Another Billion-Dollar U.S. Oil Acquisition Is on the Horizon

SM Energy is reportedly in talks to acquire XCL Resources in a deal that has been valued at $3 billion.

XCL Resources is a major player in Utah’s Uinta Basin, a shale formation that has not been getting as much attention as the Permian but is a contributor to the U.S. total in light, sweet shale crude.

The news follows a Reuters report from March this year that the owner of XCL Resources, EnCap Investments, was looking for a buyer after it failed to merge XCL Resources with another local player in the Uinta Basin because antitrust regulators stopped the deal.

The target company’s average daily output is around 55,000 barrels from its acreage of 45,000 acres in the Uinta Basin. It is also developing a sand mine to supply its own frac sand for its shale wells.

If the deal goes through, Bloomberg noted in its report on the news, it would become the second big exit for EnCap Investments after the sale of some portfolio assets to Matador Resources for 41.9 billion.

The buyer, SM Energy, is focused on the Eagle Ford and the Midland Basin in Texas. The former is currently seeing a revival in interest among investors, by the way, even as most M&A activity in the shale patch remains concentrated in the Permian.

Last month, Crescent Energy struck a deal with SilverBow Resources to acquire it for $2.1 billion in an all-stock deal. Crescent Energy said about the deal that “Scaled enterprise advantages and complementary assets [are] expected to drive significant annual synergies of $65 to $100 million through immediate cost of capital savings and operating efficiencies.”

Earlier this year, Rystad Energy forecast that global M&A activity in the upstream sector could see some $150 billion change hands in deals between April and December this year, after the strongest first quarter for oil M&A in five years.

North America was home to the bulk of the deals, representing 83% of the total in the first quarter of the year alone.

By Charles Kennedy for Oilprice.com

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