Chevron has agreed to acquire PDC Energy, a Colorado-based oil and gas company, in an all-stock deal that values the latter at $7.6bn, with the inclusion of its debt.
The transaction is valued at $72 per share or $6.3bn.
Listed on Nasdaq, PDC Energy specifically operates in the core of the Wattenberg field, which is a horizontal oil play in Colorado. The exploration and production company, which was founded in 1969, also operates in the Delaware Basin in West Texas.
As per the terms of the deal, shareholders of PDC Energy will exchange each of their shares in the company for 0.4638 Chevron shares.
PDC Energy president and CEO Bart Brookman said: “The combination with Chevron is a great opportunity for PDC to maximise value for our shareholders. It provides a global portfolio of best-in-class assets.
“I look forward to blending our highly complementary organisations, and I’m excited that PDC’s assets will help propel Chevron toward our shared goal for a lower carbon energy future.”
Chevron said that the deal enables access to high-quality assets that are likely to yield higher returns in lower carbon intensity basins in the US.
Besides, PDC Energy offers it robust free cash flow, low breakeven production, and scope for development near its own position in the Denver-Julesburg (DJ) Basin. The deal also gives Chevron additional acreage to consolidate its position in the Permian Basin.
In the DJ Basin, Chevron will add 275,000 net acres with proved reserves of more than one billion barrel of oil equivalent (BOE) of proved reserves in largely economic locations that enable synergies in capital and operations.
Chevron will gain 25,000 net acres in the Permian Basin that are held by production which will be integrated into the company’s existing capital efficient development.
Chevron chairman and CEO Mike Wirth said: “PDC’s attractive and complementary assets strengthen Chevron’s position in key U.S. production basins.
“This transaction is accretive to all important financial measures and enhances Chevron’s objective to safely deliver higher returns and lower carbon. We look forward to welcoming PDC’s team and shareholders to Chevron and continuing both companies’ focus on safe and reliable operations.”
The deal has been approved unanimously by the boards of directors of both parties.
Subject to PDC Energy’s shareholder approval, regulatory approvals, and other customary conditions, the transaction is anticipated to close by the year-end.
