Chevron to Absorb PDC Energy in $6.3B Deal

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The all-stock transaction, valued at $6.3 billion, is expected to enhance Chevron's operational presence in key U.S. basins.

Chevron Corporation has declared its intent to acquire PDC Energy, Inc., having signed a definitive agreement to purchase all outstanding shares of the latter company. The all-stock transaction, valued at $6.3 billion or $72 per share, is predicated on Chevron’s closing price as of May 19, 2023. Under the agreement terms, PDC shareholders will acquire 0.4638 shares of Chevron per each PDC share they hold. The total value of the acquisition, inclusive of debt, amounts to $7.6 billion.

This acquisition furnishes Chevron with high-grade assets projected to yield superior returns in less carbon-intensive U.S. basins. PDC’s robust free cash flow, low production breakeven point, and development opportunities align well with Chevron’s current position in the Denver-Julesburg (DJ) Basin. In addition, PDC offers Chevron further acreage in the Permian Basin.

Chevron Chairman and CEO Mike Wirth commented, "PDC's valuable and synergistic assets bolster Chevron’s stance in crucial U.S. production basins. This transaction augments all significant financial indicators and advances Chevron’s goal of safely providing higher returns and reducing carbon emissions."

Bart Brookman, PDC President and CEO, noted that the deal "provides a global portfolio of best-in-class assets" and believes that PDC’s assets will contribute to Chevron's movement towards a lower carbon energy future.


The transaction, which enhances earnings per share, free cash flow, and return on capital employed (ROCE), is predicted to add approximately $1 billion in annual free cash flow for Chevron. The acquisition is also expected to boost Chevron's proven reserves by 10% at a cost under $7 per barrel of oil equivalent (BOE). Chevron's planned capex increase of about $1 billion per year is anticipated to offset around $400 million in capex efficiencies after closing.

The acquisition will be finalized through Chevron's equity. Upon closing, Chevron will issue approximately 41 million shares of common stock. The total enterprise value of $7.6 billion includes net debt. The transaction has received unanimous approval from the Boards of Directors of both companies and is expected to close by the end of 2023, pending PDC shareholder approval, regulatory approvals, and other customary closing conditions.

Morgan Stanley & Co. LLC is serving as the lead financial advisor to Chevron, while J.P. Morgan Securities LLC is fulfilling a similar role for PDC Energy. Legal advice for the companies is being provided by Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Wachtell, Lipton, Rosen & Katz, in tandem with Davis Graham & Stubbs.