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CORRECTION, 3/13/14, 11:00 a.m. EDT: The original version of this article misspelled the name of Vinson & Elkins partner T. Mark Kelly. We regret the error.

Houston-based Energy XXI has agreed to buy rival upstream company EPL Oil & Gas in a deal announced Wednesday that is valued at $2.3 billion, including assumed debt.

By acquiring EPL, which has headquarters in Houston and New Orleans, Energy XXI says it will become the largest public, independent oil producer focused on the continental shelf of the Gulf of Mexico. Once combined, the two exploration and production companies are expected to produce roughly 65,000 barrels of oil equivalent per day and have an enterprise value of about $6 billion.

Reuters notes that the deal will help Energy XXI compete with such Gulf of Mexico rivals as Fieldwood Energy, which is backed by private equity firm Riverstone Holdings. Fieldwood has been increasing its footprint in the region through such acquisitions as its January purchase of offshore drilling assets from SandRidge Energy for $1.12 billion. That deal came on the heels of Fieldwood’s $3.75 billion acquisition last year of Apache Corporation’s Gulf assets.

Energy XXI’s EPL purchase values the target company at $39 per share and roughly $1.53 billion overall, with 65 percent of the deal to be paid in cash and the other 35 percent in Energy XXI common shares. The transaction—which also includes the assumption of about $770 million in EPL debt—represents a per-share premium of 34 percent over EPL’s Tuesday closing price. Once the deal closes, EPL’s shareholders will own roughly 23 percent of the combined company.

Vinson & Elkins is advising Energy XXI on the acquisition with a team led by Houston-based M&A partners T. Mark Kelly and Stephen Gill. Finance partner David Wicklund is also advising on the deal, along with tax partner Gary Huffman, employee benefits partner Shane Tucker, antitrust partner William Vigdor, environmental law partner Larry Nettles, labor and employment partner Thomas Wilson, IP partner Peter Mims and capital markets partners David Stone and Sarah Morgan. The Vinson associates working on the deal are Lina Dimachkieh, Grace Ho, Lavonne Burke Hopkins, Justin Hunter, Adam Law, Kai Liekefett, Kate Rainey, Mark Wang and Robert Wilson.

Vinson led the way for Energy XXI in 2010 when it bought Gulf of Mexico oil and gas assets from ExxonMobil for $1.01 billion.

Sidley corporate partners Mark Metts and E. Anna Ha, along with tax partner Timothy Devetski, are leading a Houston-based team from that firm advising EPL on the transaction. In the past, the firm has represented EPL on a number of public offerings as well as a $38.4 million purchase of Gulf of Mexico oil and gas assets from Stone Energy Corporation in 2011.