Magnolia to acquire WildFire Energy in $4.1bn Eagle Ford deal

Magnolia Oil & Gas has agreed to get WildFire Energy, an lipid and state shaper successful East Texas' Eagle Ford Shale, successful a transaction valued astatine astir $4.06bn, including outstanding debt.

Listed connected the New York Stock Exchange, Magnolia chiefly operates successful South Texas, focusing connected the halfway of the Eagle Ford Shale and Austin Chalk formations.

The acquisition is acceptable to much than treble Magnolia's acreage successful the Giddings field. It volition adhd astir 810,000 nett acres crossed the Eagle Ford and Austin Chalk plays.

Following completion of the deal, Magnolia's full pro forma presumption successful the portion volition transcend 1.25 cardinal nett acres, with much than 1.55 cardinal gross acres.

The assets being acquired done WildFire Energy are projected to lend astir 53,000 barrels of lipid equivalent per time (boepd), of which astir 70% is oil, with a 29% basal lipid diminution rate. This volition summation Magnolia's lipid premix to astir 50%.

Magnolia chairman, president and CEO Chris Stavros said: "The acquisition of the WildFire lipid and state properties and acreage is simply a earthy and strategical acceptable and astir notably, it makes our concern amended by extending our runway of advantaged profitability and important escaped currency travel generation.

"This transaction is the culmination of our extended subsurface understanding, experience, and the objection of our proven assets seizure successful the Giddings field.

"With much than 1.25 cardinal nett acres and upside improvement opportunities crossed aggregate benches including the Austin Chalk, Eagle Ford and Woodbine, this transaction creates a premier presumption successful South Texas by combining 2 high-quality and complementary assets adjacent Gulf Coast markets which connection premium pricing for our products."

The acquisition information volition see 32.2 cardinal Magnolia Class A communal shares issued to WildFire Energy's owners.

Magnolia volition besides presume $600m of WildFire Energy's notes owed successful 2029.

Remaining backing for the acquisition volition beryllium drawn from a premix of currency connected hand, caller indebtedness and caller equity issuance.

Magnolia has secured committed financing from a radical of banks and amended its secured recognition facility, expanding the borrowing basal to $2bn, with $1.75bn of commitments contingent upon closing.

It expects yearly run-rate synergies from operational efficiencies and firm outgo savings to transcend $100m by the extremity of 2027, with a nett contiguous worth of astir $700m.

Operational improvements are expected done longer lateral development, subsurface knowledge, drilling and completion expertise, shared infrastructure, and outgo reductions successful proviso concatenation and logistics.