The takeover - the largest the industry has seen during the past three years - ends months of speculation over the future of Unocal, one of the largest US independent oil companies.
ChevronTexaco, the second-largest American oil company, beat Italy’s ENI, Europe’s fourth-largest oil company, and China National Offshore Oil Corporation (CNOOC), the Chinese government oil company.
The Unocal acquisition puts ChevronTexaco ahead of Total of France as the fourth-largest oil company in the world in terms of total oil and gas production, behind Exxon Mobil, BP and Shell.
ChevronTexaco will pay US$4.4 billion in cash and issue 210 million shares for Unocal, valuing the company at US$62 per share. It will also assume US$1.6 billion of Unocal debt.
Oil giants are flush with cash, thanks to record crude prices, but short of opportunities to develop fields and replace reserves.
The world's top 10 oil companies made more than US$100 billion in profit last year as crude averaged US$41 per barrel. This boom is expected to continue this year, with oil futures on the New York Mercantile Exchange setting a fresh record Monday, rising above US$58 per barrel for the first time.
Analysts say the deal will give ChevronTexaco access to Unocal's strong positions in Asia, one of the world’s fastest growing regions for oil and gas.
Among Unocal's assets are LNG plants in Indonesia, where ChevronTexaco is already the leading producer; gas developments in Thailand; and oil fields in the Gulf of Mexico.
Unocal also has large assets in the Caspian Sea, where ChevronTexaco is already a strong player, including a position in the planned Baku-Tbilisi-Ceyhan oil pipeline and a stake in Azerbaijan's national oil company.
ChevronTexaco expects the Unocal takeover to increase its proved reserves by 15% to 13 billion barrels of oil equivalent, and raise its oil production from 2.5 to 3 million barrels per day.
Unocal - founded in 1890 as Union Oil Company of California – has had a string of disappointing production growth announcements and recently courted controversy by doing business in Myanmar and trying to build a pipeline in Afghanistan during the time of the Taliban.
The acquisition is still subject to the approval of Unocal's shareholders and regulatory approval. ChevronTexaco said that after the deal was completed it planned to sell assets worth US$2 billion and expected pretax annual savings of $325 million.
