Executives from Coterra, Devon Energy (NYSE:DVN), Ovintiv and Northern Oil and Gas discussed the merits of diversified shale portfolios, recent capital and operational initiatives, and the current commodity price environment during a conference panel in Florida.
Diversification vs. concentration: a portfolio debate
Coterra leadership framed diversification as a “balanced business model” across commodities and basins, describing three main benefits: strategic capital allocation flexibility, operational learning transfer, and greater financial stability. The company said having both oil and gas exposure allows it to pivot capital as relative commodity pricing changes and provides steadier cash flows that support return-of-capital priorities such as dividends and share repurchases.
Ovintiv described a different path: narrowing the company’s footprint to two core areas—the Montney and the Permian—after a multi-year portfolio transformation. Management said the focus was driven by where Ovintiv believes it has enduring inventory runway and operational advantage, emphasizing that the “right strategy” depends on what a company is good at and how it can sustain returns over a long period of time. Ovintiv also pointed to cross-basin learning between the Montney and Permian, including remote operations and automation initiatives in Canada and advances in completion approaches such as simul-frac and trimul-frac.
Ovintiv on asset monetization and the Montney buildout
Ovintiv said it has begun early-stage work on a potential divestiture process for its Mid-Continent/Anadarko assets, including selecting advisors, engaging potential buyers, and preparing a data room. Management noted that the macro backdrop could make near-term dealmaking challenging, but characterized the assets as long-dated PDP, making longer-term oil views relevant to valuation, not just near-term pricing on the strip.
On the Montney, Ovintiv said it continues to see significant remaining resource and improving development potential as basin egress and infrastructure expand. The company discussed recent acquisitions, including NuVista and Paramount, and said it believes it has 15 to 20 years of inventory on the oil side. Management emphasized the asset’s condensate exposure, describing condensate as sold largely as diluent for oil sands producers and priced “pretty close to flat to WTI.” Ovintiv also reiterated a target of $100 million in annual synergies from the NuVista acquisition and said executing those synergies quickly is a near-term focus.
Northern Oil and Gas outlines Utica deal economics
Northern Oil and Gas described itself as a 100% non-operator that increasingly partners with operating companies to acquire undivided interests paired with development agreements. The company said its recently announced Utica transaction was complex, involving a seller made up of both a public upstream company and an affiliated public midstream company, as well as a broader transaction involving another acquisition.
Northern said a key element of the deal is buying both upstream and midstream assets, which it expects to change the cost structure materially compared with a standalone upstream operator paying a third-party or affiliated midstream provider. The company gave an example, stating that a field’s operating cost could decline from roughly $3 per Mcf to about $1.80 per Mcf when fully integrated. It also said volumes in a midstream system with roughly $500 million invested have fallen from about 600 million per day to around 150 million per day, and the company expects to be able to increase volumes by nearly three times over the next five years, positioning the asset as a volume and free-cash-flow growth engine.
Devon’s free cash flow target, long-term outlook, and AI focus
Devon emphasized a company-wide focus on “sustainable free cash flow,” centered on a goal to deliver an incremental $1 billion of sustainable free cash flow by the end of the year. Management said the company is more than 60% of the way toward that target and expressed confidence in achieving it.
Looking longer-term, Devon suggested the company could look different in 10 to 15 years and said it is evaluating opportunities that overlap with its existing capabilities. Management discussed geothermal as an example, noting that while Devon does not currently market electricity, geothermal could align with core competencies such as geology and geophysics, leasing, horizontal drilling and completions, and surface facilities development, potentially supplemented through partnerships.
Devon also highlighted AI as a key enabler of its free cash flow initiative. Management said the company is running 80 value workstreams in parallel and stated that each is enabled by AI in some form. It described three “waves” of AI adoption: improving data accessibility, embedding AI into workflows, and redesigning processes from the ground up with technology at the center.
Operational updates: Coterra’s Marcellus and Permian performance
Coterra addressed questions about potentially monetizing its Marcellus position, describing the asset as a strong fit that generates significant free cash flow at a low reinvestment rate and has helped fund growth in the Permian. The company characterized Northeast Pennsylvania and the Delaware Basin as “top-tier rock” and said the Marcellus remains a core component of its portfolio approach.
In the Permian, Coterra discussed water-related challenges in Culberson County in the second quarter. Management said the team adjusted the development plan by substituting certain wells in the second half of the year to keep the full-year outlook in line with guidance while diagnosing and remediating issues. The company described remedial work including cement squeeze jobs to address crossflow, noted the affected area involved five net wells, and said subsequent wells performed in line with or better than prior expectations. Coterra added it expects to run a plan of 25 to 30 wells per year outside of the specific development row discussed.
The panel concluded with a broader discussion of supply economics and shale maturity. Northern Oil and Gas said it views marginal U.S. oil supply cost at roughly $65 to $70 WTI and argued that prices below that level are unlikely to sustain U.S. production indefinitely. Devon offered a more optimistic view on recent capital efficiency, citing continued improvements in well costs in recent years that have, in its view, more than offset maturing productivity trends.
About Devon Energy (NYSE:DVN)
Devon Energy Corporation (NYSE: DVN) is an independent oil and gas exploration and production company headquartered in Oklahoma City, Oklahoma. The company focuses on the exploration, development, production and marketing of hydrocarbons, including crude oil, natural gas liquids (NGLs) and natural gas. Devon operates as an upstream energy company that acquires, evaluates and develops onshore resource plays using a combination of drilling, completion and production optimization techniques.
Core business activities include identifying and developing energy reserves, operating well programs and managing reservoir performance to generate production and cash flow.
