Shares in U.S. shale oil producers Devon Energy (DVN) and Coterra Energy (CTRA) both dropped early Monday after announcing their $58 billion merger agreement.
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Clay Gaspar, Devon’s President and CEO, noted that the deal would create a “premier shale operator” that would be called Devon Energy. Devon shareholders are expected to own about 54% of the merged entity. In contrast, Coterra shareholders will hold the remaining 46% (based on a fully diluted basis, that is, assuming all possible shares are counted).
As part of the deal, Coterra shareholders will receive 0.70 shares of Devon for each Coterra share. However, the merger — which has been approved by the boards of both companies — is still subject to each firm’s shareholders’ approval and is expected to close in the second quarter of this year.
U.S. Shale Oil Boom to Fade in Coming Years
The announcement confirms earlier media reports and comes as the U.S. Energy Information Administration (EIA) projected that American shale oil production rose to 9.7 million barrels per day (bpd) in 2025, with overall U.S. oil output topping a record high of 13.6 million bpd.
However, the EIA has also previously stated that it expects the boom in U.S. shale production to peak at 14 million bpd in 2027 and then decline rapidly afterward. In addition, drilling activity in the U.S. has been falling as producers have been boosting output by relying on new technologies to extract more oil from existing wells.
Devon and Coterra Eye Growth in Delaware Basin
Meanwhile, both companies have noted that they expect the merger to provide the new entity with “a premier position in the economic core of the Delaware Basin.” They also expect the synergies to help save $1 billion annually before tax, starting from the end of 2027.
In addition, the companies believe the merger will “materially enhance” their capital efficiency through the integration of their technology platforms. The combined entity is expected to be headquartered in Houston, with Clay Gaspar as President and CEO and Tom Jorden, Coterra’s chairman, CEO, and president, acting as non-executive chairman of the board.
DVN vs. CTRA – Which Oil Stock Offers the Bigger Upside?
Both stocks currently enjoy a Strong Buy rating from Wall Street. However, Coterra’s shares currently hold the bigger upside potential of about 13% compared to Devon’s roughly 9%.
