Devon Energy and Coterra Energy have announced the signing of a definitive agreement to merge in an all-stock transaction. The combination will create a leading large-cap shale operator with a high-quality asset base anchored by a premier position in the economic core of the Delaware Basin.
The combined company will be named Devon Energy and will be headquartered in Houston while maintaining a significant presence in Oklahoma City. The formation of this premier company is expected to unlock substantial value by leveraging each company’s core strengths and through the realization of $1 billion in annual pre-tax synergies. The realization of synergies, technology-driven capital efficiency gains and optimized capital allocation will drive near and long-term per share growth.
KEY HIGHLIGHTS
- Transformative merger combines high-quality assets and complementary technical capabilities
- Creates a scaled, large-cap E&P with leading inventory duration and durable free cash flow
- Devon to be a leader in the Delaware Basin, with more than 10 years of high-quality inventory
- $1.0 billion in identified pre-tax synergies projected to drive significant, annual free cash flow improvements
- Integration of technology platforms expected to materially enhance capital efficiency
- Accretive to key per-share financial measures, including free cash flow and net asset value
- Committed to returning capital to shareholders through a planned quarterly dividend of $0.315 per share and a new share repurchase authorization exceeding $5 billion, both subject to Board approval
- All-stock transaction enhances investment-grade financial strength and lowers future cost of capital
TRANSACTION DETAILS
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. Based on Devon’s closing price on January 30, 2026, the transaction implies a combined enterprise value of approximately $58 billion. Upon completion, Devon shareholders will own approximately 54 percent of the go-forward company and Coterra shareholders will own approximately 46 percent on a fully diluted basis.
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.
CEO COMMENTARY
'This transformative merger combines two companies with proud histories and cultures of operational excellence, creating a premier shale operator,' said Clay Gaspar, Devon’s President and CEO. 'We've 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 $1 billion. This will drive higher free cash flow and greater shareholder returns beyond what either company could achieve alone.'
Tom Jorden, Chairman, CEO, and President of Coterra, said, 'This combination enhances the Delaware and brings together two premier organizations with complementary cultures rooted in operational excellence, disciplined capital allocation, and data-driven decision-making focused on creating per share value. The combined company will offer best-in-class rock quality and inventory depth, supported by a balanced commodity mix, leading cost structure, and a conservative balance sheet. Devon Energy will be strongly positioned to deliver top-tier capital efficiency gains and consistent profitable per share growth through the commodity cycles.'
TRANSACTION BENEFITS
- Creates a premier large-cap shale operator – The merger will create one of the world's leading shale producers, with pro forma third quarter 2025 production exceeding 1.6 million barrels of oil equivalent (Boe) per day, including over 550 thousand barrels of oil per day and 4.3 billion cubic feet of gas per day. The combined company's portfolio will be anchored by world-class acreage in the Delaware Basin, complemented by a balanced and diversified product mix that positions the company to deliver a resilient free cash flow profile.
- Expands the Delaware, America’s premier basin – The combined company will be one of the largest producers in the Delaware Basin, with pro forma third quarter 2025 production of 863,000 Boe per day distributed across nearly 750,000 net acres in the core of the play. This franchise asset will account for more than 50 percent of the combined company’s total production and cash flow, underpinned by more than 10 years of top-tier inventory, including the largest amount of sub-$40 inventory in the industry.
- Delivers significant cost synergies – The company expects to achieve $1.0 billion in annual pre-tax merger synergies by year-end 2027. Synergies to be realized through an optimized capital program, operating margin improvements, and streamlined corporate costs. The all-stock structure of the transaction ensures shareholders of both Devon and Coterra will fully benefit from this value creation.
- Technology-focused leader – The combined AI capabilities of both organizations will establish an strong technology platform across subsurface, operations, and enterprise functions. AI-driven optimization will enhance capital efficiency, operational performance, and decision-making at scale.
- Accretive to financial metrics – The transaction is expected to be accretive to all shareholders on key per-share financial measures, including free cash flow and net asset value.
- Accelerates shareholder returns – The company’s strong financial foundation combined with accretion from synergy capture will allow for the acceleration of cash returns to shareholders. Upon closing, the company plans to declare a quarterly dividend of $0.315 per share and establish a new share repurchase authorization in excess of $5 billion, both subject to Board approval.
- Maintains fortress balance sheet – Enhanced economies of scale and an investment-grade balance sheet are expected to lower the company's future cost of capital. The company has one of the strongest capital structures in the sector, with an estimated pro forma net debt-to-EBITDAX ratio of 0.9x and $4.4 billion in total pro forma liquidity as of September 30, 2025.
GOVERNANCE AND LEADERSHIP
Following the merger, the board of directors will consist of 11 members, six directors from Devon and five from Coterra. Clay Gaspar will serve as President and CEO, and Tom Jorden will assume the role of Non-Executive Chairman of the Board. Devon will appoint the lead independent director. The CEO and executive leadership will be based in Houston with executive leadership comprised of talent from both Devon and Coterra.
ADVISORS
Evercore is serving as financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Devon. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are serving as financial advisors to Coterra. Goldman Sachs & Co. LLC also provided a fairness opinion to Coterra. Gibson, Dunn & Crutcher LLP is serving as legal advisor to Coterra.
ABOUT THE COMPANIES
Devon Energy is a leading oil and gas producer in the U.S. with a diversified multi-basin portfolio headlined by a world-class acreage position in the Delaware Basin. Devon’s disciplined cash-return business model is designed to achieve strong returns, generate free cash flow and return capital to shareholders, while focusing on safe and sustainable operations.
Coterra is a premier exploration and production company based in Houston, Texas with focused operations in the Permian Basin, Marcellus Shale, and Anadarko Basin. We strive to be a leading energy producer, delivering sustainable returns through the efficient and responsible development of our diversified asset base. Learn more about us at www.coterra.com.
Source: Devon Energy
