By David French

June 7 (Reuters) - Civitas Resources Inc, the U.S. oil and gas producer being formed through the merger of Bonanza Creek Energy Inc and Extraction Oil & Gas Inc , will acquire peer Crestone Peak Resources for $1.3 billion, including debt, according to people familiar with the matter.

Announced last month, the merger between Bonanza Creek and Extraction will create the largest exploration and production company focused on Colorado's Denver-Julesburg (DJ) Basin. Taking over Crestone, which is also active in Colorado, will further expand that footprint.

Civitas will use its own stock as currency to pay Crestone's owners, including the Canada Pension Plan Investment Board (CPPIB) and investment firm The Broe Group, the sources said. The agreement could be announced as early as Monday, they added.

The sources spoke on condition of anonymity ahead of a formal announcement. Bonanza Creek, Extraction and Crestone did not immediately respond to requests for comment.

Consolidation in the DJ basin is intensifying as oil and gas exploration and production companies grapple with regulatory restrictions in Colorado on where and how they can drill.

Crestone was formed in 2016 when CPPIB and Broe acquired assets, centered around the Greater Wattenberg portion of the DJ Basin, from Encana Oil & Gas.

Bonanza Creek and Extraction said last month that their merger would create Colorado's first carbon neutral oil and gas producer.

Extraction's largest shareholder is investment firm Kimmeridge Energy Management, which has been pushing for measures to improve the shale industry's green credentials, including putting forward the creation of a carbon trading platform for the U.S. oil and gas industry.

(Reporting by David French in New York; editing by Richard Pullin)

((davidj.french@thomsonreuters.com;))