DALLAS (AP) — Occidental Petroleum wrapped up a $38 billion deal to acquire Anadarko on Thursday after Chevron declined to sweeten its offer, ending a rare bidding war in the oil patch.
The deal gives Occidental access to Anadarko’s rich holdings in the Permian Basin of west Texas and New Mexico, the hottest field in the oil and gas business.
To win that prize, Occidental outlasted Chevron — a company five times its size.
Occidental CEO Vicki Hollub said the deal further establishes her company as a premier operator able to boost production.
The bidding war surprised those who follow the energy sector. No one had seen a similar grab in decades.
Ambitions have grown, however, in the race to seize a piece of the choice oil and gas fields spread across the Permian.
“It’s truly a real estate question,” said Mike Sommers, CEO of the American Petroleum Institute, a trade group representing more than 600 companies in the oil and gas industry. “Who has the real estate, where the resource is, and Anadarko clearly has key resources within the Permian Basin.”
With so few major operators in that area of the country, future acquisition targets will likely be smaller than the sum that Occidental spent for access to such rich real estate.
“I think we should pay attention to those smaller producers that have significant resources within the Permian basin,” Sommers said.
Occidental agreed to pay $59 in cash and 0.2934 of an Occidental share for each share of Anadarko common stock. Houston-based Occidental put the deal’s value at $57 billion, including the assumption of Anadarko’s debt.
Anadarko, which is based in The Woodlands, Texas, will pay a $1 billion break-up fee to Chevron, which agreed in April to buy the company for $33 billion.
The deal is expected to close in the second half of this year. It would need approval by Anadarko shareholders and U.S. regulators. Chairman and CEO Al Walker said the outcome delivered significant immediate value to Anadarko shareholders.