Chevron to acquire PDC Energy in $6.3 billion all-stock deal
13 Jul 2023
According to reports, US-based Chevron Corporation — one of the top oil & gas firms in the world — has signed a definitive agreement with PDC Energy, an energy production firm, to acquire all of PDC Energy’s outstanding shares in an all-stock deal with an estimated value of US$6.3 billion (US$ 72 per share).
Strong cash flows, low break-even production and growth opportunities in the Denver-Julesburg Basin and the Permain Basin are some of the key gains from this deal for Chevron.
- The transaction will be accretive to all the prime financial measures within the first year after the deal closes, Chevron hopes.
- Chevron hopes to add US$ 1 billion in annual free cash flow at US$ 70 per barrel Brent, and US$ 3.50 per mcf Henry Hub.
- The proposed acquisition will boost Chevron’s proven reserves by 10% (at an acquisition cost under US$ 7 per barrel of oil equivalent, or BOE).
- Chevron hopes that its new presence in the DJ Basin (275,000 net acres of land) adjacent to its existing operations will yield financial and operational synergies for Chevron Corporation.
- Chevron hopes to integrate its existing capital-efficient development operations with the 25,000-acre Permain Basin, which is under production.
- Chevron hopes to boost its capex by US$ 1 billion per year.
- After the successful closure of this all-stock deal, Chevron anticipates issuing approximately about 45 million shares of common stock.
- The total transaction value of US$ 7.6 billion includes a net debt component. The transaction is expected to close by the end of 2023.