SM Energy Company (NYSE:SM) is in advanced talks to acquire XCL Resources, LLC, a top oil and gas producer in Utah, according to people familiar with the matter. SM could announce a deal with XCL backers including EnCap Investments L.P. in the coming days, said the people, who asked to not be identified because the details aren?t public. The deal would value XCL at about $3 billion, according to one of the people.

No final decision has been made, and its backers could opt to hold onto XCL or choose another buyer, the people said. Representatives for SM, XCL and EnCap didn?t immediately respond to requests for comment. The deal comes amid a flurry of mergers and acquisitions in oil and gas, as cash-flush operators strike deals to scale up and refresh their drilling inventory.

Buying XCL would extend SM?s reach into the Uinta Basin, an up-and-coming oil and gas field that produces a waxy kind of oil that?s used to make lubricants.