Global energy major Chevron Corp. (NYSE:CVX) has agreed to acquire PDC Energy (NASDAQ:PDCE) at $72 per share. The all-stock deal points to a total enterprise value of $7.6 billion for PDC.
The move provides Chevron strategic development avenues adjacent to its presence in the Denver-Julesberg (DJ) Basin as also an additional presence in the Permian Basin. The acquisition is expected to provide Chevron $1 billion in additional free cash flow each year (at $70 per barrel Brent) and also increases its proved reserves by 10%.
Under the agreement, stockholders of PDC will receive 0.4638 CVX shares for each PDC share held by them. The transaction is expected to close by the end of this year and in aggregate, upon closing, CVX will issue about 41 million common shares.
Overall, the Street has a Moderate Buy consensus rating on Chevron alongside a $190 consensus price target. PDC shares are up nearly 8.6% at the time of publishing today.
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