Post-merger Devon sees big role for AI as it tackles integration, seeks $1 billion in synergies

By Jessica Whiteside, Contributor

Investments in AI will be key to the new Devon Energy’s strategy for boosting operating results as the Devon and Coterra Energy organizations are integrated following their mega-merger.

Prior to the closure of the deal on 7 May, former Coterra CEO and President, Tom Jorden, now Devon’s Non-Executive Chairman of the Board, said the combined company would be characterized by a “relentless emphasis on technology and innovation.”

Pre-merger, both Devon and Coterra had built reputations as AI leaders in the exploration and production space, including applications of AI for subsurface modeling, drilling and completions, and production operations.

“By combining our complementary technological capabilities and expansive datasets, we create an industry-leading technology platform that accelerates AI deployment across our combined portfolio,” Clay Gaspar, Devon Energy President and CEO, said prior to completion of the merger. “This enhanced capability will drive meaningful value through optimized wellbore placement, reduced nonproductive time, improved artificial lift efficiency and faster, more informed capital allocation decisions.”

Maximizing value from scale

The merger makes Devon Energy one of the biggest large caps in its peer group, with an enterprise value of just over $60 billion, proforma production of more than 1.6 million barrels of oil equivalent per day (based on figures from Q3 2025) and holdings of around 2.3 million acres.

“We have a scale that we have not had before and want to make sure that, as we put this thing together, we’re maximizing that value and making sure that we’re doing everything we can to be the No. 1 operator in every basin,” Matt Hinson, Devon’s VP of Drilling & Completions, said at the IADC Drilling Onshore Conference in Houston on 14 May.

The combined company’s largest holdings are in the Permian-based Delaware Basin, which was home to flagship assets for both Devon and Coterra. It now accounts for 70% of the company’s oil production, Mr Hinson said.

“We have greater than 10 years of inventory, and when we say inventory, that’s investible, high-grade inventory that we see moving forward,” he said of the combined company’s Delaware assets.

Just two weeks after the merger, Devon strengthened its Delaware position even further by acquiring 16,300 net undeveloped acres in New Mexico for approximately $2.6 billion through a US Bureau of Land Management oil and gas lease sale. The contiguous acreage is adjacent to Devon’s existing position in the Delaware and will support the drilling of longer laterals and multiwell pad development.

“Our combined understanding of the basin following the Coterra merger only reinforced our conviction in the quality and depth of this inventory and our confidence in moving decisively to capture these accretive high-quality opportunities,” Mr Gaspar stated in a press release announcing the federal acquisition, which brings Devon’s total Delaware holdings to more than 760,000 net acres.

In addition to its expanded Delaware acreage, Devon also holds 520,000 net acres in the Anadarko Basin, which had featured significant overlap between Devon and Coterra assets, along with 90,000 net acres in the Eagle Ford and 730,000 net acres in its Rockies holdings in the Powder River and Williston Basins. It also has 190,000 net acres in the Marcellus Shale, brought to the merger by Coterra. Reuters reported in late May, based on anonymous sources, that Devon had received an $8 billion offer for its Marcellus position, although the company did not respond to Reuters’ request for comment and no official announcements have been made.

According to Mr Hinson’s presentation at the 14 May conference, Devon is running 34 rigs and 11 frac crews across its multi-basin portfolio. The total includes 22 rigs and six frac crews in the Delaware, placing Devon just behind ExxonMobil in that basin, he noted. There are another four rig crews and one frac crew running in the Anadarko Basin, two rigs and a frac crew in each of the Eagle Ford and Marcellus areas and four rigs in Devon’s Rockies holdings.

Identifying opportunities for synergies

With the merger complete, the combined Devon is now reviewing opportunities to secure $1 billion in annual pre-tax synergies by the end of 2027.

Some $350 million of that total is expected to come from capital optimization in drilling and completions through strategies made possible by the merger, not least of which is the supply chain leverage that will come from operating at a scale neither Devon nor Coterra had before.

Other capital optimization strategies in drilling and completions will include longer laterals enabled by acreage overlap, optimized rig scheduling, standardized well designs and integration of subsurface data platforms to optimize completion designs.

“The challenge to the team is this was a merger of equals, and I want to make sure that we sit down and look at every different aspect of how each of us operated and make sure we’re picking the best process moving forward,” Mr Hinson said.

Value extraction from third-party providers will be part of the review, he added. On the rig side, for example, quarterly performance reviews will dig into details such as connection times to the second, trip speeds, skid times and who’s offlining or not offlining

He also noted that, as Devon moves ahead with integration, the company will bear in mind that the investment community has asked it to keep a flat-to-low growth production profile and return free cash flow back to investors; the board has approved an $8 billion share repurchase program.

Integrating AI into drilling and completions

So how does AI factor into the company’s drilling and completions plans?

During Devon Energy’s Q1 2026 earnings call, held a day before the merger completion in May, Mr Gaspar discussed how the company’s use of AI has evolved through three waves. He described wave one as providing a “more immediate connection to Devon’s massive stores of data, transforming what was inefficient data-hunting time into data analysis and value creation time.”

Three years ago, Devon launched an internal AI platform called ChatDVN that has become part of the company’s daily workflow. Wave two saw AI begin to take on complex calculations, write code for new apps, and translate drilling, completions and production data into “actionable intel” for engineers, which then led to improved drilling and completions times.

Devon is now moving into wave three, which focuses on “redesigning internal processes from the ground up with AI at the center,” Mr Gaspar said. He called the use of technology and AI to optimize the business “the same playbook we will leverage with the Coterra integration.”

At the IADC conference, Mr Hinson highlighted some of the AI capabilities that Devon’s integrated tech platform now offers, including AI agents for optimizing well designs, AI-driven completions sequencing, basin-wide use of AI for pre-drill prediction of well performance and AI-driven supply chain and contract optimization.

He described how, about three years ago, the pre-merger Devon determined that it needed some type of platform for its drilling and completions teams. This resulted in the company’s InnDrill and InnFrac applications, now used across the company as one-stop shops for collecting, managing, presenting and analyzing drilling and completions costs, performance and real-time data.

As the InnDrill tool monitors real-time data, for example, it can flag certain events that, if they meet pre-determined criteria, will result in a notification being sent to the appropriate personnel. Mr Hinson gave an example of the criteria that might be used to trigger notifications about a motor stall.

“If we have X amount of stalls within X amount of time with this type of pressure spike, we can send those notifications straight to the rig that’s there, both on the team’s channel that everybody has access to, but also to the cell phone of the PIC (person in charge) and the superintendent that’s in the basin.”

This AI-aided approach enables issues to be identified and checked more swiftly and with fewer steps than in the past. For example, about 10 years ago, Devon’s real-time monitoring center would be staffed by a couple of hundred of people who would use algorithms to understand performance in terms of connection times, motor stalls and other issues, Mr Hinson said. The problem was the drilling engineer might not get a report until the next day on issues that happened 24 to 36 hours ago – after the wellsite personnel already moved on to something different.

The speed of intel and analysis now available through AI-enabled workflows has been “a great change for us,” he noted.

Democratizing coding

The development of Devon’s InnDrill and InnFrac tools was a process that took about 2.5 years of back-and-forth between drilling engineers and IT professionals, Mr Hinson said.

However, the advances in AI are such today that even engineers without coding backgrounds can quickly customize these apps to meet their needs. He gave the example of a non-coding engineer who was able to prompt Claude Code to add a dark-mode option to each window of one of the in-house apps, something it accomplished in minutes while the engineer was away at lunch.

“The transition that’s happened over the last two or three months is amazing,” Mr Hinson said, adding that he himself had used Claude Code to create his presentation slides for the IADC conference. He also described how the company uses AI tools to support benchmarking of metrics from non-operated wells. The AI tools extract unstructured data from PDF reports provided by operating partners, then store the captured data in a structured database that makes it easier to compare well metrics from different partners.

AI has revolutionized how quickly Devon is able to analyze data, Mr Hinson said, and he urged any company not yet exploring AI to talk to its IT professionals about potential solutions.

“It is and will continue to be very revolutionary for our industry and all others,” he said. DC