The owners of THQ Appalachia I LLC are exploring a sale of the U.S. natural gas producer that could value it at more than $5 billion, including debt, people familiar with the matter recently said.

An investment bank has been hired to run the sale process, which kicked off earlier this month, for the company backed by Tug Hill Operating and private equity firm Quantum Energy Partners.

THQ Appalachia, which focuses on the Marshall and Wetzel counties in West Virginia, has net production of around 760 MMcf/d.

While volatility in commodity markets has made it tougher to value energy producers, THQ Appalachia is expected to fetch bids of more than $5 billion due to the worth of its existing production and potential value of its undeveloped acreage, the sources said on June 17.

Potential bidders in the sale process also have the option of buying XcL Midstream, a pipeline firm that moves THQ Appalachia’s gas to market and whose CEO is also CEO at Tug Hill.

If the same buyer chooses to purchase XcL, the price tag of the deal would go up further, the sources added.

The sources, who requested anonymity as these discussions are confidential, cautioned that the sale is subject to market conditions and is not guaranteed, as Tug Hill and Quantum could ultimately decide to retain some or all of THQ Appalachia and XcL’s assets.

Tug Hill and Quantum declined to comment. XcL did not immediately respond to a comment request.

Earlier in June, U.S. natural gas futures traded at their highest level since 2008. The high commodity price levels are encouraging longstanding owners of privately-held gas producers to put them up for sale.

So far this year, Chief E&D Holdings was sold to Chesapeake Energy Corp., while Aethon Energy Management placed its North Louisiana assets for sale.

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