By David French
NEW YORK, Sept 4 (Reuters) – Citadel has held talks to buy U.S. oil production assets, as the hedge fund and commodities trader considers expanding further into owning physical assets, five people familiar with the matter said.
The firm founded by Ken Griffin was among the bidders for WildFire Energy, which was put up for sale earlier this year by buyout firms Warburg Pincus and Kayne Anderson, according to four of the sources. Magnolia Oil & Gas ultimately won the auction, agreeing to buy the operator in the Eagle Ford shale in South Texas for $4.06 billion.
The WildFire bid was among a handful of engagements that Citadel has had in recent weeks with private equity firms that own exploration and production companies about buying oil-weighted assets, the sources said. They asked not to be identified because the matter is private.
As crude prices spike and tensions in the Middle East disrupt global energy markets, U.S. oil and natural gas assets have drawn heightened buyer interest because they can deliver oil without passing through chokepoints such as the Strait of Hormuz.
While uncommon, hedge funds and trading houses that have traditionally traded commodities on exchanges have also been expanding their ownership of physical assets, often to complement their trading businesses.
Citadel and Warburg declined comment. Kayne Anderson did not respond to a comment request.
PLATFORM ASSET
Citadel is already a major trader in oil, natural gas, power and other commodities.
Owning physical production assets can serve as a natural hedge for financial firms that trade commodities through futures and derivatives, because the physical barrels they produce tend to gain value in the same market conditions — such as supply disruptions or geopolitical shocks — that can generate losses on their paper trading positions.
Oil prices have been persistently elevated this year, with U.S. crude touching a six-week high on Thursday amid escalating Middle East tension. That has benefited oil producers, with many recording their best earnings in years in the second quarter. Industry executives have also warned that tight supply could take months to ease, even if hostilities were to end immediately.
Other major commodity traders have also been expanding into oil and gas production and generating good returns. Vitol in July agreed the sale of its VTX Energy Partners U.S. shale venture, and Reuters reported last week that Gunvor was in talks to buy assets in the Haynesville shale for more than $1 billion.
For Citadel, buying a platform such as WildFire would offer not just producing assets but also an existing management team to operate them and any future acquisitions.
That would mirror the approach which Citadel took when it entered the U.S. natural gas production space last year. Citadel bought Paloma Natural Gas from EnCap Investments in February 2025, renamed it Apex Natural Gas, and then acquired further assets, including from Comstock Resources and Azul Resources, which is backed by Carnelian Energy Capital.
(Reporting by David French in New York; editing by Echo Wang and Sanjeev Miglani)
Comments