PDC Energy Inc. is answering activist investor calls made earlier this year to return more cash to shareholders with an all-stock merger worth roughly $1.7 billion including the assumption of debt.

The Denver-based oil and gas producer announced the merger agreement with SRC Energy Inc. on Aug. 26 expected to materially increase PDC’s scale and free cash profile that the company said will enhance its ability to return additional capital to shareholders.

In the agreement, PDC will acquire SRC Energy, gaining SRC’s core area of operations is in the Greater Wattenberg Field of the Denver-Julesburg (D-J) Basin. Combined, the company is set to become the second-largest producer in the D-J Basin.

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