ExxonMobil (XOM 0.87%) recently agreed to acquire Pioneer Natural Resources in a $60 billion megadeal that will reshape the U.S. oil and gas industry. The merger will create the largest producer in the prolific Permian Basin. That greater scale will help Exxon save money in the long run and enhance its investment returns.

Many expect the deal will spark a wave of mergers in the oil patch. It's already leading several oil companies to consider following in Exxon's footsteps and making an acquisition, including Devon Energy (DVN 3.19%). Here's a look at the companies Devon is mulling over and how a deal could reshape the oil specialist.

Building a leading multibasin producer one deal at a time

Devon Energy is no stranger to acquisitions. In 2021, it closed a $12 billion all-stock merger-of-equals transaction with WPX Energy to create a leading multibasin U.S. producer. That larger scale would enhance its returns and cash flow. The transaction also led Devon to launch the oil industry's first fixed-plus-variable dividend framework to return more of the combined company's oil-fueled cash flows to shareholders. 

Devon continued to increase its scale last year, closing a couple of smaller bolt-on deals. It acquired the leasehold interests and related assets of RimRock Oil & Gas in the Williston Basin for $865 million. It also bought Eagle Ford operator Validus Energy in a $1.8 billion all-cash deal. Those transactions increased its scale in two operating areas, enhancing its cash flow and returns. 

On the hunt for its next deal

Devon is reportedly already looking for its next deal, and it has set its sights high. According to Bloomberg, the company has held preliminary merger talks with Marathon Oil (MRO 2.04%). It has also looked at privately held CrownRock. 

Buying up Marathon Oil would create a big splash. The oil company has a $23 billion enterprise value (EV) compared to Devon's $38 billion EV. Like Devon Energy, it's a multibasin producer. Marathon operates in the Permian, Eagle Ford, Williston, and Anadarko Basins, all areas where Devon operates. In addition, Marathon has some international exposure, with operations in Equatorial Guinea. A merger with Marathon could enable Devon to significantly enhance its scale across several of its core basins, increasing its cash flow and returns.

Meanwhile, a deal with CrownRock would be all about the Permian. The company holds a large position in the region. According to reports, it's seeking more than $10 billion in a sale. An acquisition of CrownRock would enable Devon to significantly enhance its scale in that key oil basin to better compete with larger rivals like Exxon. 

What a megamerger could mean for Devon

Another significant merger would transform Devon Energy into an even larger-scale oil and gas producer. That increased scale would enable the company to potentially capture significant merger synergies and cost savings to enhance its investment returns and free cash flow. It could use its increased free cash flow to return even more money to shareholders via its variable dividend framework.

However, it's also possible that Devon could scrap that plan and opt for a more traditional fixed-dividend policy complemented by share repurchases. That's the framework used by ExxonMobil, which is acquiring Pioneer, a company that had followed Devon's blueprint by launching a similar fixed-plus-variable dividend framework. While Devon's policy was initially popular with investors, its share price has fallen with its dividend over the past year. A merger could lead the company to reset its capital return strategy. Given its lower share price and the likelihood it would issue a lot of shares to complete a major deal, it could shift its focus to share repurchases.

A potentially major change could be ahead

Devon Energy is looking to follow Exxon's lead and make a major acquisition to increase its scale. A potential deal could significantly enhance its free cash flow as the combined company captures merger synergies. That would give Devon more money to potentially return to shareholders in the future. However, it might not come via the dividend. That potential change makes this storyline an interesting one for income-focused investors to watch.