Chevron announced it reached a deal to buy Anadarko Petroleum for $65 per share — a 39% premium to the company’s closing stock price on Thursday.

Chevron said Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share, and the deal would have a total enterprise value of $50 billion. Chevron said the deal would produce $2 billion in annual cost savings within a year of closing.

The purchase would be funded by 200 million new shares and $8 billion in cash. Chevron would also assume $15 billion in debt. It also plans to sell assets worth up to $20 billion between 2020 and 2022, the company said.

“This is the biggest upstream deal since Shell and BG in 2015,” said Roy Martin, a senior analyst at Wood Mackenzie.

CNBC, citing unnamed sources, reported that Occidental Petroleum had been prepared to pay $70 for Anadarko, but the acquisition by Chevron better positions it to compete with larger rivals Exxon Mobil, Royal Dutch Shell, and BP.

“Chevron now joins the ranks of the UltraMajors — and the big three becomes the big four,” Martin said.

Chevron was advised by Credit Suisse Securities. Anadarko was advised by Evercore and Goldman Sachs.

“This transaction builds strength on strength for Chevron,” chairman and CEO Michael Wirth said in a statement. “The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deepwater Gulf of Mexico capabilities, and will grow our LNG business. It creates attractive growth opportunities in areas that play to Chevron’s operational strengths and underscores our commitment to short-cycle, higher-return investments.”

On closing, Chevron would keep its headquarters in San Ramon, California, and Wirth would remain CEO.

The deal is expected to close in the second half of the year.