US-based Colgate Energy Partners is assessing a sale after receiving a takeover interest from an undisclosed firm, reported BNN Bloomberg, citing people familiar with the development.

It is estimated that the sale could earn up to $5bn for the private equity-backed energy explorer, which has been preparing to go public.

The exploration and production company could either sell to a larger rival company, or undertake a merger of equals with nearby companies, the report added.

Colgate Energy and its backers, NGP Energy Capital, and Pearl Energy Investments, are working with undisclosed advisers to launch the initial public offering (IPO) and assess a potential sale.

The sources told the publication that Colgate Energy is anticipated to generate earnings before interest, taxes, depreciation, and amortisation (EBITDA) of over $1bn this year.

Colgate Energy, which has not made a final decision, could also consider operating independently.

The firm’s main interest is acquiring and developing conventional and unconventional oil properties in the Permian basin, in the US.

Focused on developing more than 100,000 net acres in the Delaware basin, the company holds properties in the Reeves and Ward Counties, Texas, and Eddy County, New Mexico.

Several US oil and gas exploration firms have been entering into deals to benefit from the higher commodity prices.

In November 2021, Colgate Energy agreed to buy approximately 22,000 net acres, in New Mexico, from an undisclosed seller.

The assets have an estimated average net daily production capacity of approximately 750 barrels of oil equivalent per day.

Last year, Colgate also acquired Occidental Petroleum’s 25,000 net acres in the Southern Delaware basin, in Texas, for $508m.

The acreage comprises approximately 360 active wells that produce 10,000 barrels of oil equivalent per day.