Devon Energy Corporation (NYSE: DVN) started Monday’s session with a strong performance as its stock price rally by more than 5%. The company’s strong performance has highlighted the positive sentiments of investors after the company has announced that it is planning to buy WPX Energy Inc. for $2.56 billion as it is trying to boost its presence in the Delaware portion of the prolific shale field.

The merged company which will be named Devon Energy will get benefits from improved scale, enhanced margins, higher free cash flow, and the financial strength to speed up the return of cash to shareholders through an industry-first “fixed plus variable” dividend strategy. The transaction is anticipated to close in the first quarter of 2021. Both the company’s boards of directors have unanimously approved the decisions.

As per the agreement, all the shareholders of WPX will get the equal exchange ratio of 0.5165 shares of Devon common stock for each share of WPX common stock owned. After the execution of transactions, WPX shareholders will own 43 percent of the combined company on a fully diluted basis while Devon shareholders will own approximately 57 percent of the combined company.

Devon Energy Corporation (NYSE: DVN) shares were trading up 5.27% at $9.29 at the time of writing on Monday. Devon Energy Corporation (DVN) share price went from a low point around $4.60 to briefly over $26.42 in the past 52 weeks, though shares have since pulled back to $9.29. It has moved up 101.75% from its 52-weeks low and moved down -64.86% from its 52-weeks high. Devon Energy Corporation’s market cap has remained high, hitting $3.43 billion at the time of writing.

The merger agreement will speed up Devon’s transition to a business model that prioritizes free cash flow generation overproduction growth. The merger agreement will maintain a strong balance sheet and liquidity of the company. This agreement will create one of the largest oil producers in the US and it also increases the scale and diversification.