Buyout firm EnCap Investments pledges to buy $ 1.5 billion from EP Energy -sources

Aug. 11 (Reuters) – Private equity firm EnCap Investments has agreed to acquire EP Energy for $ 1.5 billion, people familiar with the matter said, less than a year after the oil producer and gas emerged from a bankruptcy process which ceded control to its creditors.

EnCap plans to split EP, which owns production assets in South Texas and northeast Utah, into its separate geographies and merge them with existing holding companies, the sources say.

Utah’s assets in the Uinta Basin will be merged with XCL Resources, while Eagle Ford’s Texas operations will be consolidated with an EnCap company with acreage in the region, the sources added.

EnCap, EP and XCL did not respond to requests for comment. The sources spoke on condition of anonymity as the information is not public.

EP filed for bankruptcy in October 2019, but its attempts at restructuring were affected by the surge in oil prices in early 2020. Like many US energy producers whose finances were decimated by the collapse, EP has gave shares in a newly incorporated company in exchange for eliminating $ 4.4 billion in debt.

Emerged from bankruptcy in October 2020, EP said in March it had selected Credit Suisse Group (CSGN.S) and Jefferies Financial Group (JEF.N) to explore a sale of the company.

The rebound in crude oil prices, which have jumped 40% so far this year as an improving economic climate bolsters demand for energy, has sparked mergers and acquisitions. This allowed shareholders of formerly bankrupt companies to pull out of their investments. Read more

Reuters reported in June that EnCap was among the interested parties, with buyout firm Quantum Energy Partners and privately held Validus Energy also seeking to acquire some or all of EP. Read more

EP had 115,000 net acres and produced from over 900 wells in Eagle Ford at the end of 2020, while its assets in Utah spanned 155,000 net acres and produced over 400 wells.

Reporting by Shariq Khan in Bengaluru and David French in New York; edited by David Evans

Our Standards: Thomson Reuters Trust Principles.

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