The Devon–Coterra merger creates a $58B, >1.6 MMBOE/d large-cap shale leader anchored by a dominant Delaware Basin position, deep sub-$40/bbl inventory, and a balanced oil-gas portfolio built for durability rather than growth. With $1B of run-rate synergies, disciplined reinvestment (<50%), and strong gas leverage to LNG and power demand, the combined company is positioned to deliver resilient free cash flow and accelerated shareholder returns through the cycle.
Bottom Line
The Devon–Coterra merger creates a top-tier U.S. shale major built around Delaware Basin scale, deep low-cost inventory, and capital discipline, with gas exposure positioned to benefit from long-cycle LNG and power demand.
1. Scale That Matters
- >1.6 MMBOE/d pro forma production
- $58B pro forma enterprise value
- Balanced mix: 44% gas, 34% oil, 22% NGL
- Positions the combined company among the largest L48 independents by production and free cash flow
Why it matters: Scale now drives cost of capital, vendor leverage, and valuation multiples — not just growth.
2. Delaware Basin Is the Anchor
- 746,000 net acres in the Delaware Basin
- 863 MBOE/d Delaware production (over 50% of total output & cash flow)
- >10 years of highly competitive inventory
- Largest sub-$40/bbl breakeven inventory among peers
Why it matters: This is not optionality — it’s structural durability in a volatile price world.
3. $1B of Real Synergies (Not Financial Engineering)
Targeted run-rate synergies by YE-2027:
- $350MM capital optimization
- $350MM operating margin improvements
- $300MM corporate cost reductions
PV-10 of synergies equals ~20% of pro forma market cap
Why it matters: This is operational overlap + scale efficiency, not headcount-only cuts.
4. Gas Portfolio Is Strategically Timed
- Marcellus: 190k net acres, 330 MBOE/d, low reinvestment, high FCF
- Anadarko: Liquids-rich gas with NGL upside
- Gas exposure aligns with LNG exports, AI data centers, and power load growth
Why it matters: This is long-cycle gas leverage, not short-term Henry Hub speculation.
5. Capital Discipline Is Explicit
- <50% reinvestment rate (2027e)
- 0.9x net debt / EBITDAX
- $4.4B liquidity
- Planned $0.315/share quarterly dividend
- $5B+ share repurchase authorization expected
Why it matters: This is a shareholder-return vehicle, not a growth-at-any-cost operator.
6. AI Is Framed as a Core Advantage (Not a Buzzword)
AI deployed across:
- Subsurface modeling & well design
- Drilling & completions optimization
- Artificial lift & production automation
- Enterprise decision-making & workflows
Why it matters: This supports repeatable capital efficiency, not experimental tech spend.
Final Take
This merger is not about growth — it’s about resilience, inventory quality, and free cash flow durability.
Devon + Coterra becomes:
- A Delaware-anchored shale major
- With gas upside into LNG & power
- Running a capital-return-first model
- Designed for a lower-multiple, higher-volatility energy market
