All-stock Devon–Coterra (NYSE: CTRA) merger targets $1B synergies

Rhea-AI Filing Summary

Devon Energy and Coterra Energy have signed a definitive agreement to merge in an all-stock transaction that implies a combined enterprise value of approximately $58 billion. The deal would create a large-cap shale operator with a high-quality asset base centered on the Delaware Basin.

The companies expect about $1 billion in annual pre-tax synergies by leveraging their core strengths. After closing, Devon shareholders are expected to own roughly 54% of the combined company and Coterra shareholders about 46% on a fully diluted basis. Closing is targeted for the second quarter of 2026, subject to regulatory and shareholder approvals.

Positive

• Transformative scale and positioning: The all-stock merger would create a leading large-cap shale operator with a high-quality asset base anchored in the core of the Delaware Basin.
• Targeted cost and efficiency gains: Management projects approximately $1 billion in annual pre-tax synergies, which, if achieved, could materially enhance the combined company’s earnings power and capital efficiency.
• Balanced ownership structure: Post-closing, Devon shareholders are expected to own about 54% and Coterra shareholders about 46% of the combined company on a fully diluted basis, preserving substantial participation for both groups.

Negative

• Regulatory and approval risk: Closing is contingent on governmental and regulatory approvals and separate shareholder approvals, any of which could delay the merger, impose conditions, or prevent completion.
• Integration and synergy realization risk: The companies caution that cost savings and growth benefits from the merger may not be fully realized or could take longer than expected due to integration challenges.
• Extended timeline and external uncertainties: Closing is not expected until the second quarter of 2026, exposing the transaction to prolonged commodity-price volatility, macroeconomic shifts, and other risk factors detailed in their SEC filings.

Insights

Energy M&A analyst

Devon and Coterra propose a $58 billion all-stock merger with $1 billion in targeted annual synergies.

The agreement combines two shale-focused producers into a single large-cap operator anchored in the Delaware Basin. The all-stock structure implies no immediate cash outlay and leaves existing investors owning pro rata stakes, with Devon shareholders at about 54% and Coterra at about 46% of the combined company on a fully diluted basis.

Management targets roughly $1 billion in annual pre-tax synergies, which, if realized, could come from operating efficiencies, overlapping infrastructure, and corporate cost reductions. However, the forward-looking language highlights numerous risks, including regulatory approvals, integration challenges, synergy realization, commodity price volatility and potential impacts on customer and employee relationships.

The transaction is expected to close in the second quarter of 2026, subject to approvals from regulators and both shareholder bases. Subsequent SEC filings, including the Form S-4 registration statement and joint proxy statement/prospectus, are expected to provide detailed terms, governance structure, and pro forma financial information for investors evaluating the merger.

Filed by Devon Energy Corporation

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934, as amended

Subject Company: Coterra Energy Inc.

Commission File No.: 1-10447

Dear [Shareholder],

On behalf of the Devon Energy Board of Directors, I wanted to highlight our February 2 press release  and presentation regarding Devon and Coterra’s definitive agreement to merge in an all-stock transaction. The combination will create a leading large-cap shale operator with a high-quality asset base anchored by a premier position in the economic core of the Delaware Basin.

The transaction implies a combined enterprise value of approximately $58 billion and is expected to unlock substantial value by leveraging each company’s core strengths and through the realization of $1 billion in annual pre-tax synergies.

Devon shareholders will own approximately 54% of the go-forward company and Coterra shareholders will own approximately 46% on a fully diluted basis once the transaction closes, which is expected in the second quarter of 2026, subject to regulatory approvals and approvals by both Devon and Coterra shareholders.

We will keep you posted as we move towards a shareholder vote on the transaction. In the meantime, please don’t hesitate to reach out if you’d like to set up a call to discuss.

Regards,

[Sender]

ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the proposed merger (the “Proposed Transaction”) of Devon Energy Corporation (“Devon”) and Coterra Energy Inc. (“Coterra”), Devon will file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 to register the shares of Devon’s common stock to be issued in connection with the Proposed Transaction. The registration statement will include a document that serves as a prospectus of Devon and a joint proxy statement of each of Devon and Coterra (the “joint proxy statement/prospectus”), and each party will file other documents regarding the Proposed Transaction with the SEC. INVESTORS AND SECURITY HOLDERS OF DEVON AND COTERRA ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT DEVON, COTERRA, THE PROPOSED TRANSACTION AND RELATED MATTERS. A definitive joint proxy statement/prospectus will be sent to stockholders of each of Devon and Coterra when it becomes available. Investors and security holders will be able to obtain copies of the registration statement and the joint proxy statement/prospectus and other documents containing important information about Devon and Coterra free of charge from the SEC’s website when it becomes available. The documents filed by Devon with the SEC may be obtained free of charge at Devon’s website at investors.devonenergy.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Devon by requesting them by mail at Devon, Attn. Investor Relations, 333 West Sheridan Ave, Oklahoma City, OK 73102. The documents filed by Coterra with the SEC may be obtained free of charge at Coterra’s website at investors.coterra.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Coterra by requesting them by mail at Coterra, Attn: Investor Relations, Three Memorial City Plaza, 840 Gessner Road, Suite 1400, Houston, Texas 77024.

PARTICIPANTS IN THE SOLICITATION

Devon, Coterra and certain of their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from Devon’s and Coterra’s stockholders with respect to the Proposed Transaction. Information about Devon’s directors and executive officers is available in Devon’s Annual Report on Form 10-K for the 2024 fiscal year filed with the SEC on February 19, 2025 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0001090012/000095017025022844/dvn-20241231.htm), and its definitive proxy statement for the 2025 annual meeting of shareholders filed with the SEC on April 23, 2025

(and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0001090012/000110465925037545/tm252204-6_def14a.htm). Information about Coterra’s directors and executive officers is available in Coterra’s Annual Report on Form 10-K for the 2024 fiscal year filed with the SEC on February 25, 2025 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0000858470/000085847025000075/cog-20241231.htm), and its definitive proxy statement for the 2025 annual meeting of shareholders filed with the SEC on March 20, 2025 (and which is available at https://www.sec.gov/ix?doc=/Archives/edgar/data/0000858470/000110465925026126/tm2429648-2_def14a.htm). Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the registration statement, the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the Proposed Transaction when they become available. Stockholders, potential investors and other readers should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions.

NO OFFER OR SOLICITATION

This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

FORWARD LOOKING STATEMENTS

This communication includes “forward-looking statements” as defined by the SEC. Such statements include those concerning strategic plans, Devon’s and Coterra’s expectations and objectives for future operations, as well as other future events or conditions, and are often identified by use of the words and phrases such as “expects,” “believes,” “will,” “would,” “could,” “continue,” “may,” “aims,” “likely to be,” “intends,” “forecasts,” “projections,” “estimates,” “plans,” “expectations,” “targets,” “opportunities,” “potential,” “anticipates,” “outlook” and other similar terminology. All statements, other than statements of historical facts, included in this communication that address activities, events or developments that Devon or Coterra expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond Devon’s and Coterra’s control. Consequently, actual future results could differ materially and adversely from Devon’s and Coterra’s expectations due to a number of factors, including, but not limited to those, identified below.

With respect to the Proposed Transaction between Devon and Coterra, these factors could include, but are not limited to: the risk that Devon or Coterra may be unable to obtain governmental and regulatory approvals required for the Proposed Transaction, or that required governmental and regulatory approvals may delay the Proposed Transaction or result in the imposition of conditions that could reduce the anticipated benefits from the Proposed Transaction or cause the parties to abandon the Proposed Transaction; the risk that a condition to closing of the Proposed Transaction may not be satisfied; the length of time necessary to consummate the Proposed Transaction, which may be longer than anticipated for various reasons; the risk that the businesses will not be integrated successfully; the risk that the cost savings, synergies and growth from the Proposed Transaction may not be fully realized or may take longer to realize than expected; the expected dividends and share repurchases, as well as related growth and yield, may not be approved by the board of directors of the combined company or realized on the stated timeline or at all; the diversion of management time on transaction-related issues; the effect of future regulatory or legislative actions on the companies or the industries in which they operate; the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; potential liability resulting from pending or future litigation; changes in the general economic environment, or social or political conditions, that could affect the businesses; the potential impact of the announcement or consummation of the Proposed Transaction on relationships with customers, suppliers, competitors, business partners, management and other employees; the ability to hire and retain key personnel; reliance on and integration of information technology systems; the risks associated with assumptions the parties make in connection with the parties’ critical accounting estimates and legal proceedings; the volatility of oil, gas and natural gas liquids (NGL) prices, including from changes in trade relations and policies, such as the imposition of tariffs by the U.S., China or other countries; uncertainties inherent in estimating oil, gas and NGL reserves; the uncertainties, costs and risks involved in Devon’s and Coterra’s operations; natural disasters and epidemics; counterparty credit risks; risks relating to Devon’s and Coterra’s indebtedness; risks related to Devon’s and Coterra’s hedging activities; risks related to Devon’s and Coterra’s environmental, social and governance initiatives; claims, audits and other proceedings impacting the business of Devon or Coterra, including with respect to historic and legacy operations; governmental interventions in energy markets; competition for assets, materials, people and capital, which can be exacerbated by supply chain disruptions, including as a result of tariffs or other changes in trade policy; regulatory restrictions, compliance costs and other risks

relating to governmental regulation, including with respect to federal lands, environmental matters and water disposal; cybersecurity risks; risks associated with artificial intelligence and other emerging technologies; Devon’s and Coterra’s limited control over third parties who operate some of their respective oil and gas properties and investments; midstream capacity constraints and potential interruptions in production, including from limits to the build out of midstream infrastructure; the extent to which insurance covers any losses Devon or Coterra may experience; risks related to shareholder activism; general domestic and international economic and political conditions; the impact of a prolonged federal, state or local government shutdown and threats not to increase the federal government’s debt limit; as well as changes in tax, environmental and other laws, including court rulings, applicable to Devon’s and Coterra’s respective businesses.

Additional information concerning other risk factors is also contained in Devon’s and Coterra’s most recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other SEC filings.

Many of these risks, uncertainties and assumptions are beyond Devon’s or Coterra’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Nothing in this communication is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per share of Devon or Coterra for the current or any future financial years or those of the combined company, will necessarily match or exceed the historical published earnings per share of Devon or Coterra, as applicable. Neither Devon nor Coterra gives any assurance (1) that either Devon or Coterra will achieve their expectations, or (2) concerning any result or the timing thereof, in each case, with respect to the Proposed Transaction or any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results.

All subsequent written and oral forward-looking statements concerning Devon, Coterra, the Proposed Transaction, the combined company or other matters and attributable to Devon or Coterra or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Devon and Coterra do not undertake, and expressly disclaim, any duty to update or revise their respective forward-looking statements based on new information, future events or otherwise.

FAQ

What did Devon and Coterra announce in this Form 425 filing?

Devon and Coterra announced a definitive agreement to merge in an all-stock transaction. The combination is expected to create a large-cap shale operator anchored in the Delaware Basin, with detailed terms to be provided in a forthcoming Form S-4 and joint proxy statement/prospectus.

What is the implied value of the Devon and Coterra merger?

The merger implies a combined enterprise value of approximately $58 billion. This figure reflects the scale of the proposed all-stock combination and underscores management’s view of the combined company as a leading large-cap shale operator with a high-quality asset base.

How will ownership be split between Devon and Coterra shareholders after the merger?

Upon closing, Devon shareholders are expected to own about 54% of the combined company, while Coterra shareholders are expected to own around 46% on a fully diluted basis. This split reflects the agreed relative valuation and share exchange terms of the all-stock transaction.

What synergies are expected from the Devon–Coterra merger?

The companies expect approximately $1 billion in annual pre-tax synergies from the merger. These benefits are anticipated to come from leveraging each company’s core strengths, improving operating efficiencies, and reducing overlapping costs across their shale-focused asset base, subject to execution risks.

When is the Devon and Coterra merger expected to close?

The merger is expected to close in the second quarter of 2026. Completion depends on obtaining required governmental and regulatory approvals, as well as approvals from both Devon and Coterra shareholders, and other customary closing conditions described in the companies’ SEC materials.

What regulatory filings will be made for the Devon–Coterra merger?

Devon plans to file a registration statement on Form S-4 with the SEC, including a joint proxy statement/prospectus for both companies. This document will contain important information about the merger and will be sent to shareholders once declared effective and finalized.

Where can Coterra (CTRA) investors find more details about the merger?

Coterra investors can access merger-related documents on the SEC’s website and Coterra’s investor site. The joint proxy statement/prospectus within Devon’s Form S-4 will provide detailed terms, risk factors, and pro forma information once available, helping shareholders evaluate the proposed transaction.