Kimmeridge, a private investment firm focused on the energy sector, released an open letter to Devon Energy's (NYSE: DVN) future board ahead of the expected May 4, 2026 closing of Devon's merger with Coterra (CTRA).

The letter calls for immediate action on strategic direction, capital allocation, and performance metrics following the merger completion. Kimmeridge, which describes itself as a long-term Devon shareholder, supports the merger's strategic rationale but warns against post-merger inertia.

"The merger of Devon and Coterra represents a compelling strategic combination that brings together high-quality assets, operational scale and the potential for durable free cash flow," said Mark Viviano, Managing Partner at Kimmeridge. "The combined company has a clear opportunity to close an unwarranted valuation gap, provided it acts decisively from day one."

The firm advocates for an accelerated program of non-core asset divestitures to create a streamlined portfolio focused on high-margin assets, particularly Devon's Delaware Basin positions. Kimmeridge argues that Devon's current valuation reflects a conglomerate discount due to unclear capital allocation priorities and non-core assets.

The letter also addresses executive compensation structure, recommending 100% performance-based long-term incentives. Kimmeridge notes that under Devon's existing plan, only 60% of long-term incentives are performance-based, citing that 2022 performance units paid out at 75% of target despite Devon achieving eighth-highest total shareholder return among a twelve-company peer group.

Founded in 2012, Kimmeridge is an alternative asset manager that launched public engagement in 2020 to reform the public exploration and production sector. The firm states its platform has outperformed the S&P 500 and relevant indices by 2x on an annualized basis since inception.