Executives from several U.S. shale producers and one non-operating mineral and royalties company outlined how they are positioning their portfolios, capital programs, and technology strategies amid a softer commodity backdrop during a conference panel focused on the “diversified shale E&P business model.” The discussion featured leaders from Coterra Energy (NYSE:CTRA), Devon, Ovintiv, and Northern Oil and Gas.
Diversification vs. pure play: how management teams frame the choice
Coterra CEO Shane (last name not provided in the transcript) argued the company’s diversified, “balanced” approach across oil and natural gas offers three main advantages: strategic flexibility, operational benefits from cross-basin learning, and more stable cash flows. He said diversification allows Coterra to shift capital between gas and oil inventory depending on relative commodity economics.
Financially, Shane said a balanced oil-and-gas portfolio can help stabilize cash flow and support capital returns. He highlighted Coterra’s dividend framework, noting that even in a softer oil environment the company has “two, three, 4x coverage” of its dividend relative to free cash flow, and described share repurchases as a “flywheel” over time.
Ovintiv’s Corey (last name not provided) said the pure-play versus diversified debate should be grounded in what a company is “really good at” and where it can maintain a differential advantage. He described Ovintiv’s portfolio transformation toward two core areas—the Montney and the Permian—emphasizing inventory depth and the ability to transfer operational improvements between basins, including automation, remote operations, and the use of AI. He also highlighted the company’s ability to apply completion advances such as Simul-Frac, Trimul-Frac, and continuous pumping across assets.
Ovintiv: narrowing to Montney and Permian, with divestiture work underway
Corey said Ovintiv is in the early stages of marketing its Mid-Continent assets, noting the company has selected advisors, contacted potential buyers, and is preparing a data room. He cautioned the near-term commodity backdrop could make the next few weeks “challenging” if buyers focus on the front of the curve, but emphasized the assets are long-dated producing properties, making longer-term oil price expectations important to valuation.
On the Montney, Corey said the company believes the market is increasingly appreciating the resource’s potential as infrastructure constraints ease. He called the Montney “largely undeveloped,” with improving “construction and egress” unlocking development. He said Ovintiv feels good about inventory duration following the NuVista acquisition and the prior year’s Paramount transaction, citing “15 to 20 years on the oil side.” He characterized the Montney liquids stream as predominantly condensate sold largely as diluent to oil sands producers, and said pricing is “pretty close to flat to WTI.”
Corey said near-term priorities include rapidly capturing synergies—he reiterated guidance of $100 million of annual synergies from the NuVista acquisition—and demonstrating operational performance in the basin to investors through site visits.
Northern Oil and Gas: integrated upstream and midstream deal in the Utica
Nick (last name not provided) said Northern Oil and Gas operates as a 100% non-operator and has increasingly partnered with operators over the past five years to acquire undivided interests alongside development agreements. He described the company’s recently announced transaction in the Utica as complex, involving a selling party made up of both an affiliated public upstream company and public midstream company, as well as a separate private-business acquisition occurring in parallel. Northern partnered as a 49% participant with another public company, and Nick said the transaction moved quickly once the broader deal process resolved.
Nick said Northern underwrites assets on an “8/8 basis,” evaluating them as if buying 100% and noting that development outcomes can vary depending on the operator even if producing volumes are comparable. He also emphasized what he described as a unique feature of the transaction: Northern is acquiring both upstream and midstream assets. He said full integration changes the cost structure materially compared with an upstream-only owner paying affiliated midstream fees, offering an example in which operating costs could fall from about $3 per Mcf to about $1.80 per Mcf when integrated.
Nick said the midstream system has significant capacity, noting it has about $500 million invested and that volumes had fallen from around 600 million cubic feet per day to about 150 million cubic feet per day. He said Northern expects to “almost triple” volumes over the next five years, positioning the assets as a volume and EBITDA growth engine with additional cost and performance upside.
Coterra: defending the Marcellus role and addressing Permian operational issues
Asked about investor calls to monetize its Marcellus position, Shane said the Marcellus has been an “excellent asset” that generates significant free cash flow at a low reinvestment rate, helping fund Permian growth over the past three-plus years. He described Northeast Pennsylvania as “top-tier rock,” and said portfolio construction at Coterra is anchored by owning top-tier assets, including both the Marcellus and the Delaware Basin.
On Permian operations, Shane discussed challenges in Culberson County during the second quarter tied to Harkey wells. He said the team adjusted the development plan by substituting Upper Wolfcamp wells for certain Harkey wells in the second half of the year, keeping full-year performance “flat” to guidance while the company diagnosed and remediated issues.
He broke the response into three areas:
- Windham row remediation: cement squeeze work to address water crossflow from an upper injection zone, with five net wells affected.
- In-flight Harkey wells: six Harkey wells completed in the third quarter performed “in line to better” than prior expectations.
- Ongoing program: a plan for 25 to 30 Harkey wells per year outside the row development, with management expressing confidence based on lessons learned.
Shane said the company still delivered the oil volumes it had “promised to deliver” for 2025 despite the mid-year disruption.
Devon: free cash flow focus and expanding use of AI
Devon’s Clay (last name not provided) said the company has been focused on a goal of achieving an incremental $1 billion of sustainable free cash flow by year-end, stating it was “over 60% there” and that he felt confident in meeting the target. Looking longer term, he said Devon’s portfolio is strong through the mid-decade, but stressed that the company should plan beyond five years, suggesting Devon’s business profile 15 years from now could look “entirely different” than today.
Clay also discussed Devon’s assessment of longer-term opportunities where its capabilities overlap with emerging businesses, referencing geothermal developer Fervo as an example. He said geothermal can share similarities with shale development—geology and geophysics, leasing, drilling and completing horizontal wells, and building surface facilities—while acknowledging Devon does not currently market electricity and would likely need partners.
On AI, Clay said Devon is using technology as a central enabler of its operational improvement program. He cited 80 value workstreams running in parallel and said “every single one” is enabled by AI in some way. He outlined three “waves” of AI adoption at Devon:
- Wave 1: making data more accessible, shifting engineers from spending most of their time finding data to spending most of their time analyzing it.
- Wave 2: integrating AI directly into workflows, with select groups already operating in this mode.
- Wave 3: rebuilding projects from the ground up with AI as the central design element, which Clay said Devon expects to have in “full-fledged” form by year-end.
The panel also touched on broader industry dynamics. Nick argued that current prices are below levels needed to sustain U.S. production over time, estimating a U.S. marginal cost of supply of $65 to $70 WTI, while Clay said his team has continued to improve well costs year over year in the “high single digits,” helping offset productivity maturation. Both framed the current environment as cyclical, with operators attempting to balance maturing inventories against operational and technological gains.
About Coterra Energy (NYSE:CTRA)
Coterra Energy (NYSE: CTRA) is an independent oil and natural gas exploration and production company focused on the development, production and optimization of onshore hydrocarbon resources in the United States. The company’s operations center on the exploration, drilling, completion and production of crude oil, natural gas and natural gas liquids (NGLs), with an emphasis on maximizing operational efficiency and capital discipline across its asset base.
Its business activities include identifying and developing resource-rich acreage, operating producing wells, managing reservoir performance and marketing produced hydrocarbons to a range of midstream and energy customers.
