March 28 (Reuters) - EnCap Investments is seeking to

sell XCL Resources, four people familiar with the matter said,

two years after the private equity firm's plan to combine the

oil and gas producer with a local rival was thwarted by U.S.

antitrust regulators.

XCL, one of the largest energy producers in the Uinta shale

formation of Utah, could be worth at least $2.8 billion

including debt, and could achieve a higher valuation when

accounting for its undeveloped assets, the sources said.

Investment bankers at Jefferies Financial Group ( JEF ) are

running the sale process for XCL, which kicked off earlier this

month, the sources added, requesting anonymity because the

matter is confidential.

An EnCap spokesperson declined comment, as did a Jefferies

spokesperson. XCL and Rice Investment Group, which owns a

minority position in XCL, did not respond to requests for

comment.

EnCap first invested in XCL in 2018 with a $400 million

capital commitment. XCL has around 45,000 net acres in the

Uinta, according to its website.

The company produces around 55,000 barrels of oil equivalent

per day, the sources said. XCL also owns assets used for

transporting water using in energy production. A sand mine the

company is developing to source the material used in the

fracking process to break open rock will be online later this

year.

The type of oil extracted in the Uinta is unlike any other

crude grade found in the United States, with a waxy consistency

and a high paraffin content, according to Utah's Department of

Environmental Quality.

EnCap agreed in August 2021 to buy EP Energy, which had

assets in the Uinta and South Texas, for $1.5 billion, with the

aim of merging EP's Uinta assets with XCL.

However, the Federal Trade Commission threatened to sue and

block the deal over fears it would reduce competition and lead

to higher prices for Utah consumers. Crescent Energy ( CRGY )

acquired EP's Uinta assets in 2022 instead.

A new suitor for XCL may not face the same antitrust

hurdles. The FTC said earlier this month the Uinta Basin's

competitive landscape had "changed significantly" since the

aborted EP deal, as more oil production and an increased number

of operators reduced the risk of producers raising prices

unilaterally.

U.S. oil and gas producers went on a $192 billion buying

spree in 2023, taking advantage of acquirers' high stock prices

to secure lower-cost reserves. The FTC is now scrutinizing many

of these deals.