© Reuters. An oil production site run by Civitas Resources is seen near Broomfield, Colorado, U.S, December 2, 2021. REUTERS/Liz Hampton/FILE PHOTO
By David French
(Reuters) – Civitas Resources Inc is nearing a deal to acquire oil and gas operations in the Permian basin from private equity firm NGP Energy Capital Management LLC for close to $5 billion, including debt, people familiar with the matter said on Monday.
The deal would transform Civitas, currently valued at $5.6 billion, expanding its operations beyond Colorado’s Denver-Julesburg (DJ) basin into the lucrative Permian basin in Texas and New Mexico, considered the heart of the U.S. shale industry.
Civitas is in advanced discussions with NGP to buy Hibernia Resources as well as much of Tap Rock Resources, the sources said.
The company will fund the deal using a mixture of cash and newly-issued Civitas shares, although the precise ratio could not be learned from the sources.
If the negotiations conclude successfully, an agreement could be announced as early as Tuesday, the sources said, requesting anonymity because the matter is confidential.
Civitas, NGP, Tap Rock and Hibernia did not respond to requests for comment.
Reuters reported in April that NGP was exploring a sale of Tap Rock and Hibernia.
Civitas, created in 2021 through the combination of three smaller DJ basin producers, bills itself as Colorado’s first carbon-neutral energy producer. It uses carbon offsets and renewable energy credits to compensate for emissions it cannot eliminate from its energy production operations.
The Denver-based company currently operates on more than 500,000 net acres and produces roughly 160,000 barrels of oil equivalent per day (boed), according to its website.
Tap Rock, among the largest private equity-controlled oil producers left in the Permian, is producing more than 100,000 boed from the Delaware portion of the basin in New Mexico, according to its website. Hibernia, which does not disclose the level of its production, operates in the Midland part of the Permian basin in Texas.
Cashing out on Tap Rock and Hibernia would help NGP with its bid to raise its 13th natural resources fund – the first flagship fund from the firm since 2018.