Permian Driller Colgate Explores $5 Billion Sale

Feb 16, 2022

(Bloomberg) Colgate Energy, a private equity-backed energy explorer in the Permian Basin that’s been preparing to go public, is also considering a sale after getting takeover interest, according to people familiar with the matter.The company could fetch about $5 billion in a sale, said one of the people, who asked to not be identified because the matter isn’t public. It could sell to a larger rival or do a merger of equals with companies operating nearby, the people said. The company and its backers Pearl Energy Investments and NGP Energy Capital are working with advisers to evaluate a sale as well as an initial public offering, they said.

It expects to generate more than $1 billion in earnings before interest, taxes, depreciation and amortization this year, the people said. No final decision has been made and Colgate Energy could opt to remain independent.

A representative for Colgate declined to comment. Representatives for Pearl Energy and NGP Energy didn’t respond to requests for comment.

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Colgate Energy comes to market as U.S. oil and gas explorers ramp up deal making amid a boom in commodity prices. The Permian Basin of West Texas and New Mexico — the largest and most productive U.S. oilfield — has long been a focus of consolidation because it is immensely lucrative and fairly fragmented. Colgate Energy is one of the most active private drillers in the basin.

Colgate Energy is among dozens of private equity-backed explorers established in recent years in the Permian. It was started in 2015 with backing from Pearl Energy and NGP Energy and has built a large position in a fast-growing patch of the Permian known as the Delaware Basin, where it operates on more than 100,000 net acres, according to its website.

It grew aggressively last year with its purchase of assets from Occidental Petroleum Corp. and Luxe Energy LLC. Reuters previously reported on Colgate Energy’s IPO plans.