Validus Energy Acquires Citizen Energy

By Shariq Khan and David French
(Reuters) – Privately held oil and gas producer Validus Energy has struck a deal to buy rival Citizen Energy for more than $2 billion, including debt, according to sources familiar with the matter.

A record consolidation wave is sweeping through the U.S. shale industry. A post-COVID surge in oil prices flooded the sector with cash, prompting buyers to lock up the best drilling sites.

Validus prevailed in the auction for Tulsa-based Citizen Energy over other bidders, the sources said, requesting anonymity due to the confidential nature of the discussions.

Citizen, backed by private equity firm Warburg Pincus, began exploring a sale in recent months after Validus made an offer to acquire the company, according to the sources.

Warburg and Citizen declined to comment, while Validus did not respond to requests for comment.

This acquisition marks the second notable purchase in the Mid-Continent region for Validus, which earlier this year spent about $450 million to acquire assets from Continental Resources (NYSE:CLR). Continental did not respond to requests for comment.

Founded with a $300 million equity commitment from Warburg in 2018, Citizen has grown through acquisitions to become one of the largest private oil and gas producers in the Mid-Continent basin, primarily covering Oklahoma and parts of Kansas, Texas, and Arkansas.

The region initially attracted investors in the mid-2010s but failed to meet production forecasts, resulting in many companies either failing or selling for a fraction of their previous value. One significant acquisition by Citizen was Roan Resources for $1.52 a share in 2019, following a peak value of Roan’s shares at $16 a share a year prior.

The consolidation of the region’s privately-owned producers has created sizable companies that are appealing acquisition targets for larger, cash-rich energy corporations.

Validus, which previously focused on south Texas and was sold for $1.8 billion to Devon Energy (NYSE:DVN) in 2022, is backed by institutional investors, with its management team featuring former investment banker Cameron Brown and Felix Energy founder Skye Callantine, according to its website.