Devon and Coterra merge to create a $58B US energy powerhouse

Devon Energy has completed a major merger with Coterra Energy, forming a new oil and gas giant. The $21.4 billion all-stock deal closed in the second quarter of 2026, creating one of the largest independent energy producers in the US. Meanwhile, Constellation Energy remains a key player in the AI-driven power sector, despite recent financial challenges.

Devon Energy announced its merger with Coterra on 2 February 2026, with the deal finalised shortly after. The combined company now holds an enterprise value of $58 billion, with Devon shareholders owning 54% of the new entity. Following the merger, Devon raised its quarterly dividend by 31% to $0.315 per share and authorised a share buyback programme worth over $5 billion.

The company also secured two major long-term contracts. A seven-year agreement will supply 65 million cubic feet of gas daily to a 1,350 MW power plant from 2028, supporting AI-driven electricity demand. Additionally, Devon locked in a 10-year deal to export 50 million cubic feet of liquefied natural gas (LNG) per day, starting the same year. In 2025, Devon generated $3.1 billion in free cash flow, a sharp increase from the previous year, with a market capitalisation of around $28.7 billion and a trailing earnings multiple of 11x.

Constellation Energy, meanwhile, remains a Wall Street favourite for its role in powering AI data centres. Its narrative centres on nuclear energy as a key driver for future growth. However, the company's financials show mixed results. While fourth-quarter revenue rose 13% year-over-year, full-year net income dropped 38% to $2.3 billion. Despite this, Constellation trades at 41x trailing earnings, with a market cap near $109 billion. Its stock has fallen 18% since January, reflecting investor caution about its high valuation.

Devon Energy's merger with Coterra has positioned it as a dominant force in US energy, backed by strong cash flow and new supply agreements. Constellation Energy continues to attract attention for its AI-linked power strategy, though its high valuation contrasts with recent profit declines. Both companies now face different challenges as they navigate shifting market demands.