Warburg Pincus Uses Price Volatility to Place RimRock Oil & Gas Up For Sale

(Reuters) — Private equity firm Warburg Pincus has placed its portfolio company RimRock Oil & Gas up for sale, three people familiar with the matter said, aiming to take advantage of the upswing in commodity prices to offload the Bakken gas producer. 

It is Warburg's second attempt to sell the gas producer in just over a year, the sources noted. A 2021 auction process failed to secure a buyer at the valuation which Warburg sought.

While current commodity price volatility makes it more challenging to appraise energy assets, RimRock is now expected to achieve a valuation in the high hundreds of millions of dollars, up from the target price last year of upwards of $500 million, the sources added.

This uplift reflects how sellers' expectations have risen due to a recent boom in U.S. natural gas prices — which have jumped by around three-quarters since the start of the year.

Warburg has retained an investment bank for the sale of RimRock, which owns assets spread over 29,500 net acres in the Bakken shale play of North Dakota.

The sources cautioned there is no guarantee that a sale of RimRock will materialize, and Warburg could decide to retain the company. They requested anonymity as the plans are confidential.

Warburg declined comment. RimRock did not respond to a request for comment.

U.S. natural gas futures were trading at around $6.63 per million British thermal units on Monday, up 78% this year, due in part to Russia's invasion of Ukraine creating a global supply crunch and increasing demand for American exports of liquefied natural gas.

That surge has encouraged private equity firms to eye the sale of long-standing oil and gas investments. Warburg first invested in RimRock in 2016, pledging up to $500 million to acquire oil and gas acreage.

Warburg sold natural gas pipeline operator Navitas Midstream for $3.25 billion in January, just a month after it sold Permian basin-focused oil and gas producer Chisholm Energy. 

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