EnerVest Sells Eagle Ford / Austin Chalk Assets to TPG For $2.6 Billion

Transaction Details: 

TPG Pace Energy Holdings has inked a deal to aquire EnerVest's Eagle Ford and Austin Chalk assets for $2.66 billion in cash and stock.

Asset Details

• Acreage : 360000 net Acres
• Location : 1435 (435 in Karnes, 1000 in Giddings)
• Production : 4,000 boe/d (62% oil)
• Price : $2,660M

TPG is a blank check company that was formed by ex-Oxy CEO Steve Chazen and private equity firm TPG Capital.

As part of the transaction, TPGE and EnerVest are partnering to create a pure-play Eagle Ford company, Magnolia Oil & Gas Corporation. The new company will be led by Steve Chazen, who will serve as Magnolia’s full-time Chairman, President and CEO. EnerVest will retain a significant ownership stake in Magnolia.

EnerVest initially acquired the position back in 2016, via two deals totaling ~$1.2 billion:

• $501 million deal with Gulftex

• $674 million deal with Blackbrush

The Giddings Field asset also hosts EnerVest's JV with Apache, which was signed back in 2007.

Magnolia Company Highlights:

• Approximately 40,000 boe per day of current net production with 31,000 boe per day in Karnes County and 9,000 boe per day in Giddings Field - Total production base is 62% oil and 78% liquids (value of ~$1.2 billion based on $30,000 per flowing BOE average)

• 360,000 net acres, including 14,000 net acres in the core of Karnes County (land value of ~$1.46 billion or $4,055 per acre)

• Industry leading all-in-cost and full cycle economics in Karnes County with break-evens in the low $30’s per barrel

• Estimated new well paybacks of less than one year in both Karnes County and Giddings Field

• Strong financial profile with low leverage, strong liquidity and substantial cash flow generation after capital requirements of the planned rig program

• Estimated 2018 EBITDA of $513 million and approximately $240 million of estimated 2018 free cash flow after capital investment

• Industry leading 10% free cash flow yield. Very low leverage (0.6x 2018 estimated EBITDA) and more than $500 million of initial liquidity