Diversified Energy Co. is in advanced talks to acquire Elliott-backed oil and gas company Birch Resources for more than $1.7 billion in cash, according to people familiar with the matter. A deal for Birch, which operates in the Permian Basin—the largest oilfield in the US—could be announced in the coming weeks. The people asked not to be identified because the details are not yet public.

Diversified Energy is poised to emerge as the winner in a competitive sale process. The acquisition would give the buyer a significant foothold in the Permian Basin, a key producing region. The deal underscores the ongoing consolidation in the energy sector as companies seek to scale up in prized assets.