Chevron Corp. agreed to buy Anadarko Petroleum Corp. in a $33 billion deal that adds U.S. shale oil and African liquefied natural gas and puts it in the top ranks of the world’s largest energy companies.
The takeover puts Chevron neck-and-neck with the oil and gas production of Exxon Mobil Corp. and Royal Dutch Shell Plc, both of which have dominated Big Oil over the past decade. The combined company’s cash flow last year, $36.5 billion, would have exceeded Exxon’s.
“Chevron now joins the ranks of the ultramajors,” Roy Martin, an analyst at Wood Mackenzie Ltd., said in a note.
The $65 per-share stock-and-cash deal announced Friday sees Chevron doubling down on its expansion into the fast-expanding Permian Basin of West Texas and New Mexico, while also increasing its exposure to liquefied natural gas with Anadarko’s project in Mozambique. The new company will sell $15 billion to $20 billion of assets from 2020 to 2022 to reduce debt and return cash to investors.
Occidental Petroleum Corp. had made a $70-per-share bid for Anadarko and it’s now weighing whether to move forward with a counter offer, according to a person familiar with the matter. CNBC reported Occidental’s bid earlier.
Anadarko rose 32 percent to $61.78 in New York, but didn’t trade above the offer price, implying investors don’t expect a bidding war. Chevron fell 4.9 percent, the biggest drop since February last year.
The transaction is the biggest strategic move yet for Michael Wirth, the 58-year-old chemical engineer who became Chevron’s chief executive officer just 14 months ago. He has quickly shaken up the company by announcing an aggressive expansion plan for the Permian.
«We will now see Chevron emerging as the clear leader among all Permian players, both in terms of production growth and as a cost leader,» said Per Magnus Nysveen, head of research at consultant Rystad Energy AS in Oslo.
Anadarko, which is based in The Woodlands, Texas, has long been rumored as a takeover target for the world’s largest oil companies, offering a suite of assets including a massive LNG facility in Mozambique that’s racing against Exxon’s project to be the first operating in the country.
The deal is the biggest takeover in the oil and gas industry since Shell’s 47 billion pound ($61 billion) purchase of BG Group in 2015, according to data compiled by Bloomberg. Widening the measure to include chemicals and state-owned companies, both would be eclipsed by Saudi Aramco’s $69 billion acquisition of a majority stake in local petrochemical company Sabic this year.