Stone Ridge reportedly offering $8bn for Devon’s Marcellus assets

Alternative asset manager Stone Ridge Asset ‌Management has reportedly offered to buy Devon Energy’s Marcellus shale assets for roughly $8bn. Citing four sources familiar with the matter, Reuters reported on May 29 that the proposal comes as Devon is reviewing its business after closing its merger with Coterra Energy earlier in May.

The Marcellus assets previously belonged to Coterra and cover 190,000 net acres (769square km) in Pennsylvania. According to the sources, Devon has not yet made any decisions on the future of these shale gas assets. However, the combined company’s operations in the wake of the merger centre on the Permian Basin’s Delaware sub-basin. Indeed, following the closing of the merger, Devon acquired further Delaware Basin acreage in a federal onshore lease sale in late May for around $2.6bn. Against this backdrop, it may be unsurprising that potential buyers are eyeing its other assets.

According to Reuters’ sources, Stone Ridge submitted its Marcellus offer as a way to initiate conversations about a deal with Devon. However, they added that there was no guarantee that the offer would lead to a sale, or even a consideration of a sale by Devon.

The sources also said that Stone Ridge’s proposal included the use of the largest asset-backed securitisation (ABS) ever in the US oil and gas industry. They reportedly declined to provide further details on the actual size of a financing.

ABS financing entails pledging future revenue from oil and gas production as collateral to lower borrowing costs. Historically, the use of such financing structures has been rare in the oil and gas industry but in has been gaining traction in the last couple of years, especially in order to help fund purchases of mature assets with established production.

Reuters noted that Stone Ridge has been among ‌the most ⁠active users of ABS funding buyers to acquire oil and gas assets. Indeed, two sources told the news service that this included the acquisition of Ovintiv's Oklahoma assets in April by Stone Ridge in partnership with Flywheel Energy for $3bn. Some of Reuters’ sources added that Stone Ridge could also partner on a possible acquisition of Devon's Marcellus assets with another party – particularly one that would be more suited to operating the undeveloped portion of the acreage.

Devon is expected to produce around 1.6mn barrels of oil equivalent per day (boepd) in 2026 following the merger with Coterra. The Marcellus would account for around 20% of this if the company retains those assets.