Shares of oil producer PDC Energy (PDCE - Get Report) surged on Monday after the company announced it was acquiring SRC Energy (SRCI - Get Report) in an all-stock deal valued at about $1.7 billion, including debt.
Under the terms of the agreement, SRC shareholders will receive a fixed exchange ratio of 0.158 a PDC share for each share of SRC common stock, representing an implied value of $3.99 per SRC share based on PDC's closing common stock price on Aug. 23.
The agreement, which also includes the assumption of approximately $685 million in debt, positions the combined company to take advantage of its "complementary assets" in the Delaware Basin - a geologic basin in West Texas and southern New Mexico famous for holding large oil field deposits.
Upon closing of the transaction, PDC shareholders will own about 62% of the combined company, and SRC shareholders will own approximately 38%.
Shares of PDC jumped 21.19%, or $5.35 a share, to $30.60 in early trading on Monday. Shares of SRC also surged, climbing 17.59% to $4.88.
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