ConocoPhillips Co. agreed to acquire Permian Basin shale producer Concho Resources Inc. on Oct. 19 in an all-stock transaction valued at $9.7 billion.

The announcement confirmed reports made roughly a week ago of a potential deal and also continues a wave of consolidation across the E&P space, which has largely been shunned by investors due to the sector’s reputation of generating poor returns. The trend is expected to continue as many believe it signals a path forward for the troubled U.S. shale patch.

“The leadership and boards of both companies believe today’s transaction is an affirmation of our commitment to lead a structural change for our vital industry,” ConocoPhillips chairman and CEO Ryan Lance said in a statement on Oct. 19.

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