Filed by PDC Energy, Inc.
pursuant to Rule 425
of the Securities Act of 1933
and deemed filed pursuant
to Rule 14a-6 under the
Securities Exchange Act
of 1934
Subject Company: PDC Energy, Inc.
(Commission File No.: 001-
37419)
On July 20, 2023, PDC Energy, Inc.
(“PDC”) provided the following communication relating to its pending merger transaction with Chevron Corporation (“Chevron”)
to its employees.
PDCE/Chevron Transaction
Employee
Frequently Asked Questions
This Frequently Asked Questions
document includes new questions and answers, as well as updates to questions previously answered in the June 5, 2023, document.
Please continue to send your questions or comments to FAQ@pdce.com.
IMPORTANT: The information provided below is for pre-closing
ONLY. Until the transaction closes, PDC Energy and Chevron will continue to operate as separate companies.
General Information
People Matters
Severance
Pay and Compensation
Benefits
Total Rewards
Long-term Equity
Facilities
Information
GENERAL INFORMATION
| Q: | When can we expect the transaction to legally close? |
| A: | We remain on track for a legal
close in early August. The PDC shareholder meeting to vote on the transaction is confirmed
for August 4, 2023. Should approval be granted, then, subject to customary closing conditions,
we are scheduled to close on Monday, August 7, 2023. |
| Q: | What work is underway to thoughtfully plan how we bring our
companies together? |
| A: | Shortly after the acquisition
was announced, Integration Planning Teams made up of representatives from PDC Energy
and Chevron were formed to begin determining how to best integrate the people, assets, and
culture of PDC Energy into Chevron after legal closing. Until closing is completed, the Planning
Teams are subject to legal restrictions on the information that can be shared between the
companies. Once legal close happens, we will be able to share complete information across
both companies to fully inform our integration planning and the decisions that need to be
made as part of this process. We will share additional updates about integration planning
and related activities once more information becomes available. |
| Q: | Is there anything that I should be doing now to prepare for
integration? |
| A: | Maintaining business continuity
and safe operations is and will remain our top priority, and it is critical that you stay
focused on prioritizing safety as you execute day-to-day responsibilities. You should proceed
with business as usual as we work toward legal close and thereafter. |
| Q: | What should I do if a Chevron employee contacts me with questions
or requests for information? |
| A: | As a general rule, you should
direct any communication with Chevron through Ryan Kowalski, PDC Energy Integration Lead,
at ryan.kowalski@pdce.com. |
For PDC Energy employees who are participating on an Integration
Planning Team, please work with your applicable Chevron contact, but make sure to provide consistent updates about your interactions
with the Integration Planning Team.
It is important to remember that until the transaction
is complete, PDC Energy and Chevron will continue to operate as separate and independent companies.
| Q: | What should I do if I am contacted by the news media? |
| A: | Consistent with PDC Energy
company policy, prior to legal close you should continue to forward any inquiries from the
media that you receive to Aaron Vandeford at aaron.vandeford@pdce.com or 303-381-9493.
Upon legal close, any media inquiries should be directed to Trudi Boyd at trudi.boyd@chevron.com. |
PEOPLE MATTERS
| Q: | What will happen to my job at legal close? |
| A: | PDC Energy will continue to
operate under its existing organization structure. Your employment status will not change
on August 7, and there are no immediate changes in reporting lines or work locations
for most employees. Once finalized and approved, Chevron will communicate the new organizational
design moving forward, as well as selection process and timeline. Until you hear otherwise,
please continue your job duties to ensure business continuity. |
| Q: | Will our reporting structure change? |
| A: | Integration Planning Teams
made up of representatives from PDC Energy and from Chevron are currently working to determine
how to best integrate our people, assets, and culture. We intend to minimize potential disruption
so that we can remain focused on prioritizing safe, reliable day-to-day operations, and most
PDC employees will continue to report to the same manager upon legal close. |
| Q: | Will there be a new organization upon legal close? |
| A: | PDC Energy will continue to
operate under its existing organization structure with no immediate changes in reporting
lines for most employees. After legal close, Integration Planning Teams will work together
to review organizational design and will share any important updates once the review process
has been completed. |
| Q: | Should we expect layoffs as a result of the acquisition? |
| A: | As we remain two separate
companies, it is too early to determine what future organization design may look like. Upon
legal close, Integration Planning Teams will collaborate to review organization design
and determine how to integrate our people, assets and culture. Any changes in employment
staffing will be subject to local laws and requirements. |
SEVERANCE
| Q: | If I am not retained as an employee by Chevron, will I be entitled
to receive severance or other separation benefits? |
| A: | As stated in the June 5,
2023, FAQ document, under PDC’s change of control severance plan, full or part-time
employees are eligible for change of control severance benefits upon a qualifying termination
during the change of control period (i.e., within 24 months following the transaction closing).
Note that severance payments under PDC’s change of control severance plan are “double
trigger,” meaning first the transaction must close and second there must be a qualifying
termination. A qualifying termination means either an (1) employee is terminated without
cause (as defined in the change of control severance plan), or (2) employee resigns
for good reason (which is generally defined in the change in control severance plan to include,
without the applicable employee’s prior written consent, (i) an employee experiences
a material diminution in his or her aggregate base salary (based on the highest annual base
salary in effect during the two years of employment immediately preceding the date of the
qualifying termination) and target annual bonus opportunity, or (ii) an employee experiences
a change in the geographic location at which the employee must perform his or her services
of greater than 50 miles from the geographic location at which employee was performing services
(i.e., Denver, Evans, Midland or Pecos office locations)). We will treat any impacted
employees fairly and with respect. |
| Q: | What are our change of control severance benefits upon a qualifying
termination? |
| A: | As previously stated in the
June 5, 2023, FAQ document, for an employee who experiences a qualifying termination
then he or she will be eligible for the following severance benefits, subject to the execution
and non-revocation of a general release of claims in favor of PDC and its affiliates: |
| · | 12 months of base salary (based on the highest annual base salary
in effect during the two years of employment immediately preceding the date of the qualifying
termination) and 100% target bonus for the year in which the qualifying termination occurs. |
| · | For an employee who timely elects COBRA, for 12 months following
termination, the employee will be entitled to a portion of the premiums for the coverage
elected by the employee so that the employee’s share of the medical insurance premium
will be the same as a similarly situated active employee. After 12 months, employees would
be responsible for the full premium if they choose to stay on the COBRA program. |
| · | Before electing COBRA coverage, please note that electing to stop
paying for COBRA coverage is not a qualifying event to go onto another plan (i.e.,
a spouse’s plan). A qualifying event while on COBRA coverage would be eligibility on
a new plan with a different employer, or open enrollment on a spouse’s plan. All qualifying
event changes need to be requested within 30 days of the event. |
PAY AND COMPENSATION MATTERS
| Q: | Will there be any change to my compensation? |
| A: | Chevron has committed to maintaining
PDC Energy’s current base salary or hourly rate, as well as PDC Energy’s existing
short-term incentive compensation opportunity, for each continuing PDC employee for one year
from the date of legal close. Additionally, under PDC’s change of control severance
plan, PDC employees are eligible for change of control severance benefits upon a qualifying
termination during the change of control period, which is 24 months following the transaction
closing. One aspect of a qualifying termination includes no material diminution in an employee’s
aggregate base and target annual bonus opportunity during such 24-month period post-closing. |
| Q: | Will I be eligible for a 2023 short-term incentive bonus? |
| A: | PDC Energy’s 2023 short-term
incentive bonuses will be paid to eligible employees as of closing. The bonus will be pro-rated
based on the portion of the year that has elapsed prior to the closing date. |
The bonus will be calculated based on actual performance,
meaning we need to remain focused on our corporate metrics to continue with the exceptional performance we have historically experienced.
However no formal IPP process will be associated with the bonus determination and payout.
| Q: | Will there be any changes to our pay schedule or payroll system? |
| A: | You will continue to receive
your paycheck following our current pay schedule through our existing payroll system (ADP),
including all tax and benefit deductions, until further notice. |
BENEFITS MATTERS
| Q: | What is going to happen to my health benefits? |
| A: | It is intended that your current
PDC Energy benefit plans will continue until you become eligible to participate in Chevron
U.S.-payroll benefit plans, foreseeably sometime after December 31, 2023. As such, the
balance of your deductible and your coverage will remain the same through December 31,
2023. |
| Q: | What happens to my flexible spending account? |
| A: | Upon legal close, your flexible
spending account will remain in place through at least year-end 2023. |
| Q: | I am on the high deductible health plan and have contributions
from my paycheck and from PDC going into my health savings account. What happens to that
post-closing and post-employment? |
| A: | Health saving account funds
are yours to manage and will remain in Fidelity until you choose to move them. |
| Q: | Will I still receive my monthly wellness reimbursement benefit
through year-end 2023? |
| A: | Yes, as long as you properly
submit your wellness reimbursement receipts through Rocky Mountain Reserve, you will be reimbursed
through year-end 2023. |
| Q: | Does the acquisition change my short-term disability or FMLA
benefits? |
| A: | Your current PDC Energy benefit
plans will continue without interruption until you become eligible to participate in Chevron
U.S.-payroll benefit plans, although we expect to retain PDC’s benefits through at
least December 31, 2023. |
| Q: | Will Chevron recognize PDC Energy years of employee service? |
| A: | Yes, your PDC Energy service
will generally count toward your Chevron service. As part of the HR onboarding experience,
you’ll learn more about how service is applied to some of your Chevron benefits. |
TOTAL REWARDS MATTERS
| Q: | What will happen to PDC Energy’s 401(k) plan? |
| A: | PDC and Chevron intend that
your current PDC Energy benefits will continue until you become eligible to participate in
Chevron U.S.-payroll benefit plans, and you should continue to use your existing resources
and contacts to manage your current benefits. We expect to maintain PDC’s 401(k) plan
benefits through at least December 31, 2023. Employer matching contributions will continue
through year-end 2023. Additionally, a 3% profit sharing contribution will be contributed
to the plan within 5 days prior to closing, prorated to reflect the portion of the year elapsed
prior to closing for those who meet eligibility criteria outlined in the PDC plan. When
switching to Chevron benefit plans, information will be provided to you in advance of your
transition as part of your HR onboarding. |
| Q: | Can I still use my professional development stipend? |
| A: | Yes, we always recommend developing
your professional skills. However, all professional development stipends must be approved
and paid for prior to the closing date. |
| Q: | Can I still apply for tuition reimbursement? |
| A: | Yes. It is important to remember
this benefit is a reimbursement, which means funds are issued upon successful completion
of the approved courses. If you have questions about future eligibility, we encourage you
to consult with HR; please note that all tuition reimbursement requests must be approved
prior to the legal close. |
| Q: | Will my work schedule change after the close of the transaction? |
| A: | You should continue to follow
your current work schedule as it remains unchanged. Should any changes to work schedules
be necessary at your location, you will receive more detailed information about next steps
and timing in advance of any change. |
LONG-TERM EQUITY MATTERS
| Q: | What will happen to my shares of PDC stock in the transaction? |
| A: | Once the transaction closes,
your shares of PDC stock will convert into shares of Chevron stock based on an exchange ratio
of .4638 Chevron shares to PDC Energy shares. This means that for each PDC share you hold,
you will be entitled to receive .4638 Chevron shares, with a cash payment made in lieu of
any fractional shares. |
For example, if you own 100
vested shares of PDC stock, upon the closing of the transaction you will receive 46 shares of Chevron stock, plus a fractional share
payment in cash. Note that with respect to PDC stock you hold in E*Trade, following the legal close, statements will be distributed
into your E*Trade account; however, you will not be able to access your E*Trade account for a few days around the legal close date to
allow for the conversion.
| Q: | What will happen to my RSUs in the transaction? |
| A: | Once the transaction closes,
each outstanding PDC Restricted Stock Unit (RSU) award will be converted into an equivalent
Chevron RSU award based on the merger exchange ratio (.4638), which is the number of shares
Chevron will issue for each individual share of PDC. The accumulated dividend equivalent
balance on the PDC RSU award at closing will transfer over to the Chevron RSU award and be
paid if required by and in accordance with the terms and conditions applicable to the PDC
RSU award immediately prior to closing. |
Note that with respect to your PDC RSU awards that you
hold in E*Trade, following the legal close, statements will be distributed into your E*Trade account; however, you will not be able to
access your E*Trade account for a few days around the legal close date to allow for the conversion.
| Q: | What are the terms of the new Chevron RSUs? |
| A: | Your PDC RSU awards that are
converted to Chevron RSU awards will have the same terms and conditions as were applicable
to the PDC RSU awards immediately prior to closing, including vesting schedule. In accordance
with the current terms of each PDC RSU award agreement, the corresponding Chevron RSU awards
will be eligible to vest upon (1) the regularly scheduled vesting date, (2) your
earlier termination without cause or (3) your earlier resignation for good reason (as
the terms “cause” and “good reason” are described in the PDC change
of control severance plan). |
| Q: | Is there anything I must do prior to conversion for my unvested
RSUs? |
| A: | It will be IMPORTANT to confirm
all grants in E*Trade have been “accepted” – please log into your E*Trade
account and accept all your awards prior to closing. |
FACILITIES
| Q: | What will happen to PDC Energy’s corporate HQ and locations? |
| A: | Integration Planning Teams
from both PDC Energy and Chevron are working together to plan how to best integrate PDC Energy
into Chevron. Until the transaction closes, PDC Energy and Chevron will continue to operate
as separate companies as they do today and maintain their current offices. |
INFORMATION
| Q: | How can I obtain more information? |
| A: | We understand you may have
additional questions leading to the close of the transaction and what it means for you. Please
email FAQ@pdce.com if you have additional questions. |
Important Information for Investors and Stockholders
This communication does not constitute an offer to sell or the solicitation
of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended. In connection with the potential transaction, Chevron filed a registration statement on Form S-4
with the Securities and Exchange Commission (“SEC”) containing a preliminary prospectus of Chevron that also constitutes
a preliminary proxy statement of PDC. The Form S-4 was declared effective on July 7, 2023, and the definitive proxy statement/prospectus
was mailed to stockholders of PDC on the same date. This communication is not a substitute for the proxy statement/prospectus or registration
statement or for any other document that Chevron or PDC may file with the SEC and send to PDC’s stockholders in connection with
the potential transaction. INVESTORS AND SECURITY HOLDERS OF CHEVRON AND PDC ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security
holders are able to obtain free copies of the proxy statement/prospectus and other documents filed with the SEC by Chevron or PDC through
the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Chevron are available free of
charge on Chevron’s website at http://www.chevron.com/investors and copies of the documents filed with the SEC by PDC are available
free of charge on PDC’s website at http://www.pdce.com/investors-overview.
Chevron and PDC and certain of their respective directors, certain
of their respective executive officers and other members of management and employees may be considered participants in the solicitation
of proxies with respect to the potential transaction under the rules of the SEC. Information about the directors and executive officers
of Chevron is set forth in its Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC
on February 23, 2023, and its proxy statement for its 2023 annual meeting of stockholders, which was filed with the SEC on April 12,
2023. Information about the directors and executive officers of PDC is set forth in its Annual Report on Form 10-K for the year
ended December 31, 2022, which was filed with the SEC on February 22, 2023, and its proxy statement for its 2023 annual meeting
of stockholders, which was filed with the SEC on April 12, 2023. These documents can be obtained free of charge from the sources
indicated above. Additional information regarding the interests of such participants in the solicitation of proxies in respect of the
potential transaction are included in the registration statement and proxy statement/prospectus and other relevant materials to be filed
with the SEC when they become available.
Cautionary Statement Regarding Forward-Looking Information
This communication contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally include statements
regarding the potential transaction between Chevron and PDC, including any statements regarding the expected timetable for completing
the potential transaction, the ability to complete the potential transaction, the expected benefits of the potential transaction, projected
financial information, future opportunities, and any other statements regarding Chevron’s and PDC’s future expectations,
beliefs, plans, objectives, results of operations, financial condition and cash flows, or future events or performance. These statements
are often, but not always, made through the use of words or phrases such as “anticipates,” “expects,” “intends,”
“plans,” “targets,” “forecasts,” “projects,” “believes,” “seeks,”
“schedules,” “estimates,” “positions,” “pursues,” “may,” “could,”
“should,” “will,” “budgets,” “outlook,” “trends,” “guidance,”
“focus,” “on schedule,” “on track,” “is slated,” “goals,” “objectives,”
“strategies,” “opportunities,” “poised,” “potential” and similar expressions. All such
forward-looking statements are based on current expectations of Chevron’s and PDC’s management and therefore involve estimates
and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from
the results expressed in the statements. Key factors that could cause actual results to differ materially from those projected in the
forward-looking statements include the ability to obtain the requisite PDC stockholder approval; uncertainties as to the timing to consummate
the potential transaction; the risk that a condition to closing the potential transaction may not be satisfied; the risk that regulatory
approvals are not obtained or are obtained subject to conditions that are not anticipated by the parties; the effects of disruption to
Chevron’s or PDC’s respective businesses; the effect of the potential transaction on the parties’ stock prices; the
effects of industry, market, economic, political or regulatory conditions outside of the parties’ control; transaction costs; Chevron’s
ability to achieve the benefits from the proposed transaction, Chevron’s ability to promptly, efficiently and effectively integrate
acquired operations into its own operations; unknown liabilities; and the diversion of management time on transaction-related issues.
Other important factors that could cause actual results to differ materially from those in the forward-looking statements include those
described in the “Risk Factors” section of PDC’s most recent Annual Report on Form 10-K, as it may be updated
from time to time by quarterly reports on Form 10-Q and current reports on Form 8-K all of which are available on PDC’s
website at http://investor.pdce.com/sec-filings and on the SEC’s website at http://www.sec.gov, and in the “Risk Factors”
section of Chevron’s most recent Annual Report on Form 10-K, as it may be updated from time to time by quarterly reports on
Form 10-Q and current reports on Form 8-K, all of which are available on Chevron’s website at https://chevroncorp.gcs-web.com/financial-information/sec-filings
and on the SEC’s website at http://www.sec.gov. Those disclosures are incorporated by reference in this communication. Other unpredictable
or unknown factors not discussed or incorporated by reference in this communication could also have material adverse effects on forward-looking
statements. Neither PDC nor Chevron assumes any obligation to update any forward-looking statements, except as required by law. Readers
are cautioned not to place undue reliance on these forward-looking statements, as they speak only as of the date hereof.
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