Chevron announced Friday it will acquire smaller US rival Anadarko for $33 billion in a deal that strengthens the oil giant's exploration and production holdings in its home market.
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.
Anadarko also has a handful of overseas ventures, including a major liquefied natural gas project in Mozambique that Chevron said would help bolster one of Chevron's major global businesses.
"This transaction builds strength on strength for Chevron," said Chevron Chief Executive Mike Wirth.
"The combination of Anadarko's premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deepwater Gulf of Mexico capabilities and will grow our LNG business."
For Chevron, the second-biggest US oil company after Exxon Mobil, the takeover of Anadarko marks its biggest deal since its purchase of Texaco, which closed in 2001.
In another transaction, Chevron in 2005 bought Unocal for $18.3 billion after raising the price during a high-profile bidding war with China's CNOOC that drew interest from lawmakers in Washington.
The acquisition is composed of 75 percent stock and 25 percent cash, with Anadarko shareholders receiving 0.39 shares of Chevron and $16.25 in cash for each Anadarko share held.
By combining the companies, Chevron expects to cull $1 billion in costs. The oil giant will also "high grade" its portfolio and sell off some $15 billion to $20 billion of assets.
In 2018, Chevron had $42.4 billion in revenues and pumped 3.1 million barrels oil-equivalent per day, above the level of most members of the Organization of the Petroleum Exporting Countries.