PDC Energy (PDCE) Acquires Two Delaware Basin Companies for $1.5B
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PDC Energy, Inc. (“PDC” or the “Company”) (Nasdaq: PDCE) today announced that it has entered into definitive agreements to acquire two privately held companies managed by Kimmeridge Energy Management Company for approximately $1.5 billion, subject to due diligence and certain customary closing conditions. The privately negotiated transaction includes approximately 57,000 net acres in Reeves and Culberson Counties, Texas with an average working interest of approximately 93 percent. Current net production is approximately 7,000 barrels of oil equivalent per day (“Boe/d”) from 21 horizontal wells, with two additional wells in the completion and flowback phase. The transaction is expected to close in the fourth quarter of 2016.
Key Acquisition Highlights
- Approximately $1.5 billion privately negotiated acquisition of approximately 57,000 net acres in the Core Delaware Basin with approximately 41,000 net acres in Reeves County and 16,000 net acres in Culberson County.
- Approximately 7,000 Boe/d of net production consisting of approximately 42 percent oil and 65 percent liquids.
- More than 700 gross estimated horizontal drilling locations targeting the Wolfcamp A, B and C zones with significant upside potential through downspacing and additional intervals.
- Approximately 530 million barrels of oil equivalent (“MMBoe”) of preliminary estimated net reserve potential based on combined total of only 4 to 12 wells per section.
- Scalable owned and operated midstream infrastructure including gas gathering systems, pipelines, right-of-ways and five salt water disposal wells.
President and Chief Executive Officer, Bart Brookman commented, “This is truly a remarkable opportunity for PDC, its employees and its shareholders. Through a methodical approach, we were able to execute our stated acquisition strategy and add an extensive inventory of highly-economic drilling locations that complement our already strong portfolio. I am extremely thrilled with the work of our team and am very excited to begin applying our operating expertise to this premier Delaware Basin acreage position.”
Transaction Terms and Financing
Consideration in the transaction includes approximately $915 million of cash and approximately 9.4 million shares of PDC Energy common stock privately placed to the sellers and valued at approximately $590 million. The Company intends to fund the cash portion of the acquisition through potential equity and debt financings prior to closing. Through committed financing from J.P. Morgan, the Company has secured incremental liquidity, bringing its current liquidity to approximately $1.4 billion.
The Company will continue to prioritize its balance sheet strength and is targeting a pro forma debt to EBITDAX of less than 2.5 times.
J.P. Morgan served as the exclusive financial advisor to PDC on the acquisition and sole provider of committed financing. Davis Graham & Stubbs LLP served as legal counsel to PDC. Evercore served as financial advisor and Sidley Austin LLP served as legal counsel to each of the sellers on the acquisition.
2016 Delaware Basin Operating Plan
In the remainder of the year, the Company plans to spud approximately nine horizontal wells – seven of which have 1.5 or 2 mile laterals – and expand certain midstream infrastructure for an expected total capital outlay of approximately $55 to $65 million. Additionally, the Company is finishing completion operations on two horizontal wells and plans to operate two drilling rigs by year-end 2016.
Lance Lauck, Executive Vice President Corporate Development and Strategy, commented, “This acquisition is a significant step towards executing our vision of becoming a premier mid-cap E&P company. Adding this Delaware position to our Core Wattenberg acreage gives us more than one billion net Boe of liquid-rich reserve potential in two of the top-tier U.S. onshore basins. We are very well positioned to continue providing strong returns and delivering long-term shareholder value. PDC will continue to emphasize the importance of a strong balance sheet while we pursue additional value creation through operational enhancements and inventory expansion.”
Conference Call Information
Please join PDC senior management for an investor call on Wednesday, August 24, 2016 at 11 a.m. Eastern time for a detailed discussion on this transaction. The related slide presentation will be available on PDC’s website at www.pdce.com.
Conference Call and Webcast:Date/Time: Wednesday, August 24, 2016, 11:00 a.m. ETWebcast available at: www.pdce.com Domestic (toll free): 877-312-5520International: 253-237-1142Conference ID: 69242652
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Create E-mail Alert Related CategoriesCorporate News, Hot Corp. News, Hot M&A, Management Comments, Mergers and Acquisitions
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