EnCap’s initial investment XCL was $400m. Credit: WORKSITE Ltd. on Unsplash.

Private equity firm EnCap Investments is exploring the sale of Utah-based oil producer XCL Resources, reported Reuters citing sources familiar with the matter.

This move comes two years after an attempted merger with a local competitor was blocked by US antitrust regulators.

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XCL Resources is potentially valued at over $2.8bn, including debt. This valuation could increase when considering the company’s undeveloped assets, the sources told the publication.

The sale process, managed by Jefferies Financial Group, began earlier this month.

EnCap’s initial investment in independent oil and gas company XCL dates back to 2018, with a capital commitment of $400m.

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XCL Resources, in which Rice Investment Group owns minority stake, is engaged in acquisition and development of horizontal resource plays in the Lower 48.

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The operations of XCL Resources include approximately 45,000 net acres in the Uinta Basin. Its daily production is estimated at around 55,000 barrels of oil equivalent.

Additionally, XCL owns infrastructure for water transportation used in energy production.

The company is also developing a sand mine to supply materials for the fracking process. This is planned to be commissioned later this year.

Earlier this year, Reuters reported that EnCap was exploring the sale of its Bakken shale-focused oil and gas producer Grayson Mill Energy. 

Investment bank Jefferies Financial Group was appointed to oversee the sale process, which is expected to commence later in 2024.

In 2023, EnCap divested a trio of companies to natural gas company Ovintiv in a deal valued at $4.27bn.