Oil shares jump after Chevron buys Andarko and merger fever hits oil patch

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Chevron's $33 billion acquisition of Anadarko sparked speculation the oil patch will see a new wave of consolidation as major players look to build scale and lower costs in the shale sector.

div > div.group > p:first-child"> Stocks of prospective targets surged. Apache stock jumped nearly 6% in early trading, Chesapeake stock rose more than 1%, and Pioneer Natural Resources increased 5.4%. Bigger players like Occidental Petroleum and Hess were also higher, as traders reassessed valuations in a group that has been beaten down.

Both Chevron and ExxonMobil are relative newcomers to the shale industry and both have made inroads into plays like the Permian Basin, where their heft has helped bring down costs. Chevron has not been shy that it was seeking acquisitions. The company said in a release that it would look to upgrade its portfolio and potentially divest of $15 billion to $20 billion in assets between 2020 and 2022. The company said it expects the acquisition to be accretive to free cash flow and earnings one year after closing, with a $60 price for Brent, the international oil standard. Brent was at $71.75 per barrel Friday.

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Energy stocks in broad rally premarket after Chevron buyout deal of AnadarkoShares of oil and gas companies were broadly higher in premarket trade Friday, outside of Chevron Corp.'s stock , which shed 4.0% after the $33 billion...
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