Houston-based Occidental Petroleum Corp. (Oxy) on Wednesday took Chevron Corp. to the mat for Anadarko Petroleum Corp. with a cash-and-stock offer estimated to be a 20% premium to the supermajor’s bid earlier this month.

Oxy offered to pay an overall price estimated at $76/share in a cash-and-stock deal valued at $57 billion, based on its closing price on Tuesday. The offer includes assuming net debt and the book value of noncontrolling interests. Anadarko shareholders would receive $38.00/share in cash and trade each share for a 0.6094 share of Oxy.

Chevron’s cash-and-stock offer earlier this month, estimated at $33 billion, or around $50 billion including debt, is structured as 75% stock and 25% cash. The overall value is estimated at $65/share, based on Chevron’s closing price on April 11, the day before the offer was made.

In early trading Wednesday, Oxy was down more than 2% at around $60.24/share. Chevron was also off more than 2% at nearly $119/share. Anadarko had gained more than 12% and was trading at nearly $72/share.

“Occidental believes its proposal is superior both financially and strategically for Anadarko’s shareholders, creating a global energy leader with the scale and geographic diversification to drive growth and deliver compelling value and returns to the shareholders of both companies,” the independent producer said. “The combined company will be uniquely positioned to leverage Occidental’s demonstrated operational and technical expertise, producing greater anticipated synergies than Anadarko’s pending transaction.”

Oxy said it would deploy its expertise to enhance Anadarko’s assets not only in the Permian Basin, considered the lynchpin of the portfolio, but also its global assets, Oxy CEO Vicki Hollub said. Oxy in recent years has become more Permian-oriented, but it has worldwide operations in almost every energy sector.

“As you know Occidental has long admired Anadarko, and we believe that a combination of our two companies would create a global energy leader with a winning shareholder value proposition,” Hollub wrote in a letter to the Anadarko board. “The resulting diverse but focused company will be a world leader in shale development and enhanced oil recovery.”

Hollub revealed that Oxy has made three offers to Anadarko “since late March,” each “significantly higher” than Chevron’s offer.

“Our most recent proposal, conveyed in writing on the morning of April 11, followed by a merger agreement we were prepared to sign, was for $76/share, comprised of 40% cash and 60% stock,” Hollub wrote. “We were surprised and disappointed that your board did not engage with us on that proposal, or our proposal of April 8, even though both were significantly higher than the price you accepted from Chevron.”

Oxy’s board has unanimously approved the latest proposal and has financing commitments in hand with BofA Merrill Lynch and Citi for the cash portion of the proposal.

“Our merger agreement will not contain any financing condition, and we do not anticipate any delay to completing the regulatory approval process,” Hollub wrote. “We would expect to seek the approval of the shareholders of both companies and close a transaction in the second half of 2019.”

Hollub said it was “unfortunate that Anadarko agreed to pay a break up fee of $1 billion, representing approximately $2/share, without even picking up the phone to speak to us after we made two proposals during the week of April 8 that were at a significantly higher value to the transaction you were apparently negotiating with Chevron.”

Occidental and Anadarko have complementary assets, Hollub said. “We have been focused on Anadarko for several years because we have long believed that we are ideally positioned to generate compelling value from a combination with them. We look forward to engaging immediately with Anadarko’s board and stakeholders to deliver this superior transaction.”

CNBC’s David Faber interviewed Hollub shortly after the Oxy offer was publicly announced early Wednesday. “We are the right acquirer for Anadarko Petroleum because we can get the most out of the shale,” Hollub said. “What hasn’t been talked about very much is that the upside in this deal is the shale play, is the shale development.

“Seventy-five percent of the value of Anadarko is in the shale, and we’re the best company to develop the shale. We have a proven track record in the Permian.”

Chevron also has a proven track record in its legacy play. When Chevron announced its proposal, CEO Michael Wirth had emphasized that the transaction would be more than “just a shale play.”

Specifically in the Permian, the Chevron-Anadarko combination would create a 75-mile-wide corridor across the Delaware sub-basin. Chevron also eclipsed Wall Street earnings expectations for 4Q2018, with surging Permian production helping to lift output by 12% year/year to 3.1 million boe/d.

Hollub acknowledged in the CNBC interview that Anadarko’s Mozambique liquefied natural gas (LNG) export project and its broad Gulf of Mexico (GOM) prospects are “not synergistic with us.” Both are in Chevron’s wheelhouse.

“But the reality is, that’s only about 15% of the value of this deal. So, where the money’s going to be made, where the value is going to be added, is in the development of the shale.”

Why, Faber asked, would Oxy proceed if its proposal “clearly” did not appeal to Anadarko’s board?

In July 2017, Oxy made its “first approach” to discuss a merger with CEO Al Walker, Hollub said. “Since then, we’ve been in friendly transactions and conversation and engagement. And even today, this is still a friendly engagement…”

Hollub disagreed that many will view Oxy’s offer as hostile. Oxy has “the most compelling bid out there today, and we can add the most value through the shale development,” she told Faber.

Asked if Oxy had been looking at other Lower 48 developments beyond Anadarko, Hollub said “in the two years that we’ve been working on this, there is no other opportunity that has the upside potential that this does. This is one of those very rare opportunities.”

The Oxy CEO claimed that in the Delaware sub-basin, Oxy wells perform about 74% better than Anadarko’s, with lower costs overall. With more than 10,000 wells that could be drilled, “that’s a huge upside.”

One of the Anadarko board’s concerns is said to be the price of Oxy shares. Faber asked what assurances Hollub could give that the Oxy share price would hold up, given shareholder concerns.

“We delivered a return on capital employed of 18% in 2018,” she said. “That’s the best we’ve delivered since 2011. And oil prices in 2011 were $95 versus $65 in 2018. And the importance of that is we’re delivering better return on capital employed than the majors are. So, our performance is better.

“What we haven’t had a chance to do is talk to our shareholders and help them understand the strategy here and how we view this,” Hollub said. “Now…we’ll have the opportunity to be clearer with them about what we intend to do and why this makes sense.” She said she was confident shareholders would support the merger.

The proposed transaction would enhance Oxy’s position as one of the largest producers in the Permian with an estimated 533,000 boe/d of total output. Anadarko also is a leading operator in Colorado’s Denver-Julesburg Basin, the GOM, as well as Algeria and Ghana, with growing LNG opportunities.

According to Oxy, the combination would lead to more than 1.4 million boe/d of current production. Additionally, Oxy wants to leverage existing initiatives to use its carbon dioxide enhanced oil recovery expertise and infrastructure “for economic and social benefit by applying its low carbon strategy to Anadarko’s asset base.”

The merger is expected to be accretive to Oxy’s cash flow and free cash flow (FCF) on a per share basis “after dividends in 2020 and beyond…” Oxy said it also has identified $3.5 billion in annual FCF improvements that would be “fully achieved by 2021, comprised of $2 billion in annual pre-tax run-rate cost synergies, and $1.5 billion of capital reductions, with the potential for further upside…

“The annual capital reduction will be delivered in the first year and result in moderating near-term production growth from 10-15% on a combined basis.”