NEW YORK, Feb 12 (Reuters) - 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 Reuters.

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, Reuters reported

in September. Validus had earlier bought some assets in the same

oilfield from Continental Resources, Reuters reported.