Chevron will buy Anadarko Petroleum for $33 billion in cash and stock, energizing its deepwater exploration in the gulf and in the energy-rich southwest region of Texas called the Permian Basin.
The deal announced Friday comes with U.S. crude prices up 40% this year and vaults Chevron into a new league.
While the combined company will remain far behind Exxon Mobil Corp. and Royal Dutch Shell Plc. in market capitalization, it jumps from the fourth biggest producer among major drillers to second, according to Wood Mackenzie.
“Chevron now joins the ranks of the UltraMajors—and the big three becomes the big four,” wrote Roy Martin, senior analyst at Wood Mackenzie, referring to Exxon, Shell and BP.
With the acquisition, Chevron gets access to Anadarko’s liquid natural gas operations in Mozambique. The combined company will also control a 75-mile-wide corridor across the Delaware Basin, just beside the Permian Basin, a region bountiful with natural gas that has been exploited through shale drilling.
There has been some pressure in energy markets as OPEC tries to push prices higher through production cuts.
When the organization of oil-producing states released its monthly report this week, it revealed that energy output from OPEC had declined to levels not seen since early 2015.
That is largely being driven by the energy powerhouse Saudi Arabia, which last month removed another 324,000 barrels of oil per day from the market.
Still, U.S. crude was selling for less than $65 per barrel Friday. That’s far from levels well above $100 per barrel reached just before the economic downturn in 2008, and there are signals that global economic growth is slowing.
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