Devon Energy and Coterra Energy announced Monday they will combine operations in an all-stock merger valued at approximately $58 billion, with the new entity to be headquartered in Houston and operate under the Devon Energy name.
The merger will create one of the largest independent shale producers in the world, with core operations concentrated in the Delaware Basin straddling West Texas and New Mexico. Company executives said the combination is expected to generate about $1 billion in annual cost savings and operational efficiencies.
“This transformative merger combines two companies with proud histories and cultures of operational excellence,” Devon President and CEO Clay Gaspar said in a statement released Monday. Gaspar will lead the combined company as chief executive officer from the Houston headquarters, while Coterra CEO Tom Jorden will serve as non-executive chairman.
The companies said the deal was unanimously approved by both boards of directors and is expected to close in the second quarter of 2026, pending regulatory approvals and shareholder votes.
Houston to house executive leadership
Under the terms of the merger, executive leadership and corporate headquarters functions will be based in Houston, while the combined company will maintain a significant operational presence in Oklahoma City, where Devon Energy is currently headquartered.
Strategic planning, capital allocation decisions and technology development will be directed from Houston, reinforcing the city’s position as the center of the domestic energy industry. Drilling and production operations will remain focused in the Delaware Basin and other key shale regions across the United States.
The move adds to Houston’s growing concentration of major energy company headquarters and builds on the city’s existing infrastructure of service providers, financial institutions and technical talent that support the oil and gas sector.
Production scale and financial profile
The merged company is projected to produce more than 1.6 million barrels of oil equivalent per day, positioning it among the top tier of U.S. independent exploration and production companies. More than half of the combined production and cash flow is expected to come from assets in the Delaware Basin, one of the most productive and cost-efficient shale plays in North America.
Company officials said the combined entity will have more than 10 years of high-quality drilling inventory, with a large portion of wells remaining economically viable at oil prices below $40 per barrel. That low-cost structure is intended to support sustained free cash flow generation and provide flexibility in volatile commodity price environments.
Devon and Coterra executives have emphasized that the merger will allow the combined company to deliver higher returns to shareholders through increased operational scale, improved capital efficiency and enhanced financial flexibility.
Integration and cost savings
Integration planning is already underway, with company leaders targeting approximately $1 billion in annual cost savings and operational synergies. Those savings are expected to come from streamlined corporate functions, reduced overhead, consolidated supply chain management and the deployment of advanced technologies.
The combined company plans to leverage artificial intelligence and machine learning tools to optimize drilling and completion designs, reduce downtime and improve well performance across its asset base. Technology teams from both companies will be integrated to accelerate the rollout of digital and automation initiatives.
Corporate operations will be consolidated to eliminate duplicative functions in finance, legal, human resources and information technology. The companies said integration efforts will be phased in over the first 18 to 24 months following the close of the transaction.
Employment and workforce implications
Neither Devon Energy nor Coterra Energy disclosed whether the merger will result in workforce reductions, and company spokespeople did not respond to questions about planned headcount changes.
Large-scale energy mergers typically lead to job cuts as companies consolidate back-office functions, eliminate overlapping roles and centralize executive and administrative teams. The combined company has not announced specific job retention or relocation plans for employees currently based in Oklahoma City or other regional offices.
Industry analysts have noted that while field operations and technical positions often remain intact following mergers, corporate and administrative roles are more vulnerable to consolidation as companies seek to capture cost synergies.
Regulatory and shareholder approvals
The transaction is subject to approval by the Federal Trade Commission and the Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act. Both companies said they expect to receive regulatory clearance without significant divestitures, citing limited operational overlap in their core producing regions.
Shareholders of both Devon Energy and Coterra Energy will vote on the merger in separate meetings expected to be held in early 2026. Company executives have said they are confident the deal will receive strong shareholder support based on the strategic and financial benefits of the combination.
If approved, the merger will close in the second quarter of 2026, with integration activities beginning immediately thereafter.
Delaware Basin consolidation continues
The Devon-Coterra merger is the latest in a wave of consolidation in the U.S. shale industry, as companies seek to build scale, reduce costs and compete more effectively in global energy markets.
The Delaware Basin, which spans the Permian Basin region of West Texas and southeastern New Mexico, has been a focal point of merger activity due to its low production costs, extensive infrastructure and large remaining resource base. Other recent large-scale mergers in the basin include ExxonMobil’s acquisition of Pioneer Natural Resources and Chevron’s purchase of PDC Energy.
Energy analysts expect consolidation to continue as companies pursue larger, more capital-efficient operations capable of generating sustained free cash flow and returning capital to shareholders through dividends and share buybacks.
The combined Devon-Coterra entity will rank among the top independent producers in the Delaware Basin, alongside companies such as Occidental Petroleum, Diamondback Energy and ConocoPhillips.
