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All-Eyes-Are-on-the-Rocky-Mountains-State-as-PDC-Acquires-Great-Western-for-$1.3B

Great Western Petroleum's assets will be acquired by PDC Energy for $1.3 billion. 

A Denver-based producer, Great Western has core operations in Weld and Adams counties in Colorado with 54,000 net acres and about 55,000 boe/d (42% oil / 67% liquids) of PDP. In total, Great Western has 315 operating locations, of which about 125 are DUCs/approved permits. It is owned by affiliates of EIG, TPG Energy Solutions, and The Broe Group. 

As part of the agreement, the acquisition will be financed by issuing 4 million shares of common stock to existing Great Western shareholders and by providing $543 million in cash to the company.

According to PDC’s president and CEO Bart Brookman, besides adding meaningful scale to the company itself, this acquisition simultaneously signals to the market PDC's commitment to ensuring that reliable and sustainable energy production will continue in Colorado for years to come. 

Via this deal, PDC Energy’s position in the D-J basin increases roughly to 230,000 net acres, additionally, shareholder returns will be boosted thanks to the M&A overhang that will be removed. Besides these assets, the company also holds some 25,000 net acres in the Delaware Basin in the Permian. 

If undeveloped acreage is not included, the analysts estimated that the purchase price would be about $24,000 per boe/d of flowing gas.

It is expected that the transaction will result in industry-leading shareholder returns, according to CFO Scott Meyers. The company plans to finance the transaction with cash on hand and borrowings under its credit facility. The Pro forma leverage ratio for PDC is not expected to exceed 1.0x at closing.

In addition to honoring and growing the base dividend, PDC intends to aggressively buy back nearly 60% of its shares while they are trading at an unwarranted discount to intrinsic value. It is planned that PDC will retire more shares by the end of the third quarter than it will issue in connection with the Great Western merger.

As of 2022, PDC Energy expects to run three rigs and 1.5 crews on the combined D-J asset, which is estimated to cost between $900 million and $1 billion in Pro-forma CAPEX. On a Pro-forma basis, pre-tax production will be between 250,000 and 260,000 boe/d, and oil will be between 82,000 and 87,000 barrels/day.

All in all, PDC expects to increase its total production by 25% and its oil production by 35% as a result of the deal. The deal should also result in some synergies including a 15% reduction in overall cost per BOE.

Davis, Graham, and Stubbs LLP provides PDC with legal counsel, and PJT Partners is the exclusive financial adviser. The financial adviser to Great Western is Citi, while the legal counsel is Latham & Watkins LLP.

And if you wish to learn more about various lucrative oil & gas assets, contact our Houston sales office or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.

Tel. +1 713-203-3128

Email: treitmeier@hartenergy.com

Winds of Change: Admiral Sold Its Assets in Delaware Basin

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And Petro-Hunt E&P is the new sheriff in town with 21,430 net acres of leasehold in the Basin, production of which surpasses 7,000 bbl/d and 100 MMcf/d respectively. To take advantage of it, Petro-Hunt plans to begin an active development drilling program on these assets in the coming months heavily upgrading the numbers of its 775 operating oil wells and contributing to over 8,100 non-operated wells. Time will tell, however, whether or not this move will be able to deliver such results.

Pine Wave Energy and Silver Hill Reached an Agreement Over Haynesville Assets — Deal is Sealed

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Looks like Pine pulled the plug on its properties in Caddo Parish, Louisiana, and Harrison and Panola counties, Texas. Which includes a total of 12,500 acres and ownership interests in 10 operated wells with a production capacity of 100 million cubic feet per day along with 18 miles of naturalgas gathering pipelines. Did Pine just give up on Haynesville?

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Shareholder’s payout target was increased by 50% after the largest U.S. independent oil producer surpassed Wall Street’s earnings estimates on growing energy prices, said Houston-based Conoco Phillips Co. on Aug. 4. Due to Western sanctions on major producer Russia throttling energy supply amid a rebound in demand from pandemic lows, oil and gas #prices have soared. Crude has been trading more than 25% higher since the start of the year and results also benefited from high natural gas prices. Meanwhile, shares were down a fraction, to $91.03, in early trading but are up about 26% year to date. Conoco Phillips stated, that the average price obtained for a barrel of oil and gas accelerated 77% from a year earlier to $88.57. The company acknowledges that it has not hedged any of its oil and gas sales to make the most of higher market prices. The capacity of 1.69 million boe/d was in line with Wall Street estimates, however, the company expected the current quarter’s output would be between 1.71 million and 1.76 million boe/d.

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California oil joint venture, Aera Energy, of Exxon Mobil Corp. and ShellPlc is being sold to German asset manager IKAV, according to the agreement of Sept. 1. Shell noted that the sale of its 51.8% membership interest in Aera Energy is for a total consideration of about $2 billion in cash with additional contingent payments based on future oil prices, subject to regulatory approval. However, the total transaction value was not disclosed. Being one of California’s largest oil and gas producers, Aera Energy accounts for nearly 25% of the state’s production. The sale by Exxon Mobil and Shell ends a 25-year-long partnership in California, meanwhile, it persists a streak of divestments of mature oil and gas properties by the two supermajors. Aera Energy LLC operates about 13,000 wells in the San Joaquin Valley in California, producing oil and associated gas. In 2021, Aera took out about 95,000 boe/d. Exxon Mobil’s interests in the Aera oil-production operation in California contained a 48.2% share of Aera Energy LLC and a 50% share of Aera Energy Services Co. held by Mobil California Exploration & Producing Co. Moreover, Exxon Mobil affiliates have signed a separate agreement for the sale of an associated loading facility and pipeline system. The sale effectively ends Shell’s upstream position in California. The company reported that the divestiture is valued to result in a post-tax impairment of $300 million to $400 million, subject to adjustments.

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The completion of the merger between Centennial Resource Development Inc. and Colgate Energy Partners II LLC happened on Sept. 1, sealing the debut of Permian Resources Corp., which is considered the largest pure-play E&P company in the Delaware Basin. Permian Resources’ idea was to combine two successful E&P companies, creating a better, stronger, and more strategically compelling company. Centennial and Colgate announced an agreement to merge in May, denying rumors that Colgate, a privately held independent Midland-based company, had been seeking an IPO. The merger estimated Colgate at about $3.9 billion and consists of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt. Permian Resources, being the combined company, has a deep inventory of “high-quality” drilling locations on around 180,000 net acres the companies anticipate will provide more than $1 billion of free cash flow in 2023 at current strip prices, in accordance with the company release on Sept. 1.

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