Sources: Devon Energy and Coterra Energy, two US shale producers, are in merger talks.

Three people with knowledge of the matter have confirmed that Devon Energy and Coterra Energy are looking at a possible merger. This could result in one of the biggest independent shale producers in the United States.

The combination would be among the biggest between U.S. producers of energy in recent years. This comes at a time when U.S. crude oil prices are under pressure from a global glut in the near term and the prospect that Venezuela will increase its supply to the market over the next few years.

Sources said that the two companies are in early stage talks about a merger. They cautioned, however, that a deal was not guaranteed.

Devon shares ended 4.2% lower and now have a market cap of approximately $24 billion. Coterra stock rose 1.5% to value the Houston based company at almost $20 billion.

Devon and Coterra didn't respond to our requests for comment.

The economies of scale would?control costs. While the energy dealmaking in 2025 was less than previous record-breaking years were, the arguments for consolidation between U.S. producers of oil and gas remain valid. The benefits include economies of size, which could help control costs in a low-price environment for crude oil, and securing more resources at a moment when many shale formations are maturing, with prime development land becoming scarce.

Both companies are active in multiple shale formations. They can be found in the Delaware portion in Texas, New Mexico and Oklahoma's Anadarko Basin.

Devon has also acquired assets in the Eagle Ford play of South Texas, as well as North Dakota’s Williston basin. Coterra, formed in 2021 by the merger of Marcellus-focused Cabot Oil & Gas and Cimarex Energy, has a strong presence in Appalachia. Kimmeridge Energy Management - a firm that invests in energy - has been putting pressure on Coterra. On November 4, they made their demands public. Kimmeridge, one of the most well-known activists in oil and natural gas, also holds a position in Devon.

Mark Viviano, Kimmeridge Managing partner, said: "We support a transaction which allows the combined company focus on its premier Delaware assets." "We see significant operational synergies resulting from the increased scale and offset acreage positions."

(source: Reuters)