Citi explores who Devon may buy following Marathon Oil takeout

Citi says who could Devon Energy (DVN) look to acquire now has been a common question following ConocoPhillips’ (COP) offer to buy Marathon Oil (MRO). Citi examined potential candidates for larger deals within its coverage, namely Coterra Energy (CTRA), Ovintiv (OVV) and Permian Resources (PR). Coterra would likely require a merger-of-equals deal for Devon given Coterra’s modest premium on consensus 2025 cash flow, Ovintiv offers the best inventory count expansion via its Montney position and best cash flow accretion, and Permian offers cash flow accretion even with a modest premium but acreage adjacency is limited, and inventory life is similar to that of Devon, the analyst tells investors in a research note. Thus, Citi sees Ovintiv as the most likely target amongst these three, but also see all three as lower probability targets for Devon. It appears more likely that Devon looks outside Citi’s coverage and/or to privates if it is going to execute on a deal, contends the firm.