Kimmeridge Releases Letter to the Board of Coterra Energy Outlining Urgent Steps to Restore Governance and Unlock Shareholder Value

Rhea-AI Summary

Kimmeridge, a significant shareholder, released an open letter on Nov 4, 2025 urging Coterra Energy (CTRA) to restore governance and refocus strategy after the failed Cabot–Cimarex merger. Kimmeridge highlights a 32% Marcellus proved-reserve write-down within 13 months, consolidation of CEO/Chair roles, and underperformance versus XLE and peers. The firm calls for an independent non-executive Chair, divestment of Marcellus and Anadarko assets, and a repositioning as a Delaware Basin (Permian) pure play to simplify operations and seek a valuation re-rating.

Positive

• Calls for an independent non-executive Chair to restore oversight
• Recommendation to divest Marcellus and Anadarko to create a Permian pure play
• Cites lowest cost of supply wells in the Delaware since 2022 (Enverus)

Negative

• 32% proved-reserve write-down in the Marcellus within 13 months
• Consolidation of CEO, President and Chair roles reducing board independence
• Reported underperformance vs XLE and self-selected peer group; valuation compression

Insights

Corporate governance and investor-activism analyst

Kimmeridge's open letter is an impactful activist move calling for board changes after a material reserve write-down and sustained underperformance.

The firm pins the company's underperformance to governance and strategic failure, citing a 32% write-down of Marcellus proved reserves within thirteen months and a persistent valuation gap versus peers. Concentration of roles (CEO, President and Chair) and eight of ten directors having backed the merger form the factual basis for Kimmeridge's demand for an independent, non-executive Chair.

Risks and dependencies include the Board's willingness to change leadership and any ensuing proxy fight or negotiated settlement. The letter's explicit calls and concrete metrics make near-term governance contest risk material to corporate strategy and investor sentiment. Watch for Board responses, any announcement of an independent Chair, and filings or votes tied to this campaign over the next weeks to months.

NEW YORK, Nov. 4, 2025 /PRNewswire/ -- Kimmeridge, a private investment firm focused on the energy sector and a significant shareholder of Coterra Energy (CTRA), today released an open letter to Coterra's Board of Directors 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.

"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 to the Board of Coterra Energy

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.

Cautionary Statement Regarding Forward-Looking Statements

This press release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein in any state to any person. The information herein contains "forward-looking statements". Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "potential," "targets," "forecasts," "seeks," "could," "should" or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements are subject to various risks, uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct or that any of the objectives, plans or goals stated herein will ultimately be undertaken or achieved. If one or more of such risks or uncertainties materialize, or if Kimmeridge's underlying assumptions prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Kimmeridge that the future plans, estimates or expectations contemplated will ever be achieved.

Media Contact:
Kekst-Kimmeridge@kekstcnc.com

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/kimmeridge-releases-letter-to-the-board-of-coterra-energy-outlining-urgent-steps-to-restore-governance-and-unlock-shareholder-value-302603337.html

SOURCE Kimmeridge

FAQ

What did Kimmeridge demand of Coterra (CTRA) on Nov 4, 2025?

Kimmeridge asked CTRA to appoint an independent non-executive Chair, refocus on the Delaware Basin, and consider divesting Marcellus and Anadarko assets.

How large was Coterra's Marcellus reserve write-down cited by Kimmeridge?

Kimmeridge cites a 32% proved-reserve impairment in the Marcellus within thirteen months of the merger.

What strategic shift does Kimmeridge propose for Coterra (CTRA)?

Kimmeridge recommends repositioning CTRA as a Permian (Delaware Basin) pure play by divesting low-decline Marcellus and Anadarko assets.

Does Kimmeridge claim operational strengths at Coterra (CTRA)?

Yes; it cites Enverus data saying CTRA produced the lowest cost of supply wells in the Delaware since 2022 among operators with ≥100 completions.

What governance issue does Kimmeridge identify at Coterra (CTRA)?

Kimmeridge highlights concentration of power because the CEO also serves as President and Chair, diverging from many energy peers.