Chevron Corp has announced its acquisition of shale producer PDC Energy Inc in a deal worth $7.6 billion. The acquisition will add 10% to Chevron’s reserves, giving it future production in the United States. The deal values PDC at $72 per share, representing a premium of 14% to its 10-day average as of Friday. The acquisition will add 260,000 barrels of oil and gas production per day to Chevron’s output as soon as 2024. Chevron executives have been saying since last year that the company was looking for acquisitions in the U.S. The company also recently flagged it wanted to reduce its cash stockpile in a way that would enhance shareholder profitability.
Chevron has been under pressure on Wall Street to show it can keep expanding production after 2027 as its main shale holdings in the Permian Basin of West Texas and New Mexico near their peak output. The deal will increase Chevron’s capital spending by about $1 billion per year, raising its range to $14 billion to $16 billion through 2027, the company said. The PDC Energy deal is Chevron’s second in three years to bulk up operations in Colorado and Wyoming. The No. 2 U.S. oil producer is one of the top producers in the Denver-Julesburg Basin after its $13 billion acquisition of Noble Energy in 2020.
The acquisition of PDC Energy Inc will increase Chevron’s oil and gas footprint in the United States. The deal is expected to close by year-end, and it will add about $1 billion to both its capital expenditures and free cash flow as soon as 2024. Chevron executives have been saying since last year that the company was looking for acquisitions in the U.S. The company also recently flagged it wanted to reduce its cash stockpile in a way that would enhance shareholder profitability. The deal will increase Chevron’s capital spending by about $1 billion per year, raising its range to $14 billion to $16 billion through 2027, the company said.
Keywords: Chevron, PDC Energy Inc, acquisition, oil and gas, United States, capital expenditures, free cash flow, shareholder profitability.