CrownRock LP, a private equity-backed oil and gas producer, is reportedly considering a sale that could value the company at over $10 billion, including debt. Led by Texas billionaire Timothy Dunn, CrownRock has begun preliminary talks with investment banks to oversee a sale process expected to commence by early 2024, according to anonymous sources.
Major oil companies like Exxon Mobil and Chevron, who have the financial capacity for such an acquisition, are likely to be approached for their interest in the deal. However, the sources emphasized that a sale is not guaranteed and declined to comment further. Neither CrownRock nor Chevron responded to requests for comment, while Exxon declined to comment.
If completed, this sale could be the most significant in the U.S. oil and gas sector since ConocoPhillips’ all-stock acquisition of Concho Resources in 2020, a deal valued at $13.3 billion, including debt.
The potential sale comes amid a surge in oil prices, driven by constrained supply and growing investor confidence in the resilience of energy demand across major economies. CrownRock’s decision also highlights the increasing competition for valuable assets in the Permian Basin, the largest U.S. oilfield, where the company operates. CrownRock owns about 86,000 net acres in the northern Midland basin, a part of the Permian in Texas.
The move could have significant implications for M&A activity in the energy industry, particularly in the lucrative Permian Basin. The region has seen a spike in dealmaking, fueled by competition for prime acreage. A sale of this magnitude could trigger a wave of consolidation, as companies look to strengthen their portfolios and capitalize on the current market conditions.
According to Fitch Ratings, as of December 2021, CrownRock had over 15 years’ worth of oil and gas reserves in its prime drilling locations. The majority of the company is owned by buyout firms, with Lime Rock Partners holding a 60% stake since the company’s inception in 2007.
CrownRock’s Timothy Dunn, through his family’s CrownQuest Operating LLC, merged his prior oil and gas assets into the partnership with Lime Rock. The potential sale of CrownRock not only underscores the attractiveness of assets in the Permian Basin but also could set the stage for further high-value transactions in the energy sector.
