CVX - This Oil Dividend Stock's $4.7 Billion Deal Takes It in the Opposition Direction as Chevron
2023-06-21 09:05:00 ET
Chevron (NYSE: CVX) recently made headlines after agreeing to spend $7.6 billion to acquire PDC Energy (NASDAQ: PDCE) . The deal surprised many because Chevron's acquisition will make it a leading producer in Colorado's DJ Basin instead of significantly boosting its position in the Permian Basin. Chevron opted to bulk up in that lesser-known region because the deal is so accretive. The acquisition will increase its proved oil equivalent reserves by 10% for less than $7 per barrel while adding $1 billion to its annual free cash flow.
Fellow DJ Basin producer Civitas Resources (NYSE: CIVI) recently went in the opposite direction, unveiling transformative transactions to enter the Permian Basin. The highly accretive deals will significantly boost its free cash flow, enabling Civitas to increase its dividend by 20% next year. Here's a closer look at the oil dividend stock 's deal and how it differs from Chevron's acquisition.
Civitas Resources has agreed to acquire oil-producing assets from Hibernia Energy III and Tap Rock Resources, portfolio companies of funds managed by NGP Energy Capital Management. It's paying $2.45 billion ($1.5 billion in cash and 13.5 million shares) to acquire 30,000 net acres owned by Tap Rock in the Delaware Basin side of the Permian. Meanwhile, it's spending $2.25 billion in cash to buy Hibernia's Midland Basin assets, which include 38,000 net acres.
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This Oil Dividend Stock's $4.7 Billion Deal Takes It in the Opposition Direction as Chevron