By Shariq Khan and David French
(Reuters) – Privately held oil and gasoline producer Validus Power has struck a deal to purchase rival Citizen Power for greater than $2 billion, together with debt, in line with folks conversant in the matter.
A document consolidation wave has been sweeping by way of the U.S. shale business. A post-COVID surge in oil costs flooded the sector with money, and consumers have been searching for to lock up the very best drilling websites.
Validus prevailed within the public sale for Tulsa-based Citizen Power over different bidders, the sources stated, requesting anonymity because the discussions are confidential.
Citizen, backed by personal fairness agency Warburg Pincus, began exploring a sale in current months after Validus provided to purchase the corporate, the sources stated.
Warburg and Citizen declined to remark. Validus didn’t reply to requests for remark.
The deal marks the second notable acquisition within the Mid-Continent area for Validus, which earlier this 12 months spent roughly $450 million to purchase property from Continental Sources (NYSE:), the sources stated. Continental didn’t reply to requests for remark.
The most recent iteration of Citizen was launched with a $300 million fairness dedication from Warburg in 2018 and has grown by way of acquisitions into one of many largest personal oil and gasoline producers within the Mid-Continent basin, which predominantly covers Oklahoma, and contains components of Kansas, Texas, and Arkansas.
The area initially drew traders within the mid-2010s however didn’t dwell as much as manufacturing forecasts.
This brought about many firms to fail, or promote for a fraction of their earlier worth. One in all Citizen’s acquisitions was of Roan Sources for $1.52 a share in 2019, roughly a 12 months after Roan’s shares peaked at $16 a share.
The next consolidation of the area’s privately owned producers created sizable firms which have now develop into enticing acquisition targets for bigger, cash-flush power firms.
Validus, whose earlier enterprise was targeted on south Texas and was offered for $1.8 billion to Devon Power (NYSE:) in 2022, is backed by institutional traders and its administration workforce, which incorporates former funding banker Cameron Brown and Felix Power founder Skye Callantine, in line with its web site.