Chevron Corp., the second-largest U.S. oil company, has agreed to buy third-ranked Texaco Inc.
in a $35 billion stock deal that will form an energy powerhouse, sources familiar with the situation said. If approved by regulators, the deal will be the latest in a wave of transactions that reshaped the industry by creating behemoths such as Exxon Mobil and BP Amoco. Chevron and Texaco rank as the world's fifth- and seventh-largest oil companies
and long have been viewed as ripe to participate in the consolidation sweeping the industry.
The new company, to be called Chevron Texaco Corp.
, will also go head-to-head against other industry leaders like Royal Dutch/Shell and TotalFina Elf. The boards of both companies approved the deal on Sunday after details of the transaction were finalized over the weekend, said the sources, who spoke on condition of anonymity. Details of the transaction had leaked out over the past few days and a formal announcement was expected early Monday morning.
The new company will be run by current Chevron boss O'Reilly, the sources said. Texaco head Peter Bijur will serve as vice chairman of the combined company and will be responsible for refining and marketing operations, power and chemicals.