EnCap Investments LP has combined two of its portfolio companies in the Permian basin, creating an oil producer worth more than $4 billion including debt that the private equity firm wants to take public as soon as next year, people familiar with the matter said on Monday.
The energy-focused investment firm has merged Advance Energy Partners and Ameredev II LLC, which both operate in the Delaware portion of the Permian - the region of Texas and New Mexico considered the heart of the U.S. shale industry, where output is expected to exceed 5 million barrels per day in January for the first time ever.
In the last three years, buyout firms have also frequently merged their own energy companies together - a trend the industry has dubbed "smashcos." These reduce management costs and create a larger company better suited to operate when crude prices are subdued.
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