PDC Energy Inc. said Monday it agreed to buy Denver-Julesburg (DJ) Basin operator Great Western Petroleum LLC in a $1.3 billion cash-and-stock deal that would “materially” boost its holdings in Colorado’s Wattenberg field.

pdc rig

The Denver-based PDC said the deal, which includes $500 million in net debt, would be financed by issuing about four million shares of common stock to existing Great Western shareholders and $543 million of cash.

The transaction, expected to close in the second quarter, would give PDC an additional 55,000 boe/d in the DJ’s Wattenberg field – 42% crude oil and the 58% weighted to liquids. The oil and natural gas producer operates primarily in the Wattenberg field but has holdings in the Permian Basin’s Delaware sub-basin.

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“Coupled with our existing high-quality inventory, this core Wattenberg acquisition adds meaningful scale to PDC while also demonstrating our commitment to – and confidence in – the future of safe and responsible energy development in the state of Colorado,” CEO Bart Brookman said.

The acquisition would also give PDC 315 identified locations – 125 of which are either drilled but uncompleted wells (DUC) or approved permits. The company estimated its pro forma combined DUC and approved permit count at 500 locations based on year-end 2021 data.

PDC said its proved reserves at the close of 2021 totaled 814 million boe, up 11% from the prior year., with proved developed reserves accounting for 49% of the total.

Following the acquisition, PDC estimated its proved reserves would total about 1 billion boe, with developed reserves accounting for 50% of the total.

In the Wattenberg field, PDC estimated its year-end undeveloped inventory, including DUCs, at 1,800 locations with an average lateral length of 9,700 feet, an increase of nearly 10% compared to the average lateral length of undeveloped locations at year-end 2020. Total inventory represents an inventory life of more than ten years at the current development pace, the company said.