Private equity firms Kayne Anderson Capital Advisors and Warburg Pincus are exploring a sale of Terra Energy Partners LLC, seeking as much as $2.5 billion, including debt, for the natural gas producer, people familiar with the matter said.

The buyout firms launched an auction process to sell their majority stake in Terra earlier this month with the help of an investment bank, the sources said.

The sources added there was no certainty over the price or timing of a deal, should one occur. Significant volatility in commodity prices, in particular, makes valuing assets hard, with sources pointing to a potential valuation of between $2 billion and $2.5 billion. They asked not to be identified because the matter is confidential.

Kayne Anderson and Warburg declined comment. Terra did not respond to a comment request.

U.S. natural gas prices have more than doubled this year as Russia’s invasion of Ukraine has roiled global supply that was already squeezed by post-pandemic demand. U.S. natural gas futures hit $9 earlier in May for the first time since 2008, spurring on private equity firms to cash out on assets for top dollar.

Houston-headquartered Terra is the largest gas producer in the Piceance Basin of Colorado, with 370,000 net acres cranking out around 530 MMcf/d of gas, according to its website.

Terra was formed in 2015 with backing from Kayne Anderson. In 2016, Warburg joined Kayne Anderson as an equal partner after it helped fund the acquisition of Terra’s current acreage position from WPX Energy for around $910 million.

Other gas producers put up for sale by their private equity owners this year include Caerus Oil & Gas, backed by a trio of investment firms that include Oaktree Capital Management. Warburg has also explored a sale of RimRock Oil & Gas.

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