U.S. shale producer Devon Energy has agreed to acquire Coterra Energy in an all-stock transaction valued at nearly US$26 billion, creating one of the largest domestic oil and gas producers in the United States by output. The merger positions the combined company behind only Exxon Mobil, Chevron, and ConocoPhillips in total production volumes, marking a renewed wave of consolidation in the energy sector.
The deal, announced on February 2, comes after a slowdown in oil and gas mergers last year, when falling crude prices, increased OPEC output, and global trade tariffs dampened investor appetite. With oil prices now stabilising, analysts say merger activity is regaining momentum as producers seek scale, efficiency, and long-term inventory depth.
The transaction values Coterra at approximately US$21.5 billion, excluding about US$5 billion in assumed debt, and gives the combined company an enterprise value of around US$58 billion. Devon shareholders will own 54 percent of the merged entity, which is expected to close by the end of June, subject to regulatory and shareholder approvals.
The merger creates the largest oil and gas producer in the Delaware Basin, the western portion of the Permian Basin spanning west Texas and southeastern New Mexico. The Delaware Basin will account for just over half of the combined company’s daily production of roughly 1.6 million barrels of oil equivalent. Additional operations will extend across Oklahoma, Pennsylvania, North Dakota, Wyoming, and south Texas’s Eagle Ford Shale.
Devon chief executive Clay Gaspar will continue to lead the company, while Coterra CEO Tom Jorden will assume the role of non-executive chairman. Devon will relocate its headquarters from Oklahoma City to Houston, Coterra’s current base, while maintaining a significant operational presence in Oklahoma.
Gaspar described the transaction as a strategic fit driven by complementary assets rather than size alone. He said both companies’ strongest holdings are in the Delaware Basin, and combining them creates what he called the premier position in the region. Analysts note that large, logical consolidation targets have become increasingly scarce following the heavy merger activity of 2023 and 2024, making operational overlap and efficiency gains critical to investor support.
Management estimates the deal will deliver US$1 billion in synergies by the end of 2027. These include US$350 million in reduced capital spending, US$350 million in annual operating efficiencies, and US$300 million from workforce reductions and lower corporate costs. Devon will control six of the 11 seats on the board of the combined company.
Following completion, the company plans to review its asset portfolio and may divest non-core holdings, but executives have signalled that the Delaware Basin will remain the centrepiece of its strategy. The basin’s deep, layered geology allows multiple drilling targets on the same acreage, offering long-term production potential despite higher drilling costs compared with other parts of the Permian.
The timing of the merger also aligns with rising natural gas demand, driven by growing exports and surging electricity consumption linked to data centres and artificial intelligence infrastructure. While the Midland Basin has traditionally been favoured for its oil-rich output, executives say the Delaware’s higher gas exposure has become an advantage under current market conditions.
The transaction underscores a broader return of dealmaking to the U.S. oil and gas sector, as producers respond to shifting commodity prices, tightening inventories of prime acreage, and investor pressure to prioritise operational efficiency over growth for its own sake.
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