(Bloomberg) -- PDC Energy Inc. surged to a two-year high after joining the parade of drillers buying into the biggest U.S. oilfield.
Shares jumped as much as 12 percent to $71, the highest intraday level since October 2013, and traded 7.8 percent higher at $68.60 as of 12:57 p.m. in New York. They’re up 28 percent for the year.
PDC agreed to pay about $1.5 billion for two closely held companies with a combined 57,000 acres in the Permian Basin in West Texas, the Denver-based explorer said in a statement Tuesday. The driller will pay $915 million in cash and give about 9.4 million of its shares to Kimmeridge Energy Management Co., a New York-based private equity fund that manages the two companies.
Drillers including Pioneer Natural Resources Co., Parsley Energy Inc. and Concho Resources Inc. have all announced deals in the Permian this year, expanding their presence in one of the few North American oil regions where production is profitable at current prices. Until now, PDC has concentrated on wells in Colorado and Ohio, according to its statement.
The Delaware Basin will continue to be the focus of transaction activity going forward, Sam Burwell, an analyst at Canaccord Genuity Inc., said in a note Wednesday. The basin has sizable private equity-backed operators that are "logical" takeover targets, he said. And buyers are likely to be those with little-to-no Permian exposure.
The acquired acres in Reeves and Culberson counties in Texas produce the equivalent of about 7,000 barrels of oil a day.
JPMorgan Chase & Co. is offering PDC a $600 million bridge loan and increasing an existing revolving credit line by $250 million to $700 million, the company said in a filing on Wednesday, adding it doesn’t expect to draw on the bridge facility but rather use its own resources to pay for the cash portion of the deal.