Big Deal In The DJ -- August 26, 2019

The Niobrara / DJ / Colorado  is tracked here. Big news, link here.

• PDC -- growing operator in two key US unconventional basins (DJ and the Permian)
• PDC will beef up its Wattenberg Field position in Colorado by buying SRC Energy, a pure-play producer in the basin
• $1.7 billion
• 86,000 net acres (DJ) + 36,000 net acres (Permian) = 122,000 net acres
• $1.7 billion / 122,000 net acres = $14,000 / net acre spread across the DJ and the Permian
• at $55/bbl WTI, free cash flow is targeted at around $800 billion from now through year end 2021, about 50% of which will be returned to shareholders (share buybacks; paying down debt; nothing said about initiating a dividend; several high-profile Bakken operators now pay a dividend;
• from Yahoo!Finance:
• shares outstanding: 66.28 million
• market cap: $1.97 billion
• enterprise value: $3.09 billion
• forward dividend: 0.00
• revenue, full year, 2018: $1.313 billion = $19/share
• net income from continuing ops: $2 billion = 3 cents/share
• $400 million / 66.28 million shares = $5.85 / share
• PDC would become the second-largest DJ Basin producer with 166,000 boepd
• compare with the announcement today for COP to get the Alaska North Slope project
• #1 in DJ: the former Anadarko Petroleum company, recently acquired by Occidental Petroleum, 301,00 boepd
• the deal: PDC will have 182,000 net acres, producing nearly 200,000 bopd
• PDC will also control 36,000 net acres in the Delaware Basin in Texas

Just between you and me, I think PDC got a better deal than COP (the Alaska announcement earlier today). 

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, relationship, or career decisions based on what you read here or think you may have read here. I often make simply arithmetic errors. I often misread things. The numbers above have not been proofed or triple-checked; some numbers have been rounded.

More at the linked site.

Also at the Denver BizJournal; I haven't read all of that article; not sure if there's any additional news.  Bizjournals readers will eventually hit a paywall. Apparently PDC gave the middle finger to some of its hedge fund investors. This was the last paragraph in Bizjournal:

PDC Energy has faced pressure from a hedge fund and investor in the business this year to pull back on its growth plans and focus more on returning money to investors.

Tea leaves from this announcement:

• taking advantage of cheap money
• a shakeout across the industry
• companies setting themselves up for huge returns in the out years
• DJ bigger than we think? 
• provides some "cover" for Vicki Hollub by showing the "real" value of DJ acreage

Personal thoughts: most of this is in Weld County which includes Denver-Aurora. This should give folks pause. What could possibly go wrong?