(Reuters) – Oil and gas producer Civitas Resources is exploring a sale of part or all of its assets in the Denver-Julesburg Basin (DJ Basin) in Colorado, which could be valued at more than $4 billion, Bloomberg News reported on Wednesday.
The company is working with a financial adviser to gauge buyer interest and would be open to divesting fully from the basin if it receives a sufficiently attractive offer, the report said, citing people familiar with the matter.
Civitas did not immediately respond to a Reuters request for comment.
“A valuation north of $4.0 billion is reasonable, but the company would be shrinking not just in market cap and enterprise value, but also lower capital returns, which may not be well received in a market that places value on scale,” said Gabriele Sorbara, an analyst at Siebert Williams Shank.
“On the positive side, a potential sale would remove the market/investor stigma associated with Colorado, which is weighing on the valuation, and turn Civitas into a pure-play Permian company,” Gabriele said.
Civitas has been expanding its operations in the lucrative Permian basin in Texas and New Mexico. In 2023, it acquired some Permian assets from private equity firm NGP Energy Capital Management for $4.7 billion as well as some acreage in the Midland Basin from Vencer Energy for about $2.1 billion.
The Denver-based company’s average daily production in the Colorado basin stands at about 169,000 barrel of oil equivalent (boe), according to its website.
(Reporting by Pooja Menon in Bengaluru; Editing by Shilpi Majumdar)
Comments