Oxy makes public bid for Anadarko over Chevron

[Elderberry]

Houston Chronicle by Jordan Blum April 24, 2019

Houston's Occidental Petroleum is upping its offer to buy Anadarko Petroleum, creating a public bidding war and takeover effort after Chevron agreed to acquire Anadarko 12 days ago.

Occidental said it is offering roughly $38 billion for Anadarko in a cash-and-stock deal, valuing The Woodlands-based producer at $76 per share versus Chevron's $33 billion deal at $65 a share.

Oxy had previously offered more than $70 a share, but Anadarko chose the lower Chevron bid, seeing a better strategic fit and a bet on Chevron's long-term value.

"We have been focused on Anadarko for several years because we have long believed that we are ideally positioned to generate compelling value from a combination with them," said Oxy Chief Executive Vicki Hollub. "We look forward to engaging immediately with Anadarko's board and stakeholders to deliver this superior transaction."

More: https://www.houstonchronicle.com/business/energy/article/Oxy-makes-public-bid-for-Anadarko-over-Chevron-13790978.php

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Related video

http://finance.yahoo.com/video/occidental-ceo-discusses-decision-formal-114406275.html?soc_src=mail&soc_trk=ma

Lots of moving pieces here.

Oxy is a company that decided to sell off most of its domestic and some international assets in order to concentrate on the Permian.  It even moved its HQ from California where it had been for over 80 years and located in Houston to provide more focus to Permian.  It is greatly strengthening that position with the purchase of Anadarko.  It is the largest oil producer in the state, and elevated a person whose career was Permian-based to its CEO. 

Chevron on the other hand has not focused much on the Permian until recently.  Instead, it has chosen to pursue large international projects such as in Australia, Africa and Kazakhstan as well as deep water GOM.  It has now recognized the need to provide for a stronger Permian program and is attempting to consolidate its Permian holdings gained primarily from its acquisition of Texaco almost 20 years ago.

CVX's problem is, although it has deep pockets compared to Oxy, Oxy has more to gain than Chevron has to lose in this takeover.

A major problem for Chevron right now is focus.   It has the last remaining HQ of any major company in California where it has a lot of significant assets.   It also has the problem of the legislature of California, driven by environmentalists, who are passing legislation to restrict (eventually end) all oil and gas drilling in the state.   

Bill to Cut Oil and Gas Production In California Passes First Committee
‘We have so much to clean up in California’
 https://californiaglobe.com/legislature/bill-to-cut-oil-and-gas-production-in-california-passes-first-committee/

If this passes, Chevron will lose bigtime, more than any deal it might gain if it acquired Anadarko.