When the Buyer Becomes the Bid:
The Letter to Devon, Decoded
By Mary Holcomb, Senior Content Strategist & Writer, EAG Inc.
For more than fifty years, Devon Energy has been a company that buys, not a company that gets bought. That’s what makes last week’s news land differently than a typical activist letter.
“It’s a bit ironic,” says EAG CEO Elizabeth Gerbel. “Devon has been a consolidator itself, buying up assets and companies for decades. And now an activist is arguing the resulting organization is too complex, and Devon should be consolidated into a larger company.”
Toms Capital Management, one of Devon’s top-five shareholders, is publicly pressing the company to explore a sale. Kimmeridge has been pushing for a non-strategic asset sale plan for months. And the company facing that pressure is the same one that spent decades on the other side of these deals, absorbing WPX Energy, and more recently Coterra Energy.
Alongside peers like Chesapeake Energy (now Expand Energy), XTO Energy (now part of ExxonMobil), and Range Resources, Devon helped write the modern shale playbook.
The case against Devon centers on scale. Its $58 billion all-stock merger with Coterra closed in May 2026, pushing the company across six basins with a mixed oil-and-gas footprint.
“That just makes it harder for investors to value the new company,” Gerbel says, noting that a focused operator like Diamondback Energy typically commands a better multiple. But she’s careful not to hand complexity the whole blame.
“I think complexity is part of the story, but not the whole story,” she says. The market is also pricing in execution risk, waiting to see whether the savings promised at the time of the merger actually materialize.
That distinction matters, because it shapes which fix actually works. Kimmeridge wants Devon to streamline through asset sales. Toms Capital has advocated for a full sale of the company. Gerbel comes down clearly on one side.
“I really think the asset sales will, over time, create more value, if Devon can get the right price for those assets,” she says.
Her reasoning is arithmetic: sell non-core assets at five-and-a-half to six times cash flow, buy back stock at four-and-a-half, and “you’re creating value with every deal that happens.”
If it does come to a full sale, she sees two real buyers.
“ExxonMobil has the biggest checkbook,” she says, pointing to ExxonMobil’s acreage sitting right next to Devon’s in the Delaware Basin. But she’s just as quick to note that money and fit aren’t the same thing. ConocoPhillips, she says, may be the better strategic match, though she’s not sure if absorbing Devon is the best strategy for ConocoPhillips after recently absorbing Marathon.
The bigger lesson, in her view, isn’t really about who buys Devon. It’s about what happens when a company goes quiet on its own story for too long.
“I read the letter less as sell tomorrow, and more as a mechanism to encourage management to lay out a timeline,” she says.
Devon’s next real chance to answer is its third-quarter earnings call slated for November 2026. Lay out a real plan there, Gerbel says, and the pressure likely eases. Stay vague, and expect louder letters next.
The Bigger Picture
Devon isn’t the first company to run into this exact tension. Elliott Management ran a nearly identical playbook at bp, building a roughly $3.8 billion stake and pushing for a back-to-basics simplification that’s since helped drive a real share-price recovery.
In 2019, the same fund pushed Marathon Petroleum to break itself into three pieces, and within five weeks, Marathon had already announced a spinoff.
Grow big enough through acquisition, and the burden shifts, fast, from “did we do the deal” to “can we prove the deal was worth it.” Investors don’t give a new, larger company an indefinite grace period to sort itself out.
They watch for the specific things that were promised at signing: the cost savings, the operational synergies, the cleaner balance sheet, and they start asking pointed questions the moment those things go quiet.
That’s really what’s happening to Devon right now. Not a company in crisis, but a company that grew quickly and hasn’t yet closed the gap between what the Coterra merger promised and what the market can currently see.
Gerbel’s read on the letter reflects that directly: it isn’t a demand to sell by tomorrow, it’s a demand for transparency, and the results that should follow from a real plan.
Silence doesn’t read as confidence to the market. It reads as an absence of a plan, whether or not one actually exists.