Page 9 - NorthAmOil Week 34

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PDC to expand in Wattenberg through SRC acquisition
US
PDC will become the second-largest producer in the DJ Basin following the acquisition.
PDC Energy has announced this week that it is buying SRC Energy in an all-stock deal worth $1.7bn, including the assumption of the latter’s $685mn of net debt. SRC is a pure-play producer in Colorado’s Wattenberg eld, in the Denver-Julesburg (DJ) Basin, where PDC will become the second-largest producer following the acquisition.
e combined company will have output of 166,000 barrels of oil equivalent per day (boepd) in the Wattenberg. The only producer with higher DJ Basin output is Anadarko Petroleum, which extracts 301,000 boepd in the region.
Under the deal, SRC shareholders will receive 0.158 PDC shares for each share held, suggesting apriceof$3.99perSRCshareora3.9%discount to the company’s closing price on August 23. e market reacted positively to news of the merger on August 26, with PDC share prices rising 23%, while SRC’s share price climbed by 17.6%.
PDC shareholders will own about 62% of the company upon closure of the transaction – which is anticipated in the fourth quarter of this year – while SRC will own the remaining stake.
e combined company will hold 182,000 net
acres (737 square km) in the Wattenberg eld, as well as with PDC’s 36,000 net acres (146 square km) in the Permian’s Delaware sub-basin. PDC is expected to exit 2019 with output of about 200,000 boepd.
“SRC’s complementary, high-quality assets in the core Wattenberg, coupled with our existing inventory and track record of operational excel- lence, will create a best-in-class operator with the size, scale and nancial positioning to thrive in today’s market,” PDC’s president and CEO, Bart Brookman, said in a statement. “We remain committed to our core Delaware Basin acreage position and are con dent the combined com- pany with its multi-basin focus will be well-po- sitionedtodeliversuperiorshareholderreturns,” he added.
“On the headline this deal looks to check all the boxes Wall Street has asked for, including consolidation of duplicate corporate structures, sticking to a basin the buyer knows well and not overpaying on premium,” Enverus’ M&A ana- lyst, Andrew Dittmar, was reported by Reuters as saying. He added that a positive reaction from investors could encourage further deals.™
BHP makes highest bid in Gulf lease sale
GULF OF MEXICO
BHP Group led the latest US Gulf of Mexico lease sale in terms of both the combined value of high bids and the single largest bid placed. Lease Sale 253, held in New Orleans on August 21, generated nearly $159.4mn in high bids for 151 tracts.
Roughly 77.9mn acres (315,250 square km) were on o er during the auction, with 835,006 acres (3,379 square km) receiving bids, accord- ing to preliminary data from the US Department of the Interior’s (DoI) Bureau of Ocean Energy Management (BOEM). is accounted for just over 1% of the total acreage on o er, though the BOEM noted that the results from this year’s lease sales marked an upward trend. BOEM officials said this year had seen the highest annual bid level since 2015, with the latest result combined with a March auction that attracted $244.3mn in high bids.
e National Ocean Industries Association (NOIA) said the “modest” results “re ect the
cautiously optimistic attitude of an offshore industry still in recovery”.
e highest bid, by BHP, was for Green Can- yon Block 124 and amounted to $22.5mn. In total BHP submitted 20 high bids for a combined $41.8mn, which was the highest gure in terms of combined value, though Equinor and BP bid on the highest number of tracts, with 23 and 21 bids respectively. Anadarko Petroleum had the second-largest sum of high bids at $23.4mn for 14 blocks. e move is noteworthy because Anadarko was recently taken over by Occidental Petroleum and there is speculation that the com- bined company will opt to sell its o shore assets.
Most of the bids centred around existing o - shore infrastructure, illustrating the popularity of subsea tieback options that are cheaper than building new platforms at a time when oil prices remain volatile.
Of the 151 tracts that received bids, 117 were in water depths of over 800 metres (2,625 feet).™
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