Civitas Resources considers billion-dollar partial sale in Colorado

The oil and gas producer Civitas Resources is considering the sale of part or even all of its assets in the Denver-Julesburg Basin in Colorado. According to Bloomberg News, the value of this transaction could exceed the four billion dollar mark. As part of the sales plans, Civitas has engaged a financial advisor to gauge the interest of potential buyers and would be willing to completely divest the Colorado assets if the offer is enticing enough. A statement from Civitas itself is still pending. Analyst Gabriele Sorbara from Siebert Williams Shank stated that such a sale could eliminate the image problem affecting the company's valuation due to Colorado, making Civitas a pure Permian Basin company. Already in 2023, Civitas had acquired Permian assets for $4.7 billion from the private equity firm NGP Energy Capital Management and acreage in the Midland Basin from Vencer Energy for about $2.1 billion. In the Denver-Julesburg Basin, the company's average daily production is approximately 169,000 barrels of oil equivalent. Colorado, as the fourth-largest oil producer in the USA, is often the scene of disputes between the oil industry and environmentalists, who push for stricter controls on fossil fuel production. A compromise last year included a flexible fee per produced barrel of oil, adjusted to market prices. Sorbara notes that investors are currently avoiding exploration and production companies focused on Colorado, even though conditions for these are expected to remain stable until 2028. A valuation of over four billion dollars seems reasonable, but shrinking market capitalization and corporate value, as well as lower capital returns in a market that values scale, could be negatively perceived. Civitas shares increased by almost two percent in pre-market trading.