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Devon Agrees to Buy US Shale Rival Coterra for $21.4 Billion
Deal, Expected to Close in Q2, Shows How Shale Companies Are Pushing to Consolidate
Devon Energy Corp. agreed to acquire Coterra Energy Inc. for about $21.4 billion in stock to create one of the world’s biggest shale companies as dwindling drilling sites spur producers to consolidate.
The deal calls for Coterra stockholders to receive 0.7 Devon shares for each share they own, according to a statement Feb. 2. It amounts to a roughly 12% premium for Coterra investors based on the stock value in mid-January before news broke that the companies were in talks, but it’s a slight discount to the Jan. 30 closing price, according to energy data platform Enverus.
Coterra’s shares fell Feb. 2 as much as 4.6% for the biggest intraday drop in almost a month, while Devon slipped as much as 2.6%.
The deal, expected to close in the second quarter, illustrates how shale companies are pushing to consolidate as many of the best U.S. drilling sites have been tapped. The combination would strengthen their positions in the Delaware Basin, a fast-growing swath of the country’s largest and most productive oil field, the Permian Basin of West Texas and New Mexico. It gives them more scale to better compete with rivals such as Exxon Mobil Corp. and Diamondback Energy Inc.
The company will keep the Devon name, and Devon CEO Clay Gaspar will remain as CEO after the tie-up closes. Bloomberg News first reported the talks and revealed last week that a deal was near.
“We become a clear leader in the Delaware Basin giving us unmatched opportunity to capitalize on our core position,” Gaspar told analysts and investors Feb. 2 on a conference call. “This combination is a very powerful free cash flow machine.”
NEWS: Today we announced a definitive agreement to combine with Coterra Energy in a transformative all-stock merger creating one of the world's largest shale producers. #DVNCTRA
Learn more here: https://t.co/YrZHbEPsQr
SEC Legend: https://t.co/0nErCl0HJE pic.twitter.com/2BbYLFMzmu — Devon Energy (@DevonEnergy) February 2, 2026
Devon shareholders will own 54% of the combined company, and Coterra shareholders will own 46%.
The combined company would be one of the biggest oil and natural gas producers in U.S. shale with pro-forma third-quarter output of more than 1.6 million barrels per day of oil equivalent.
Devon has rights to about 400,000 net acres in the Permian, where Coterra also has a 346,000-acre position. Output from the Permian will make up most of the company’s total production and their overlapping acreage will allow them to drill longer horizontal wells.
Devon and Coterra have tried to merge “a few times” over the years but hadn’t been able to find agreement until now, Gaspar told Bloomberg News in an interview. Gaspar added that he and Coterra CEO Tom Jorden have been working really hard over the past few months to make sure they could articulate to investors that a deal would be beneficial.
“There’s a lot of familiarity between the companies,” Gaspar said. “These deals are always harder to put together than what it looks like from the outside in.”
In addition to a large natural gas position in the Marcellus Shale, the combined company will have producing assets in the Rockies as well as Oklahoma and South Texas. Capital allocation for each region and any possible asset sales will be among the first decisions made after the deal closes, Gaspar said.
The enterprise value of the deal is around $58 billion and it will generate about $1 billion in pre-tax savings.
“The Delaware Basin is the real prize of the deal from Devon’s perspective and the centerpiece of the combined company,” said Andrew Dittmar, principal analyst at Enverus.
Coterra was formed through the 2021 merger of Cimarex Energy Co. and Cabot Oil & Gas Corp. At the time, analysts were baffled by the logic of oil-heavy Cimarex pairing with Cabot, which focused on natural gas.
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Kimmeridge Energy Management Co., an outspoken oil and gas investor with stakes in both companies, has voiced support for a potential tie-up that would allow the combined company to focus on their Delaware Basin assets.
Coterra CEO Tom Jorden will become non-executive chairman of Devon, which will move its headquarters to Houston while keeping a presence in Oklahoma City where it has been based for decades.
“We’ve looked at all kinds of potential futures for Coterra,” Jorden said on the call. “This was by far the best option that we had considered.”
Evercore is serving as financial adviser, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Devon. Goldman Sachs & Co. and J.P. Morgan Securities are serving as financial advisors to Coterra. Goldman Sachs & Co. also provided a fairness opinion to Coterra. Gibson, Dunn & Crutcher is serving as legal adviser to Coterra.
Written by David Wethe, David Carnevali and Michelle F. Davis
