In recent years, the oil and gas industry's largest merger countdown? Coterra, a giant of the Permian era, is rumored to be merging with Devon Energy Corporation.

Media reports citing informed sources revealed that the American Permian oil and gas giant Coterra Energy Inc. (CTRA.US) is in deep negotiations with Devon Energy Corporation (DVN.US) regarding a merger; if successful, this would become one of the largest oil and gas mergers in recent years globally. The sources mentioned that the two oil and gas giants may announce the merger deal within the next few days. They also added that no final decisions have been made yet and the timing may change, and the negotiations could fall through. The deal would strengthen their market-leading positions in the Permian Basin in West Texas and New Mexico, giving them a larger scale to compete better with rivals such as Exxon Mobil Corporation. On Thursday on the New York stock market, Coterra's stock price rose by 4.6% at one point, pushing the company's market cap to around $22 billion. Devon Energy Corporation's stock price also rose by 3.7%, reaching a market cap of $26 billion. The latest discussions about the merger between the two companies indicate that large American oil and gas drillers are urgently seeking to consolidate their oil and gas resources after a relatively slow year in 2025. This deal would reinforce their energy dominance in the Permian Basin in West Texas and New Mexico - the largest and most productive oil and gas field in the United States, allowing the combined entity to gain a larger market share to better compete with rivals like Exxon Mobil Corporation and Diamondback Energy Inc. "The assets in the Permian Basin are the core of any proposed transaction," said senior analyst Vincent Piazza from Bloomberg Intelligence. Assets in the Appalachia region and other regions rich in gas would not be seen as critical issues. Piazza added: "Due to the difficulty of packaging the assets to investors as a clear theme because of their diversity, streamlining and integrating the highest-quality resources is the most feasible." Devon Energy Corporation operates in the Delaware Basin, an area experiencing rapid drilling growth in the Permian Basin, with approximately 400,000 net acres; Coterra also holds 346,000 acres in the area. Additionally, Coterra has large-scale assets in the Marcellus Shale. Kimmeridge Energy Management Co., a long-standing outspoken oil and gas investment institution, holds stakes in both companies and has expressed support for a potential merger between the two to focus on their Delaware Basin assets after the merger. The merger would be beneficial for both parties The slow pace of mergers in 2025, the scarcity of high-quality inventory, and the increasing importance of cost control are driving top North American shale oil and gas E&P companies towards consolidation. Devon Energy Corporation disclosed in investor materials that its production composition is roughly 47% oil/27% natural gas/26% NGL (more liquid biased). Coterra's performance disclosure shows a larger volume of natural gas production, but the company emphasizes the asset portfolio's "oil and gas balance," which means integrating the high-quality oil and gas assets from both companies in the Permian Basin. Both companies have "vast and scalable core holdings" in the Delaware Sub-basin of the Permian Basin, making them top players in the Permian shale oil sector; however, Devon Energy Corporation is more centered in the Permian Basin, while Coterra has a diversified oil and gas asset portfolio across multiple basins, with the Permian Basin being one of its core asset pieces. Coterra is clearly a combination type E&P of Permian + Marcellus + Anadarko (capital can be allocated between different commodities/basins). Though Devon Energy Corporation is an operator in multiple basins, its Delaware assets are among the most crucial scale assets (around 400,000 net acres). Therefore, this potential large-scale merger is positively inclined towards both parties from an engineering/operational logic standpoint. The overlap of the Delaware and sub-basins is essentially equivalent to the hardest logic for business synergies: larger contiguous scale, more uniform development pace, cost dilution for infrastructure/procurement/surface engineering/completion teams, and better competition with Exxon, Diamondback, and other North American energy giants; institutional investors generally view the "scale and efficiency brought by the Delaware overlapping assets" as the main logic for the merger.