Devon and Coterra's $58B merger creates a new US energy titan by 2026

Devon Energy (DVN) is set to merge with Coterra Energy (CTRA) in a major all-stock deal valued at $58 billion. The combined company, expected to finalise in the second quarter of 2026, will create a new energy giant with Devon shareholders holding 54% of the entity. Analysts are now watching how the merger will reshape the company's valuation and market position.

Devon Energy entered 2025 with strong financial performance, generating $3.1 billion in free cash flow—a significant increase from the previous year. Its market capitalisation at the time stood at around $28.7 billion. The company also cut capital spending to $3.6 billion while boosting oil production to 390,000 barrels per day in the fourth quarter, surpassing its own targets.

The firm secured two major long-term contracts in 2026. A 10-year deal locks in exports of 50 million cubic feet per day of liquefied natural gas (LNG) starting in 2028, ensuring steady revenue. Additionally, a separate seven-year agreement will supply 65 million cubic feet per day to a 1,350-megawatt power plant, directly linked to rising electricity demand from AI data centres.

Meanwhile, Constellation Energy (CEG), another key player in the energy sector, faces a different outlook. Despite a 13% revenue increase in the fourth quarter compared to the prior year, its full-year net income dropped by 38% to $2.3 billion. The company's stock has fallen 18% since January, even as it trades at 41 times trailing earnings with a market cap of roughly $109 billion. In contrast, Devon's valuation sits at 11 times trailing earnings, highlighting a stark difference in investor sentiment between the two firms.

Once the Devon-Coterra merger completes, shareholders will see a 31% rise in the quarterly dividend, bringing it to $0.315 per share. The new company will also launch a share buyback programme worth over $5 billion. As of March 16, 2026, Devon's market capitalisation reached €25.17 billion, though direct comparisons to pre-merger figures remain unclear from available data.

The merger between Devon and Coterra will form one of the largest independent oil and gas producers in the US. Higher dividends, a multibillion-dollar share repurchase plan, and long-term supply contracts position the combined entity for steady cash flow. Investors will now track how the deal impacts production, costs, and shareholder returns in the coming quarters.