Devon Raises 2026 Synergy Run-Rate After Eagle Ford Sale Agreement

The Tip Desk · November 5, 2026 · 4 min read

The oil and gas producer agreed to sell Eagle Ford for $4.2 billion in cash and lifted its year-end 2026 synergy target to about $350 million.

Devon Energy (DVN) agreed to sell its Eagle Ford assets for $4.2 billion in cash and raised its expected year-end 2026 pre-tax synergy run rate to approximately $350 million, 75% above the $200 million exit rate it outlined in August.

The U.S. oil and gas producer said the sale, announced Oct. 8, has an effective date of July 1, 2026 and is expected to close in early 2027. After taxes and effective-date adjustments, net proceeds are expected to be approximately $3.5 billion and will be used to accelerate share repurchases and reduce debt.

The company also raised its 2027 average synergy outlook to approximately $700 million from $600 million and continues to expect at least $1.0 billion of annual pre-tax run-rate synergies by year-end 2027. The increase in the 2026 exit rate is spread across capital optimization, operating margin improvements, and corporate cost reductions, the company said.

Third-quarter results marked Devon’s first full quarter of combined operations after the May 7 Coterra Energy merger. Production averaged 1,668,000 barrels of oil equivalent per day, up from 1,359,000 Boe per day in the second quarter, and oil averaged 553,000 barrels per day.

Permian oil rose to 389,000 barrels per day from 329,000, and Permian total oil equivalent rose to 901,000 Boe per day. Marcellus gas of 2,018 million cubic feet per day and Marcellus oil equivalent of 336,000 Boe per day appeared after the Coterra close. Eagle Ford oil averaged 37,000 barrels per day; the company said those volumes were below expectations because of the timing of completions.

Oil, gas and NGL sales totaled $5.9 billion. Realized oil including hedges was $79.54 a barrel, down from $88.09 in the second quarter. Realized natural gas including cash settlements was $2.16 a Mcf. Unhedged natural gas realizations improved to 66% of Henry Hub, above the guidance range, as additional Permian takeaway capacity commenced service and narrowed Waha differentials, the company said.

Cash costs including production expenses, general and administrative expenses, and financing costs totaled $12.89 a Boe, approximately 2% below the midpoint of guidance. Gathering, processing and transportation was $3.20 a Boe and G&A $1.18 a Boe, both below guidance ranges. Lease operating expenses were slightly above the quarterly guidance range due to higher workover activity and third-party water disposal.

Net earnings were $1.0 billion, or $0.88 a share, versus $1.9 billion, or $2.03 a share, in the second quarter. Core earnings were $1.6 billion, or $1.42 a share.

Operating cash flow was $2.8 billion and adjusted free cash flow was $2.0 billion. Capital expenditures excluding acquisitions totaled $1,496 million, including $937 million of Permian upstream capital. Activity averaged 32 operated drilling rigs and 8 completion crews, with 124 net operated wells tied in at an average lateral length of 11,400 feet.

Devon retired the remaining $750 million of its term loan, bringing debt reduction since merger close to $1.25 billion. Outstanding debt was $10.6 billion and net debt $10.2 billion, 0.9 times trailing twelve-month EBITDAX. The company plans to retire an additional $1.5 billion of long-term debt, reaching a $9 billion gross debt target in early 2027.

The company returned $1.53 billion in the quarter through a $0.32 a share dividend ($366 million), $414 million of share repurchases and the term-loan retirement. It expects repurchases to step up to more than $1 billion in the fourth quarter and to rise further in 2027 after Eagle Ford proceeds. The board declared a $0.32 a share dividend for the fourth quarter.

Devon is reaffirming full-year 2026 production and capital guidance with Eagle Ford included through closing. Fourth-quarter production is expected at 1,660,000 to 1,700,000 Boe per day and oil at 550,000 to 560,000 barrels per day, with capital of $1.29 billion to $1.395 billion. On a pro forma basis after the Eagle Ford sale, the company expects 2027 oil production of approximately 525,000 barrels per day and total production of approximately 1,600,000 Boe per day on total capital of approximately $5.3 billion. Full 2027 guidance will be provided with fourth-quarter results in February.

During the third quarter, Devon acquired a 25% interest in the Solitude Pipeline System with firm transportation capacity, connecting Permian natural gas to Gulf Coast and LNG-linked pricing. The investment, funded by cash flow, is expected to improve realized natural gas prices once the system enters service.