Pending Acquisition (Notes)

9 Months Ended

Sep. 30, 2019

Pending Acquisition [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

PENDING ACQUISITION

On August 25, 2019, we and SRC entered into an Agreement and Plan of Merger (the “Merger Agreement”) under which we will acquire SRC in an all-stock transaction (the “SRC Acquisition”). We expect the SRC Acquisition to be completed early in the first quarter of 2020, subject to PDC and SRC shareholder approval and the satisfaction of certain customary closing conditions, including the receipt of federal regulatory approvals. The Merger Agreement may be terminated by us or SRC in certain circumstances. We will account for the SRC Acquisition as a business combination using the acquisition method of accounting.

Upon completion of the SRC Acquisition, SRC shareholders will automatically receive 0.158 of a share of our common stock in exchange for each share of SRC common stock. This exchange ratio is fixed and will not be adjusted for changes in our or SRC’s stock price. The value of the SRC Acquisition, which will include assumption of SRC's net debt, will be dependent upon the market value of our common stock on the date of closing. We estimate that we will issue up to approximately 40 million shares of our common stock in connection with the SRC Acquisition.

During the nine months ended September 30, 2019, we recorded transaction costs related to the SRC Acquisition of $5.0 million, which are included in general and administrative expense in our condensed consolidated statement of operations. The liabilities associated with such amounts are included in other accrued expenses in our condensed consolidated balance sheet as of September 30, 2019.

Subject to closing the SRC Acquisition, the borrowing base on our revolving credit facility will increase from $1.6 billion to $2.1 billion. In addition, we elected to increase the aggregate commitment amount under our revolving credit facility to (i) $1.7 billion upon closing of the SRC Acquisition and (ii) up to $1.9 billion, at our sole discretion, at any time following closing of the SRC Acquisition before April 30, 2020. As described below, if the SRC Acquisition results in a "Change of Control" under the indenture governing SRC’s $550 million 6.25% Senior Notes due December 2025 (the "SRC Senior Notes"), we will be required to offer to purchase those notes. We expect that our decision regarding the expansion of the commitment to $1.9 billion will be based in part on whether we make such an offer and, if so, the amount of SRC Senior Notes tendered in the offer.

Upon closing the SRC Acquisition, we will assume the SRC Senior Notes and be required to pay off and terminate SRC's revolving credit facility. As of September 30, 2019, SRC had $165 million outstanding under its revolving credit facility. The SRC Senior Notes contain a change of control provision pursuant to which, if the consummation of the SRC Acquisition results in a “Change of Control” under the indenture governing the SRC Senior Notes, we will be required to make an offer to repurchase the SRC Senior Notes at a price equal to 101 percent of the principal amount of the notes, together with any accrued and unpaid interest to the date of purchase.

Additionally, in August 2019, contingent on the closing of the SRC Acquisition, our Board of Directors (the "Board") approved an increase and extension to the Stock Repurchase Program from $200 million to $525 million with a target completion date of December 31, 2021.