Devon Energy and Coterra Energy Merge in $58 Billion Deal
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6d ago
0mins
Should l Buy DVN?
Source: Fool
- Merger Scale: Devon Energy is acquiring Coterra Energy in a $58 billion all-stock deal, creating the second-largest independent oil and gas producer in the U.S. with a production capacity exceeding 1.6 million barrels of oil equivalent per day, second only to ConocoPhillips.
- Shareholder Structure: Upon completion of the merger, existing Devon shareholders will own approximately 54% of the combined entity, which is expected to close in the second quarter, enhancing Devon's position in the Delaware Basin and driving future cash flow growth.
- Synergy Expectations: Devon anticipates achieving over $1 billion in annual pre-tax synergies post-merger, primarily through optimizing capital programs and improving operating margins, which will significantly enhance the company's financial performance.
- Increased Shareholder Returns: Following the merger, Devon plans to raise its quarterly dividend by 31% to $0.315 per share and initiate a share repurchase program exceeding $5 billion, further enhancing shareholder returns and increasing investment appeal.
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Analyst Views on DVN
Wall Street analysts forecast DVN stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for DVN is 43.25 USD with a low forecast of 35.00 USD and a high forecast of 55.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
21 Analyst Rating
17 Buy
4 Hold
0 Sell
Strong Buy
Current: 43.170
Low
35.00
Averages
43.25
High
55.00
Current: 43.170
Low
35.00
Averages
43.25
High
55.00
About DVN
Devon Energy Corporation is an oil and gas producer in the United States with a diversified multi-basin portfolio headlined by an acreage position in the Delaware Basin. The Company is primarily engaged in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs). It owns a portfolio of assets located in the Delaware Basin, Rockies, Eagle Ford and Anadarko Basin. The Delaware Basin operates in southeast New Mexico and across the state line into west Texas. It offers exploration and development opportunities from many geologic reservoirs and play types, including the oil-rich Wolfcamp, Bone Spring, Avalon and Delaware formations. Its Rockies development consists of its Williston Basin and Powder River Basin assets. The Eagle Ford operations are located in Texas' DeWitt and Karnes counties. The Anadarko Basin development is located in western Oklahoma. It has a joint venture with Dow to develop a portion of its Anadarko Basin acreage.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Market Reaction: This stock price increase may be linked to analysts' optimistic expectations for its future performance, further bolstering market confidence in Devon Energy.
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- Shareholder Rights Advocacy: The law firm encourages Marine shareholders to contact them to discuss their rights, indicating that the merger terms may contain clauses that limit ordinary shareholders' access to superior competing offers, impacting their financial interests.
- Post-Merger Equity Structure: Upon completion of the merger between Devon Energy Corporation (NYSE:DVN) and Coterra Energy Inc., Devon shareholders will own approximately 54% of the combined entity, highlighting the significant implications of the merger on shareholder equity.
- Contingency Fee Arrangement: Halper Sadeh LLC will handle the case on a contingent fee basis, meaning shareholders will not incur out-of-pocket legal fees, aiming to secure increased compensation and disclosures for defrauded investors while protecting their legal rights.
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- Strategic Transformation: Over the past year, the company has positioned itself as a leader in supplying energy for artificial intelligence infrastructure, supplementing its traditional pipeline business with new power generation capabilities, which is expected to bolster future profitability.
- Major Investment Projects: The Socrates project in Ohio is set to come online in the second half of this year, generating 440 megawatts of power, with Meta Platforms signing a purchase agreement, highlighting its strategic importance in meeting data center power demands.
- Future Growth Targets: The company aims to grow its EBITDA at a rate of 5% to 7% annually, with analysts watching to see if it will raise this target at the upcoming analyst day, further driving long-term growth.
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Barclays Upgrades Devon Energy to Overweight with $50 Target
- Stock Surge: Devon Energy (DVN) rose 4.5% in Wednesday's trading, reaching a new 52-week high of $43.68, reflecting market optimism regarding its merger prospects.
- Rating Upgrade: Barclays upgraded Devon Energy's rating from Equal Weight to Overweight, raising the price target from $52 to $50, emphasizing the significant improvements in cash returns and synergy capture from the merger.
- Merger Benefits: Analysts believe the merger with Coterra Energy (CTRA) creates a differentiated E&P rate-of-change story, projecting approximately $1 billion in synergies by 2028, with free cash flow (FCF) yields expected to reach 13% in 2027 and 14% in 2028.
- Undervalued Assets: Despite both companies demonstrating strong independent performance, analysts noted that the market has not fully reflected the quality and depth of their asset bases, suggesting the combined entity will be
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- Investigation Focus: Halper Sadeh LLC is investigating Peakstone Realty Trust (NYSE: PKST) regarding its sale to Brookfield Asset Management for $21.00 per share, potentially indicating breaches of fiduciary duties to shareholders.
- Merger Details: Upon completion of the merger between Devon Energy Corporation (NYSE: DVN) and Coterra Energy Inc. (NYSE: CTRA), Devon shareholders will own approximately 54% of the combined entity, which may impact shareholder value and rights.
- Shareholder Rights Protection: The firm may seek increased consideration and additional disclosures for shareholders, aiming to safeguard their legal rights and provide other forms of relief in the proposed transactions.
- Legal Services Offered: Halper Sadeh LLC offers legal services on a contingent fee basis, encouraging affected shareholders to reach out to discuss their rights and options, demonstrating a commitment to investor protection.
See More
Devon Energy Stock Up 10.4% Year-to-Date
- Analyst Ranking: The ranking is formed by averaging analyst opinions across 500 components, reflecting market sentiment and confidence in various stocks.
- Devon Energy Performance: Devon Energy (DVN) has shown a year-to-date stock price increase of 10.4%, indicating a relatively strong performance in the market that may attract more investor interest.
- Market Reaction: This stock price increase may be linked to analysts' optimistic expectations for its future performance, further bolstering market confidence in Devon Energy.
- Diverse Perspectives: While the views expressed may not reflect Nasdaq's stance, they provide investors with a diverse market perspective, aiding in making more informed investment decisions.
See More
