Chevron logo. REUTERS
The American oil giant Chevron, the third largest oil company in the world by market value, accumulating a capitalization of more than 290,000 million dollars, announced on Monday the purchase of PDC Energy. The deal will be executed by exchanging all of PDC’s shares, valuing them at $72 each, 14% more than their average price over the past week. PDC shareholders will receive 0.4638 Chevron shares for each PDC share. In total, Chevron will pay shareholders 6.3 billion dollars, while the total value of the operation increases to 7.6 billion if the PDC Energy debt that Chevron will assume is taken into account.
The operation has had the unanimous approval of both boards of directors, but its completion will be subject to the acceptance by the shareholders of PDC Energy and the approval of the competition authorities. It is estimated that if it goes ahead it will close at the end of this year. Chevron’s shares have reacted to the news with a slight fall of around 1%, while those of PDC Energy appreciate 8% to exceed $70 per share.
The purchasing firm hopes to get oil out of this takeover. According to the estimates that Chevron has shared, they contemplate that PDC Energy will contribute 1,000 million more annually to the company’s cash flow, assuming that the price of oil will be around 70 dollars in 2024, the price at which market futures currently point.
In addition, with the purchase, Chevron will increase its strategic crude oil reserves. Specifically, it will add around 1,000 million barrels of oil “in economic areas and that allow operational synergies”, which represents 10% of Chevron’s current reserves. With these magnitudes, Chevron would be paying around 7 dollars per barrel of oil, a cost to which the expenses associated with its exploitation would have to be added.
On the other hand, Chevron expects the transaction to achieve cost synergies of around 100 million dollars (93 million euros) before taxes within a year of closing the transaction. Morgan Stanley will be the entity in charge of advising Chevron throughout the acquisition process, while JP Morgan will do the same with PDC Energy.
“Although this is a small move by Chevron standards – the total price is less than the company’s first-quarter cash flow – PDC fits perfectly with CEO Mike Wirth’s strategic plan to grow prudently in certain areas. that fit in with existing assets rather than taking part in large deals. Already in 2020, Chevron carried out a similar movement, the purchase of Noble Energy for 5,000 million dollars, an acquisition that was acclaimed by analysts, ”the Bloomberg news agency writes about the acquisition.
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