Devon Energy and Coterra Energy have agreed to merge through an all-stock transaction, creating a major entity in the US shale industry with an estimated combined enterprise value of $58bn.
The new entity, which will operate under the name Devon Energy, will be headquartered in Houston, Texas, while maintaining a substantial presence in Oklahoma City.
With a strong operational base in the Delaware Basin, the enlarged Devon Energy aims to leverage core strengths and attain $1bn in annual pre-tax synergies.
The Boards of Directors of the two companies unanimously approved the merger, which is expected to be finalised in the second quarter of 2026, pending regulatory and shareholder approvals.
Under the agreement terms, Coterra Energy shareholders will receive 0.7 shares of Devon Energy common stock for each of their shares. This will result in Devon Energy shareholders owning around 54% and Coterra Energy shareholders approximately 46% of the new company on a fully diluted basis.
Efforts to achieve synergies will focus on enhanced capital efficiency, optimised capital allocation and technology integration, driving per-share growth in free cash flow and net asset value.
Devon Energy president and CEO Clay Gaspar said: “This transformative merger combines two companies with proud histories and cultures of operational excellence, creating a premier shale operator. We have now built a diverse asset base of high-quality, long-duration inventory to drive resilient value creation and returns for shareholders through cycles.
“Underpinned by our leading position in the best part of the Delaware Basin, and a deep set of complementary assets, we expect to capture annual pre-tax synergies of $1bn. This will drive higher free cash flow and greater shareholder returns beyond what either company could achieve alone.”
The combined production portfolio will feature more than 1.6 million barrels of oil equivalent per day, anchored by high-quality acreage in the Delaware Basin.
The merger is set to enhance Devon Energy's position as one of the largest producers in this region, with substantial operations across nearly 750,000 net acres.
Financially, the merger is structured to strengthen investment-grade status and reduce future capital costs.
Post-merger governance will see Gaspar continue as president and CEO, with Coterra Energy’s president and CEO, Tom Jorden, stepping into the role of non-executive chairman.
The board will comprise 11 members, split between six directors from Devon Energy and five from Coterra Energy.
Financial advisory support for Devon Energy is being provided by Evercore, with legal counsel from Skadden, Arps, Slate, Meagher & Flom.
Coterra Energy is being advised financially by Goldman Sachs and JP Morgan Securities, with legal advice from Gibson, Dunn & Crutcher.
In September 2024, Devon Energy acquired Grayson Mill Energy assets in a cash and stock deal valued at $5bn.
