Coterra Energy is reportedly engaged in discussions with Devon Energy, a rival U.S. shale producer, about a potential merger, according to Reuters.
The news agency, citing sources familiar with the negotiations, stated that the talks are currently preliminary. Both companies have not yet decided on a final agreement, and there is no guarantee the merger will proceed.
The sources requested anonymity due to the confidential nature of the discussions.
If completed, the merger would establish one of the largest independent shale producers in the United States.
This development occurs as U.S. crude prices experience pressure from a near-term global oil surplus and future supply prospects from Venezuela.
Following the reports, Devon Energy's shares fell by 4.2%, reducing its market capitalization to approximately $24 billion. In contrast, Coterra Energy's stock rose by 1.5%, valuing the company at nearly $20 billion.
Both companies operate in several shale formations, including the Delaware Basin within the Permian region of Texas and New Mexico, as well as Oklahoma's Anadarko Basin.
Coterra Energy faces strategic pressures, including public demands from Kimmeridge Energy Management for governance changes, which were made in November 2025.
Mark Viviano, managing partner at Kimmeridge, told Reuters, "We would be supportive of a transaction that allowed the combined company to focus on their premier Delaware assets." He added, "We see material operational synergies from the enhanced scale and offsetting acreage positions."
Beyond their joint presence in the Permian Basin, both companies have extensive operations elsewhere. Devon Energy holds assets in South Texas' Eagle Ford play and North Dakota's Williston Basin, while Coterra Energy has significant operations in Appalachia.
Coterra Energy was formed in late 2021 through the merger of Cimarex Energy and Cabot Oil & Gas.
In November 2024, Coterra Energy announced definitive agreements to purchase assets from Franklin Mountain Energy and Avant Natural Resources, with a total transaction value of $3.95 billion. The deal closed in January 2025.
Through these acquisitions, Coterra Energy strengthened its portfolio in Lea County, New Mexico, adding roughly 49,000 highly contiguous net acres and 400–550 net locations.