Sources: Validus Energy will buy natural gas producer, 89 Energy III, for $850 Million.

Sources familiar with the deal said that Validus Energy, a privately owned U.S. gas and oil producer, has agreed to purchase 89 Energy III, a rival company, for $850 million including debt.

According to sources, the deal will add more than 25,000 barrels equivalent to oil per day to Validus’s growing footprint in Oklahoma's Anadarko Shale Basin, making it one of the biggest private players in U.S. Mid-Continent region oil.

According to its website, 89 Energy III produces 70% gas.

Kayne Anderson announced the formation of this company in May 2021, after a merger between three Mid-Continent oil and gas producers.

Around that time, energy-focused firms were consolidating their portfolios to reduce costs following a period when energy prices had dropped due to the coronavirus epidemic.

It was also beneficial in the long term, as it allowed them to gain scale and become more appealing acquisition targets when oil prices rose sharply the following years.

Validus and 89 Energy III have not responded to requests for comments. Kayne Anderson declined comment.

In recent months, the Mid-Continent has seen a surge in deal activity. This is due to a more conservative approach towards drilling than in late 2010. Natural gas reserves in the region are also attracting renewed interest from investors, who expect a surge of demand for power to fuel data centers.

Validus has been one of the most active buyers during this current wave of Mid-Continent deals. It is backed by institutional investors as well as its management.

Reports from September last year stated that the Denver-based firm purchased Citizen Energy rival for more than $2 billion dollars from Warburg Pincus. Validus bought assets from Continental Resources in the same oilfield. Reporting by Shariq Khan in New York Editing and proofreading by Marguerita Chow

(source: Reuters)