Devon and Coterra merge in $58 billion deal to create U.S. Shale giant
Devon Energy and Coterra Energy decided on Monday to merge as part of a $58 billion all-stock transaction, creating a large-cap company with the top spot in the Permian Basin. The shale industry is consolidating to reduce costs and increase'scale.
The largest deal in the sector, since Diamondback's deal of $26 billion for Endeavor Energy Resources 2024, comes at a time when a global glut of oil and the increasing likelihood that more Venezuelan barrels will return to the market are putting pressure on U.S. crude price margins.
M&As have slowed in the sector in 2025. However, producers continue to pursue size advantages. This includes lowering barrel costs and extending drilling runways, especially in mature basins such as the Permian or?Anadarko. Coterra's shares are up nearly 14% from the first report of deal talks on January 15, while Devon is up?about 6 percent.
Both stocks traded lower on Monday morning. Devon fell about 3%, and Coterra dropped 2.7%. Both stocks were following a roughly 5% drop in oil prices.
Shareholders will receive 0.70 Devon share for each share they hold. Devon will own approximately 54% of combined company. According to calculations, the deal's equity value is $21.4 billion.
The combination will be incrementally beneficial for both shareholders as it will bring together two companies of high quality to create a bigger entity, which should attract more investor interest in the volatile energy market today," said Siebert Williams Shank & Co. Analyst Gabriele Sorbara.
Operation in Major Basins
Coterra and Devon operate in several U.S. major shale formations. They have overlapped positions in the Delaware part of the Permian Basin, in Texas, New Mexico as well as in Oklahoma's Anadarko Basin.
Pro-forma production in 2025 for the third quarter is expected to exceed 1.6million barrels per day. This includes more than 550,000 oil barrels and 4.3billion cubic feet of natural gas.
The Delaware Basin is where most of the production and cash flow will come from. The combined company will own approximately 750,000 acres of net land in the heart of the play.
DIRECTORY AND HEADQUARTERS
The merger should be completed in the second quarter of 2026. After that, the combined company would retain its name, remain based in Houston, and have a significant presence in Oklahoma City.
Clay Gaspar, the CEO of Devon, will be leading the company. Tom Jorden, CEO of Coterra will take on a non-executive role. Reporting by Pooja menon, Sumit saha, and Arunima kumar in Bengaluru. Editing by Tasim zahid and Arun Koyyur
(source: Reuters)
