Multinational energy company Chevron has reached an agreement to acquire US-based shale producer PDC Energy (PDC) in a transaction valued at $6.3bn.
Under the terms of the agreement, Chevron will acquire all of the outstanding shares of PDC for $72 a share.
The company will issue PDC shareholders 0.4638 Chevron shares in exchange for each PDC share.
With a total enterprise value of $7.3bn, including debt, the transaction will expand Chevron’s footprint in the US.
The acquisition includes high-quality assets that are complementary to the company’s operations in key production basins in the country.
The assets are expected to provide higher returns in lower-carbon-intensity basins.
The acquisition is expected to add 275,000 acres in proximity to the company’s existing position in the Denver-Julesburg (DJ) Basin.
It will also strengthen Chevron’s position in the Permian Basin through additional acreage of 25,000 acres that are held by production.
The acquired acreage in the DJ Basin is expected to add proved reserves of more than one billion barrels of oil equivalent. It is proposed that the Permian Basin acreage of PDC be integrated into Chevron’s existing development operations.
It will add 10% to the company’s proved reserves at an estimated cost of less than $7 a barrel.
The transaction will also lift the oil and gas major’s capital expenditure (capex) by $1bn a year and deliver around $400m in capex efficiencies, upon completion.
Chevron chairman and CEO Mike Wirth said: “PDC’s attractive and complementary assets strengthen Chevron’s position in key US production basins.
“This transaction is accretive to all important financial measures and enhances Chevron’s objective to safely deliver higher returns and lower carbon.”
The transaction has received approval by the boards of directors of both companies.
Subject to approval of PDC shareholders and other closing conditions, the acquisition is anticipated to be completed by the end of this year.
In February this year, Chevron agreed to sells its assets in Myanmar to Canadian company MTI.