11:23 AM EST, 02/03/2026 (MT Newswires) -- Devon Energy ( DVN ) and Coterra (CTRA) merger will form one of the largest exploration and production companies and the combination is positive for shareholders, due to the scale, inventory duration and strong free cash flow outlook, RBC Capital Markets said Monday in a report.

The investment firm expects a mid-year 2026 merger closing and assumes closing and severance costs of $300 million to $400 million that will impact cash flow estimates into early 2027. RBC models 2027 FCF yield at 11%, putting it at the upper-end of large cap peers.

Following the merger, Devon's inventory duration is likely to improve and more than 4,600 drilling locations offer a 12-year maintenance case runway. Another notable upside is the $1 billion synergy target across capital, general and administrative expenses, and operations, according to the brokerage.

Asset sales remain in focus and RBC believes Coterra's Marcellus gas asset could draw some interest and is valued at about $5 billion.

RBC raised its price target on Devon to $46 from $42, with a sector perform rating.

Shares of Devon rose nearly 1% while Coterra added 1.5% in recent Tuesday trading.

Price: 40.51, Change: +0.36, Percent Change: +0.90