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* Chevron boosts Permian, LNG holdings with deal
* Biggest oil deal since Shell's BG Group deal in 2016
* Offer is 39 pct premium to Thursday's close in cash andstock
* Chevron shares dip 4 pct, Anadarko up 33 pct(Adds share prices, background on shale production)
By John Benny and Jennifer Hiller
April 12 (Reuters) - Chevron Corp on Friday said itwill buy Anadarko Petroleum Corp for $33 billion in cashand stock to bolster its position in shale oil and the liquidnatural gas (LNG) market with the biggest industry merger sinceRoyal Dutch Shell bought BG Group in 2016.
With oil prices surging this year, Chevron and larger rivalExxon Mobil Corp have been increasing investment in theUnited States' Permian basin in West Texas, the most prolificshale oil field in the country.
Chevron, Exxon, Royal Dutch Shell Plc and BP Plclargely missed out on the first phase of the Permianshale bonanza while more nimble independent producers such asAnadarko pioneered shale drilling technology and leased Permianacreage on the cheap.
Chevron, which already has 2.3 million acres in the PermianBasin, said the deal to buy Anadarko would give the combinedcompany a 75-mile (120-km)-wide corridor across the Permian'sDelaware basin, on the Texas-New Mexico border. Anadarko alsohas a Mozambique LNG project, part of one of the industry'slargest planned current investments.
The deal has sparked speculation that other shale producersare in play. Shares of Apache Corp, which also hasextensive acreage in the Permian Basin, jumped 7 percent inpremarket trading, while Pioneer Natural Resources Corose 6 percent.
Chevron shares fell 4 percent as investors weighed the costof the deal, which includes taking on $15 billion of Anadarko'sdebt.
"This seems a big bet on shale and on oil prices remaininghigh," said CMC Markets analyst Michael Hewson. "That seems abig ask if you think that renewables are set to comprise anincreasing bigger part of the energy mix."
Shares of Anadarko surged 33 percent, reflecting the 39percent premium offered by Chevron compared to Thursday'sclosing market price. The $65 per share offer was structured as75 percent stock and 25 percent cash.
Producers in the Permian basin pump around 4 million barrelsper day (mbd) and IHS Markit expects it to hit 5.4 mbd in 2023,more than the total production of any OPEC country other thanSaudi Arabia.
Last month, Chevron said it expects shale production fromthe basin to reach 600,000 barrels per day (bpd) by the end ofnext year.
The company said the deal would add to its free cash flowand profit one year after closing, if Brent crude, currentlyaround $70, holds above $60 per barrel.
Chevron also said it plans to raise annual share buybacks to$5 billion from $4 billion when the deal closes and to sell $15billion to $20 billion of assets between 2020 and 2022.
The enterprise value of deal is $50 billion..
Under the terms of the agreement, Anadarko shareholders willreceive 0.3869 shares of Chevron and $16.25 in cash for eachAnadarko share.
Chevron Chief Executive Michael Wirth will lead the combinedcompany after the deal closes. Chevron will remain headquarteredin San Ramon, California.Credit Suisse Securities (USA) LLC is Chevron's financialadviser, while Paul, Weiss, Rifkind, Wharton & Garrison LLP isits legal adviser.
Evercore and Goldman Sachs are financial advisers toAnadarko, while Wachtell, Lipton, Rosen & Katz and Vinson &Elkins LLP are its legal advisers.(Reporting by John Benny and Shradha Singh in Bengaluru, GregRoumeliotis in New York; Editing by Patrick Graham and SrirajKalluvila)
