Devon Energy's board on Thursday authorized an $8 billion repurchase program, a decision announced after the company completed its $58 billion all-stock merger with Coterra Energy earlier the same day. The board also approved a boosted quarterly dividend, and management signaled an active approach to deploying the new capital-return measures.
The repurchase authorization equates to nearly 15% of the combined market capitalization of Devon and Coterra. The company specified that the share buyback authorization will remain in place until June 30, 2029.
In addition to the share repurchase plan, Devon approved a quarterly dividend of $0.320 per share, a 33% increase relative to the prior quarter's distribution. Following the announcements, Devon Energy shares traded higher in after-hours trading, up 1.4%.
The board's actions come about a week after activist investor Kimmeridge urged changes designed to raise shareholder returns. Kimmeridge had asked Devon’s incoming board to move quickly on several fronts once the merger with Coterra closed, specifically recommending the pursuit of asset sales, improvements to capital allocation, and revisions to executive compensation to enhance returns for shareholders.
Devon’s chief executive, Clay Gaspar, said the company would be "active and opportunistic" in carrying out the buyback program, indicating management intends to use discretion on timing and scale as market conditions and company circumstances dictate.
Context and timeline
- The all-stock merger with Coterra closed earlier on Thursday.
- The $8 billion repurchase equals nearly 15% of the merged company's market capitalization.
- The buyback authorization expires on June 30, 2029.
- The quarterly dividend was raised to $0.320 per share, a 33% increase over the prior quarter.
This package of shareholder-return measures - a substantial buyback plus a materially increased quarterly dividend - follows direct pressure from an activist investor and comes immediately after a major corporate combination. Management’s stated intent to act opportunistically on repurchases highlights a flexible approach to executing the program within the prescribed authorization window.