NEW YORK (AP) — ConocoPhillips is buying shale producer Concho Resources in an all-stock deal valued at $9.7 billion making it a major presence in the Permian Basin, the top-producing oil field in the U.S.

The combined company, if approved, would be among the largest independent U.S. oil producers, with production of more than 1.5 million barrels of oil equivalent per day, a resource base of approximately 23 billion barrels of oil and an enterprise value of about $60 billion.

“Through this combination, we are joining a diversified energy company with even more scale and resources to create shareholder value in today’s markets and beyond,” said Tim Leach, chairman and CEO of Concho Resources, in a prepared statement. “Thanks to our team, Concho is one of the largest unconventional shale producers in the United States, with a high-quality asset base, a culture of operational excellence, safety and efficiency, and a strong balance sheet.”

The deal comes as many oil producers are struggling to make ends meet. Oil prices have remained low for months, mainly because efforts to contain the coronavirus halted most travel, obliterating demand for fuel. The price for a barrel of crude is down more than 30% since the start of the year, and it has been hovering around $40 a barrel, below what most producers in the U.S. need to break even. In this year's third quarter, 17 oil and gas producers filed for bankruptcy protection, which was a 21% increase compared to last year according to law firm Haynes and Boone.

The combination, which is expected to close in the first quarter of next year, could help the companies achieve $500 million in annual cost and capital savings by 2022. The companies did not say how the cost savings would be achieved, and did not immediately respond to a request for comment.

A tie-up was expected after rumors of talks began to surface. But analysts at CFRA were surprised that Concho's board agreed to the acquisition, said Stewart Glickman, energy equity analyst, in a note to investors. "(Concho) has the advantage of a large acreage position in the Permian Basin and has more time than most peers before significant long-term debt milestone payments arrive.”

The companies, both based in Texas, will combine their acreage across the Delaware and Midland basins — both part of the Permian — and also includes positions in the Eagle Ford and Bakken basins and the Montney in Canada. The Permian basin stretches from the northern reaches of Texas across the New Mexico border.

“Concho is a tremendous fit with ConocoPhillips," said CEO and Chairman Ryan Lance in a prepared statement.

Concho's common stock will be exchanged for 1.46 shares of ConocoPhillips. Shares of both companies rose slightly Monday.