Devon Energy and Coterra Combine to Create US Shale Giant in $58 Billion Deal

2026-02-02 companies

Oklahoma City, Monday, 2 February 2026.
This strategic consolidation creates a premier onshore producer, targeting $1 billion in annual savings and marking the sector’s largest merger since 2024.

Consolidating Power in the Permian

Devon Energy (DVN) and Coterra Energy (CTRA) have officially announced a definitive agreement to merge in an all-stock transaction valued at approximately $58 billion [1][4][5]. The deal, confirmed on Monday, February 2, 2026, aims to consolidate two major U.S. shale players into a singular entity capable of dominating the onshore production landscape [1][5]. Under the terms of the agreement, Coterra shareholders are set to receive 0.70 shares of Devon common stock for each share of Coterra they own [1][3][5]. Upon completion, existing Devon shareholders will control approximately 54 percent of the combined company, while Coterra shareholders will hold the remaining 46 percent [1][4][6]. This move represents the most significant consolidation in the sector since Diamondback Energy’s $26 billion acquisition of Endeavor Energy Resources in 2024 [1][6].

Strategic Synergies and Financial Framework

The primary driver behind this consolidation is the pursuit of operational efficiency and scale in a capital-intensive industry. The companies project that the merger will unlock approximately $1 billion in annual pre-tax synergies by the end of 2027 [4][5]. By combining overlapping assets, particularly in the Delaware Basin where the new entity will hold a premier position, the companies aim to optimize capital allocation and drive long-term growth [2][4]. To further entice investors, the combined company plans to maintain a quarterly dividend of $0.315 per share post-closing and has proposed a new share repurchase authorization exceeding $5 billion, subject to board approval [4]. Despite these projected benefits, market reaction was initially tepid; in pre-market trading on Monday, Devon shares fell approximately 3 percent and Coterra dropped 2.7 percent [1][2].

Operational Giants and Leadership Structure

The operational footprint of the merged company will be substantial, creating a true heavy-weight in domestic energy production. Pro forma production data for the third quarter of 2025 indicates a combined output exceeding 1.6 million barrels of oil equivalent (Boe) per day [1][4]. This volume includes over 550,000 barrels of oil and 4.3 billion cubic feet of gas daily [1][4]. The combined entity will retain the Devon Energy name and establish its headquarters in Houston, while maintaining a significant operational presence in Oklahoma City [1][5][8]. Leadership roles have been clearly defined to ensure a smooth integration: Clay Gaspar, Devon’s current President and CEO, will lead the combined company, while Coterra CEO Tom Jorden is slated to become the non-executive chairman of the board [1][4][8]. The merger is expected to close in the second quarter of 2026 [1][4][5].

Sources

Mergers acquisitions Energy sector