Sources say that Citizen Energy, a producer of shale oil and gas, will buy Validus in a deal worth more than $2 billion.

According to sources familiar with the situation, Validus Energy, a privately held oil and natural gas producer, has agreed to purchase Citizen Energy, a rival company, for over $2 billion including debt.

The U.S. Shale industry has seen a record wave of consolidation. After the COVID, oil prices surged and buyers were eager to secure the best drilling locations.

Sources who requested anonymity because the talks are confidential said that Validus won the auction for Tulsa's Citizen Energy.

Sources said that Citizen, which is backed by Warburg Pincus private equity, began exploring the possibility of a sale after Validus made an offer to purchase the company.

Warburg and Citizen declined comment. Validus has not responded to any requests for comment.

Sources said that this is Validus' second major acquisition in the Mid-Continent, after it spent $450 million earlier this year to purchase Continental Resources assets. Continental Resources did not respond when asked for comment.

Citizen's latest version was launched in 2018 with a $300-million equity commitment by Warburg. It has since grown to become one of the biggest private oil and natural gas producers on the Mid-Continent Basin, which covers Oklahoma and parts of Kansas and Texas.

The region attracted investors initially in mid-2010s, but production did not meet expectations.

Many companies failed or sold for a fraction their value. Citizen acquired Roan Resources in 2019 for $1.52 per share, roughly one year after Roan's stock peaked at $15.

After the consolidation of private energy producers in the region, a number of large companies were created. These companies are now attractive targets for larger companies with cash-flush.

Validus' website states that its previous venture, which was based in south Texas, was sold to Devon Energy for $1.8 billion in 2022. The management team includes Skye Callantine of Felix Energy and former investment banker Cameron Brown. (Reporting from Shariq Khan in New York and David French; editing by David Gregorio).

(source: Reuters)