Endeavor Energy explores sale for as much as $30 billion-sources
08/12/2023 18:50
By David French and Anirban Sen
Dec 8 (Reuters) - Endeavor Energy Partners is exploring
a sale that could value the largest privately-held oil and gas
producer in the Permian basin of the United States at between
$25 billion and $30 billion, according to people familiar with
the matter.
The sale would come almost 45 years after Texas oilman Autry
Stephens started the company that would become Endeavor. The
85-year-old wildcatter has decided to capitalize on a wave of
mega deals sweeping the sector, the sources said.
Stephens has asked JPMorgan Chase JPM.N bankers to prepare
to launch a sale process for Endeavor in the first quarter of
2024, the sources said, cautioning no transaction is certain and
asking not to be identified because the deliberations are
confidential.
Stephens has considered offers from suitors for Endeavor in
the past, including in 2018, Reuters has reported. He now wants
to settle the company's future rather than let his estate decide
after his death who it should sell it to, the sources said.
Endeavor and JPMorgan declined to comment.
Endeavor's operations span 350,000 net acres in the
Midland portion of the Permian basin, the most lucrative oil and
gas region in the United States.
The universe of potential deep-pocketed buyers for a company
the size of Endeavor is limited. However, the consolidation wave
hitting the industry, as producers seek to boost scale and lock
up the best acreage, shows there would be appetite among the
few.
In October, Exxon Mobil XOM.N clinched a $60 billion deal
to buy Pioneer Natural Resources PXD.N and Chevron CVX.N
announced a $53 billion agreement to buy Hess HES.N .
In these transactions, the acquirers are using their stock
as currency, rather than tapping into their cash piles. This
leaves them with sufficient financial firepower to bid for
Endeavor, even as they try to complete and integrate these
acquisitions. Exxon is familiar with Endeavor's operations
because the two companies teamed up to drill on some of the
latter's land until 2022.
ConocoPhillips COP.N completed in October a $2.7 billion
deal to buy out a 50% stake in the Surmont oil sands project in
Canada. It has also shown an interest in CrownRock, which is
majority-owned by private equity firm Lime Rock Partners and led
by another Texas wildcatter, Timothy Dunn, Reuters has reported.
The sale process for CrownRock is ongoing.
It is unclear whether Exxon, Chevron or Conoco will pursue a
bid for Endeavor. All three companies did not immediately
respond to requests for comment.
There has been outreach from multiple interested parties in
recent times, which helped influence the decision to explore a
sale of Endeavor, two of the sources said.
Stephens, a former appraisals engineer who became more known
through his appearances on the TV documentary series Black Gold,
grew Endeavor by acquiring the unloved acreage of his
competitors and managing to extract oil and gas profitably.
To lower his production costs, Stephens created and used his
own fracking, construction, trucking and other services
companies.
Endeavor produced 331,000 barrels of oil equivalent in the
second quarter of 2023, up 25% from the corresponding period in
2022, according to Fitch Ratings. The credit ratings agency
projected last month that Endeavor will generate about $1
billion of free cash flow in 2024.
(Reporting by David French and Anirban Sen in New York; Editing
by Susan Fenton)
((davidj.french@thomsonreuters.com;))