Anadarko Petroleum Corp. (APC) said Friday that it reached an amicable resolution in its long-standing dispute with Algerian state-oil company Sonatrach.

The agreement, which must be ratified by the Algerian government, will provide Anadarko about $1.8 billion worth of additional crude volumes in the 12 months following the official sanctioning of the deal. Also, the production-sharing agreement tying both companies will be amended to give Anadarko a bigger take, which at current prices would mean an additional $2.6 billion in net value over the remaining term of the deal.

Anadarko shares rallied on the announcement, trading up 3.46% at $86.50 premarket.

The tax dispute between Anadarko and Sonatrach was sparked by a 2006 Algerian tax law on windfall profits. At the time, many oil-rich governments sought to recast the terms of the deals they had signed with foreign oil companies in the midst of rising prices for energy.

"We are very pleased to have reached a fair and balanced resolution that will return significant value to Anadarko," said Anadarko President and Chief Operating Officer Al Walker. "This amicable solution maintains our long-standing partnership with Sonatrach that has achieved tremendous success in Algeria ."

Anadarko says it expects the Algerian government to approve the settlement within the next four months.

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