Activist investor challenges Devon’s post-merger strategy

TOMS Capital is pushing the shale producer to accelerate asset sales or consider a potential takeover.

Devon Energy is facing pressure from activist investor TOMS Capital, which is urging the U.S. shale producer to move faster on asset sales or explore a potential sale of the company following its merger with Coterra Energy.

After building a significant stake in Devon earlier this year, TOMS Capital has been pressing management to accelerate portfolio changes to unlock shareholder value, according to a Reuters report citing people close to the matter. The activist is also encouraging potential acquisition interest from other energy companies.

The news comes shortly after Devon completed its $58 billion merger with Coterra Energy, creating one of the largest independent oil and gas producers in the U.S.

While management has argued that the merger creates scale, improves efficiency, and strengthens Devon’s ability to generate shareholder returns, some investors remain skeptical that size alone will translate into higher valuation.

Fellow activist investor Kimmeridge Energy Management previously urged Devon to pursue asset sales, improve capital allocation, and streamline its portfolio, warning that the enlarged company could trade at a “conglomerate discount” if investors viewed its asset base as too complex.

TOMS Capital has gone a step further, suggesting it would be supportive of a sale of the company and has even reportedly been attempting to generate interest from other oil and gas players to make a bid.

Devon has already begun reviewing its portfolio following the Coterra merger, saying it intends to optimize its assets around its core Permian Basin position, and has committed to an $8 billion share repurchase program.

The push comes amid renewed consolidation across the oil and gas industry.

Recent examples include Chevron’s $53 billion acquisition of Hess Corporation last year, strengthening its position in Guyana and other key assets. ConocoPhillips also completed a $22.5 billion acquisition of Marathon Oil, demonstrating the industry’s shift toward larger, more diversified producers.

These deals reflect a broader strategy among energy companies to acquire high-quality reserves, improve operational efficiency, and generate shareholder returns through scale.

Devon itself has been an active participant in that trend, including its recent acquisition of additional Delaware Basin acreage.

The disagreement highlights a broader debate on whether consolidation creates genuine shareholder value or simply creates larger companies that suffer with “conglomerate discounts” and don’t see proportionately improved returns.

In Devon’s case, the answer will depend on whether management can demonstrate that the combined company can deliver stronger cash flows, improved capital efficiency, and higher shareholder returns.

If not, TOMS Capital’s campaign suggests investors may push for a different solution.

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