Jan 29 – U.S. shale producers Coterra Energy and Devon Energy could announce an agreement to merge as soon as next week, a source familiar with the matter said on Thursday.

A possible combination would rank among the largest between U.S. energy producers in recent years.

Both companies have operations across multiple shale formations, with both present in the Delaware portion of the Permian Basin in Texas and New Mexico and Oklahoma’s Anadarko Basin.

A potential deal comes against a backdrop of a spike in crude prices on Thursday on worries the U.S. could take military action against Iran. Oil prices had previously been under pressure due to concerns about a near-term global glut of the commodity. [O/R]

Shares of Coterra rose 2.6%, while those of Devon were up marginally in afternoon trading.

Coterra and Devon Energy did not immediately respond to Reuters’ requests for comment. Bloomberg News was the first to report the talks between the two companies were at an advanced stage and that they could be billed as a merger of equals. Earlier this month, Reuters had reported the two companies were in talks for a possible merger.

While energy dealmaking was subdued in 2025 compared with prior record-breaking years, arguments for consolidation among U.S. oil and natural gas producers remain valid. Benefits include economies of scale, which would help control costs within a depressed price environment for crude, as well as securing additional resources at a time when many shale basins are maturing and new prime development land is at a premium.

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(Reporting by David French in New York and Dharna Bafna and Katha Kalia in Bengaluru; Editing by Vijay Kishore, Alan Barona and Leroy Leo)