Privately owned U.S. oil and gas producer Validus Energy has struck a deal to buy rival 89 Energy III for about $850 million, including debt, sources familiar with the matter told .

The deal adds more than 25,000 barrels of oil equivalent per day of production to Validus's growing footprint in the Anadarko shale basin in Oklahoma, making the company one of the largest private players in the U.S. Mid-Continent oil region, according to the sources.

89 Energy III's output is 70% gas, according to its website.

The company was formed through a merger of three oil and gas producers in the Mid-Continent by private equity firm Kayne Anderson, announced in May 2021.

Consolidating portfolio companies was a popular move among energy-focused buyout firms around that time, as a way to cut costs after a period of lower energy prices following the onset of the coronavirus pandemic.

In the long run, it was also beneficial as it helped them gain scale and become more attractive acquisition targets as oil prices rebounded sharply in the following years.

Validus and 89 Energy III did not respond to requests for comment. Kayne Anderson declined to comment.

The Mid-Continent region has seen an uptick in deal activity in recent months, aided by a more cautious approach to drilling than during the late 2010s. The region's abundance of natural gas is also attracting renewed investor interest on expectations of a surge in demand from power generation to feed data centers.

Validus, backed by institutional investors and its management team, has been among the most active buyers in that ongoing Mid-Continent dealmaking wave.

Last year, the Denver-based company purchased rival Citizen Energy for over $2 billion from Warburg Pincus in September. Validus had earlier bought some assets in the same oilfield from Continental Resources.