(Reuters) - Chevron Corp abandoned its pursuit of Anadarko Petroleum Corp on Thursday, outmanoeuvred by a higher rival bid of $38 billion (29.23 billion pounds) that included more than three times as much cash.
The decision leaves Occidental Petroleum Corp as the likely victor in a contest that again proved the allure of U.S. shale.
Occidental has said it plans to shed most of Anadarko's non-shale properties in a deal that cements its position in the Permian Basin, the top U.S. shale field.
Chevron, whose shares had gained 25 percent in the two years prior to its Anadarko offer, declined to revise its offer after Occidental boosted the cash portion of its $76-a-share bid.
The no. 2 U.S. oil producer stands to receive a $1 billion breakup fee.
"Winning in any environment doesn't mean winning at any cost," said Chevron Chief Executive Michael Wirth.
"Cost and capital discipline always matter, and we will not dilute our returns or erode value for our shareholders for the sake of doing a deal."
Shares of Occidental fell 4.2 percent to $57.66 before the bell, Anadarko shares were down 1.8 percent at $74.51. Chevron shares were up 3.7 percent at $121.84.
(Reporting by Shanti S Nair in Bengaluru and Gary McWilliams in Houston; Editing by Sriraj Kalluvila)
