Based on Anadarko's closing price of $46.80 on Thursday, Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share.
The acquisition comes as the US has reversed a decades-long decline in oil production, thanks to new technology that has allowed it to tap hitherto unreachable, so-called "tight oil", that had been locked deep beneath the surface in shale rock.
Chevron also touted Anadarko's liquefied natural gas production, as noted by Mizuho. Wirth, who assumed his role in February 2018, expects the deal will allow Chevron to "win in any environment", playing to the company's strengths in shale, deep water and natural gas.
The total enterprise value of the transaction is US$50 billion, including the assumption of net debt and book value of non-controlling interest, Chevron said today.
Anadarko shares surged 32.1 percent in pre-market trading to $61.80, while Chevron fell 3.1 percent to $122.10.
Anadarko has always been rumoured to be a takeover target of the world's largest oil companies, offering a suite of assets including a massive LNG facility in Mozambique that is racing against an Exxon Mobil Corp. project to be first to be operational in the country. Exxon reported average production past year of 3.833 million.
Chevron Chief Executive Michael Wirth will lead the combined company after the deal closes.
It comes after the firm said past year it is seeking to sell all of its Central North Sea assets as it refocuses on the U.S. shale market.
As oil companies have become more efficient at producing shale oil, which has changed the worldwide equation by making US oil a rival against the cheap oil produced by Organization of the Petroleum Exporting Countries.
The cash-and-stock transaction is centered on Anadarko's properties in the Permian Basin in Texas and the Gulf of Mexico, two areas where Chevron is already a big player and where economies of scale can help drive value with suppliers and in key drilling and production operations.
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-Chevron said the combined entity would have had daily output of 3.596 million barrels equivalent of oil a year ago, compared with Shell's 3.666 million.
Wirth said Chevron was particularly attracted to Anadarko's high-quality oil assets, from its natural gas assets in Mozambique to the Gulf of Mexico offshore production and its Permian Basin shale.
A Chevron customer looks on as he pumps gas into his vehicle in 2009 in Greenbrae, Calif. Chevron is acquiring Anadarko Petroleum for $33 billion in cash and stock.
-Chevron will issue 200 million shares and pay US$8 billion in cash. Widening the measure to include chemicals and state-owned companies, both would be eclipsed by Saudi Aramco's US$69 billion acquisition of a majority stake in local petrochemical company Sabic this year. It estimates that the combined company can drive out $1 billion in annual costs.
Occidental Petroleum Corp. had made a US$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.
The deal may put pressure on Shell to seek assets in the Permian, where the Anglo-Dutch company has said it wants to grow. It plans to sell some $15 billion in assets over time to offset the Anadarko deal.
The deal, which is subject to shareholder and regulatory approval, is expected to close in the second half of 2019.
Chevron expects the deal to add to free cash flow and earnings per share one year after closing, at US$60-a-barrel Brent.
-Credit Suisse Group AG was financial adviser to Chevron while Paul, Weiss, Rifkind, Wharton & Garrison LLP was legal adviser. Evercore Inc. and Goldman Sachs Group Inc advised Anadarko alongside law firms Wachtell, Lipton, Rosen & Katz and Vinson & Elkins LLP.