Petroleum Development Corp. (PETD), which does business as PDC Energy, said Thursday it has agreed to sell its remaining Permian Basin assets to Concho Resources Inc. (CXO) for about $175 million. The transaction, subject to customary purchase price adjustments, is expected to close in the first quarter of 2012. The company also announced its capital budget and production estimates for 2012.
Denver, Colorado-based PDC Energy noted that the deal follows on its sale of other non-core Permian Basin assets for $13.3 million earlier this quarter. The company expects the total proceeds from the two transactions to be $188 million before tax.
The independent energy company noted that the asset sale represents about 7.8 million cubic feet equivalent per day of net production, 20 percent of which is estimated to be natural gas. The company expects to use proceeds from the sales to retire debt on its revolving credit facility and provide liquidity to fund the company's 2012 capital budget.
James Trimble, President and Chief Executive Officer, said, "These asset sales will allow PDC to focus our capital and attention on our liquids-rich horizontal Niobrara drilling program in the Wattenberg Field of Colorado, our horizontal Marcellus drilling activity in West Virginia and our newly established position in the wet gas and oil windows of the emerging Utica Shale play in Ohio."
The company expects its fiscal 2012 capital budget to be about $284 million. The budget includes development capital amounting to $198 million, 85 percent of which will be invested in the Wattenberg Field of Colorado. The capital budget includes a total of 266 drilling, completion and refrac/recompletion projects.
For 2012, PDC Energy forecasts production of 53 billion cubic feet equivalent, or Bcfe, of which 33 percent is composed of oils and natural gas liquids, or NGLs. The company noted that the outlook represents a 21 percent increase over estimated 2011 production. The company's proforma production outlook for 2011 is currently 46.5 Bcfe, after deducting production related to the sale of the Permian assets.
The company said it expects to finalize its Utica Shale plans during the first quarter of 2012 and noted that the results of its NECO asset divestiture, which is still in process, are expected in early 2012.
In Thursday's regular trading, PETD is trading at $36.65, up $0.78 or 2.17 percent on a volume of 40,734 shares.
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