Veteran, Newly Listed Private Producers on Top 100 Hungry for M&A

In this fourth annual listing of the top 100 private operators produced by Enverus and featured exclusively in Oil and Gas Investor, the evolution of the E&P sector is evident. A profound consolidation trend that began in late 2023 and characterized 2024 took many top private companies out of circulation as they merged together and with large public producers. Shawn Stuart, principal analyst at Enverus, shared his perspective on what the changes mean for the industry, what’s next for the sector and where the hottest activity may take place.

Deon Daugherty, editor-in-chief, Oil and Gas Investor: What are the most important takeaways you see in this list? Can you compare it to the 2023 listing?

Shawn Stuart, principal analyst, Enverus: Five of the top 20 operators transacted or went public during the year. We had eight new entries to the list, many that joined through acquisition of assets. The top five private operators remain the same, with the exception of Endeavor, which sold to FANG.

DD: Key energy-focused private equity firms Quantum Capital Group, EnCap Investments and Pearl Energy Investments closed multibillion dollar funds late last year and early in 2025. How do you expect that capital to be deployed?

SS: We’re seeing the impact of a fresh round of fundraising in the form of new commitments to portfolio companies, with 2025 on pace to be the most active year for new team commitments since the downturn. Firms are able to point to the successful exits of the last few years in demonstrating the opportunity in private oil and gas investments, compared to immediately after a rough stretch in 2020. The challenge will be finding opportunities in an increasingly consolidated industry. There won’t be a “one size fits all” investment strategy for these firms. Quite a few teams are returning to the tried-and-true Permian Basin despite consolidation and looking to push the productive margins even further out in areas like the Northern Delaware Basin and Southern Midland Basin. Others are looking at smaller opportunities in plays that fly under the radar of public companies like the Cherokee, San Miguel or San Juan oil, to name a few.

Other common strategies firms are likely to continue include deploying capital into mineral and royalty assets and non-operated working interests. These have been perennial favorites of private equity because of the wide opportunity set in a fragmented market and low overheard, as well as flexibility in capital deployment. An area that hasn’t been a focus for U.S. private equity traditionally, but is likely to pick up interest, are non-U.S. assets, with Canada being the most obvious target but other countries also under consideration.

DD: There are several new names on the list. What made the difference for these companies?

SS: Many new operators on the list joined the ranks through acquisition of assets. Validus acquired assets from Citizen Energy, 89 Energy and Continental [Resources] to vault the company into the top 10. FourPoint Resources is new on the list with the purchase of Ovintiv’s Uinta assets. QB Energy took over the Piceance Basin assets of Caerus, focusing on Rockies gas. In two of the examples, private assets that lacked a home in public markets were traded to another private operator with fresh dry powder to deploy, a trend that is likely to continue for privates outside the main public company’s focus areas. The third was a relatively rare large-scale asset sale by a public E&P.

DD: What can we glean about the private upstream landscape when we consider these companies and where they operate?

SS: M&A was a major theme for private operators over the past year. Ownership of Permian assets is increasingly being concentrated in the hands of public companies as private operators exit, including the major sale of family company Endeavor Energy Resources last year. Private capital is redeploying into other plays and diversifying its exposure, including investment in older legacy assets in the Rockies. The SCOOP/STACK is likely to take the opposite direction from the Permian and become an increasingly privately owned play as public companies concentrate elsewhere. There also looks to be a larger private focus on gas relative to oil, where M&A has been less frequent outside of the Haynesville. Private operators look well-positioned to capitalize on strengthening gas prices relative to the market of the past few years.

DD: How have the success strategies at private companies evolved?

SS: Balancing the right mix of production and inventory has always been key for private equity firms working towards a sale and, in recent years, we have seen public company preferences in assets shift towards assets with more remaining locations that will boost their overall inventory lives. That has likely led more private firms to prioritize leaving locations undrilled, as they can receive an attractive valuation on them in a sale. However, it also puts firms that have a higher weighting to production and less high-quality locations in a tough spot to find a buyer. Eventual exit strategies for these companies are likely to include a sale to another private company, whether private equity-sponsored or a subsidiary of a larger company like Ineos, as well as the handful of public MLPs and other late-life asset owners.

The relative glut of production-heavy and inventory-light assets available in the market is also likely to see more firms pursue an income strategy focused on yields and longer holding periods, compared to the quick resource expansion flips of prior years. That will require a recalibrating of the risk-reward profile received by investors.

DD: How might market volatility and general instability so far in 2025 influence how private producers operate going forward? Do they respond similarly to their public peers, which appears to be based on a strategy of incremental reductions in spending and activity?

SS: Private operators are generally more responsive to pricing and agile with their activity. We expect the activity drop in lower prices to be skewed more to privates rather than publics. It is also likely to put on hold some planned sales, particularly for oil-focused companies, as they wait for a more favorable market environment. We have seen more of a focus on gas recently, including the sale of Olympus [Energy] to EQT [Corp.] and Encino [Energy], which had about half of its total production coming from gas, to EOG [Resources]. While the delineation of the oil inventory was the exciting story for Encino, a company entirely focused on oil like WildFire [Energy] or Verdun [Oil] would seem much less likely to exit in this market than one with a gas focus or a balanced production stream.

DD: Where can private producers find opportunities in the current macro environment?

SS: Weak macro backdrop gives private companies opportunities to acquire longer-dated assets from public companies. As public companies combat lower price expectations, asset sales can be a tool used to bolster balance sheet strength. A longer-term cyclical bullish market for gas, driven by LNG and data center demand, is likely to push more private companies to explore forgotten gas opportunities in areas like the Rockies or the SCOOP/STACK for its optionality between liquids and gas drilling locations.

DD: What trends have you observed among the top private operations? Are they exploring less developed acreage, applying new technology to mature basins, diversifying or trying other things?

SS: Private operators continue to display willingness to push boundaries of play viability and lean into emerging zones, although that becomes incrementally more challenging with each iteration as the assets they previously liked are traded into public hands. In addition, they are testing longer laterals to improve well economics. Redevelopment strategies such as refracs are likely an area private companies will be putting attention towards as they continue to play a role of innovating, testing new or, in this case, the revisiting of old assets.

DD: Which regions or basins offer the most opportunity to private producers?

SS: Unlike in previous cycles where private equity was largely focused on the Permian, capital deployment is likely to be broader this time around. That is going to include revisiting more mature regions like the Eagle Ford and Williston, testing out smaller plays and looking at non-Haynesville gas opportunities, including the legacy Rockies plays. If we have to pick one area that offers the most potential in the U.S. right now, it is probably the Midcontinent. Opportunities to reverse declining productivity and capture upside on gas makes that region particularly stand out.