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December 14, 2021

EnCap combines two Permian basin-focused oil companies

Advance Energy Partners and Ameredev II were merged to form a combined oil producer, valuing more than $4bn.

By Aninda Chakraborty

EnCap Investments has reportedly merged two of its portfolio companies to create one of the largest privately-owned oil producers in the Delaware basin, a part of the larger Permian basin in the US.

According to a Reuters report, the move combines Advance Energy Partners and Ameredev II. The combined oil producer has a value of more than $4bn including debt, the news agency added, quoting people familiar with the development.

The combined firm is currently operating eight rigs. The Ameredev management team is expected to lead the unit.

Another source told Reuters that EnCap may advance to list the combined company next year, subject to favourable market conditions.

EnCap and Ameredev II declined to confirm the merger, while Advance did not respond to Reuters’ queries.

The deal comes at a time where recovering oil prices have triggered new consolidations in the North American shale industry.

ConocoPhillips recently completed the acquisition of Shell’s Permian assets for $9.5bn. The transaction included 225,000 net acres and producing properties in Texas, as well as crude gas and water pipelines, and infrastructure.

EnCap Investments provides venture capital to the independent sector of the US energy industry. The company has invested with more than 240 upstream and midstream companies.

Permian is the largest US shale basin. According to a monthly forecast by the US Energy Information Administration, crude production from the basin may reach 5.031 million bpd by January 2022.

Earlier this month, ExxonMobil announced plans for net-zero Permian Basin emissions by 2030.

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