(Magnolia Oil & Gas Corp.)
key takeaways:
- Magnolia Oil & Gas Corp. agreed to acquire Wildfire Energy for about $4.1 billion, including debt, the company’s largest acquisition and an expansion of its Eagle Ford Shale position.
- The transaction includes the assumption of 32.2 million Magnolia Class A shares and $600 million in Wildfire notes, while Wildfire operates more than 2,000 wells producing more than 50,000 net barrels of oil equivalent per day.
- The deal is expected to close at the end of the third quarter, while private equity-backed energy companies continue to sell amid higher crude prices and ongoing shale-field consolidation.
Magnolia Oil & Gas Corp. agreed to acquire Wildfire Energy for about $4.1 billion, including debt, expanding its presence in the Eagle Ford Shale Basin of South Texas.
According to a July 20 statement, Wildfire owners will receive 32.2 million shares of Magnolia’s Class A common shares and Magnolia is anticipating $600 million of outstanding notes due 2029.
Bloomberg News reported in June that Magnolia had emerged as the front-runner to acquire Wildfire, which would be its largest acquisition to date.
Magnolia shares have risen about 25% this year, giving it a market value of about $5.2 billion.
Wildfire is backed by private equity firms Warburg Pincus and Kayne Anderson Capital Advisors.
The deal is expected to close at the end of the third quarter.
According to its website, Wildfire operates more than 2,000 wells with a production of more than 50,000 net barrels of oil equivalent per day. The company is run by a management team that ran Wildhorse Resource Development Corp. before selling it to shale-gas pioneer Chesapeake Energy Corp. for $1.9 billion in 2019.
Private equity firms are buying billions of dollars from several closely held oil and gas companies after crude oil prices soared due to the Iran war. Publicly traded companies in the US shale patch have begun consolidation over the past few years to gain scale and reduce costs as some of the top well sites are drilled.
JPMorgan Chase & Co. and Moelis advised Magnolia while Jefferies and Bank of America advised Wildfire.
