Magnolia Oil & Gas Corp. (NYSE: MGY) has agreed to acquire substantially all of the South Texas assets of Harvest Oil & Gas Corp. for approximately $135 million in cash, and 4.2 million newly issued shares of the company’s Class A common stock valued at approximately $56 million as of the close of trading on Aug. 20.
The cash consideration will be funded using cash on the balance sheet and borrowings under the company’s revolving credit facility. The acquisition is expected to close on August 31, 2018.
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The acquisition highlights include an immediate accretive transaction that adds an undivided working interest across a portion of Magnolia’s existing Karnes County assets and all of its existing Giddings Field assets.
The acquisition adds approximately 15 net locations to the company's core Karnes County inventory and approximately 114,000 net acres to our Giddings Field position.
Harvest’s South Texas assets produced approximately 4,800 barrels of oil equivalent per day (boe/d) in the first half of 2018, with 1,400 boe/d in Karnes County (69% oil/83% liquids) and 3,400 boe/d in Giddings Field (27% oil/53% liquids).
In the first half of 2018, Harvest’s South Texas assets generated revenues less direct operating expenses of approximately $25 million and incurred approximately $13 million of capex, which resulted in approximately $12 million of revenues less direct operating expenses after capex.
“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’s chairman and CEO Steve Chazen said.
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