On February 2 local time in the United States, the renowned shale oil and gas producer Devon Energy officially announced that it had reached an acquisition agreement with Coterra Energy. The merger will be completed through a stock swap and is expected to be finalized in the second quarter of 2026, giving rise to another giant in the U.S. energy industry.

According to the terms of the transaction disclosed by both parties, the merger will adopt an all-stock swap structure. For each share of Coterra Energy stock held, shareholders will receive 0.7 shares of Devon Energy stock as consideration. Upon completion of the transaction, Devon Energy shareholders will hold 54% of the merged company, while Coterra Energy shareholders will hold the remaining 46%. The current CEO of Devon Energy will continue to lead the new company, and the board of directors will consist of 11 members, with six nominated by Devon Energy and five from Coterra Energy. Additionally, the transaction is subject to conditions such as shareholder approval and antitrust review. If it is not completed by August 1, 2026, a termination fee of $865 million may be required.

It is reported that the merged company will continue to operate under the name "Devon Energy," with an enterprise value of $58 billion, approximately RMB 402.5 billion. With its scaled asset portfolio, the new company will rank among the largest oil and gas enterprises in the United States, with production second only to traditional energy giants ExxonMobil, Chevron, and ConocoPhillips, making it a core player in the U.S. shale oil and gas sector.

In terms of assets and production capacity, the new company will focus on the high-quality shale resources in the Delaware Basin as its core operational pillar, which will contribute over 50% of the company's total production and cash flow. Leveraging the resource advantages of mature basins such as the Permian and Anadarko, it will further extend drilling cycles and optimize production capacity. Post-merger, the new company's daily production will exceed 1.6 million barrels of oil equivalent, including over 550,000 barrels of crude oil and 4.3 billion cubic feet of natural gas. It will possess over a decade of top-tier drilling inventory, including the industry's largest inventory of oil and gas resources with unit costs below $40.

Cost reduction and efficiency improvement are among the core objectives of this merger. Both companies have explicitly stated plans to achieve $1 billion in annual pre-tax cost savings by the end of 2027. These savings will be realized through optimized capital plans, improved operating margins, and streamlined corporate management costs. Behind this integration are structural changes in the global oil market's supply-demand dynamics and the U.S. shale oil and gas industry. Currently, the global market is experiencing an oil supply surplus, compounded by Venezuela's accelerated re-entry into the international crude market, which continues to depress U.S. crude prices and directly squeeze profit margins for shale oil producers. Data from the Federal Reserve Bank of Dallas shows that the average breakeven oil price for U.S. shale producers is now higher than current market prices, pushing many mid-sized producers to the brink of losses.

Although merger and acquisition activity in the U.S. shale oil and gas industry has slowed in 2025 compared to previous years, the broader trend of industry consolidation remains unchanged. Producers are increasingly turning to scaled operations to reduce unit costs and enhance market competitiveness. Industry analysts note that the merger between Devon Energy and Coterra Energy epitomizes the shale industry's transition from "rapid expansion" to "maturity and stability." The geographic distribution of their assets is highly complementary, with Devon Energy's land interests in the Delaware Basin adjacent to or overlapping with Coterra Energy's relevant assets. Post-integration, synergies such as shared infrastructure, centralized procurement and bargaining, and technical team integration are expected to reduce operating costs per barrel by 10%–15%.

As this transaction progresses, market concentration in the U.S. shale oil and gas industry will further increase. In recent years, traditional energy giants like ExxonMobil and Chevron have aggressively expanded their shale assets through large-scale acquisitions. The merger between Devon Energy and Coterra Energy will further reshape the industry's competitive landscape. In the future, mid-sized shale oil and gas companies may face a survival choice: "either merge to grow stronger or be acquired by giants." Meanwhile, leading companies with scale and low-cost advantages will occupy more favorable positions during industry adjustments. At the same time, the new company will face long-term challenges brought by the energy transition. Balancing a focus on traditional oil and gas production with the development of low-carbon businesses and refining decarbonization roadmaps will be critical to its sustainable development.

From:ChemNet