Sept 26 (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 people

familiar with the matter.

A record consolidation wave has been sweeping through the

U.S. shale industry. A post-COVID surge in oil prices flooded

the sector with cash, and buyers have been seeking 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 as the discussions are confidential.

Citizen, backed by private equity firm Warburg Pincus,

started exploring a sale in recent months after Validus offered

to buy the company, the sources said.

Warburg and Citizen declined to comment. Validus did not

respond to requests for comment.

The deal marks the second notable acquisition in the

Mid-Continent region for Validus, which earlier this year spent

roughly $450 million to buy assets from Continental Resources,

the sources said. Continental did not respond to requests for

comment.

The latest iteration of Citizen was launched with a $300

million equity commitment from Warburg in 2018 and has grown

through acquisitions into one of the largest private oil and gas

producers in the Mid-Continent basin, which predominantly covers

Oklahoma, and includes parts of Kansas, Texas, and Arkansas.

The region initially drew investors in the mid-2010s but did

not live up to production forecasts.

This caused many companies to fail, or sell for a fraction

of their previous value. One of Citizen's acquisitions was of

Roan Resources for $1.52 a share in 2019, roughly a year after

Roan's shares peaked at $16 a share.

The subsequent consolidation of the region's privately owned

producers created sizable companies that have now become

attractive acquisition targets for larger, cash-flush energy

companies.

Validus, whose previous venture was focused on south Texas

and was sold for $1.8 billion to Devon Energy ( DVN ) in 2022,

is backed by institutional investors and its management team,

which includes former investment banker Cameron Brown and Felix

Energy founder Skye Callantine, according to its website.