A report in the Financial Times indicated that the Devon Energy and Coterra Energy are “closing in” on a nearly $60 billion deal to merge.
If it happens, it would be the largest oil and gas marriage in the US shale industry in two years. Talks between Devon of Oklahoma City and Coterra of Houston were reported a few weeks earlier and now, according to the Times, are “at an advanced stage.”
According to the report, the deal could be finalized as early as next week. The report was based on “people familiar with discussions” who also warned the talks could also collapse.
Both firms are heavy players in the Permian Basin, the largest oilfield in the country and a combination of their operations and assets would allow competition against larger rivals. If such a merger were to be accomplished, the creation would create a firm with a value of an estimated $57 billion, a figure that was based on share prices as of Thursday afternoon.
“By getting together these shale companies would have greater scale, operational efficiencies particularly in their core Delaware assets and be more relevant to Wall Street investors,” said Andrew Dittmar, analyst with Enverus, according to the report by the Financial Times.
Details of the talks have not been revealed so it is unclear whether headquarters would remain in the Devon Tower.
The tower is Oklahoma’s tallest building, standing 50 stories and 844 feet. The 1.8-million-square-foot skyscraper was completed in 2012.
The merger discussion was first reported by Bloomberg and since then, shares of both companies have increased. Devon’s shares grew by 7% while Coterra saw a 12% gain.
Devon Energy was founded in 1971 by John and Larry Nichols and went public in 1988. The company focuses on shale oil, especially in the Delaware Basin but is also active in the Williston Basin of North Dakota and Montana, the Powder River Basin in Wyoming and the Eagle Ford of South Texas.
Coterra formed out of the 2021 merger of Cabot Oil and Gas and Cimarex Energy.
Source: Financial Times