Devon Energy (NYSE:DVN) and Coterra Energy (NYSE:CTRA) announced a definitive agreement to merge in an all-stock transaction that will create a large-cap US shale producer with a significant footprint in the Delaware Basin.
The combined company will operate under the Devon Energy name and be headquartered in Houston, with a continued presence in Oklahoma City.
Under the terms of the agreement, Coterra shareholders will receive 0.70 shares of Devon common stock for each Coterra share. Based on Devon’s January 30 closing price, the transaction implies a combined enterprise value of roughly $58 billion.
Devon shareholders are expected to own about 54% of the combined company, with Coterra shareholders owning about 46% on a fully diluted basis.
The companies expect the merger to create a scaled exploration and production operator with extended inventory life and durable free cash flow generation. Management estimates $1 billion in annual pre-tax synergies by year-end 2027, driven by capital optimization, operating efficiencies, and lower corporate costs. Integration of technology platforms, including AI-driven optimization tools, is expected to enhance capital efficiency and operational performance.
On a pro forma basis, the combined company’s third-quarter 2025 production exceeded 1.6 million barrels of oil equivalent per day, with more than half of output and cash flow expected to come from the Delaware Basin. The company projects more than 10 years of high-quality drilling inventory, including a substantial portion of sub-$40 break-even locations.
The merger is expected to be accretive to key per-share metrics such as free cash flow and net asset value, according to the companies. The all-stock structure is intended to preserve balance sheet strength and allow both shareholder groups to participate in the anticipated upside from synergies.
Following the merger, the board will consist of 11 directors, with six from Devon and five from Coterra. Devon President and CEO Clay Gaspar will lead the combined company as President and CEO, while Coterra Chairman, CEO, and President Tom Jorden will serve as non-executive chair of the board.
Shares of Coterra traded 2.5% lower on the news, while shares of Devon were little changed.