Coterra Energy and Devon Energy are in talks over a potential all-stock merger that would create a major Permian Basin producer, people familiar with the discussions said, as companies seek scale amid $60 oil prices.
Coterra Energy is exploring a possible combination with Devon Energy merger that could become one of the largest U.S. shale mergers in recent years, according to people familiar with the matter. The discussions are ongoing, and no agreement has been reached.
News of the talks pushed Coterra shares sharply higher, signaling investor approval of consolidation as oil prices remain under pressure. Neither company has publicly confirmed the discussions, and the sources cautioned that the talks could still fall apart.
Companies Explore All-Stock Deal as Oil Prices Pressure Shale Sector in Devon Energy Merger
The potential transaction would be structured as an all-stock deal, combining two midsize producers with extensive operations in the Permian Basin. Coterra has a market value of about $20 billion, while Devon’s market capitalization is closer to $24 billion.
A merger of that size would qualify as a megadeal by shale industry standards. Analysts say such a move reflects the renewed importance of scale as U.S. oil prices hover around $60 a barrel and investors demand capital discipline.
“Operators are looking for ways to protect margins and smooth volatility,” said an energy analyst who follows the Permian Basin. “Merging acreage and balance sheets can help companies drill more efficiently and lower costs.”
The talks come after a relatively quiet year for oil and gas dealmaking, as companies focused on integrating prior acquisitions and returning cash to shareholders. That pause now appears to be ending.
Combined Firm Would Gain Scale and Efficiency in Delaware Basin
A Devon-Coterra tie-up would consolidate significant neighboring acreage in the Delaware Basin, a core part of the Permian. Industry executives say combining operations in that area can reduce drilling and completion costs while simplifying logistics.
“This is about putting adjacent assets under one roof,” said a person familiar with the companies’ operations. “That kind of alignment makes drilling programs cleaner and more predictable.”
The combined company would rank among the Permian Basin’s top-tier producers, giving it greater influence with service providers and midstream operators. Scale also allows companies to spread fixed costs across a larger production base.
Devon Energy merger has faced headwinds from softer crude prices and uncertainty over potential Venezuelan oil returning to global markets. Analysts say those risks favor companies with strong balance sheets and flexible capital plans.
“In uncertain markets, size matters,” said another energy analyst. “Larger operators can adjust spending more easily and still maintain output.”
Industry Consolidation Reemerges After Slow Year for Mergers
Consolidation has been a defining trend in U.S. shale over the past decade, but deal activity slowed recently as companies digested major transactions. The renewed talks between Devon Energy mergersuggest that consolidation is again gaining momentum.
Smaller independents, in particular, face pressure to keep pace with larger rivals that benefit from economies of scale. At the same time, bigger producers are becoming more selective, focusing on deals that simplify portfolios rather than expand risk.
For now, the Devon-Coterra discussions remain preliminary. People familiar with the talks stressed that nothing has been signed and that negotiations could still end without a deal.
Still, the mere prospect of a merger sends a message to the market. In a volatile oil environment, companies are again prioritizing scale, operational efficiency and execution over rapid growth.
