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Rocky Mountain High - Chevron's $7.6 Billion Deal for PDC Energy Highlights Rich Rockies Cash Flows

It’s true, the Permian is — and will likely remain — the center of attention in the U.S. oil and gas industry, not just for its massive and still-growing production volumes but also for the ongoing consolidation among producers in the West Texas/southeastern New Mexico play. But while the Permian has dominated production and M&A activity the past couple of years, Chevron’s recently announced $7.6 billion acquisition of Denver-Julesburg (DJ) Basin-focused PDC Energy highlights the potential for producers to generate significant production and profits from other major U.S. regions, including the Rocky Mountains. In today’s RBN blog, we analyze Chevron’s latest mega-deal and its impacts on the buyer, seller, and the broader oil and gas industry.

In an iconic 1976 New Yorker magazine cover (see photo below), artist Saul Steinberg illustrated how New Yorkers see the rest of the world, filling two-thirds of the page with a block-by-block view west from Manhattan’s 9th Avenue to the Hudson River, then fading to a narrow strip of land representing New Jersey through Los Angeles before blending into the Pacific Ocean. Tiny hills on the distant horizon show China, Japan and Russia. His point: To a New Yorker, nothing west of the Hudson really matters. A complementary 2023 representation of Permian-focused coverage of the U.S. oil and gas industry would show West Texas and southeastern New Mexico up front, dominant and in detail, with other unconventional plays just minor, unimportant points in the distance.

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