Combined free cash near $6 billion next year, after Eagle Ford cash and buybacks, supports about $54. That is a market-like return from $48.33, not a rerating.
Key points
- $63.6 billion enterprise value at $48.33 needs about $12 billion of 2027 EBITDA at 5.3 times.
- $5.5 billion is my 2027 free cash after $5 billion of capital and cash taxes.
- $4.2 billion Eagle Ford cash (before tax) funds buybacks and the $9 billion debt goal.
The call
The shares require mid-cycle cash generation on a 1.1 billion share base. At 10 times $5.5 billion of 2027 free cash on 1.02 billion shares after modest buybacks, the math is $54, only 12 percent above today’s price.
I believe oil near $90 and $600 million of 2027 synergies get to that cash figure, not a higher multiple. The market is about right. November’s first full combined quarter and 2027 plan are the test, not a new story.
Free cash flow by quarter ($ billions)- Reported FCF
- My 2027 run-rate
GAAP cash flow minus cash capex, SEC XBRL through June 2026; 2027E is my annual run-rate /4
Valuation
| Item | Figure |
|---|
| 2027 free cash (mine) | $5.5 billion |
| Year-end 2027 shares | 1.02 billion |
| Cash multiple | 10 times |
| 12-month target | $54 |
| Dividend | $1.28 a share |
| Enterprise value today | $63.6 billion |
Ten times free cash is a mid-cycle E&P multiple when WTI is already high. Upside is more buybacks if after-tax proceeds exceed $3 billion; downside is gas basis and a lower oil print. That symmetry is a hold, not a buy.
Q2 2026 production mix (thousand boe/day)June-quarter 10-Q MD&A; Coterra from May 7 only. Eagle Ford sale is ~4% of later combined volumes.
Risks
- WTI falls toward the EIA 2027 $84 Brent path and cash misses $5 billion.
- Eagle Ford close slips past early 2027 or after-tax proceeds are thin.
- Synergies stay below the $600 million 2027 capture.
What would change my mind
A 2027 plan that shows free cash above $6.5 billion with closing proceeds fully allocated to buybacks.