PDC, SRC Energy to merge, creating second-largest Weld County O&G operator

DENVER — Denver-based oil companies PDC Energy Inc. (Nasdaq: PDCE) and SRC Energy Inc. (NYSEAMERICAN: SRCI) are merging in a deal estimated at about $1.7 billion.

The two companies plan to merge in an all-stock deal, creating a company that controls about 182,000 acres in Weld County, according to filings with the U.S. Securities and Exchange Commission Monday.

The merger would create the second-largest producer of oil and gas in the Denver-Julesberg Basin at approximately 166 million barrels of oil and gas equivalents daily, but would still be dwarfed by Occidental Oil Corp., (NYSE: OXY) which produces 301 million barrels per day, according to Q2 2019 figures from the two companies.

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The companies say the consolidated holdings will save $50 million in administrative expenses annually and create $800 million of free cash flow between the second half of this year and year-end 2021.

“We remain committed to our core Delaware Basin acreage position and are confident the combined company with its multi-basin focus will be well-positioned to deliver superior shareholder returns,” PDC Energy president and CEO Bart Brookman said in a prepared statement. “With an even more competitive cost structure, including peer-leading G&A and LOE per Boe, the combined company will have the financial flexibility and sustainable free cash flow to return significant capital to shareholders and capitalize on additional growth opportunities.”

PDC Energy currently operates 4,236 wells in Weld County, according to oil and gas database DrillingEdge.

PDC also operates approximately 36,000 acres in the Delaware Basin in west Texas.

The companies plan to complete the deal by the end of Q4 2019 pending regulatory approval, with a deadline date of Feb. 25 and an option to extend to March 25.

PDC spokeswoman said the company employs about 250 people in its Evans office, but said it’s too early in the merge process to say how that headcount will be affected.

SRC did not respond to a request for comment Monday morning.