Devon Energy Corp. and WPX Energy Inc. are in talks to combine, according to people familiar with the matter, in a move that could help the energy companies weather a prolonged industry slump.

The companies are discussing an all-stock deal that would create an entity with a combined current market value of about $6 billion. An agreement could be completed as soon as Monday, assuming the talks don’t fall apart, the people said. Devon
DVN,
-1.56%

has a market value of roughly $3.4 billion, while WPX’s
WPX,
+0.68%

is about $2.5 billion.

American shale drillers, which had helped make the U.S. the world’s top oil producer, have been hammered by the drop in demand caused by the pandemic. Companies have sharply cut drilling budgets and pulled back on growth as they seek to conserve cash during the downturn. Still, U.S. benchmark oil prices are hovering around $40, a level at which most cannot produce profitably, and many weaker companies are threatened with bankruptcy if the slump persists.

In a sign of the devastation, Devon’s shares have dropped about 64% in the past year, while WPX’s fell by around 57%. The declines are steeper than those of many of the companies’ larger rivals and compare to a roughly 53% decline in a broad index of U.S. oil-and-gas companies. Devon’s market value is a shadow of what it once was. At its peak in 2008, the company was worth more than $50 billion. WPX was worth more than $8 billion at its peak just two years ago.

Small and midsize oil-and-gas companies have performed poorly in recent years and already faced pressure from investors to deliver more consistent profits and cash flow. One way to do that is to combine forces to achieve economies of scale and reduce administrative costs.

An expanded version of this report appears on WSJ.com.

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