Chevron Corp. said it will buy Anadarko Petroleum Corp. in a stock and cash deal valued at $33 billion, or $65 a share.

The acquisition is expected to enhance Chevron’s upstream portfolio and its positions in large shale plays in the Permian basin and in the deepwater Gulf of Mexico, and adds natural gas resources. Western Midstream Partners, also part of the deal, has assets that Chevron said are in line with its upstream positions.

The companies said that their combination will create a 75-mile-wide corridor across acreage in the Delaware basin, extending Chevron’s position as a producer in the Permian basin of Texas and New Mexico.

In August 2018, the Department of Energy said that U.S. crude oil production was on track to average 11.7 million barrels per day (b/d) in 2019. The increase was forecast to be almost entirely driven by tight oil. In particular, the Permian region in western Texas and eastern New Mexico was forecast to account for more than half of the growth in crude oil production through 2019.

Chevron refinery in El Segundo, Calif. Credit: ChevronDOE said that it expects Permian regional production to average 3.9 million b/d in 2019. Favorable geology combined with technological and operational improvements have contributed to the Permian region becoming one of the more economically favorable regions for crude oil production. However, DOE cautioned that recent pipeline capacity constraints have dampened wellhead prices for the region’s oil producers. Lower wellhead prices were expected to contribute to slower growth in Permian crude oil production in 2019 compared with 2018.

In the Federal Offshore Gulf of Mexico (GOM), production was forecast to grow by 158,000 b/d in 2019 to average 1.9 million b/d. That forecast growth was expected to be driven by the ramping up of two new fields that started producing in 2017, the addition of 10 new fields in 2018, and another six new fields coming online in 2019. All totaled, these 18 fields are expected to contribute 480,000 b/d of the total 1.9 million b/d of GOM production in 2019.

Also as part of the Anadarko acquisition, Chevron said it will gain a resource base in Mozambique to support liquefied natural gas demand. It characterized the area as a cost-competitive and well-prepared greenfield project close to major markets.

Chevron also said that it plans to divest $15 to $20 billion of assets between 2020 and 2022. Proceeds would be used to reduce debt and return cash to shareholders.

The transaction was approved by the Boards of Directors of both companies and is expected to close in the second half of 2019. Upon closing, the company will continue be led by Michael Wirth as chairman and CEO. Chevron will remain headquartered in San Ramon, Calif.