Devon Energy didn’t waste any time continuing its spending spree just weeks after closing the previously announced $26 billion merger with Coterra on May 7. The two companies hold highly complementary positions in the Permian’s Delaware Basin, and Devon is now expanding that footprint further by acquiring 16,300 net undeveloped acres in Lea and Eddy counties, New Mexico, for roughly $2.6 billion.
Instead of buying the acreage from another operator, Devon picked it up directly from the federal government through a Bureau of Land Management (BLM) Oil and Gas Lease Sale, paying about $161,500 per net acre.
Devon dominated the auction, accounting for roughly 65% of the nearly $4 billion in total bids during one of the strongest backdrops federal acreage has seen in years: $100+ WTI, tightening global inventories, and a market once again willing to pay up for long-duration Delaware Basin inventory. The sale also set a record for the highest bid for a single lease: Devon bid around $405.8 million for a single lease in Lea County, NM.
The acquisition is expected to add approximately 400 net drilling locations and extend Devon’s inventory runway. The company also highlighted favorable federal lease terms, including a 12.5% royalty rate, the ability to drill longer laterals, and lower development costs through co-development and multi-well pad development.
