Chevron to add DJ basin, Permian basin acreage through $7.6 billion deal

Chevron has agreed to acquire PDC Energy in an all-stock transaction that would increase its production volumes by about 8%. Total enterprise value of the deal, including debt, is $7.6 billion.

OGJ editors

Chevron Corp., has agreed to acquire PDC Energy Inc., Denver, in an all-stock transaction valued at $6.3 billion that would increase its production volumes by about 8%. Total enterprise value of the deal, including debt, is $7.6 billion.

The deal adds low breakeven production and development opportunities adjacent to Chevron’s current position in the Denver-Julesburg (DJ) basin, as well as additional acreage in the Permian basin.

In the DJ basin, Chevron would gain 275,000 net acres adjacent to existing operations that add over 1 billion boe of proved reserves. PDC operations in the basin are focused on horizontal Niobrara and Codell development in Wattenberg field in Weld County, Colo. First-quarter 2023 production was 216,000 boe/d (60% liquids).

In the Permian basin, the deal gives Chevron 25,000 net acres that are held by production and will be integrated into Chevron’s existing development operations. PDC's operations in the basin are focused on the Delaware basin in Reeves County, Tex, primarily targeting Wolfcamp A and B development. In this year’s first quarter, the acreage produced about 28,000 boe/d (62% liquids).

Chevron expects to increase its capital spending by about $1 billion per year, raising its guidance to $14-16 billion through 2027, after realizing about $400 million in capital efficiencies post-closing, which is expected by end-2023.

The deal is expected to achieve run-rate cost synergies of around $100 million before tax within a year of closing, Chevron said.

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