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U.S. oil producers Devon Energy (NYSE: $DVN ) and Coterra Energy (NYSE: $CTRA ) have announced that they are merging in a $58 billion U.S. all-stock deal.

Should the merger be approved by regulators and finalized, it will create a company with one of the biggest positions in the Permian Basin of Texas.

In a news release, the two companies said they are merging to cut costs and increase scale.

This is the latest in a series of mergers within the U.S. energy sector, and the largest deal since Diamondback's (FANG) $26 billion U.S. acquisition of Endeavor Energy Resources in 2024.

Analysts say oil producers in the U.S. continue to pursue size advantages that include lower per‑barrel costs in maturing basins such as Permian and Anadarko.

Under the proposed deal, stockholders will receive 0.70 Devon Energy shares for each share already held. Devon will own roughly 54% of the merged company.

Devon and Coterra each operate in several major U.S. shale formations, with overlapping positions in the Delaware portion of the Permian Basin in Texas and New Mexico.

The companies also each have operations in Oklahoma's Anadarko Basin.

The combined companies will produce more than 1.6 million barrels of crude oil per day, as well as 4.3 billion cubic feet of natural gas.

The merger is expected to close in the second quarter of this year, after which the combined company will retain the name Devon and be based in Houston, Texas.

Devon Energy's Chief Executive Officer (CEO) Clay Gaspar will lead the merged company, while Coterra's CEO Tom Jorden will become non-executive chairman of the board.

DVN stock has risen 19% in the last year to trade at $40.21 U.S. per share. CTRA stock has gained 3% in the past 12 months to trade at $28.85 U.S. a share.