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Goldman Sachs analyst Neil Mehta reinstated Chevron (CVX)  as a buy and added it to the firm's "Americas Conviction List," saying he supports the oil giant's capital discipline in its decision to walk away from the purchase of Anadarko Petroleum (APC)  .

Anadarko terminated its merger agreement with Chevron and accepted Occidental Petroleum's  (OXY)  $38 billion offer to buy the energy company. Chevron will get a $1 billion breakup fee, and plans to increase its share buyback program to $5 billion a year.

"Following the termination of the Chevron-Anadarko signed merger agreement ... our $144 12-month P/E, EV/DACF and dividend yield based target implies 24% total return. We acknowledge that our positive view on Chevron could be met with increased investor debate and look to address the following areas of potential investor queries in this report," Goldman stated.

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Mehta said in a note to clients that the Anadarko deal was likely an "opportunistic approach" rather than a "defensive pursuit needed to bridge gaps in the company's portfolio."

Mehta also turned bullish on Chevron due to the company's free cash flow generation and strong capital returns program, according to Bloomberg. His target on the company's stock is $4 above the consensus of $140; Chevron has 20 buys, eight holds and no sell ratings, according to Bloomberg.

Chevron was rising slightly Wednesday to $121.75. 

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