E&P Startups X2, Rockcliff Hunt for Large-Scale M&A Amid Price Volatility

FORT WORTH, Texas—New E&P startups are on the hunt for overlooked oil and gas assets with room to run, tucked away in the hidden corners of the Lower 48.

Private equity is reloading with experienced management teams: Quantum Capital Group is backing Rockcliff III, which is eyeing M&A opportunities in the Haynesville and Eagle Ford. The previous iteration of the company, Rockcliff II, sold its East Texas Haynesville position for $2.7 billion in late 2023.

EnCap Investments LP, Westlawn Group and Rice Investment Group are backing X2 Resources, the team that previously built XCL Resources in Utah’s Uinta Basin. XCL Resources was acquired by SM Energy and non-operated partner Northern Oil & Gas (NOG) for $2.6 billion last year.

Both companies are seeking large-scale M&A during a volatile time for the industry. WTI crude prices have collapsed around $10/bbl since April due to tariff and OPEC production headwinds.

Natural gas is more constructive, with forward strip prices above $4/MMBtu for the next two years.

“Commodity prices are always going to go through their cycles. … We definitely pay attention to the near-term strip, but we also think about where it’s going long term,” Sheldon Burleson, Rockcliff’s president and CEO, said during Hart Energy’s 2025 SUPER DUG Conference & Expo.

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X2’s middle innings strategy

X2 Resources’ competitive edge has been scaling up a “third- or fourth-inning asset” and handing it off to a larger producer, said Matt Jankovksy, executive vice president of strategy and business development for X2.

That was the case in the Uinta Basin waxy crude play, where XCL grew to become the basin’s top oil producer. XCL entered the play producing around 10,000 bbl/d and sold to SM and NOG at 60,000 bbl/d.

XCL drilled 250 wells across 12 of the Uinta’s stacked pay formations, including the Uteland Butte—the basin’s main target. The company also landed laterals in emerging zones like the Douglas Creek, Castle Peak and Wasatch.

X2 has a similar acquire-and-develop strategy to XCL, Jankovksy said. And like XCL, X2 will likely focus M&A on a liquids-rich play.

“After spending five-plus years in the Uinta with 90% oil cuts and 95% revenue contribution [from oil], we never really thought about gas,” he said.

The current price rally has made X2 look at options in gassier basins, but the company’s core focus will remain on the liquids-weighted basins.

There are parts of the Permian’s Delaware Basin and Central Basin Platform that X2 has “spent real time” looking at, Jankovksy said. But the opportunities are probably earlier stage than X2 prefers—maybe first or second inning, he said.

“I would say it’s early for us internally to feel comfortable about being able to put a multi-rig program on those sorts of secondary targets,” he said.

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Rockcliff’s commodity mix

Rockcliff II was exclusively focused on Haynesville gas, but Rockcliff III adopted a more commodity-agnostic approach, actively evaluating both gas- and liquids-weighted M&A opportunities.

Haynesville gas and Eagle Ford liquids are still Rockcliff’s main targets. The company has even considered adopting a multi-basin strategy to check all the boxes, Burleson said.

Rockcliff sees an opportunity to acquire acreage that might be considered costly and non-core for a larger operator. Then, the new private equity-backed team can come in and streamline development.

The Haynesville and Eagle Ford are both relatively mature plays, where undeveloped acreage is scarce and expensive to acquire. The assets Rockcliff acquires might be more production-weighted than undeveloped, Burleson said.

Split-depth rights are also an interesting and creative way to make a deal, he said. Split-depth rights refer to the division of mineral ownership in a property based on specific underground depth intervals. In South Texas, Eagle Ford has historically been the producers’ main drilling target.

When he previously worked at Chesapeake Energy, Burleson watched the Austin Chalk bench—overlying the deeper Eagle Ford—begin to take off. Today, most major producers are tapping Austin Chalk in their South Texas programs.

Intrepid operators are looking further. Private operator Grit Oil & Gas is leading development in the shallower San Miguel play in Dimmit and Maverick counties in Texas. San Miguel sits above the deeper Austin Chalk and Eagle Ford zones.

Below Eagle Ford, the Pearsall Shale is being tested by EOG Resources and private E&P Formentera Partners, owned by Bryan Sheffield.

“Is there another Pearsall or San Miguel or some of these other plays that have been there but just haven’t been the focus until you go through a lot of your inventory in the Eagle Ford?” Burleson said.

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