The Delaware Basin was clearly positioned as the centerpiece of the combined Devon + Coterra strategy. Management repeatedly referred to it as the company’s “crown jewel” asset and suggested the merger materially strengthens Devon’s long-term position there.
1. Delaware Basin Becomes the Core Asset
Clay Gaspar stated directly:
“This amazing Delaware Basin is our crown jewel asset.”
The merger significantly increases:
- Scale
- Inventory depth
- Operational overlap
- Capital efficiency opportunities
Management emphasized that combining the two Delaware positions creates:
- Better well spacing optimization
- Improved completion design
- Better development sequencing
- Shared operational learnings
2. Synergies Are Expected to Be Largest in Delaware
A major theme was that Delaware is where the largest merger synergies will come from.
Clay Gaspar highlighted:
- D&C optimization
- Production improvements
- Capital reallocation
- Better “stacking and staggering” of wells
He specifically said:
“Even the hardest work that we do around what’s the optimal spacing, staggering, sequencing and completion design of a place like the Delaware Basin, we’ve got 2 really strong teams that have worked these very hard problems in isolation.”
The idea is:
- Devon and Coterra each independently optimized Delaware development
- Combining the datasets and engineering teams should unlock further gains
3. Delaware Inventory Life May Increase Meaningfully
Management suggested the merger could materially extend drilling inventory life.
Previously:
- Third-party estimates suggested 10+ years of inventory
Now:
- Lower D&C costs
- Better spacing optimization
- Improved recoveries
…could push economic inventory significantly further.
John Raines explained that Devon already replaced nearly 100% of consumed Delaware inventory through:
- Downspacing
- Appraisal work
- Capital efficiency improvements
He said:
“As we see lower costs, we’re going to see that same trend of the 2 companies.”
This implies:
- More locations become economic
- Marginal inventory moves into core inventory
- Delaware runway expands materially
4. Delaware Basin Ground Game Remains Aggressive
Devon said it remains highly active acquiring acreage in the Delaware.
Q1 acquisition spend:
- ~$150 million
- ~90% focused on Delaware Basin
John Raines stated:
“We’ve added well over 100 net locations in predominantly the Delaware Basin with our ground game.”
He also described:
- Active lease sale participation
- Competitive private negotiations (“knife fighting behind the scenes”)
This signals:
- Devon still sees high-quality bolt-on opportunities
- They are actively expanding core inventory
5. Delaware Will Likely Receive More Capital Allocation
While management avoided explicitly saying they will shift capital toward Delaware, the messaging strongly implied it.
Clay Gaspar repeatedly referenced:
- Capital efficiency
- Inventory depth
- Free cash flow generation
- Synergy concentration
The company is reviewing all assets and repeatedly emphasized:
“Every asset in the combined portfolio has to compete for its capital and earn its seat at the table.”
That suggests:
- Delaware likely becomes the highest-priority basin
- Lower-return or less strategic assets could eventually be sold or deemphasized
6. Delaware Is Central to AI & Production Optimization
Devon’s AI initiatives are already heavily deployed in Delaware.
Examples discussed:
- Smart gas lift optimization
- Autonomous artificial lift management
- AI-driven drilling/completion optimization
The Smart Gas Lift program:
- Started in Delaware
- Already covers 850+ wells
- Delivered production uplifts beyond pilot expectations
Management specifically tied Delaware scale to accelerating AI benefits.
7. Gas Infrastructure Still Matters in Delaware
Devon acknowledged ongoing Waha exposure issues.
However:
- Blackcomb pipeline capacity later in 2026 will reduce exposure
- Long-term outlook remains very bullish
Clay Gaspar said:
“When there is a call for Permian gas… really excited about the future for Delaware.”
The view appears to be:
- Near-term gas takeaway constraints are manageable
- Long-term power demand and LNG demand will support Delaware gas value
8. The Strategic Vision
The overall message was that Delaware Basin scale now enables:
- Better operational efficiency
- Better technology deployment
- Better capital allocation
- Longer inventory duration
- Stronger free cash flow generation
Management clearly sees the combined Delaware position as:
- One of the premier unconventional oil assets in North America
- The foundation of Devon’s long-term strategy
The call strongly suggested Devon believes:
Bigger Delaware scale = structurally better economics
Devon Delaware Basin 2026 Activity Summary
Total Wells / Records
- 44 wells
Activity Timeframe
- Earliest activity: January 5, 2026
- Latest activity: April 28, 2026
County Breakdown
| County | Wells |
|---|---|
| Culberson | 31 |
| Loving | 11 |
| Reeves | 2 |
This shows Devon is heavily concentrated in:
- Culberson County
- Secondary focus in Loving County
Primary Development Areas / Fields
| Field | Wells |
|---|---|
| FORD, WEST (WOLFCAMP) | 27 |
| PHANTOM (WOLFCAMP) | 11 |
| DERBY (BONE SPRING) | 4 |
| SANDBAR (BONE SPRING) | 2 |
Key Takeaway
The activity strongly aligns with what management discussed on the earnings call:
- Heavy emphasis on Wolfcamp development
- Delaware Basin becoming the company’s “core engine”
- Focus on high-return inventory
The concentration in:
- Ford West
- Phantom
suggests Devon is prioritizing: - Established core acreage
- Repeatable development
- Large-scale pad optimization opportunities
Rig Contractors Used
| Rig | Wells |
|---|---|
| Cactus 153 | 10 |
| Cactus 409 | 7 |
| Cactus 404 | 7 |
| H&P 255 | 6 |
| Nabors 1203 | 6 |
| Cactus 408 | 3 |
This indicates:
- Strong reliance on Cactus rigs
- Significant use of H&P and Nabors
- Multi-rig pad development strategy
Strategic Interpretation vs Earnings Call
The drilling data lines up very closely with management commentary:
1. Delaware Is Clearly the Core Asset
The concentration of activity supports Clay Gaspar’s statement that Delaware is:
“our crown jewel asset.”
Most drilling appears concentrated in:
- High-quality Wolfcamp inventory
- Large-scale development corridors
2. Focus on Operational Scale
The clustering of wells in:
- Ford West
- Phantom
…supports the merger synergy narrative around:
- Better spacing
- Stack/stagger optimization
- Shared infrastructure
- Lower D&C costs
This is exactly where Devon said it expects the biggest synergies with Coterra.
3. AI + Production Optimization Opportunity
Because these appear to be:
- Repetitive development programs
- Large multi-well campaigns
…they are ideal candidates for the AI-driven optimization Devon discussed:
- Autonomous gas lift
- Completion optimization
- Drilling optimization
- Production analytics
4. Strong Culberson County Position
The dominance of Culberson County is notable because:
- It remains one of the deeper Delaware inventory corridors
- Operators there are increasingly targeting:
- Wolfcamp
- Bone Spring stacked development
- It offers long runway inventory
This fits management’s comments about:
- Inventory depth
- Long-duration free cash flow generation
Devon Energy’s 2026 Delaware Basin drilling activity is heavily concentrated in Culberson County and core Wolfcamp development areas such as Ford West and Phantom, reinforcing management’s view of the Delaware as the company’s “crown jewel” asset and primary long-term growth engine. The drilling footprint and multi-rig development strategy align closely with Devon’s merger rationale with Coterra, which is centered on capturing operational synergies, improving capital efficiency, and leveraging AI-driven optimization across a larger combined Delaware position.
Author: phinds
