Flames are seen at the production facility of Saudi Aramco's Shaybah oilfield in the Empty Quarter, Saudi Arabian on May 22, 2018.
PHOTO: Ahmed Jadallah/Reuters/File
Flames are seen at the production facility of Saudi Aramco's Shaybah oilfield in the Empty Quarter, Saudi Arabian on May 22, 2018.
Now playing
02:29
Does OPEC really control oil prices?
Now playing
02:55
Marriott CEO: We want travelers to feel safe
CHICAGO, ILLINOIS - JANUARY 15: Demonstrators participate in a  protest outside of McDonald's corporate headquarters on January 15, 2021 in Chicago, Illinois.  The protest was part of a nationwide effort calling for minimum wage to be raised to $15-per-hour. (Photo by Scott Olson/Getty Images)
PHOTO: Scott Olson/Getty Images
CHICAGO, ILLINOIS - JANUARY 15: Demonstrators participate in a protest outside of McDonald's corporate headquarters on January 15, 2021 in Chicago, Illinois. The protest was part of a nationwide effort calling for minimum wage to be raised to $15-per-hour. (Photo by Scott Olson/Getty Images)
Now playing
03:31
What a $15 minimum wage really looks like
PHOTO: MyHeritage
Now playing
01:01
Watch old photos come to life using AI
Now playing
01:19
Warren proposes wealth tax: 'It's time for them to pay a fair share'
Now playing
01:43
Marriott CEO: Vaccinations are 'the key' to travel recovery
Nigerian former Foreign and Finance Minister Ngozi Okonjo-Iweala smiles during a press conference on July 15, 2020, in Geneva, following her hearing before World Trade Organization 164 member states' representatives, as part of the application process to head the WTO as Director General. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)
PHOTO: FABRICE COFFRINI/AFP/Getty Images
Nigerian former Foreign and Finance Minister Ngozi Okonjo-Iweala smiles during a press conference on July 15, 2020, in Geneva, following her hearing before World Trade Organization 164 member states' representatives, as part of the application process to head the WTO as Director General. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)
Now playing
04:05
WTO Chief: We need equitable and affordable access to vaccines
Goya Foods President Robert Unanue speaks at a press conference with Carlos Vecchio, the Venezuelan Ambassador who is recognized by the United States on December 21, 2020 in Doral, Florida. The two held the press conference to discuss details of a recent shipment of humanitarian aid to Venezuela, donated by Goya Foods. (Photo by Joe Raedle/Getty Images)
PHOTO: Joe Raedle/Getty Images
Goya Foods President Robert Unanue speaks at a press conference with Carlos Vecchio, the Venezuelan Ambassador who is recognized by the United States on December 21, 2020 in Doral, Florida. The two held the press conference to discuss details of a recent shipment of humanitarian aid to Venezuela, donated by Goya Foods. (Photo by Joe Raedle/Getty Images)
Now playing
03:24
Goya CEO under fire for false Trump election claims
Now playing
01:23
'There should be no threats': Biden's message to union-busters
Misinformation Trump Capitol March rn orig_00004630.png
Misinformation Trump Capitol March rn orig_00004630.png
Now playing
04:08
These Trump supporters are convinced he will be president again on March 4
PHOTO: CNN
Now playing
02:54
'Biggest trial of my life': Landlord says eviction moratorium has drained her savings
Now playing
01:36
Michael Bolton wants you to break up with Robinhood
Now playing
01:57
Fed chief downplays inflation concerns
Now playing
04:34
See what has happened to Trump's DC hotel after his loss
Now playing
01:41
Meet the 29-year-old cancer survivor set to make history in space
Bill Gates AC intv 022021
PHOTO: CNN
Bill Gates AC intv 022021
Now playing
02:32
Will Bill Gates go back to shaking hands? Hear his thoughts
(CNN Business) —  

Chevron is paying $33 billion to acquire Anadarko Petroleum in a massive deal that will bolster its natural gas and shale operations.

The cash and stock deal announced Friday values Anadarko (APC) at $65 per share, 39% higher than the oil company’s closing stock price on Thursday.

Although Chevron is well-known consumer brand, with eight refineries and nearly 8,000 gas stations, Anadarko is focused on exploration and production of of crude oil and natural gas. It sells its product to other companies that refine it.

But Anadarko has significant holdings, with the equivalent of 1.5 billion barrels of proved reserves. That makes it one of the world’s largest independent exploration and production companies.

Chevron (CVX) CEO Michael Wirth said in a statement that buying Anadarko would solidify his company’s position in shale-producing parts of the southern United States.

He said it would also enhance Chevron’s drilling operations in the Gulf of Mexico, and give the company access to a promising natural gas field in Mozambique.

“This brings together two sets of assets that fit very well,” said Wirth on an interview on CNBC Friday.

Chevron said it would issue 200 million new shares and use $8 billion in cash to fund the purchase. It will also assume $15 billion in debt.

Annual cost savings of $2 billion will be achieved within a year of the deal closing, according to Chevron, which also plans to sell assets worth up to $20 billion between 2020 and 2022.

Chevron expects to use the proceeds of those sales to further reduce debt as well as to return additional cash to shareholders. It said it would repurchase an additional $1 billion of its stock on top of the $4 billion that it already intended to buy back.

Chevron said it expects the deal to close in the second half of the year, subject to the approval of Anadarko shareholders and regulators. Wirth will continue as CEO.

– CNN Business’ Chris Isidore contributed to this report