(Reuters) - Private Canadian oil and gas producer Strathcona Resources is in advanced talks to buy rival Caltex Resources for around C$700 million ($552.97 million), adding to its enhanced oil recovery portfolio in Saskatchewan, four sources familiar with the discussions told Reuters. Caltex attracted interest from at least half a dozen public and private oil companies after the Calgary-based firm hired an investment bank to run a sale process earlier this year, one of the sources said. Caltex deploys enhanced oil recovery (EOR), a method of production that injects polymers or carbon into the ground to extract hard-to-reach oil, extending the lifespan of oilfields. Canadian EOR companies say the technology required for such projects is expensive and they do not qualify for carbon capture tax credits, as in the United States, placing them at a disadvantage.Deal talks could still fall apart, cautioned the sources, who requested anonymity as the discussions are confidential. Caltex, Strathcona and its owner Waterous Energy Fund did not respond to requests for comment. Oil and gas operators across North America have embarked on a wave of consolidation this year, hoping to scale up and cut costs to capitalize on rising oil prices after COVID-19 lockdowns last year shrank demand. Tourmaline Oil Corp bought Montney shale-focused Black Swan Energy Ltd in June, while Whitecap Resources Inc purchased Quantum Energy Partners-backed Kicking Horse Oil & Gas Ltd in April. Strathcona was formed last year by the merger of two Waterous-backed companies, Strath and Cona. While several private equity firms have also sought to exit their investments to capitalize on the rebound, Waterous Energy Fund has been among the most active buyers in the Canadian oil patch.It spent C$1.6 billion on nine deals since 2017, according to a Fitch Ratings report published in July, including a controlling stake in Osum Oil Sands in March which it merged into Strathcona three months later. A person familiar with privately owned Caltex’s operations said the company’s output totals around 12,000 barrels of oil equivalent per day, a fraction of Strathcona’s output. Caltex has two facilities: Druid, which produces heavy oil near Kerrobert, Saskatchewan, and Greater Bodo, a polymer-based EOR site that produces crude along the Alberta-Saskatchewan boundary. Strathcona, which produces 80,000 barrels of oil equivalent per day, also deploys enhanced oil recovery in Saskatchewan. ($1 = 1.2659 Canadian dollars)