Chevron expands presence in DJ Basin with PDC purchase

DENVER — Denver-based PDC Energy Inc. (Nasdaq: PDCE), which has operations in the Denver Julesburg Basin in Northern Colorado, has been acquired by Chevron Corp. (NYSE: CVX) in a deal said to be worth $7.6 billion.

Mike Wirth, chairman and CEO of Chevron, led a session with stockholders Monday in which he said the deal is a good fit for his company. “This transaction is aligned with our objective to safely deliver higher returns and lower carbon through a disciplined use of capital. The combination is expected to strengthen our position in the DJ Basin and add high-return investment opportunities that also lower our overall upstream carbon intensity. We expect PDC’s Delaware Basin (southern New Mexico and west Texas) acreage to be efficiently integrated into our leading position in the Permian,” he said.

The deal is “expected to be accretive in all important financial measures in the first year after closing assuming strip prices. We anticipate Chevron’s annual free cash flow to increase by about $1 billion including cost synergies and capex efficiencies,” he said.

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Each PDC shareholder will receive 0.4638 Chevron shares as total consideration, which represents a 14% premium on the 10-day average closing price, Wirth said. “They’ll have continued ownership in the business through shares of a much larger, more diversified company with long-standing financial priorities of dividend growth, disciplined capital investment, a strong balance sheet and share buybacks through-the-cycle.”

Chevron said that PDC positions in the DJ Basin are often adjacent to Chevron positions, making the acquisition easy to manage. Regulatory approvals in Weld County extend into 2028, the company said.

“The Colorado business will be one of our top five assets in terms of production and free cash flow,” Wirth said.

Bart Brookman, CEO of PDC, said the deal was unanimously approved by PDC’s board of directors. 

“An exciting day for PDC, but let me begin by expressing my sincere gratitude to all the PDC employees. It is their dedication and extraordinary talent that launched PDC on its trajectory of excellence and positioned us for a transaction of this magnitude. I am exceptionally proud of our team.”Chevron purchased Noble Midstream Partners LP in May 2021, a transaction preceded in October 2020 with the purchase of the rest of Noble Energy Inc.