Activist investment firm Toms Capital Management, which manages just over $4 billion in assets, has urged Devon Energy to explore strategic alternatives, including a potential sale. A letter viewed by CNBC reveals Toms has become one of Devon’s top five shareholders, increasing pressure on the oil and gas producer to reassess its post-merger strategy.
The activist campaign follows Devon’s May merger with Coterra Energy, which significantly expanded its presence in the Delaware Basin of the Permian and added exposure to the Marcellus, Eagle Ford, and Powder River basins. Toms argues this expanded portfolio has created excessive complexity and contributed to a valuation discount of at least one multiple point compared to peers. According to the letter, Devon trades at roughly 4.5 times estimated 2027 EBITDA.
Toms had previously urged Devon to streamline its portfolio but now calls for the company to consider broader strategic transactions, including a sale. The fund suggests a strategic buyer could acquire Devon and later divest individual assets, potentially shifting execution risks from Devon shareholders.
The activist campaign also involves prominent litigator Alex Spiro. Separately, Devon investor Kimmeridge has pressed the company to simplify its asset portfolio and clarify strategy post-merger. Devon has not publicly responded to the letter.
A potential sale could draw interest in Devon’s core Delaware Basin assets; however, the CNBC report notes that volatile oil prices might complicate negotiations for a major transaction. Devon shares rose about 3% on Wednesday, extending their 2026 advance to over 31% as investors weighed the possibility of strategic changes.
