MCKITTRICK, CA - MARCH 23:  Pump jacks and wells are seen in an oil field on the Monterey Shale formation where gas and oil extraction using hydraulic fracturing, or fracking, is on the verge of a boom on March 23, 2014 near McKittrick, California. Critics of fracking in California cite concerns over water usage and possible chemical pollution of ground water sources as California farmers are forced to leave unprecedented expanses of fields fallow in one of the worst droughts in California history. Concerns also include the possibility of earthquakes triggered by the fracking process which injects water, sand and various chemicals under high pressure into the ground to break the rock to release oil and gas for extraction though a well. The 800-mile-long San Andreas Fault runs north and south on the western side of the Monterey Formation in the Central Valley and is thought to be the most dangerous fault in the nation. Proponents of the fracking boom saying that the expansion of petroleum extraction is good for the economy and security by developing more domestic energy sources and increasing gas and oil exports.   (Photo by David McNew/Getty Images)
David McNew/Getty Images
MCKITTRICK, CA - MARCH 23: Pump jacks and wells are seen in an oil field on the Monterey Shale formation where gas and oil extraction using hydraulic fracturing, or fracking, is on the verge of a boom on March 23, 2014 near McKittrick, California. Critics of fracking in California cite concerns over water usage and possible chemical pollution of ground water sources as California farmers are forced to leave unprecedented expanses of fields fallow in one of the worst droughts in California history. Concerns also include the possibility of earthquakes triggered by the fracking process which injects water, sand and various chemicals under high pressure into the ground to break the rock to release oil and gas for extraction though a well. The 800-mile-long San Andreas Fault runs north and south on the western side of the Monterey Formation in the Central Valley and is thought to be the most dangerous fault in the nation. Proponents of the fracking boom saying that the expansion of petroleum extraction is good for the economy and security by developing more domestic energy sources and increasing gas and oil exports. (Photo by David McNew/Getty Images)
Now playing
03:16
Occidental Petroleum tops Chevron's deal for Anadarko
Now playing
02:04
Construction CEO: No housing market slowdown in sight
Specialist Gregg Maloney works on the floor of the New York Stock Exchange, Monday, July 19, 2021. Stocks are falling sharply Monday as worries sweep from Wall Street to Sydney that the worsening pandemic in hotspots around the world will derail what's been a strong economic recovery. (AP Photo/Richard Drew)
Richard Drew/AP
Specialist Gregg Maloney works on the floor of the New York Stock Exchange, Monday, July 19, 2021. Stocks are falling sharply Monday as worries sweep from Wall Street to Sydney that the worsening pandemic in hotspots around the world will derail what's been a strong economic recovery. (AP Photo/Richard Drew)
Now playing
00:53
Dow sinks more than 700 points on Delta variant fears
People move through LaGuardia Airport (LGA) before the start of the Fourth of July weekend on July 02, 2021 in New York City.
Spencer Platt/Getty Images
People move through LaGuardia Airport (LGA) before the start of the Fourth of July weekend on July 02, 2021 in New York City.
Now playing
02:45
US stocks sink on Delta variant concerns
rising wages job openings nela richardson jg orig_00013402.png
rising wages job openings nela richardson jg orig_00013402.png
Now playing
02:28
Economist explains why there are so many job openings
BetterUp CEO Alexi Robichaux workplace mental health orig_00023111.png
BetterUp CEO Alexi Robichaux workplace mental health orig_00023111.png
Now playing
03:06
This CEO says leaders need to focus on mental health to boost productivity at work
A driver uses the Didi Chuxing ride-hailing app on his smartphone while driving along the street in Beijing on July 2, 2021. (Photo by Jade GAO / AFP) (Photo by JADE GAO/AFP via Getty Images)
Jade Gao/AFP/Getty Images
A driver uses the Didi Chuxing ride-hailing app on his smartphone while driving along the street in Beijing on July 2, 2021. (Photo by Jade GAO / AFP) (Photo by JADE GAO/AFP via Getty Images)
Now playing
02:13
Didi shares plummet after China bans it from app stores
belski invest post pandemic orig_00001707.png
belski invest post pandemic orig_00001707.png
Now playing
02:07
Strategist: Here's how to invest post-pandemic
Federal Reserve
Now playing
03:05
The Federal Reserve to raise interest rates sooner than expected
investing during inflation david kelly orig_00002321.png
investing during inflation david kelly orig_00002321.png
Now playing
00:58
Concerned about inflation? Here's how to pivot your portfolio
NEW YORK, NEW YORK - JANUARY 28: People walk by a GameStop store in Brooklyn on January 28, 2021 in New York City. Markets continue a volatile streak with the Dow Jones Industrial Average rising over 500 points in morning trading following yesterdays losses. Shares of the video game retailer GameStop plunged. (Photo by Spencer Platt/Getty Images)
Spencer Platt/Getty Images
NEW YORK, NEW YORK - JANUARY 28: People walk by a GameStop store in Brooklyn on January 28, 2021 in New York City. Markets continue a volatile streak with the Dow Jones Industrial Average rising over 500 points in morning trading following yesterdays losses. Shares of the video game retailer GameStop plunged. (Photo by Spencer Platt/Getty Images)
Now playing
01:58
Fund manager says meme stock phenomenon is not a fad
People walk past an AMC and IMAX movie theatre in the theatre district near Broadway on May 6, 2021 in New York City. - New York Governor Andrew Cuomo announced that Broadway will reopen on September 14, 2021  at one hundred percent capacity, with some tickets going on sale starting today. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
Angela Weiss/AFP/Getty Images
People walk past an AMC and IMAX movie theatre in the theatre district near Broadway on May 6, 2021 in New York City. - New York Governor Andrew Cuomo announced that Broadway will reopen on September 14, 2021 at one hundred percent capacity, with some tickets going on sale starting today. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
Now playing
02:27
AMC shares soar to an all-time high
Now playing
01:45
Economist: Here's what's keeping workers on the sidelines
used car prices surge carmax CEO orig_00002621.png
used car prices surge carmax CEO orig_00002621.png
Now playing
01:49
Here's why used car prices are so high
Now playing
02:08
Cryptocurrency expert: Elon Musk knows 'virtually nothing'
A visual representation of the digital Cryptocurrency, Bitcoin on December 07, 2017 in London, England.
Dan Kitwood/Getty Images
A visual representation of the digital Cryptocurrency, Bitcoin on December 07, 2017 in London, England.
Now playing
03:56
Bitcoin plunges as China's crypto crackdown widens
In this photo provided by the New York Stock Exchange, traders work around stock monitoring systems on the trading floor, Wednesday, May 12, 2021, in New York. Inflation worries rattled Wall Street on Wednesday, pulling the Dow Jones Industrial Average more than 680 points lower and placing the major stock indexes on track for their worst week in more than six months. (Courtney Crow/New York Stock Exchange via AP)
Courtney Crow/New York Stock Exchange/AP
In this photo provided by the New York Stock Exchange, traders work around stock monitoring systems on the trading floor, Wednesday, May 12, 2021, in New York. Inflation worries rattled Wall Street on Wednesday, pulling the Dow Jones Industrial Average more than 680 points lower and placing the major stock indexes on track for their worst week in more than six months. (Courtney Crow/New York Stock Exchange via AP)
Now playing
02:19
Strategist: Hot inflation consistent with reopening challenges
New York CNN Business —  

Anadarko Petroleum could walk away from its marriage with Chevron.

Anadarko (APC) announced on Monday it plans to enter merger talks with Occidental Petroleum (OXY), which made a hostile takeover offer for the oil driller last week.

The Occidental cash-and-stock bid values Anadarko at nearly $57 billion. That’s about 20% more than the takeover deal Anadarko already reached with oil giant Chevron (CVX) earlier this month.

The bidding war for Anadarko reflects an intense desire by oil companies large and small to acquire America’s best shale assets. Specifically, oil companies are racing to drill oil in the Permian Basin, the West Texas shale oilfield that has made the United States the world’s leading producer.

Anadarko and Occidental had been in merger talks even before Chevron reached a takeover deal for Anadarko.

Now, Anadarko said it will resume negotiations with Occidental, which is already the No. 1 oil producer in the Permian Basin. Acquiring Anadarko’s Permian assets would lift Occidental’s output in that shale oilfield to 533,000 barrels per day.

Even though neither Anadarko nor Occidental are household names, a merger would create an oil behemoth. The combined company would be worth about $100 billion and produce about 1.4 million barrels of oil per day.

After reviewing the Occidental bid with lawyers and bankers, Anadarko’s board of directors said it has unanimously determined it could reasonably be expected to result in a “superior proposal.”

In a statement, Anadarko’s board said the Occidental bid reflects “significant improvement” in terms of value, terms, conditions and closing certainty over Occidental’s previous proposals.

Last week, Occidental offered to purchase each Anadarko share for $38 in cash and 0.6094 of a share of Occidental’s stock.

Chevron’s deal is more skewed toward stock. Chevron offered to pay $16.25 in cash and 0.3869 of a share of its stock for each Anadarko share.

In a statement, Chevron expressed confidence its deal will prevail.

“We believe our signed agreement with Anadarko provides the best value and the most certainty to Anadarko’s shareholders,” Chevron said on Monday.

Anadarko cautioned that there “can be no assurance” that talks with Occidental will result in a better deal than the one already reached with Chevron.

Despite the new negotiations with Occidental, Anadarko said the Chevron merger agreement remains in effect. The Anadarko board reaffirmed its recommendation in favor of the Chevron deal “at this time.”

Wall Street analysts have expressed concern that Occidental’s deal could strain the company’s balance sheet. Acknowledging that challenge, Occidental CEO Vicki Hollub told analysts last week that the company would “rapidly deleverage” by selling off between $10 billion and $15 billion of assets over two years.

As America’s No. 2 oil company, Chevron certainly has the firepower to sweeten its bid. But Chevron must also guard against overpaying for Anadarko and its energy portfolio.

Beyond its Permian Basin position, Anadarko is attractive because of its shale assets in Colorado, deepwater drilling properties in the Gulf of Mexico and liquefied natural gas project in Mozambique.

Last week, Chevron executives suggested Anadarko would be a better fit with their company. Chevron pointed to its track record for making successful acquisitions and role as a top-notch LNG producer.

If Anadarko goes with Occidental, Chevron won’t be left empty-handed. Under the terms of their merger agreement, Anadarko would owe Chevron a break-up fee of $1 billion if it reaches a takeover deal with another company.

Shares of Occidental fell about 2% on Monday, while Chevron and Anadarko were little changed.