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Chevron

said Monday it will acquire

PDC Energy

in an all-stock transaction valued at $6.3 billion, or $72 a share.

“PDC’s attractive and complementary assets strengthen

Chevron
’s
position in key U.S. production basins,” said Chevron Chairman and CEO Mike Wirth in a statement. “This transaction is accretive to all important financial measures and enhances Chevron’s objective to safely deliver higher returns and lower carbon.”

The deal received unanimous approval from the boards of both companies. It remains subject to PDC shareholder approval. The acquisition is expected to close by the end of 2023.

Chevron expects the transaction to add about $1 billion in annual free cash flow with Brent crude at $70 a barrel.

“We believe the acquisition is very favorable to CVX, as the deal provides a core position in the DJ Basin at a highly attractive valuation,” wrote Gabriele Sorbara, managing director of equity research at Siebert Williams Shank in a report Monday. “Accordingly, there should be additional upside to PDCE’s stock price.”

Sorbara has a Buy rating on

PDC Energy

shares and a target price of $100.

Chevron (ticker: CVX) stock was down 1.3% on Monday, while PDC (PDCE) shares climbed 8.1% to $70.37.

Write to Emily Dattilo at [email protected]