XCL Resources holds around 45,000 net acres in the Uinta Basin. Credit: pan demin/Shutterstock.

SM Energy is in advanced discussions to acquire Utah-based oil producer XCL Resources, reported Bloomberg. 

According to sources familiar with the matter, a sale that could be disclosed soon would put XCL’s value at around $3bn.    

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However, the final decision is still pending and XCL’s backers are keeping their options open. 

The acquisition would see SM Energy, an independent exploration and production company, expand into the Uinta Basin, known for its unique waxy crude oil.  

XCL Resources, supported by EnCap Investments and Rice Investment Group, holds around 45,000 net acres in the area and produces an estimated 55,000 barrels of oil equivalent per day.  

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The company also has water transportation infrastructure and is developing a sand mine for fracking. 

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This potential deal is part of a broader trend of mergers and acquisitions in the oil and gas industry, driven by companies seeking to scale up and renew their drilling inventories.  

The sale process for XCL Resources, managed by Jefferies Financial Group, commenced in early March. 

The acquisition would complement SM Energy’s existing operations in the Eagle Ford and Midland Basins in Texas.  

Furthermore, the potential transaction would represent another exit for EnCap Investments, which recently saw Matador Resources sign an agreement to acquire assets from one of its portfolio companies for $1.9bn. 

As per the terms of the transaction, Matador will purchase an Ameredev II Parent subsidiary, together with undeveloped land in Texas and New Mexico as well as oil and gas resources. 

The sale also includes a 19% share in Piñon Midstream, which controls midstream properties in southern Lea County, New Mexico. 

Quantum Capital Group recently agreed to purchase Caerus Oil and Gas, valuing the Rocky Mountain energy company at $1.8bn.