EnCap Investments' sale of oil and gas assets in Utah's Uinta Basin for $2.55 billion demonstrates that a wave of private equity exit deals in the U.S. oil sector extends beyond the popular Permian Basin in Texas and New Mexico.

EnCap-backed energy company XCL Resources sells 80% of its Uinta assets to publicly traded strategic buyer SM Energy for $2.04 billion, while Northern Oil and Gas acquires the remaining 20% for $510 million, according to Denver-based SM Energy. The assets include approximately 37,200 net acres with a daily production of 38,000 barrels of crude oil and 390 locations for drilling new wells. EnCap first backed XCL Resources in 2018.

The deal, expected to close in September, is one of the largest private equity transactions outside the Permian Basin in recent years, according to Andrew Dittmar, director at energy-focused data analysis provider Enverus in Austin, Texas.

The Permian Basin, which spans parts of West Texas and Southeast New Mexico, experienced a series of billion-dollar deals last year involving major publicly traded buyers and private equity sellers, including Houston-based EnCap. Earlier this month, EnCap's Ameredev II Parent sold Permian assets to Matador Resources for nearly $2 billion.

The increasing ownership share of large publicly traded energy companies in the Permian Basin is driving their smaller competitors to seek acquisitions in less popular areas, creating sales opportunities for private equity firms. Private equity firms specializing in energy have secured some of the largest exit deals in the Permian Basin in recent years, but have struggled to sell assets in less popular areas, according to industry analysts. SM Energy's current activities are focused on the Midland Basin, a subregion of the Permian in West Texas, and the Eagle Ford Shale region in South Texas.

In another recent sale of private equity outside the Permian, Pearl Energy Investments-backed Eagle Mountain Energy Partners in Houston announced this week that they sold assets in the Williston Basin in North Dakota and Montana for $243 million in cash and 2.5 million TXO shares to the oil and gas-focused Master Limited Partnership TXO Partners. The buyer has previously focused on the Permian and the San Juan Basin in New Mexico and Colorado.

The initial wave of consolidation was truly focused on the Permian Basin, as there were a large number of private equity portfolio companies to acquire, but there just aren't many left," said Dittmar. "You have to look further into other areas.