NEW YORK (Reuters) – DoublePoint Energy’s private equity owners are exploring a potential sale of the Permian Basin oil producer later this year that could value the company at as much as $5 billion, including debt, sources familiar with the matter said on Thursday.
A potential deal would involve one of the largest privately-owned businesses in Texas’ Midland Basin, and provide an exit for its owners which built the position in an area considered at the heart of the U.S. shale revolution.
The Permian’s importance in growing U.S. oil production to record levels, with some of the cheapest extraction costs in the country, means those holding large patches of land have been keen to try and offload these positions to oil majors which have the resources needed to fully develop production.
DoublePoint’s owners include Apollo Global Management, Blackstone Group’s GSO Capital Partners, Magnetar Capital, and Quantum Energy Partners.
Apollo, Blackstone and Magnetar all declined to comment. Quantum did not immediately respond to a request for comment.
DoublePoint’s owners have been interviewing investment banks in recent days, according to four sources aware of the matter, who spoke on condition of anonymity as the information is not public. There is no guarantee DoublePoint will succeed in selling itself, and its owners’ plans could still change.
Sources said two banks will be appointed to advise on the sale, with Jefferies likely to be one of the duo chosen because of its longstanding relationship with DoublePoint, two of the sources said.
Jefferies declined to comment.
The shopping of DoublePoint to potential buyers is expected to begin by the middle of the year, depending on market conditions, according to one of those sources and a third source.
Oil majors and large independent producers will likely be targeted as potential buyers. Last year, BP Plc, Diamondback Energy, and Concho Resources all completed sizable acquisitions in the Permian.
DoublePoint Energy was formed in 2018 by the combination of two existing companies owned by private equity firms – Double Eagle Energy Holdings III and FourPoint Energy. It had more than 70,000 acres spread across six Texas counties, according to the statement announcing the formation.
Other large privately-owned Permian Basin companies which have been marketed to potential buyers in recent months include Endeavor Energy, owned by oilman Autry Stephens, and EnCap Investments-backed Felix Energy II.
Reporting by David French; Editing by Liana B. Baker and Susan Thomas