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Acquisitions | 12 Months Ended
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Dec. 31, 2021
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions Cimarex Energy Co. On October 1, 2021, Coterra and Cimarex completed the Merger. Cimarex is an oil and gas exploration and production company with operations in Texas, New Mexico and Oklahoma. Upon the effectiveness of the Merger, each eligible share of Cimarex common stock was converted into the right to receive 4.0146 shares of common stock of the Company. Based on the closing price of Coterra's common stock on October 1, 2021, the total value of such shares of Coterra common stock was approximately $9.1 billion. Coterra and Cimarex intended for the Merger to qualify as a tax-free reorganization for U.S. federal income tax purposes. Also in accordance with the Merger Agreement with Cimarex and included as merger consideration, the Company issued 3.4 million shares of restricted stock to replace Cimarex restricted stock awards granted to certain employees. Because these restricted shares have non-forfeitable rights to dividends or dividend equivalents, the Company considers these shares as issued and outstanding shares of common stock. Purchase Price Allocation The transaction is being accounted for using the acquisition method of accounting, with the Company being treated as the accounting acquirer. Under the acquisition method of accounting, the assets, liabilities and mezzanine equity of Cimarex and its subsidiaries will be recorded at their respective fair values as of the effective date of the Merger. The purchase price allocation is substantially complete; however, it may be subject to change for up to one year after October 1, 2021, the effective date of the Merger. Determining the fair value of the assets and liabilities of Cimarex requires judgment and certain assumptions to be made. The most significant fair value estimates related to the valuation of Cimarex's oil and gas properties and certain other fixed assets, long-term debt and derivative instruments. Oil and gas properties and certain fixed assets were valued using an income and market approach utilizing Level 3 inputs including internally generated production and development data and estimated price and cost estimates. Long-term debt was valued using a market approach utilizing Level 1 inputs including observable market prices on the underlying debt instruments. Derivative liabilities were based on Level 3 inputs consistent with the Company’s other commodity derivative instruments. Refer to Note 6, “Fair Value Measurements,” for additional information. The following table represents the preliminary allocation of the total purchase price of Cimarex to the identifiable assets acquired and the liabilities assumed based on the fair values as of the effective date of the Merger.
(In millions, except share price and exchange ratio) |  | Preliminary Purchase Price Allocation
Consideration: |  |
Cimarex common stock issued as of October 1, 2021 |  | 103 |
Less unvested common stock |  | (3) |
Total Cimarex common stock to be converted |  | 100 |
Exchange ratio |  | 4.0146 |
Coterra common stock issued in exchange for Cimarex common stock |  | 403 |
Coterra common stock issued for Cimarex share awards vested on October 1, 2021 |  | 5 |
Total shares of Coterra common stock issued |  | 408 |
Coterra common stock closing price on October 1, 2021 |  | $ | 22.25 |
Total value of Coterra common stock issued |  | $ | 9,083 |
Total value of Coterra stock options issued |  | 15 |
Total value of Coterra restricted stock awards issued |  | 22 |
Total consideration |  | $ | 9,120 |
Assets acquired: |  |
Cash and cash equivalents |  | $ | 1,033 |
Accounts receivable |  | 598 |
Other current assets |  | 31 |
Properties and equipment |  | 13,300 |
Other assets |  | 324 |
Total assets acquired |  | $ | 15,286 |
Liabilities and Mezzanine Equity assumed: |  |
Accounts payable |  | $ | 528 |
Accrued liabilities |  | 258 |
Derivative instruments, current |  | 382 |
Other current liabilities |  | 83 |
Long-term debt |  | 2,196 |
Deferred income taxes |  | 2,201 |
Asset retirement obligation |  | 162 |
Derivative instruments, noncurrent |  | 7 |
Other liabilities |  | 299 |
Cimarex redeemable preferred stock |  | 50 |
Total liabilities and mezzanine equity assumed |  | $ | 6,166 |
Net assets acquired |  | $ | 9,120 |
Post-Acquisition Operating Results Cimarex contributed the following to the Company’s consolidated operating results.
(in millions) |  | October 1, 2021 through December 31, 2021
Revenue |  | $ | 1,129 |
Net income |  | 394 |
Unaudited Pro Forma Financial Information The results of Cimarex’s operations have been included in the Company’s consolidated financial statements since October 1, 2021, the effective date of the Merger. The following supplemental pro forma information for the years ended December 31, 2021 and 2020 has been prepared to give effect to the Cimarex acquisition as if it had occurred on January 1, 2020. The information below reflects pro forma adjustments based on available information and certain assumptions that Coterra believes are factual and supportable. The pro forma results of operations do not include any cost savings or other synergies that may result from the acquisition or any estimated costs that have been or will be incurred by Coterra to integrate the Cimarex assets. The pro forma information is not necessarily indicative of the results that might have occurred had the transaction actually taken place on January 1, 2020 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected in the following pro forma information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities and other factors.
|  | Year Ended December 31,
(in millions, except per share information) |  | 2021 |  | 2020
Pro forma revenue |  | $ | 5,236 |  |  | $ | 2,990 |
Pro forma net income |  | 1,205 |  |  | (2,189) |
Pro forma basic earnings per share |  | $ | 1.49 |  |  | $ | (2.71) |
Pro forma diluted earnings per share |  | $ | 1.48 |  |  | $ | (2.71) |
Other Information In connection with the Merger, the Company incurred certain merger-related restructuring and related transaction costs. The costs relate to workforce reductions and the associated employee severance benefits and the acceleration of employee benefits that were triggered by the Merger. For the year ended December 31, 2021, the Company recognized $44 million of restructuring expense related to the accrual of employee severance and termination benefits. Additionally, in conjunction with the Merger, the Company recognized $42 million of transaction costs for the year ended December 31, 2021. These fees primarily related to bank, legal and accounting fees and are included in general and administrative expenses in the Consolidated Statement of Operations.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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