Occidental Petroleum ( OXY) agreed Thursday to buy fellow oil and gas company Vintage Petroleum ( VPI), expanding its holdings in California and South America.

For each Vintage share, Occidental will pay $20 in cash, plus 0.42 of its own shares. Calculated using Occidental's most recent closing price, that values the stock portion of the acquisition at $31.49 a share, taking the total consideration to $51.49.

Based on Vintage having 68.3 million shares, the deal is worth more than $3.5 billion.

Vintage was rising $9.03, or 23%, to $47.62 in after-hours trading. Occidental was down 88 cents, or 1%, to $74.10.

As part of the transaction, Occidental plans to implement a stock repurchase program for 9 million shares. Occidental said that on a per-share basis, the acquisition should immediately add to its cash flow, free cash flow and earnings.

Vintage is on track to have about $225 million in cash at the end of the year, and Occidental plans to assume $550 million of the company's debt.

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