Carnelian Backs Williston E&P Zavanna as Bakken M&A Heats Up

Carnelian Energy Capital Management LP invested in Zavanna LLC, a longtime producer in the North Dakota Bakken and Three Forks plays.

Chris

Mathews

Hart Energy

Tue, 09/24/2024 - 04:38 PM

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Carnelian Energy Capital Management LP made an equity investment in North Dakota producer Zavanna LLC. (Source: Zavanna Energy)

Carnelian Energy Capital Management LP has made an equity investment in Zavanna LLC, a longtime producer in the North Dakota Bakken and Three Forks plays.

The new equity from Carnelian will be used to recapitalize Denver-based Zavanna and to fund development across the company’s Williston Basin position, the companies announced Sept. 24.

Financial terms of the investment were not disclosed. Carnelian and Zavanna did not respond to Hart Energy’s requests for more information by press time.

Zavanna was launched in 1994 by Bill Coleman. For more than a decade, the company has been led by CEO David Hodges and CFO Matt Ott.

Zavanna has amassed a portfolio of over 150 drilling locations across the Bakken and Three Forks formations over that time.

“Zavanna has one of the deepest inventories of drilling locations in the core Bakken fairway of Williams and McKenzie counties, and these development projects are among the most economic in North America,” said Carnelian Managing Director Kevin Goodman. “We are excited to be partnering with the management team to accelerate development.”

In addition to boosting organic development, Carnelian’s investment will also support Zavanna in making accretive bolt-on acquisitions and trades in North Dakota, Ott said.

Zavanna holds a large, blocky position in the core of the Williston Basin, near other major producers including Continental Resources, Grayson Mill Energy, Chord Energy and Hess Corp.

Zavanna Rextag Acreage Wells — Zavanna holds a large acreage position in the core of the North Dakota Williston Basin. Displayed: Horizontal wells operated by Zavanna, according to available Rextag data. (Source: Rextag)

The company’s oil production averaged approximately 5,230 bbl/d from 154 producing wells during July, according to the most recent data published by the North Dakota Oil and Gas Division. Gas output averaged about 22,200 cf/d.

“Carnelian’s flexible and collaborative approach allowed us to quickly structure and execute a transaction that brings considerable growth capital to the company,” Hodges said.

Williston M&A heats up

The area around Zavanna’s acreage position is red-hot with M&A activity. Several of the Williston Basin’s top producers have been snapped up in just the past year.

Hess is being acquired in a blockbuster $55 billion mega-merger with Chevron Corp. The deal would deliver Chevron a massive boost in the Bakken—but it’s been snared by legal and regulatory turmoil stemming from Hess’ ownership position in the prolific oil fields offshore Guyana.

A Hess subsidiary, Hess Guyana Exploration Ltd., is currently in arbitration with Exxon Mobil Corp. and China National Offshore Oil Corp. (CNOOC) after Exxon exercised a right of first refusal for Hess’ interests in the Stabroek Block offshore Guyana.

But the pivotal arbitration hearing concerning Hess’ position in Guyana won’t take place until mid-2025, casting a veil of uncertainty across the megadeal.

Devon Energy is getting deeper in the Williston through a $5 billion acquisition of Grayson Mill, a private producer backed by EnCap Investments LP.

Chord Energy got bigger in the Williston through a $4 billion takeout of Enerplus Corp.

The $17.1 billion combination of ConocoPhillips and Marathon Oil will also consolidate huge swathes of leasehold and wellbores in the Williston.

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Chris Mathews

Chris is the Senior Reporter of Shale and A&D at Hart Energy. He covers the North American upstream shale energy industry and the acquisition and divestiture deal markets.