HOUSTON -- Oilfield-services provider Baker Hughes (BHI) said it's talks with rival Halliburton (HAL) about a potential merger. 

The deal talk between the two Houston-based companies comes during a drop in oil prices that has hurt both companies' stock price.

Combined, Halliburton and Baker Hughes would be slightly larger by revenue than Schlumberger (SLB) , and hold an even larger advantage in North America, where hydraulic fracturing, or fracking, is a big business for the oilfield companies. 

A combination could give Halliburton and Baker Hughes more power to charge energy companies higher prices, particularly in North America. 

Baker Hughes shares closed up 15% at $58.75. They added another 3% in extended trading after the company confirmed the deal talks. Halliburton gained 56 cents, or about 1%, to close at $53.79 and tacked on another 68 cents in after-hours trading.

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