CrownRock LP is preparing to explore a sale that could value it at well over $10 billion including debt, people familiar with the matter said, in what could be the largest deal for a U.S. oil and gas producer going back at least three years.
The private equity-backed company, which is led by Texas billionaire businessman Timothy Dunn, has initiated discussions with investment banks about hiring advisers to run a sale process that will kick off by early 2024, the sources said.
Oil majors with pockets deep enough to afford buying CrownRock, such as Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N), are among those expected to be contacted to gauge their interest in the process, the sources added.
The sources cautioned that no deal is certain and requested anonymity because the matter is confidential. CrownRock and Chevron did not respond to comment requests. Exxon declined comment.
The potential sale of CrownRock could end up being the largest in the U.S. oil and gas producing patch since ConocoPhillips' (COP.N) all-stock deal for Concho Resources in 2020, which valued the latter at $13.3 billion, including debt.
CrownRock's decision to explore a sale follows a rally in oil prices this year, fueled by a tighter supply outlook and investor optimism over the resilience of energy demand in major economies. It also underscores how coveted spots are in the lucrative Permian basin, the largest U.S. oilfield, where CrownRock operates.
CrownRock owns approximately 86,000 net acres in the northern part of the Midland basin, which is part of the Permian in Texas. Competition for attractive acreage in the region among energy firms has fueled a rise in dealmaking.
Credit ratings agency Fitch said in December 2021 that CrownRock had more than 15 years of oil and gas to extract in its prime drilling locations.
Most of CrownRock is owned by buyout firms, led by Lime Rock Partners, which took a 60% stake when it helped launch the company in 2007.
CrownRock is led by Dunn, who - through his family's CrownQuest Operating LLC - rolled his previous oil and gas assets into the partnership with Lime Rock.
