Magnolia Oil & Gas has agreed to acquire almost all of the assets of Harvest Oil & Gas in southern Texas for around $191m in a cash-cum-stock deal.
The assets involved in the transaction had registered a production of around 4,800 barrels of oil equivalent per day (boe/d) in the first half of 2018. Out of this, 1,400boe/d was in Karnes County, with 69% oil and 83% liquids, and 3,400boe/d came from Giddings Field, with 27% oil and 53% liquids.
Harvest Oil & Gas plans to use the net proceeds from the sale of the assets to reduce outstanding borrowings under the company’s revolving credit facility. The transaction is anticipated to be completed at the end of this month.
In a separate deal, Harvest Oil & Gas agreed to sell certain Eagle Ford formation rights and existing production in Lee County, Texas to an undisclosed buyer. All the company’s latest divestitures are located in the Austin Chalk and Eagle Ford formations.
For Magnolia Oil & Gas, the deal with Harvest Oil & Gas will help in adding an undivided working interest across a part of its existing Karnes County assets and all of its Giddings Field assets.
The acquisition will result in 15 more net locations to the company’s core Karnes County inventory and also an additional 114,000 net acres or so to its Giddings Field position.
Magnolia Oil & Gas chairman and CEO Steve Chazen said: “We are very pleased to announce our agreement to acquire Harvest’s South Texas Assets. Harvest represented our largest non-operated working interest owner and the assets are a natural fit for Magnolia.
“We believe this accretive transaction is highly complementary to our business objectives of maximizing shareholder returns by generating steady production growth, strong pre-tax margins and significant free cash flow.”
Magnolia Oil & Gas is the new name of TPG Pace Energy following its recent merger with the South Texas division of EnerVest. The enlarged oil and gas company operates in South Texas, in the heart of the Eagle Ford.