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Investing.com - JPMorgan maintained its Overweight rating on Coterra Energy (NYSE:CTRA), currently trading at $26.81, as the energy company addresses production challenges in its shale operations. According to InvestingPro data, the company maintains strong financials with a 74% gross profit margin and has consistently paid dividends for 36 consecutive years.
The investment bank’s decision comes after Coterra Energy reported complications with water production at its Harkey Shale wells during its first-quarter results announcement.
Coterra disclosed it had "experienced abnormally high water production on 11 of its 22 gross Harkey Shale wells at the Windham Row project," according to JPMorgan’s analysis of the situation.
In response to these operational issues, the company has implemented a pause on future Harkey development while it conducts necessary remediation activities across the affected wells.
The energy producer continues to evaluate the situation at the Windham Row project as it works to resolve the water production problems before resuming development in the Harkey Shale formation.
In other recent news, Coterra Energy reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an EPS of $0.80, beating the forecast of $0.74. Despite this positive earnings surprise, the company’s revenue fell short, coming in at $1.9 billion compared to the expected $1.92 billion. Additionally, Coterra Energy has updated its capital expenditure guidance for 2025 to $2.2 billion, slightly reducing it from the prior estimate of $2.3 billion. The company plans to cut three rigs in the Permian Basin, impacting capex by approximately $120 million, while increasing activity in the Marcellus region by around $50 million.
JPMorgan revised its price target for Coterra Energy to $32 from $34, maintaining an Overweight rating despite the company’s capex reduction. Piper Sandler also reiterated an Overweight rating for Coterra Energy, highlighting enhanced reinvestment opportunities following recent acquisitions in the New Mexico Delaware Basin. The analysts’ reports reflect continued confidence in Coterra’s strategic direction and operational efficiency. Coterra Energy remains committed to maintaining its oil production guidance for 2025, with a focus on debt reduction and operational efficiency. These developments indicate a strategic shift in capital allocation while maintaining a strong production outlook.
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