Magnolia Oil & Gas has signed a $191m agreement to purchase certain assets in South Texas, US, from Harvest Oil & Gas.
Under the terms of the deal, Magnolia will offer $135m in cash and 4.2 million newly issued shares of its Class A common stock worth $56m.
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The company will use cash on the balance sheet and borrowings under its revolving credit facility to finance the transaction.
The acquisition, which is Magnolia’s first deal, is anticipated to be completed on 31 August.
It is said to be immediately accretive and will provide an undivided working interest across a portion of the company’s existing Karnes County assets and all of its existing Giddings Field assets.
Magnolia Oil & Gas chairman and CEO Steve Chazen said: “Harvest represented our largest non-operated working interest owner and the assets are a natural fit for Magnolia.
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By GlobalData“We believe this accretive transaction is highly complementary to our business objectives of maximising shareholder returns by generating steady production growth, strong pre-tax margins and significant free cash flow.”
Following the acquisition, the company will add 15 net locations to its core Karnes County inventory and 114,000 net acres to its Giddings Field position.
In the first half of this year, the assets being acquired produced 4,800 barrels of oil equivalent per day (boed).
Magnolia is focused on oil and gas exploration and production in the core of the Eagle Ford.
The company was formed following the business combination of TPG Pace Energy Holdings with EnerVest’s South Texas Division.
