Privately owned US oil and gas producer Validus Energy is set to acquire rival 89 Energy III for approximately $850m, including debt.
The acquisition will enhance Validus’ production capacity by adding more than 25,000 barrels of oil equivalent per day (boepd), reported Reuters, citing sources.
It will solidify Validus Energy’s position as one of the largest private players in the US mid-continent oil region, adding to the company’s footprint in the Anadarko shale basin in Oklahoma.
The output of 89 Energy III is 70% gas, as stated on its website.
The company was established in May 2021 through a merger of three oil and gas producers in the mid-continent region, facilitated by private equity firm Kayne Anderson.
During that period, energy-focused buyout companies aimed to reduce costs by consolidating portfolio companies following the drop in energy prices caused by the Covid-19 pandemic.
This strategy has proven beneficial as it has enabled companies to achieve scale and become more appealing acquisition targets amid the recovery of oil prices in subsequent years.
Neither Validus Energy nor 89 Energy III responded to requests for comment, and Kayne Anderson also declined to provide any remarks, the report said.
The mid-continent region has experienced a surge in deal activity recently, supported by a more cautious approach to drilling compared with the late 2010s.
The region’s rich natural gas reserves are attracting renewed investor interest, driven by expectations of increased demand for power generation to support data centres.
Validus Energy, which is backed by institutional investors and its management team, has been one of the most active buyers in the ongoing mid-continent dealmaking trend.
Last year, Validus agreed to acquire Citizen Energy for more than $2bn from Warburg Pincus. Validus previously purchased assets in the same oilfield from Continental Resources.
