Devon Energy Sets 500,000 Bpd Oil Target and $4.9 Billion Capital Plan After Coterra Merger

Devon Energy Corporation unveiled its post-merger 2026 production plan on June 9, targeting 1.38 million barrels of oil equivalent per day across its combined portfolio. The company set oil volumes at 500,000 barrels per day, backed by a $4.9 billion capital budget. More than 60 percent of that spending goes to the Permian Basin.

A Merger Built on Two Rounds of Prior Consolidation

The $58 billion all-stock transaction between Devon Energy and Coterra Energy closed May 7, 2026. Each Coterra share converted to 0.70 Devon shares, leaving Devon shareholders with roughly 54 percent of the combined company. Former Coterra shareholders hold the remaining 46 percent on a fully diluted basis.

Coterra itself was formed in 2021 from the merger of Cimarex Energy and Cabot Oil and Gas. Cimarex brought a core Delaware Basin and Anadarko Basin position, while Cabot contributed its Marcellus Shale franchise. Devon, in that same year, absorbed WPX Energy in an all-stock deal, adding WPX's Delaware Basin acreage and Williston Basin assets. The new Devon carries legacy positions from four predecessor companies across six U.S. basins: Delaware, Anadarko, Eagle Ford, Marcellus, Powder River, and Williston.

"This transformative merger marks a defining moment for Devon Energy," CEO Clay Gaspar said at closing on May 7. Gaspar, who led Devon before the transaction, continues as president and chief executive. Tom Jorden, Coterra's former chief executive, serves as non-executive chairman of the combined board.

Delaware Basin Anchors More Than 60 Percent of Capital

Devon allocated $2.9 billion to the Permian, representing more than 60 percent of the total $4.9 billion program. The combined Delaware Basin position spans nearly 750,000 net acres in the economic core of the play and produced 863,000 BOE per day on a combined pro forma basis in the third quarter of 2025. Devon describes this inventory as the largest sub-$40-per-barrel breakeven position in the industry.

At Thursday's WTI settlement of $68.78 per barrel, Devon's 500,000 barrels per day oil target generates approximately $34.4 million in daily gross oil revenue, or roughly $12.55 billion annualized. Against a $4.9 billion total capital budget, that ratio implies $2.56 in gross oil revenue for every dollar of capital deployed. The $40 breakeven threshold on Devon's Delaware core leaves a per-barrel margin of approximately $28.78 at current WTI prices, before royalties and production taxes.

The operational plan runs 31 rigs and 10 completion crews, with 460 to 480 net wells expected online in 2026. Permian rigs account for the majority of that fleet, concentrated in Devon's Delaware Basin Wolfcamp and Bone Spring targets. Capital spending outside the Permian allocates $875 million to the Rockies, $475 million to Eagle Ford, $275 million to the Anadarko Basin, and $225 million to Marcellus.

Shareholder Returns and Debt Retirement

Devon committed to returning up to 70 percent of free cash flow to shareholders through dividends and buybacks. The fixed quarterly dividend stands at $0.32 per share. A separate $8 billion share repurchase authorization runs alongside that dividend program.

The company also plans to retire $1.25 billion of debt during 2026. The pro forma balance sheet carried $11.9 billion in total debt as of March 31, 2026, with a net debt-to-EBITDAX ratio of 0.9x at merger close. Total pro forma liquidity stood at $4.4 billion as of September 30, 2025.

Production Guidance Below Pro Forma, Reflecting Price Discipline

The 1.38 million BOE per day full-year guidance sits 13.75 percent below the 1.6-plus million BOE per day pro forma run rate established at the time of the February 2026 merger announcement. That reduction reflects capital discipline in a $68-to-$70 WTI price environment. As this outlet reported this week, WTI has moved toward a fourth consecutive weekly loss amid concerns about Hormuz flows and an OPEC output increase, with Citi projecting Brent could reach $60 per barrel if supply normalizes. Devon's stated goal is to "deliver differentiated returns for shareholders through any commodity cycle."

Devon scheduled its second-quarter 2026 earnings release for later in July, with the call date announced on July 1. Analysts will focus on whether the combined company tracks toward the full-year production midpoint and the $600 million synergy target for 2027. The synergy run-rate target reaches $1.0 billion in annual pre-tax savings by the end of 2027.