Devon Energy and Coterra Energy are exploring a potential merger, in a deal that could create one of the largest independent U.S. shale producers, three people familiar with the matter said.
A possible combination, which would rank among the largest between U.S. energy producers in recent years, comes as U.S. crude prices are pressured by a near-term global oil glut and the prospect of more supplies entering the market in the coming years from Venezuela.
The two companies are in early-stage talks for a combination, said the sources, who cautioned a transaction was not guaranteed and spoke on condition of anonymity to discuss confidential deliberations.
Devon shares finished 4.2% lower, giving it a market capitalization of roughly $24 billion, while Coterra’s stock gained 1.5% to value the Houston-based company at nearly $20 billion.
Devon and Coterra did not respond to requests for comment.
ECONOMIES OF SCALE WOULD CONTROL COSTS
While energy dealmaking was subdued in 2025, versus prior record-breaking years, arguments for consolidation among U.S. oil and natural gas producers remain valid. Benefits include economies of scale, which would help control costs within a depressed price environment for crude, as well as securing additional resources at a time when many shale basins are maturing and new prime development land is at a premium.
Both companies have operations across multiple shale formations, with both present in the Delaware portion of the Permian basin in Texas and New Mexico and Oklahoma’s Anadarko basin.
Devon also has assets in South Texas’ Eagle Ford play, as well as North Dakota’s Williston basin. Coterra has a significant presence in Appalachia, having been formed in 2021 through a merger of Cimarex Energy and Marcellus-focused Cabot Oil & Gas.
Coterra is facing pressure from investment firm Kimmeridge Energy Management, which on November 4 went public with demands for governance and strategy changes. One of the best-known activist investors in oil and gas, Kimmeridge also owns a position in Devon, according to regulatory filings.
“We would be supportive of a transaction that allowed the combined company to focus on their premier Delaware assets,” Kimmeridge Managing Partner Mark Viviano said. “We see material operational synergies from the enhanced scale and offsetting acreage positions.”
Source: Reuters.com