Shares of U.S. Steel Corp. (NYSE: X) rose moderately and Lone Star Technologies, Inc. (NYSE: LSS) rocketed Thursday, after an announcement by U.S. Steel that it had agreed to buy Lone Star.

U.S. Steel will pay $67.50 per share, a 39 percent premium over oil-field pipe maker Lone Star’s closing price yesterday. The deal would make the combined firm the largest producer of steel tubes in North America.

Shares of U.S. Steel rose $2.81, or 2.9 percent, to $100.42 in mid-day trading on the New York Stock Exchange. Shares of Lone Star shot up $17.62, or 36.4 percent to $66.07.

U.S. Steel produces seamless tubes, while Lone Star produces welded tubes. The transaction will boost the combined firm’s steel tube production to 2.8 million tons.

This transaction represents a compelling strategic opportunity for U. S. Steel to strengthen our position as a supplier to the robust oil and natural-gas sector, said CEO John Surma said in a statement.

The purchase involves U.S. Steel cash and financing through credit facilities provided by JP Morgan. The deal has been approved by the boards of both companies but still requires shareholder and regulatory approval.

It is expected to close by the third quarter of 2007.