BY Richard Summerfield
Chevron Corp has agreed to acquire oil & gas producer PDC Energy in a deal worth $7.6bn.
Under the terms of the deal, Chevron will acquire all of the outstanding shares of PDC in an all-stock transaction valued at $6.3bn, or $72 per share. Based on Chevron’s closing price on 19 May 2023, PDC shareholders will receive 0.4638 shares of Chevron for each PDC share. The total enterprise value of the transaction is $7.6bn.
The deal has been unanimously approved by the boards of directors of both companies and is expected to close by year-end 2023. The acquisition is subject to PDC shareholder approval, as well as regulatory approvals and other customary closing conditions.
“PDC’s attractive and complementary assets strengthen Chevron’s position in key U.S. production basins,” said Mike Wirth, chairman and chief executive of Chevron. “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 combination with Chevron is a great opportunity for PDC to maximize value for our shareholders. It provides a global portfolio of best-in-class assets,” said Bart Brookman, president and chief executive of PDC. “I look forward to blending our highly complementary organizations, and I’m excited that PDC’s assets will help propel Chevron toward our shared goal for a lower carbon energy future.”
The deal for PDC will increase Chevron’s oil & gas footprint in the US, adding around 10 percent to the company’s reserves, giving it future production in the US, as well as adding about $1bn to both its capital expenditures and free cash flow as soon as 2024, or within a year of the deal closing. According to Mr Wirth, the acquisition will add 260,000 barrels of oil and gas production per day to Chevron’s output in 2024. The deal will also increase Chevron’s capital spending by about $1bn per year, raising its range to $14bn to $16bn through 2027.
Chevron has been increasingly active in recent years, completing deals to grow its operations in Colorado and Wyoming. The company, the second largest US oil producer, is one of the top producers in the Denver-Julesburg Basin after its $13bn acquisition of Noble Energy in 2020.
News: Chevron to boost US presence with $7.6 bln PDC Energy buy