Canadian pension fund CPP Investments is weighing strategic options, including a sale or initial public offering, for Encino Acquisition Partners that could value the U.S. oil and natural gas producer at as much as $7 billion, including debt, people familiar with the matter said.
The deliberations come as the energy industry is anticipating tailwinds from the administration of President Donald Trump, which has put forward an economic agenda tailored to boost fossil-fuel production, as it speeds up permits for energy projects and rolls back environmental protections.
Moreover, the booming demand for artificial intelligence and data centers is expected to drive a jump in U.S. power demand, which in turn is likely to boost the need for natural gas to fuel power generation.
Houston, Texas-based Encino, which is majority-owned by CPP, is in the early stages of evaluating options and is working on selecting investment banks to lead the review process, the sources said, requesting anonymity as the matter is confidential. A deal is expected to happen later this year, the sources said, cautioning that Encino’s plans are subject to market conditions.
Encino and CPP declined to comment.
Encino operates in the Utica shale basin of Ohio and is one of the largest privately owned oil and gas exploration and production companies in the United States.
It was formed in 2017 as a partnership to buy and develop U.S. oil and gas assets. Under the terms of the agreement, CPP Investments invested $1 billion in the venture, while oil and gas producer Encino Energy agreed to operate the acquired assets.
A year later, Encino Acquisition Partners bought Chesapeake Energy’s Ohio assets for $2 billion. CPP Investments said in April 2024 it would invest another $300 million in the business to help accelerate the development of the company’s assets.
In January, Infinity Natural Resources raised $265 million from its IPO and the company’s shares jumped on their debut in New York. The positive market reaction to the natural gas producer’s stock market launch helped accelerate Encino’s decision to explore its options, one of the sources said.
(Reporting by David French in New York, Editing by Anirban Sen and Lisa Shumaker)