US-based oil and gas producer EnerVest has signed agreements to sell its Eagle Ford and Austin Chalk assets to TPG Pace Energy (TPGE) in a cash-and-stock deal valued at around $2.66bn.
Led by Occidental Petroleum’s former CEO Steve Chazen, TPGE is a special purpose vehicle focused on acquisitions in the energy sector.
Under the terms of the agreements, EnerVest and TPGE will form Magnolia Oil & Gas, with Chazen as the CEO.
The newly formed entity will acquire EnerVest’s 360,000 total net acres in South Texas, including around 14,000 net acres in Karnes County and 345,000 net acres in the Giddings Field.
Magnolia is expected to produce more than 40,000 barrels of oil equivalent (boe) per day from its Eagle Ford and Austin Chalk asset positions.
Chazen said: “In creating Magnolia, we have a unique opportunity to build a new company anchored by what we consider to be some of the highest quality oil-producing acreage in the country.
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By GlobalData“We believe Magnolia’s acreage in Karnes County has some of the best economics in the US and, when coupled with the upside in the Giddings Field, is a great fit with our criteria.
“Our objective is to maximise shareholder returns by generating steady production growth, strong pre-tax margins in excess of industry norms and significant free cash flow.”
TPGE was established by TPG Pace Group and Chazen last year in an effort to build a large-scale oil and gas business.
Once the business combination is completed, TPGE will be renamed Magnolia Oil & Gas.
The transaction will see EnerVest receive a cash payment of around $1.2bn and retain nearly 120 million shares of common stock.
TPGE is set to undertake a private placement of around 33 million shares to raise $330m.
