Offshore Technology

Daily Newsletter

08 August 2023

Daily Newsletter

Chevron wraps up acquisition of PDC Energy

Including debt, the deal has an enterprise value of $7.3bn.

Energy major Chevron has completed the acq u isition of PDC Energy (PDC), a US-based shale producer, in an all-stock transaction valued at $6.3bn.

The total enterprise value of the deal, including debt, is $7.6bn.

Announcing the deal in May, Chevron said the acquisition of PDC gives it access to top-notch assets that are anticipated to generate higher returns in US basins with lower carbon intensity.

Besides providing development options next to its operations in the Denver-Julesburg (DJ) Basin and low breakeven production, PDC also adds more land to Chevron's acreage in the Permian Basin, the company noted.

Specifically, the acquisition brings 275,000 net acres in the DJ Basin, which adds more than a billion barrels of oil equivalent proved reserves and 25,000 net acres in the Permian Basin.

Chevron president for Americas exploration and production Bruce Niemeyer said: “We are pleased to welcome PDC Energy into Chevron. Our companies have similar cultures, with a focus on safe and reliable operations, teaming to deliver results and benefitting the communities where we operate.

“PDC’s high-quality assets open up even greater opportunities in important US basins where Chevron already has a strong presence.”

In July 2023, Chevron agreed to sell its stake in the Ganal production-sharing contract (PSC), Rapak PSC and Makassar Straits PSC to Italian energy company Eni.

Chevron holds a 62% stake each in the PSCs for Ganal and Rapak and a 72% stake in the PSC for Makassar Straits. In the Ganal and Rapak Blocks, Eni has a 20% ownership stake.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.