Dealmaking ground to a halt for most of the past six years due to an interest-rate tightening cycle and Biden-era policies that took a more restrictive stance towards dealmaking.

However, under the Trump administration, government regulators have taken a more accommodating stance to dealmaking, leading to renewed deal flow starting in 2025.

And now, this M&A wave has made its way to the oil and gas industry.

Earlier this week, Devon Energy (DVN) announced its acquisition of Coterra Energy (CTRA) in an all-stock deal valued at $21.5 billion. 

The deal has a total enterprise value of roughly $58 billion, making it one of the biggest deals in the oil and gas space in recent years.

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Merger and acquisition (M&A) activity stalled for much of the past six years as a result of an interest-rate tightening cycle and Biden-era policies that took a more restrictive stance towards consolidation.

The Federal Reserve hiked rates 11 times between May 2022 and July 2023, effectively bringing rates from near-zero levels to their highest point in over two decades. With rates at historic highs, borrowing became expensive.

After remaining flat for most of 2024, rates began a downward trend in September 2024, with easing continuing into 2025. As a result, rates plummeted to 4.5%, before succeeding cuts in September, October, and December of last year further lowered rates to 3.75%.

Meanwhile, Biden-era policies stifled M&A activity further as the administration took a more restrictive stance towards dealmaking.

However, this has changed under the Trump administration which has enacted deregulatory policies designed to cut through red tape and promote dealmaking across multiple industries.

Last year, the Justice Department and the Federal Trade Commission only blocked three mergers, below the average of six deals during the Biden administration. 

2025 saw the resurgence of M&A activity with a record 68 transactions worth $10 billion or more being announced. The total value of M&A activity also surged to $4.5 trillion, well above the $3.1 trillion in 2024.

And now, this wave of M&A activity has made its way to the oil and gas industry.

Earlier this week, Devon Energy (DVN) announced its acquisition of Coterra Energy (CTRA) in an all-stock deal worth $21.5 billion. 

This deal, once it pushes through, will lead to the creation of one of the biggest U.S. oil and gas producers. Moreover, the total enterprise value (“TEV”) of this acquisition sits at around $58 billion, making it one of the biggest acquisitions in the oil and gas industry over the past six years. 

Under the terms of the deal, the combined entity will retain the Devon Energy name and will be led by Devon President and CEO Clay Gaspar, with Coterra CEO Tom Jorden serving as nonexecutive chairman of the board.

Devon Energy’s shareholders will own around 54% of the combined entity while Coterra shareholders will own approximately 46%.

The deal—which is expected to close in the second quarter of 2026—will lead to the creation of one of the world’s largest shale producers with a forecasted output of 1.6 million barrels per day of oil equivalent by the third quarter of this year.

Moreover, the combined entity will become one of the biggest players in the Permian Basin of West Texas and New Mexico. 

The combined company will have a large natural gas position in the Marcellus Shale and possess assets in the U.S. Rockies, Oklahoma, and South Texas.

Devon’s acquisition of Coterra marks a turning point in U.S. shale. With most of the drilling sites already occupied, they are turning to consolidation to remain competitive.

With the federal government adopting a deregulatory stance, investors can expect more consolidations to occur in the oil and gas industry in the near future.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research