An American independent energy company that explores for and produces oil, natural gas, and natural gas liquids from shale basins across the United States, including the Delaware, Eagle Ford, and Anadarko regions. Founded in 1971 in Oklahoma City by accountant John Nichols and his lawyer son Larry, it grew from a small family business into one of the country's largest independent producers. Its 2002 purchase of Mitchell Energy helped spark the modern shale boom.
Devon's Q2 2026 net income rose to $1.9B after the Coterra merger closed, adding 488 MBoe/d of production.
The Coterra merger transformed Devon's scale overnight. rose 73% to $7.4 billion and reached $1.9 billion as total production climbed 63% sequentially to 1,359 MBoe/d, driven by the addition of Coterra's legacy assets and a 37% increase in unhedged oil realizations. The combined company now carries $9.9 billion in and must deliver on $1.0 billion in promised annual synergies.
Key takeaways
The all-stock merger with Coterra Energy closed on May 7, 2026, adding approximately 488 MBoe/d of production from the Permian, Anadarko, and Marcellus basins and lifting total Q2 production to 1,359 MBoe/d.
reached $1.9 billion, up from $120 million in Q1 2026, as the merger contributed a full quarter of Coterra's results and unhedged oil realizations rose 37% to $95.10 per barrel on higher WTI prices.
rose 73% to $7.4 billion, while more than doubled to $2.4 billion and widened 5.0 points to 32.1%.
Section summaries
Management's Discussion and Analysis
Devon's Q2 2026 earnings surged to $1.9B, driven by the Coterra merger closing, higher oil prices, and a $201M Fervo investment gain.
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reached $1.9 billion in Q2 2026, up from $120 million in Q1 2026, primarily due to the all-stock merger with closing on May 7, 2026.
was $3.7 billion, funding $500 million in debt retirement, $366 million in dividends, and the announcement of a new $8.0 billion program.
Total assets more than doubled to $70.9 billion and rose to $41.7 billion from the merger, while increased 18% to $9.9 billion.
A $201 million gain on the Fervo Energy investment contributed to earnings, and the company guided Q3 2026 combined production to 1,660–1,690 MBoe/d.
What changed
The Coterra merger, flagged in Q1 2026 as expected to close on May 7, 2026, closed on schedule and immediately added roughly 488 MBoe/d of production, transforming the company's scale.
The business optimization plan targeting $1.0 billion in annual pre-tax cash flow improvements by year-end 2026, previously reported as ahead of schedule, was not mentioned as a distinct item in this quarter's narrative, with management focus shifting to the $1.0 billion in merger synergies targeted by year-end 2027.
The August 2025 EPA notice of violation for alleged air permit violations in New Mexico and western Texas, previously flagged with a potential penalty above $1 million, remains unresolved; two additional Coterra legacy EPA matters from 2023 are now also disclosed as potentially resulting in penalties above $1 million.
Unhedged gas realizations fell 79% to $0.35 per Mcf, a sharp decline from $1.67 per Mcf in Q2 2025, driven by lower Henry Hub prices and negative Permian basis differentials.
What to watch
Whether Q3 2026 combined production reaches the guided 1,660–1,690 MBoe/d as the company integrates Coterra's legacy assets across three basins.
Progress toward the $1.0 billion in annual merger synergies, with approximately $600 million expected in 2027, and whether early integration produces measurable cost reductions.
Resolution of the three outstanding EPA notices of violation—one legacy Devon matter from August 2025 and two legacy Coterra matters from June and August 2023—each of which may result in a penalty above $1 million.
The trajectory of unhedged gas realizations, which fell to $0.35 per Mcf in Q2 2026, as a 10% shift in forward curves now moves derivative positions by approximately $350 million.
Total production rose 63% sequentially to 1,359 , with the addition of 's legacy assets in the Permian, Anadarko, and Marcellus basins contributing approximately 488 MBoe/d.
Unhedged oil realizations increased 37% to $95.10 per barrel, tracking a 28% rise in WTI, while unhedged gas realizations fell 79% to $0.35 per Mcf due to lower Henry Hub prices and negative Permian .
Total production expenses increased 56% to $1.39 billion due to the merger, though lease operating expense per Boe decreased 22% to $5.06, reflecting a shift in post-merger asset mix.
was $3.7 billion for the quarter; the company retired $500 million of debt, paid $366 million in dividends, and announced a new $8.0 billion program.
Devon expects to deliver $1.0 billion in annual pre-tax merger synergies by year-end 2027, with approximately $600 million captured in 2027, and guided Q3 2026 combined production to 1,660-1,690 .
Quantitative and Qualitative Disclosures About Market Risk
Commodity Price Risk As of June 30, 2026, we have commodity derivatives that pertain to a portion of our estimated production for the last six months of 2026, as well as for 2027. The key terms to our open oil, gas and NGL derivative financial instruments are presented in Note 3…
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Commodity Price Risk
As of June 30, 2026, we have commodity derivatives that pertain to a portion of our estimated production for the last six months of 2026, as well as for 2027. The key terms to our open oil, gas and NGL derivative financial instruments are presented in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.
The fair values of our commodity derivatives are largely determined by the forward curves of the relevant price indices. At June 30, 2026, a 10% change in the forward curves associated with our commodity derivative instruments would have changed our net positions by approximately $350 million.
Interest Rate Risk
At June 30, 2026, we had total debt of $11.4 billion. Of this debt, $10.7 billion was comprised of debentures and notes that have fixed interest rates which averaged 5.49%. We also have a $750 million Term Loan which has a variable interest rate that is adjusted monthly. The interest rate on the Term Loan was 4.96% at June 30, 2026.
We are involved in various legal proceedings incidental to our business. However, to our knowledge as of the date of this report and subject to the environmental matters noted in Part I, Item 3. Legal Proceedings of our 2025 Annual Report on Form 10-K and the matters described b…
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We are involved in various legal proceedings incidental to our business. However, to our knowledge as of the date of this report and subject to the environmental matters noted in Part I, Item 3. Legal Proceedings of our 2025 Annual Report on Form 10-K and the matters described below, there were no material pending legal proceedings to which we are a party or to which any of our property is subject. For more information on our legal contingencies, see Note 18 in “Part I. Financial Information – Item 1. Financial Statements” of this report.
Environmental Matters
Devon has elected to use a $1 million threshold for disclosing certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party. Devon believes proceedings under this threshold are not material to Devon’s business, financial condition and results of operations.
On June 26, 2023, we received a NOV from the EPA relating to alleged air emission violations by Coterra Energy Operating Co. (f/k/a Cimarex Energy Co.), a subsidiary of the Company, during 2020 and 2022 in Texas and New Mexico. On July 25, 2023, we subsequently received a letter from the U.S. Department of Justice that the EPA has referred this matter for civil enforcement proceedings. On August 17, 2023, we received a separate NOV from the EPA relating to alleged air emission violations by Coterra Energy Operating Co. during 2023 in New Mexico. The Company has been engaging with the EPA to resolve each of these matters, which remain ongoing, and management cannot predict their ultimate outcome; however, resolution of each of these matters may result in a fine or penalty in excess of $1 million.
Please see our 2025 Annual Report on Form 10-K and other SEC filings for additional information.