(Reuters) – Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) are flush with cash yet their acquisition targets are taking stock as the only form of payment, an arrangement that allows the two largest U.S. energy companies to clinch transformative deals despite volatile oil and gas prices.

Chevron said on Monday it would acquire Hess (NYSE:HES) in a $53 billion all-stock deal, less than two weeks after Exxon said it would buy Pioneer Natural Resources (NYSE:PXD) for $59.5 billion in stock.

The moves followed similar, smaller all-stock deals in the last three years, including Exxon’s $4.9 billion agreement to buy Denbury and Chevron’s acquisition of PDC Energy (NASDAQ:PDCE) and Noble Energy (NASDAQ:NBL) for $6.3 billion and $5 billion, respectively.

People involved in the negotiations of these deals, as well as analysts and executives in the sector, said that using stock as currency helped reconcile price disagreements with acquisition targets in a volatile energy market.

Geopolitical turmoil, from Russia’s war in Ukraine to conflict in the Middle East, has kept energy prices choppy for most of the past two years. U.S. oil futures are up about 7% so far this year after gaining a similar amount in 2022, while U.S. gas futures have plunged about 35% after rising about 20% last year.

The CEOs of the acquired companies, some of whom were founders and attached to them, were reluctant to agree to cash deals that would crystallize a price they may end up regretting should energy prices move up, these people said.

By selling for stock, an acquired company’s shareholders can participate in the upside of the combined company. They can also defer taxes by holding on to their new shares rather than cashing out.

CEO John Hess, whose father founded the eponymous company in 1933, said he decided to sell it after two years of on-and-off talks with Chevron, because the value of the two companies aligned with the trajectory of their shares only recently.

“It’s a win-win. Since our shareholders are getting Chevron stock, we get to participate in the upside, and also get a higher dividend,” he said.

He added that Hess shareholders who keep their shares in their combined company will see their dividend rise from $1.75 to $6 per share following the close of the deal.

Exxon and Chevron are keen on these deals because they want to avoid the risk of exploring unproven reserves as oil and gas become scarcer. They are under pressure to acquire peers that are skilled operators across lucrative oil and gas regions, such as the Permian basin, the largest U.S. oilfield, and Guyana, one of the world’s fastest growing oil provinces.

The Hess deal represents a small 4.9% premium to Friday’s closing share price. This is because the company’s valuation was already frothy; Hess shares have returned 330% to their shareholders, including dividends, over their last three years, and Morningstar analysts said on Monday they were trading 40% over what they believe was their fair value.

In similar fashion, Exxon paid just an 18% premium to Pioneer’s undisturbed share price to clinch an all-stock deal for it. In the last deal that Chevron agreed to use cash – its $33 billion bid for Anadarko in 2019 – it had to stomach a much larger 39% premium.

Chevron walked away from the Anadarko deal when Occidental Petroleum (NYSE:OXY) outbid it with a $38 billion offer. Neither Chevron nor Exxon have deployed cash in their acquisitions since.

WHERE DOES THE CASH GO?

Using just stock as deal currency raises the question of what Exxon and Chevron will do with their cash piles, which have grown as global oil supply remains tight. Exxon and Chevron had $29.5 billion and $9.3 billion in cash, respectively, as of the end of June.

The most obvious route is returning excess cash to shareholders, which will now include those of the acquired companies. Keeping dividends and share buybacks strong helps compensate existing Exxon and Chevron shareholders for the dilution incurred in the all-stock acquisitions.

Chevron said on Monday it would raise its dividend by 8% in the first quarter after it grew annually by 6%, and would also buy back stock worth $20 billion annually – enough to repurchase all the stock issued to buy Hess in just three years.

Exxon has not updated its dividend plans since agreeing to acquire Pioneer but has reiterated it could buy back shares worth $17.5 billion each year over the next two years.

“In an indirect way, the cash is supportive of these all-stock deals, because generous buyback programs allow the companies to trim share counts over time after issuing the new equity,” said Andrew Dittmar, a director at energy consultancy Enverus.