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(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