Prolific oil and gas developer Double Eagle is exploring a sale of its latest Permian Basin-based producer in a deal that could be worth more than $6.5 billion, including debt, according to people familiar with the matter.
The Double Eagle team is expected to launch a sale process for the producer in the second half of this year, the sources said, requesting anonymity as the matter is confidential.
Publicly listed oil and gas producers, including those already operating in the Midland portion of the Permian where Double Eagle Energy Holdings IV is located, are expected to be potential acquirers, the sources added, cautioning a deal is not guaranteed.
If the deal talks are successful, Double Eagle IV’s sale would mark one of the largest transactions involving a privately-held U.S. energy producer during the past year.
Recent notable deals involving privately-owned producers include Diamondback Energy’s $26 billion tie-up with Endeavor Energy and Occidental Petroleum’s $12 billion cash-and-stock deal for CrownRock.
A deal would generate another huge payday for the team led by oil entrepreneurs Cody Campbell and John Sellers, who sold their third iteration of Double Eagle to Pioneer Natural Resources for $6.4 billion in 2021.
Double Eagle IV, which counts EnCap Investments as its biggest investor, has raised $2.3 billion in total funding since it was launched from investors including Apollo Global Management, Elda River Capital, and members of its management team.
Double Eagle, EnCap and Elda River declined comment. Apollo did not immediately respond to a request for comment.
The fourth Double Eagle covers around 55,000 net acres in Texas and is expected to generate more than 90,000 barrels of oil equivalent of net production by the end of this year, the sources said.
Merger and acquisition activity in the U.S. shale patch has hit record levels over the past year due to a flurry of megadeals, as exploration and production companies are seeking to boost scale and add premium drilling locations as part of a once-in-a-generation consolidation wave.
Notable deals include Exxon Mobil’s $60 billion takeover of Pioneer; Chevron’s $53 billion pending acquisition of Hess ; and ConocoPhillips’ $22.5 billion deal for Marathon Oil that was announced earlier on Wednesday.
(Reporting by David French in New York; Editing by Anirban Sen and David Gregorio)