Devon now boasts a premier multi-basin asset base. This provides deep inventory and low-cost development opportunities for decades. Strong capital discipline allows the company to generate substantial free cash flow across various commodity price environments while maintaining a solid investment-grade balance sheet with low net debt.
Shareholder returns remain an industry-leading priority through a disciplined dividend framework paired with substantial share buybacks. The firm is well-positioned to expand production margins and deliver sustainable free cash flow expansion.
DEVON ENERGY (New York symbol DVN; www.dvn.com) is an independent U.S. oil and natural gas exploration and production company that extracts crude oil, natural gas, and natural gas liquids (NGLs) from onshore U.S. shale basins.
The firm has now completed its acquisition of COTERRA ENERGY (another Power Growth Investor buy).
The roughly $24.8 billion all-stock deal has created one of the largest U.S. oil-and-gas producers and another dominant player in the Permian Basin of West Texas and New Mexico. Both companies currently operate in the oil rich region.
Coterra shareholders received 0.7 shares of Devon for each share of Coterra they held. Devon shareholders now own 54% of the combined company, while Coterra shareholders own 46%.
The combined Devon Energy/Coterra is active in these core U.S. onshore basins:
- Delaware Basin (southeast New Mexico and west Texas, part of the Permian) — has more than 10 years of high-quality drilling inventory. This is where the Coterra merger added the most scale, since Coterra also had a major Delaware Basin position.
- Anadarko Basin — western Oklahoma (Canadian, Kingfisher, and Blaine counties)
- Eagle Ford — south Texas (DeWitt County)
- Williston Basin — North Dakota (the Bakken)
- Powder River Basin — Wyoming
Devon’s legacy assets covered all five of these areas. Coterra brought additional Delaware Basin acreage plus its Marcellus Shale natural gas position in Pennsylvania.
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Activist push spurred Devon’s merger with Coterra
The combined company is one of the world’s largest shale producers with output of about 1.6 million barrels of oil equivalent per day. Oil makes up about one-third of its production, with natural gas accounting for most of the rest.
Moreover, the new Devon is targeting $1.0 billion in annual cost savings by the end of 2027.
Devon President and CEO Clay Gaspar kept his titles at the combined company, which is based in Houston (but while maintaining a significant presence in Oklahoma City). Coterra CEO Tom Jorden is serving as non-executive chairman of the board.
Notably, in recent months, before the merger, Coterra became the target of an activist push by investment firm Kimmeridge, which pushed for new leadership at Coterra and said it should sell its natural-gas operations to focus on its crude business in the Permian.
Devon’s shares currently yield 2.5%.
Recommendation in Power Growth Investor: Devon Energy Corp. is a buy.
