EnCap Merges Two Permian Portfolio Companies in $4 Billion Deal

EnCap Investments LP has combined two of its portfolio companies in the Permian Basin, creating an oil producer worth more than $4 billion including debt that the private equity firm wants to take public as soon as next year, people familiar with the matter said on Dec. 13.

The energy-focused investment firm has merged Advance Energy Partners and Ameredev II LLC, which both operate in the Delaware portion of the Permian—the region of Texas and New Mexico considered the heart of the U.S. shale industry, where output is expected to exceed 5 million bbl/d in January for the first time ever.

This year’s recovery in crude oil prices sparked a merger spree in the North American shale industry, as operators sought scale to cut costs while slowly growing production. The Permian has been the epicenter for dealmaking, due to its position as the top U.S. oil producing field.