call for a truly independent Chair.
Refocusing on the Core: The Delaware Basin Opportunity
Kimmeridge believes Coterra's future lies in focusing on its highest quality assets in the Delaware basin. According to Enverus data, Coterra has produced the lowest cost of supply wells in the Delaware since 2022 amongst all operators with at least one hundred completions. Shareholder value can be maximized by divesting the low-decline Marcellus and Anadarko assets and repositioning the Company as a Permian pure play. A focused Coterra would simplify operations and improve returns on invested capital, allowing for a valuation re-rating. Complexity has failed. Focus and credibility will restore value.
Shareholders deserve a board that works for them, not for management. We are calling on Coterra's board of directors to think and act like owners, not observers.
Kimmeridge stands ready to engage constructively but will not accept continued inaction.”
