Magnolia Oil & Gas to acquire certain properties in Giddings for $300M

Magnolia Oil & Gas announced that the company has entered into a definitive purchase agreement to acquire certain oil and gas producing properties including leasehold and mineral interests in Giddings for $300M, subject to customary purchase price adjustments. The cash outlay at closing is estimated to be approximately $260M, adjusted for the free cash flow generated by the assets between the effective date of July 1, 2023, and the anticipated closing date in the fourth quarter of 2023. The consideration will be funded with cash on hand, which was $677M as of June 30, 2023. The seller may also receive up to a maximum of $40M in additional contingent cash consideration through December 2025 based on future commodity prices. Magnolia President and CEO Chris Stavros stated, “We continue to leverage our accumulated knowledge and advanced understanding of Giddings by adding bolt-on oil and gas properties to expand our portfolio of high-quality opportunities and improve the overall business. Today’s transaction is a natural strategic fit for Magnolia and meets both the financial and operational characteristics we look for in a bolt-on acquisition that can be easily integrated into our Giddings development program. Magnolia’s acreage in Giddings now totals more than half a million net acres, with a development area of more than 150,000 net acres. Our business model is reinforced by capital discipline and provides for significant free cash flow generation through the cycle. This acquisition allows us to opportunistically deploy some of our additional cash into assets that generate high financial returns, increase our dividend per share payout capacity, and enhance value for our shareholders.”