Magnolia Oil & Gas (MGY): Announces Plan to Acquire WildFire Energy for $4B, with Strong Asset Overlap in Giddings/Eagle Ford

Research evidence excerpt

Magnolia Oil & Gas (MGY): Announces Plan to Acquire WildFire Energy for $4B, with Strong Asset Overlap in Giddings/Eagle Ford

Goldman Sachs Magnolia Oil & Gas (MGY)

Transaction Details

Pro Forma Outlook. MGY notes that the acquired assets are expected to contribute

roughly 53 Mboe/d of total production with a ~70% oil cut, and a base oil decline rate of

29%. The acquisition is expected to more than double MGY’s acreage in the company’s

core Giddings operating region to a total of >1.25 mn net acres, with 810,000 acres to

be added through this transaction. MGY notes the legacy WildFire Energy assets hold

access to premium Gulf Coast pricing. Pro forma, MGY expects the company to maintain

its limit on capital spending at 55% of annual Adjusted EBITDAX, as well as an outlook

for moderate total company total and oil production growth. MGY will provide further

details on impacts to the company’s 2026 production and capital spending following the

acquisition close, which is expected in late 3Q26.

Transaction Details. MGY’s $4.06 bn acquisition of WildFire Energy is expected to

consist of 32.2 mn shares of MGY Class A common stock (~$866 mn as of 7/17 market

close), and the assumption of WildFire’s $600 mn in outstanding notes due in 2029. MGY

expects to fund the remaining amount through a combination of cash on hand, as well as

a balanced mix of debt and new Common equity. Alongside the transaction, MGY has

also increased the company’s secured credit facility to a $2.0 bn borrowing base, with

elected commitments of $1.75 bn contingent upon transaction close. MGY noted the

company will increase the company’s quarterly base dividend by 9% to $0.18 per share,

payable in 3Q26, as well as a continuation of the company’s program to repurchase 1%

of shares outstanding per quarter.