PDC Energy to acquire SRC Energy in $1.7-billion deal

PDC Energy Inc. has agreed to acquire SRC Energy Inc. in an all-stock transaction valued at $1.7 billion, including SRC’s net debt of $685 million.

PDC Energy Inc. has agreed to acquire SRC Energy Inc. in an all-stock transaction valued at $1.7 billion, including SRC’s net debt of $685 million.

With 182,000 net acres in Weld County, Colo., and pro forma second-quarter 2019 total production of 200,000 boe/d (166,000 boe/d in the Wattenberg), the combine would be the second-largest producer in the DJ basin, PDC said. In addition, PDC holds 36,000 net acres in the Delaware basin.

The consolidated footprint will enable a long-term development plan focused on long laterals and trucking elimination, PCD said. Over 95% of anticipated oil production will be transported via pipeline, it said.

Some 80% of the pro forma gross acreage position is in unincorporated rural Weld County, while the remaining 20% is within Weld County local municipal boundaries, with the city of Greeley accounting for half of that total. About half of municipal permits submitted have received local approval, with the remaining in process.

In 2020, PDC plans to invest $1.2-1.4 billion to operate three Wattenberg and two Delaware basin drilling rigs. The plan is expected to generate $275 million in free cash flow assuming $55/bbl and $2.70/Mcf NYMEX oil and gas prices, respectively, with full-year production averaging 200,000-220,000 boe/d.

The combine will be led by PDC’s executive management and will remain based in Denver. PDCs’ board will expand to nine with two members from the SRC board expected to be included.

Upon closing—expected in this year’s fourth quarter subject to closing conditions as well as regulatory and shareholder approvals—PDC shareholders will own 62% of the combine and SRC shareholders will own 38%.

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