The deal comes as oil majors like Exxon Mobil look to carve out a dominant position in the Permian basin, the largest US shale field and the driver of a boom in American oil production.
Shale and Tight. The combination of the two companies will create a 75-mi-wide corridor across the most attractive acreage in the DE basin, extending Chevron's leading position as a producer in the Permian basin.
"Chevron now joins the ranks of the UltraMajors - and the big three becomes the big four", Martin said. "The acquisition makes the majors' peer group much more polarized".
Chevron, headquartered in California, will "jump ahead of Shell and BP" in size after the merger, he notes.
USA crude production stands at a record 12mn barrels a day (bpd), and the nation is the third-largest producer of LNG, the super-cooled fuel that is seeing record demand as a cheaper, cleaner alternative for countries that still rely heavily on coal for power generation. Chevron shares have been down 4.7% from Thursday's shut of $125.99 a share. The company said will boost its share repurchase rate by US$1 billion to US$5 billion per year upon closing of the deal. The company's stock had a trading volume of 100,925,401 shares, compared to its average volume of 6,675,564.
Chevron's chairman and CEO, Michael Wirth, celebrated the agreement as a transaction that "builds strength on strength for Chevron".
"This is a megadeal that cements the trend of big oil companies taking over the US shale industry, with more acquisitions to come", said John Kilduff of Again Capital.
Chevron will have greatly expanded access to assets as a result of the combination. "That's what drives this".
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The report explained that growth in MENAP region was expected to decline to 1.5pc in 2019, before recovering to about 3.2pc by 2020.
Also notable were gains by other midsized oil companies such as Devon Energy, EOG Resources and Marathon Oil amid speculation the takeover could spur other deals.
Analysts predict further consolidation as the smaller companies that revolutionized the industry through advances in horizontal drilling and hydraulic fracking have seen their stock prices languish and have curtailed spending due weak returns. The company said it will also assume about US$15 billion of net debt, giving Anadarko an enterprise value of US$50 billion.
With the purchase, Chevron expects to improve its position in the Permian Basin, extend its infrastructure network in the Gulf of Mexico, and generally improve its natural gas holdings.
Chevron's acquisition of Anadarko is meant to enhance its Upstream portfolio and further improve on its already leading positions in large, attractive shale, deepwater and natural gas resource basins, the companies said. Forbes' composite ranking method put Chevron as third after Shell and Exxon in Juny, 2018.
Producers in the Permian basin pump around 4 million barrels per day (mbd) and IHS Markit expects it to hit 5.4 mbd in 2023, more than the total production of any OPEC country other than Saudi Arabia.
"It will be a continuous shift toward larger companies in basically all segments of the shale industry", said Artem Abramov, head of shale research for Rystad Energy. Based on Chevron's closing price on April 11th, 2019 and under the terms of the agreement, Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share.
Anadarko rose 32 percent to US$61.78 in NY, but did not trade above the offer price, implying that investors do not expect a bidding war.