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The all-stock merger creates a much larger U.S. shale operator with pro forma production of more than 1.6 million barrels of oil equivalent per day and a dominant Delaware Basin footprint (about 750,000 net acres and > 860,000 boe/d from that basin) with thousands of drilling locations and multi‑year inventory.
Management expects $1 billion in annual pre-tax synergies by year‑end 2027 (split roughly into $350M capital optimization, $350M operating margin gains, and $300M corporate cost cuts), with some savings arriving within six months and an 18‑month focus to fully realize the target; synergy NPV is cited at about 20% of pro‑forma market cap on a PV‑10 basis.
The combined company plans stronger capital returns and a healthier balance sheet, targeting a quarterly dividend of $0.315, a share‑repurchase authorization in excess of $5 billion, and pro‑forma metrics including $4.4 billion liquidity and ~0.9x net debt/EBITDAX.
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Devon Energy (NYSE:DVN) and Coterra Energy outlined the rationale and expected benefits of their announced all-stock merger during a joint conference call, describing the deal as a “transformative” combination intended to create a larger, more durable U.S. shale operator with increased scale, a stronger balance sheet, and a greater ability to return cash to shareholders.
Coterra Chairman, CEO and President Tom Jorden said the transaction creates a “powerful new E&P company” defined by asset quality, scale, capital efficiency, operational excellence, and “a relentless emphasis on technology and innovation.” Jorden emphasized that the merger aims to create “a better company,” not only a larger one, and highlighted commodity and geographic diversity as tools to navigate volatile oil and gas markets.
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Devon President and CEO Clay Gaspar, who is expected to lead the combined company as president and CEO, said the merger creates a “clear path to superior value creation” that neither company could achieve independently. Gaspar described the combined company as a “premier shale operator” with substantial positions across major U.S. basins, anchored by a leading position in the Delaware Basin that he said will generate more than half of total production and cash flow.
Gaspar said the combination would create one of the world’s largest shale producers, with more than 1.6 million barrels of oil equivalent per day of production on a pro forma basis. He argued that this level of scale enables operational and financial advantages such as supply chain purchasing power, improved marketing and infrastructure optimization, and elimination of corporate redundancies.