Private equity firm EnCap Investments is exploring a sale of Grayson Mill Energy that could value the Bakken shale-focused oil and gas producer at around $5 billion, inclusive of debt, people familiar with the matter said on Thursday.
EnCap has tapped investment bank Jefferies Financial Group to run a sale of Grayson Mill, the sources said. The process will kick off later in 2024, subject to market conditions, the sources added.
The sources cautioned that no deal is certain and asked not to be identified because the matter is confidential.
EnCap and Jefferies declined to comment. Grayson Mill could not be reached for comment.
Merger and acquisition activity in the U.S. shale patch hit record levels in 2023, as exploration and production companies sought to boost scale and add premium drilling locations. Major deals included $50 billion-plus purchases by Exxon Mobil and Chevron of, respectively, Pioneer Natural Resources and Hess.
This makes for a favorable environment for private equity firms such as EnCap to cash out on assets. Last year, EnCap sold a trio of companies to Ovintiv for $4.275 billion, while Earthstone Energy – in which EnCap held a significant minority stake – was bought by Permian Resources for $4.5 billion.
Grayson Mill was formed in 2016 by EnCap and its management team and grew to become one of the largest privately held energy producers in the Bakken, which stretches across North Dakota and parts of Montana. The company also has some assets in the neighbouring Powder River Basin of Wyoming.
Its growth was boosted by acquisitions. In 2021, Grayson Mill bought the Bakken operations of Equinor for $900 million. Last year, Grayson Mill spent $825 million to buy the entirety of Ovintiv’s position in the basin.
