(Reuters) – Ascent Resources LLC, one of the largest privately held U.S. natural gas producers, is preparing an initial public offering (IPO) it hopes will give it a market valuation of around $6 billion, according to people familiar with the matter.
Depending on timing, it would be the first major stock market listing of a U.S. shale operator since Russia’s invasion of Ukraine in February drove a spike in gas prices.
The ensuing stock market volatility that prevented many companies from launching an IPO is now subsiding and energy prices remain elevated, making it a favorable environment for Ascent to consider pursuing a listing.
The two private equity firms that own Ascent – the Energy & Minerals Group and First Reserve Corp – are working with Citigroup Inc and Barclays Plc to prepare for an IPO of Ascent, the sources said.
Bloomberg News reported last week that Ascent had held talks with Gulfport Energy Corp, another U.S. natural gas exploration and production company, about a possible tie-up. The Reuters sources said discussions have happened sporadically since the end of 2021 and have consistently broken down as the sides were too far apart on valuation expectations.
Ascent may register its IPO confidentially with the U.S. Securities and Exchange Commission as early as April and could be ready for its stock market debut in New York in the second half of 2022, the sources added.
The sources cautioned that timing, valuation and whether the IPO takes place at all were subject to market conditions, and spoke on condition of anonymity because the matter is private.
Ascent, Barclays, Citigroup, EMG, First Reserve and Gulfport all declined comment.
By listing Ascent on the stock market, the buyout firms would retain the option of finding a buyer for the company down the line. Blackstone Inc, for example, clinched a $615 million deal last August to sell natural gas producer Vine Energy to Chesapeake Energy Corp, only five months after the investment firm had listed Vine in New York.
Ascent produces gas from approximately 337,000 net acres in Ohio’s Utica shale formation, according to its website. The company was founded in 2013 by EMG and First Reserve and late oilman Aubrey McClendon, who stepped away from Ascent a year later. It had $2.6 billion of debt at the end of 2021.
(Reporting by David French in New York; Editing by Matthew Lewis)