HOUSTON (Reuters) – Occidental Petroleum Corp on Wednesday started the first takeover battle for a major oil company in years, offering $38 billion for Anadarko Petroleum Corp, a bid that topped a $33 billion offer by Chevron Corp.

Both suitors are offering a premium for Anadarko’s holdings in the Permian Basin of West Texas and New Mexico. The vast shale field holds oil and gas deposits that can produce supplies for decades using new, low-cost drilling techniques.

Occidental’s surprise $76-per-share bid is valued at $57 billion, including debt. That is well above Chevron’s $65-per-share offer, worth $50 billion including debt, and would make an Occidental-Anadarko deal the fourth-largest in terms of oil production.

Anadarko said it had received the bid, but had not yet determined whether it was a “superior proposal,” and for now reaffirmed its recommendation of a sale to Chevron.

“We are confident the transaction agreed to by Chevron and Anadarko will be completed,” said Chevron spokesman Kent Robertson.

Occidental, meanwhile, said it boosted the cash portion of its offer to 50 percent. Chevron offered 25 percent cash and 75 percent stock.

Anadarko shares jumped 11.6 percent to close at $71.40, well above the $65 per share offered by Chevron. Occidental shares dipped 0.6 percent to $62 and Chevron’s were 3.1 percent lower at $118.28 on the day.

A deal would add nearly a quarter million acres to Occidental’s holdings in the lucrative Permian shale basin, and double its global production to 1.4 million barrels of oil and gas per day.

“We are very confident. Our proposal is so strong, it’s definitely superior, and we now know the value which we can communicate to shareholders,” Vicki Hollub, Occidental’s chief executive officer, said in an interview. She said the deal would boost cash flow and allow Occidental to raise its dividend over time.

Still, Occidental has lost more than 7 percent of its value since it disclosed its interest in Anadarko. It faces hurdles to sell its own shareholders on the deal.

“We don’t think a bidding war with Chevron (CVX) is in the best interest of OXY shareholders,” analysts at KeyBanc Capital Markets wrote in a client note.

Occidental is “going head-to-head against a supermajor four times its size” and Chevron is likely to win, said Pavel Molchanov of Raymond James, adding “this is an extremely fluid situation.”

VALUE ‘IN THE SHALE’

A combined Occidental and Anadarko would be a “long-term leader in the Permian,” Hollub said, noting that Anadarko’s shale assets in the Permian Basin and in Colorado are most appealing to Occidental.

“The value of this is in the shale,” said Hollub, who ran Occidental’s Permian Basin operations before becoming CEO in 2016.

The Anadarko board will have to give the Occidental offer “strong consideration,” and would be “hard pressed” to reject it outright even though it clearly prefers to sell to Chevron, said Brian Kessens, portfolio manager at Tortoise Capital, which holds shares in an Anadarko pipeline business and in Chevron.

Occidental’s latest offer could pressure Chevron to revise its bid, analysts said, although Kessens said Chevron has no incentive to do so unless the Anadarko board accepts Occidental’s.

“Something tells me this isn’t going to be the last foray between these companies,” Kessens said.

Occidental must deliver strong growth or it could itself become a takeover target, said a person familiar with merger-and-acquisition discussions. Currently, there about $40 billion of onshore oil assets up for sale in the United States.

Occidental’s offer would require shareholder votes at both companies. Anadarko would have to pay Chevron a $1 billion break-up fee if its board chooses Occidental’s offer.

“It is unfortunate that Anadarko agreed to pay a break up fee of $1 billion, representing approximately $2 per share, without even picking up the phone to speak to us after we made two proposals during the week of April 8,” Hollub wrote in a letter to Anadarko’s board.

Analysts have said they expect further industry consolidation. Small oil producers revolutionized the sector through advances in horizontal drilling and fracking, but their stock prices have languished with investors pressing for higher returns.

The Permian produces about 4 million barrels per day (bpd), and is expected to hit 5.4 million bpd by 2023, according to consultancy IHS Markit, more than the total production of any OPEC country other than Saudi Arabia.

Occidental has offered $38 in cash and 0.6094 of its shares for each share of Anadarko. It represents a premium of 19 percent to Anadarko’s closing price on Tuesday and 62 percent to the closing price on April 11, the day before Chevron made its bid.

Under Chevron’s bid, Anadarko shareholders would receive 0.3869 share of Chevron and $16.25 in cash for each Anadarko share.