(Bloomberg) — Pioneer Natural Resources Co., one the largest independent US oil producers, is considering an acquisition of Appalachian natural gas producer Range Resources Corp., according to people familiar with the the matter.

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Texas-based Pioneer is weighing a deal for its smaller US rival as it seeks further consolidation in the shale industry, the people said, asking not to be identified discussing confidential information.

Deliberations are ongoing and there’s no certainty the companies will reach an agreement, the people said.

Pioneer said in a statement that it “is not contemplating a significant business combination or other acquisition transaction.” A representative for Range couldn’t be reached for comment.

Range rose as much as 18% on Friday before closing 12% higher at $28.26 for the biggest one-day jump since May, boosting the company’s market value to $6.8 billion. Pioneer shares fell 4.1% to $196.57 in New York trading, giving the company a market value of $46 billion.

Strategic Shift

Buying Range would mark a major strategic shift for Pioneer by bringing it into the Marcellus shale basin in southwest Appalachia, where the key resource is gas, not oil. Pioneer already produces gas in the Permian Basin in West Texas, but only as a byproduct from its oil wells.

Pioneer’s Chief Executive Officer Scott Sheffield has a reputation for dealmaking, with acquisitions of Parsley Energy and DoublePoint Energy since 2020. Both deals expanded Pioneer’s acreage in its core Midland Basin asset.

The US shale sector is poised for a big return to dealmaking this year as some of the largest oil companies look for ways to deploy cash, according to a McKinsey & Co. report Friday.

Share Gains

Shares of other Appalachian-focused gas producers also climbed Friday. EQT Corp. rose 6.9%, while Coterra Energy Inc. gained 3.6% and Antero Resources Corp. advanced 8.1%.

US natural gas futures had spiked even before Russia’s invasion of Ukraine one year ago, amid uncertainty over global supplies. But in the past two months they have plunged by more than half during an unusually mild winter in the US, which has meant weaker-than-expected demand for the fuel.

–With assistance from Kevin Crowley and Mitchell Ferman.

(Updates with Pioneer statement in fourth paragraph)

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