Chevron buys rival Anadarko in $33-billion bet on shale oil and LNG, the biggest energy deal in four years
Chevron Corp. agreed to buy Anadarko Petroleum Corp. in a US$33 billion bet on shale oil and liquefied natural gas that’s the industry’s biggest deal since 2015.
It also increases its exposure to LNG at a time when the fight against climate change is making natural gas the preferred fuel. Some of Anadarko’s assets may be sold after the deal closes, the company said. In oil and gas production terms, the deal puts Chevron neck-and-neck again with Royal Dutch Shell Plc for the title of the second-largest integrated major oil company, slightly behind Exxon. Chevron said the combined entity in 2018 would have had output of 3.596 million barrels equivalent of oil, compared with Shell’s 3.666 million. Exxon reported average production last year of 3.833 million.
Chevron expects the deal to add to free cash flow and earnings per share one year after closing, at US$60-a-barrel Brent. The company said will boost its share repurchase rate by US$1 billion to US$5 billion per year upon closing of the deal. It expects the transaction to achieve run-rate cost synergies of US$1 billion before tax and capital spending cuts of US$1 billion within a year of closing.
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