US oil and gas producer, Devon Energy Corporation, will buy shale-oil rival WPX Energy for an estimated $2.56 billion as it looks to cement its position in the top US oilfield, according to Reuters.

The deal, which comes after a tough week for crude prices amid the COVID-19 pandemic, is expected to close in Q1 2021 and help cut costs and increase annual cash flow by $575 million in Q4 2021.

Rick Muncrief, chief executive of WPX, told Reuters, “This cycle was driven by COVID, but you never know when the next cycle will happen, so we’re building a combined company that has the capabilities to withstand all the headwinds but can really prosper in better times.” 

The deal structures the combined company, with Devon owning 57% stake, to hold 400,000 net acres in the Delaware Basin of West Texas and southern New Mexico, and produce 277,000 barrels of oil per day (bbl/d).

This news was greeted by investors with WPX shares up 16.4% at $5.17, while Devon rose 11.1% to $9.80.

This is the second major merger to take place within the fracking industry. In July, Chevron Corp agreed to buy Noble Energy Inc for $5 billion in stock and the assumption of debt.