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Magnolia Oil & Gas agreed to buy WildFire Energy for about $4.06 billion, a deal that would make it the premier Eagle Ford/Austin Chalk operator in South Texas and more than double its Giddings field acreage.
The acquisition adds about 810,000 net acres and boosts pro forma production to roughly 159,000 barrels of oil equivalent per day, while proved developed reserves rise materially and Magnolia expects the assets to lift its oil mix.
Magnolia expects at least $100 million in annual synergies by the end of 2027 and plans to keep returning cash to shareholders, including a 9% dividend increase and ongoing share repurchases, while reducing debt over time.
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Magnolia Oil & Gas (NYSE:MGY) said it has agreed to acquire WildFire Energy for approximately $4.06 billion, a transaction management described as a strategic bolt-on that will substantially expand Magnolia's position in the Giddings field and create what it called the premier Eagle Ford/Austin Chalk operator in South Texas.
Chris Stavros, Magnolia's Chairman, President and Chief Executive Officer, said on a conference call that the WildFire acquisition "more than doubles" Magnolia's existing acreage position in the Giddings field and reflects the company's long-standing acquisition criteria, including operational overlap, financial attractiveness and resource upside.
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"The WildFire acquisition greatly enhances Magnolia's position by extending our runway of advantage to high return profitability and significant free cash flow generation," Stavros said.
The company said the purchase price will be funded with a mix of cash and equity, including 32.2 million shares of Magnolia Class A common stock issued to WildFire's owners. Magnolia will also assume WildFire's $600 million of outstanding notes due in 2029. The remaining amount is expected to be funded through cash on hand and a balanced mix of debt and new common equity.
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Magnolia said it has obtained committed financing and amended and increased its secured credit facility to a $2 billion borrowing base, with elected commitments of $1.75 billion contingent upon closing. The transaction has been unanimously approved by Magnolia's board and is expected to close late in the third quarter.
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