Dive Brief:
- Chevron Corp. has agreed to buy oil and gas company PDC Energy in an all-stock agreement worth $6.3 billion, according to a Monday press release.
- The acquisition includes 275,000 net acres in the Denver-Julesburg Basin adjacent to Chevron’s existing operations and 25,000 net acres in the Permian Basin that will be integrated into Chevron’s existing operations in the area.
- The acquisition is expected to grow Chevron’s oil equivalent proved reserves by 10% and add $1 billion to the company’s annual free cash flow if oil stays above $70 per barrel, according to the announcement.
Dive Insight:
The transaction has already been unanimously approved by the boards of directors of both Chevron and PDC Energy and is expected to close by the end of 2023, pending shareholder and regulatory approval.
The DJ basin acreage is expected to add over 1 billion in barrels of oil equivalent to Chevron’s proved reserves.
Chevron has also been involved in the Permian for roughly a century, and already had about 2.2 million acres in the area, producing over 300,000 barrels a day of oil.
“PDC’s attractive and complementary assets strengthen Chevron’s position in key U.S. production basins,” said Chevron Chairman and CEO Mike Wirth. “This transaction is accretive to all important financial measures and enhances Chevron’s objective to safely deliver higher returns and lower carbon.”
This continues Chevron’s recent expansion of its oil production. During its first-quarter earnings report, it noted that it has begun producing oil from the Mad Dog 2 project in the Gulf of Mexico, as well as crude oil liftings from Venezuela, supplying 8.7 million barrels of crude oil to the U.S. during the quarter.
San Ramon, California-based Chevron is one of the world’s largest oil companies, producing crude oil and natural gas and manufacturing transportation fuels, lubricants, petrochemicals and additives. In the U.S., Chevron also owns more than 1,000 ExtraMile Convenience Stores through a joint venture with Jacksons Food Stores.
