NEW YORK (AP) ― In a deal that shows just how quickly falling prices can upend the energy industry, Halliburton is buying rival oilfield services company Baker Hughes for cash and stock worth $34.6 billion.

Global oil prices have tumbled 31 percent over the past five months to levels not seen in four years. That has forced the industry to cut costs by delaying or scaling back drilling ― which means less work for Halliburton and Baker Hughes, companies that manage oil and gas fields for energy companies.

Even when prices were high, oil and gas companies had begun to slow capital spending and new drilling as rising costs cut into profit margins. Energy companies now have even less to spend.

Halliburton Chairman and CEO Dave Lesar said Monday that the combined company will be able to reduce costs by $2 billion a year.

The oil plunge also lowered the price tag on Baker Hughes. Baker Hughes shares slumped 32 percent ― from $75 to $51 ― between late June and Thursday, when the companies said a deal was being discussed. The drop reduced Baker Hughes’ market capitalization by $10.4 billion.

Halliburton will pay $78.62 per Baker Hughes Inc. share. Baker Hughes shareholders will receive 1.12 Halliburton shares plus $19 in cash for each share they own.

Baker Hughes shares gained $5.34, or 9 percent, to $65.32. Shares of Halliburton fell $5.85, or 10.6 percent, to close at $49.23.

When the transaction is complete, Baker Hughes stockholders will own approximately 36 percent of the combined company.

More energy deals may be in the works as companies with stronger balance sheets buy those that have seen their value drop precipitously.

In a recent conference call with investors, ExxonMobil hinted that it may be a good time to use its considerable cash position to buy undervalued assets.

Kurt Hallead, an analyst at RBC Capital Markets, says conglomerates General Electric and Siemens, which have been beefing up their oil and gas services divisions, could look to expand further now that potential targets have gotten cheaper.

The Halliburton-Baker Hughes deal comes just days after talks between the two had stalled. Baker Hughes said Friday that Halliburton refused to raise its first and only offer and Halliburton was preparing to attempt a hostile takeover.

The combined company would generate slightly larger revenue than Schlumberger Ltd., now the world’s biggest oil services company.