Chevron To Expand In Permian Basin, Acquiring Anadarko Petroleum For $33 Billion

Chevron To Expand In Permian Basin, Acquiring Anadarko Petroleum For $33 Billion

The oil giant also expects to streamline its portfolio by selling between $15 billion and $20 billion of assets.

It puts Chevron neck-and-neck with the oil and gas production of Exxon and Royal Dutch Shell Plc, both of which have dominated Big Oil over the past decade.

The shale oil-and-gas boom reversed a long decline in US crude production and propelled the country to a record 12 million barrels a day (bpd), more than Russian Federation and Saudi Arabia. It estimates that the combined company can drive out $1 billion in annual costs.

Anadarko shareholders will receive 0.38 shares of Chevron and $16.25 (£12.43) in cash for each of their shares.

Shares of Anadarko jumped 32% at the opening bell Friday, while Chevron's stock fell 5.3%.

The last five years has seen the US double its domestic oil production and become a rival to Saudi Arabia and Russian Federation as the world's premier supplier.

Analysts say the deal means Chevron "joins the ranks of the ultra majors", becoming the second-largest producing major in 2019, rising from fourth-largest.

Chevron Chief Executive Michael Wirth will lead the combined company after the deal closes. They will also assume about US$15 billion of net debt, giving Anadarko an enterprise value of US$50 billion.

Chevron gets access to Anadarko's liquid natural gas operations in Mozambique and it would control a 75-mile-wide corridor across the Delaware Basin, a region bountiful with natural gas.

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The Chevron executive is detailed-oriented and a relentless worker, said Mike Sommers, president of industry group American Petroleum Institute, where Wirth is a member of the executive committee.

"It creates attractive growth opportunities in areas that play to Chevron's operational strengths and underscores". The company said will boost its share repurchase rate by US$1 billion to US$5 billion per year upon closing of the deal.

Chevron said the combined entity would have had daily output of 3.596 million barrels equivalent of oil previous year, compared with Shell's 3.666 million. However, it wasn't the only bidder, as Occidental Petroleum reportedly offered more than $70 a share - so it's possible there could still be a bidding war for Anadarko.

Anadarko, which is based in The Woodlands, Texas, has always 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.

Anadarko also has a Mozambique LNG project, part of one of the industry's largest planned current investments, which Wirth said he still expects to move to final approval "sooner rather than later" this year.

-The transaction has a break-up fee equivalent to about 3 per cent of the deal value, according to a person familiar with the matter.

Chevron will acquire all outstanding shares of Anadarko in a cash and stock deal for £25.2bn, or $65 per share (£49.71).

-Credit Suisse Group AG was financial adviser to Chevron while Paul, Weiss, Rifkind, Wharton & Garrison LLP was legal adviser.

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