Chevron to buy PDC Energy in an all-stock deal valued at $6.3 billion, at premium of nearly 11%

Chevron Corp.
CVX,
+0.79%
announced Monday an agreement to buy Colorado-based oil and gas producer PDC Energy Inc.
PDCE,
+0.25%
in an all-stock deal valued at $6.3 billion, or $7.6 billion when including debt. PDC’s stock was halted for new until 8:30 a.m. Eastern, while Chevron shares fell 0.4%. Under terms of the deal, PDC shareholders will receive 0.4638 Chevron shares for each PDC share they own. Based on Friday’s closing price for Chevron’s stock of $155.23, the deal values PDC shares at $72 each, a 10.6% premium to PDC’s Friday closing price of $65.12. Chevron said it expects the deal, which is expected to close by the end of 2023, to add to “all key financial measures” within the first year after closing, and to add about $1 billion in free cash flow per year with Brent at $70 a barrel. Synergies from the deal are expected to be around $100 million. “PDC’s attractive and complementary assets strengthen Chevron’s position in key U.S. production basins,” said Chevron Chief Executive Officer Mike Wirth. PDC’s stock has gained 2.6% year to date through Friday, while Chevron’s stock has dropped 13.5% and the Dow Jones Industrial Average
DJIA,
-0.33%
has gained 0.8%.