Two Colorado oil and gas companies Monday announced a merger that will create one of the biggest players in the state’s Denver-Julesberg (DJ) Basin.

Bonanza Creek Energy Inc. (NYSE: BCEI) and Extraction Oil & Gas Inc. (NASDAQ: XOG) will create new company Civitas Resources Inc. with an “all-stock merger of equals.”

The two companies have projected operating Civitas will save $25 million in expenses and capital spending annually. The new company will operate across 425,000 net acres with an expected production base of 117 thousand barrels of oil equivalent per day. Officials said “Civitas is projected to be one of the most well-capitalized companies in the industry.”

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“Successful E&P (exploration and production) operators will be those who place a priority on disciplined capital deployment, deliver operational and cost excellence, maintain a relentless focus on shareholder value, and have governance standards that are aligned with the times,” said Eric Greager, president and CEO of Bonanza Creek, in a statement. “Bonanza Creek and Extraction each bring a demonstrated commitment to these principles, as well as shared organizational and community values. Together, as Civitas, we will embody an E&P business model ideally suited to deliver for all of our stakeholders.”

Graegar will serve as Civitas’ president and CEO. Current Extraction Chairman Ben Dell will be chairman of the new board. The new company is valued at $2.6 billion, and the deal is expected to be finalized in Q3.

“We believe the combination of Bonanza Creek and Extraction will create one of the most durable, profitable, and progressive producers in the DJ Basin, with premium assets at the front end of the cost curve,” said Tom Tyree, Extraction CEO, in a statement. “Collectively, we will create significant value for all stakeholders as we will become Colorado’s first net-zero oil and gas producer through the continuing reduction in operational emissions coupled with a multi-year investment in certified emissions offsets.”

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Those “Colorado’s first net-zero oil and gas producer” plans include: “continuing reduction in operational emissions coupled with a multi-year investment in certified emissions offsets,” as well as greater use of electric vehicles for the company’s fleet and building EV charging stations in the communities where it operates.

Extraction emerged from Chapter 11 bankruptcy reorganization in 2020.