Devon Energy (DVN) and Coterra Energy (CTRA) both down ~3% pre-market Monday after the companies said they agreed to merge in an all-stock transaction to create a leading shale operator anchored by a premier position in the Delaware Basin.
The companies said the merger will create one of the world’s leading shale producers, with pro forma Q3 2025 production exceeding 1.6M boe/day, including over 550K bbl/day of oil and 4.3B cf/day of gas.
Under the deal terms, Coterra (CTRA) shareholders will receive a fixed exchange ratio of 0.70 share of Devon (DVN) common stock for each share of Coterra common stock; based on Devon’s closing price on January 30, the transaction implies a combined enterprise value of ~$58B.
Upon completion, Devon (DVN) shareholders will own ~54% of the combined company, and Coterra (CTRA) shareholders will own the remaining 46% on a fully diluted basis; the company will be named Devon Energy and will be headquartered in Houston.
The companies said they expect to realize $1B in annual pre-tax synergies, driving significant annual free cash flow improvements.
The companies said they are committed to returning capital to shareholders through a planned quarterly dividend of $0.315/share and a new stock buyback authorization exceeding $5B, both subject to board approval.