Super shale oil merger incoming? Coterra considers tying up with Devon Energy, shares surge over 10%
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The U.S. shale oil industry may be heading into a new round of major mergers and acquisitions.
According to reports on Thursday, the 14th Eastern Time, Coterra Energy is exploring a merger plan with Devon Energy, and the two companies are negotiating the terms and structure of a potential merger, with one option being an all-stock deal.
Sources revealed that the negotiations are still uncertain; no agreement may be reached, and other bidders may emerge. Coterra has also recently been in M&A talks with at least one other company. Representatives of Coterra and Devon have not immediately responded to requests for comment.
If Coterra and Devon reach an agreement, it would be one of the largest oil and gas deals in recent years. Both companies have substantial oil and gas assets in the Permian Basin, and after the merger would be better positioned to compete with giants such as ExxonMobil.
This deal highlights how oil and gas industry giants, after a relatively quiet 2025, are eager to accelerate consolidation. Oil prices are currently stable at around $60 per barrel, while Chevron and ExxonMobil are digesting large acquisitions recently completed.
After news broke of Coterra considering an acquisition of Devon, Coterra’s stock price surged intraday on Thursday, nearing $28.50 at midday, hitting a new high for the day with an intraday gain of 12.3%. It then gradually gave up most of its gains, narrowing the midday gain to below 2%. The company’s market value was around $19.7 billion. Devon Energy's midday stock price fell more than 4%, with its market value still exceeding $20 billion.
Integration of Adjacent Assets in the Permian Basin
Like other major U.S. oil and gas deals in recent years, the core of this potential transaction is to expand scale in the Permian Basin. This basin, located in West Texas and New Mexico, is the largest and most productive oilfield in the U.S.
Devon owns about 400,000 net acres in the rapidly growing Delaware Basin region of the Permian Basin, while Coterra owns 346,000 acres in the same area. The merger would enable the combined company to better compete with Permian giants such as Exxon and Diamondback Energy.
Oil and gas companies favor deals involving adjacent assets because integration of operations and drilling longer horizontal wells can boost efficiency and returns. Devon also has drilling operations in the Rocky Mountains, southeastern Texas, and Oklahoma, while Coterra’s other businesses cover western Oklahoma and the Marcellus shale gas region in Pennsylvania.
Ongoing Consolidation Trend Among Mid-sized Companies
This potential deal in some ways resembles last year’s $12 billion acquisition of SM Energy by Civitas Resources, which also involved two mid-sized companies with substantial assets in the Permian Basin and operations in other basins.
Devon and Coterra are unique in that both have significant assets across multiple U.S. shale basins, while industry darlings like Permian Resources and Diamondback Energy typically focus on a single large block—usually more favored by investors.
Coterra was formed by a merger between Cimarex Energy and Cabot Oil & Gas in 2021. At the time, analysts were puzzled about the logic of merging oil-focused Cimarex with gas-focused Cabot. Kimmeridge Energy Management, one of the most active oil and gas investors in the U.S., has been pushing for reforms at Coterra, including changes to leadership. The firm also holds shares in Devon.
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