PDC Energy has agreed to purchase the Denver-Julesburg (DJ) Basin operator Great Western Petroleum, owned by affiliates of EIG, TPG Energy Solutions and The Broe Group. The deal is valued at $1.3 billion, including net debt of approximately $500 million.

Under the terms of the agreement, the acquisition will be financed through the issuance of approximately 4 million shares of common stock to existing Great Western shareholders and approximately $543 million of cash, subject to customary post-closing adjustments. The transaction is expected to close in the second quarter of 2022 and is expected to be financed with cash on hand and borrowings under the company’s credit facility.

The purchase increases PDC scale through the acquisition of approximately 55,000 barrels of oil equivalent (Boe) per day, composed of approximately 42 percent crude oil and 67 percent liquids, and year-end 2021 SEC proved reserves of 185 MMBoe.

The acquisition consists of approximately 315 total locations, with approximately 115 combined DUCs and approved permits in Adams County and approximately 10 approved permits and 90 low-risk, unpermitted locations in Weld County. An additional 96 locations have approved Form 2A permits in Adams County, providing a line of sight to attaining Form 2 sub-surface permits. PDC projects its current level of DUCs and approved permits to be sufficient for all completion activity through 2023.

PDC exited the year with approximately 145 DUCs and approximately 230 approved permits in hand, which includes the eight-well Spinney OGDP that was approved by the COGCC in early October. Further, the company’s 70-well Kenosha OGDP recently passed the completeness determination stage of the approval process and is tentatively scheduled to be heard by the COGCC Commissioners in May 2022. Finally, the company submitted its 450-well Guanella Comprehensive Area Plan (CAP) in December 2021.

PDC’s estimated SEC proved reserves as of year-end 2021 were 814 million Boe, with proved developed reserves accounting for approximately 49 percent of the total.

For the year ahead, PDC’s capital investment between $900 million and $1 billion is expected to generate total production between 225,000 and 240,000 Boe per day and between 74,000 and 81,000 Bbls of oil per day.

Post-close, the company plans to operate three Wattenberg rigs, one Delaware rig, and one and a half Wattenberg completion crews, resulting in anticipated second half daily total production and daily oil production of approximately 250,000 to 260,000 Boe and 82,000 to 87,000 Bbls, respectively.

To contact the author, email andreson.n.paul@gmail.com

What do you think? We’d love to hear from you, join the conversation on the Rigzone Energy Network. The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.