Investing.com – Merger fever hit the energy sector Friday as Chevron 's $33 billion deal to buy Anadarko Petroleum triggered speculation about further tie-ups in the industry.
Chevron (NYSE:CVX) agreed to pay $65 per Anadarko (NYSE:APC) share in stock and cash, sending Anadarko's shares up nearly 33%. The merger will create an oil-production powerhouse boasting a total enterprise value of about $50 billion.
Chevron said the deal would enhance its upstream portfolio and strengthen its positions in large shale, deepwater and natural-gas basins.
The merger, expected to close in the second half of the year, will achieve $1 billion in run-rate cost synergies and $1 billion in capital spending cuts within a year of closing, according to the companies.
Shareholders are also set to receive a large windfall, as Chevron plans to ramp up its share-repurchase program to $5 billion from $4 billion after the merger is completed.
Chevron was not the only suitor with eyes on Anadarko.
Occidental Petroleum (NYSE:OXY) had offered $70 per share in cash and stock, CNBC reported, citing unnamed sources. Occidental may turn its attention to other Permian major shale players now.
Pioneer Natural Resources (NYSE:PXD), Parsley Energy (NYSE:PE) and Concho Resources (NYSE:CXO), major Permian shale companies, rallied on news of the deal.