Devon Energy and Coterra Energy announced on Monday a definitive agreement to merge and create a premier shale operator in an all-stock transaction, implying a combined enterprise value of about $58 billion.
The deal, announced today after weeks of speculation, would create a company with a significantly increased position in the premier part of the Permian Basin and operations in the Marcellus Shale and Anadarko Basin.
The deal will create one of the top shale producers with pro-forma third quarter 2025 production exceeding 1.6 million barrels of oil equivalent (Boe) per day, including over 550,000 barrels of oil per day and 4.3 billion cubic feet of gas per day, the companies said.
The combined company will be named Devon Energy and will be headquartered in Houston while maintaining a significant presence in Oklahoma City.
Devon and Coterra expect to realize $1 billion in annual pre-tax synergies with the deal.
Lower oil prices have shale producers considering how they can boost investor returns when expanding drilling at $60 a barrel oil or lower is eating the margins.
In terms of drilling opportunities, the combined company will have the largest inventory in the Delaware basin with a breakeven of below $40 per barrel, according to Devon’s presentation of the merger deal.
The combined company will also have top-tier capital efficiency in each basin, with operations in the Permian, Anadarko, Eagle Ford, Marcellus, and the Rockies regions.
Under the terms of the agreement, Coterra shareholders will receive a fixed exchange ratio of 0.70 share of Devon common stock for each share of Coterra common stock. Upon completion of the deal, Devon shareholders will own about 54% of the go-forward company and Coterra shareholders will own approximately 46%.
The transaction, which was unanimously approved by the boards of directors of both companies, is expected to close in the second quarter of 2026, subject to regulatory approvals and customary closing conditions, including approvals by Devon and Coterra shareholders.
By Tsvetana Paraskova for Oilprice.com
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