A story this week from Hart Energy highlighted the recent activity of South Texas operator Magnolia Oil & Gas, which closed a $40 million bolt-on acquisition in the Giddings Field outside of the company’s core development area, which Magnolia disclosed in an Aug. 1 earnings report.
Magnolia is focused on the Austin Chalk, where it holds 22,800 net acres in a well-delineated, low-risk position in the core of Karnes County, Texas. The company also holds about 460,000 net acres in the Giddings area, which it describes as a “re-emerging oil play with significant upside and what we believe to be substantial inventory.”
Magnolia President and CEO Chris Stavros said the company remains committed to a disciplined approach toward capital spending, generating moderate annual production growth, attaining high pre-tax margins, and providing steady and consistent free cash flow.
“Earlier this week we successfully completed a small bolt-on oil and gas property acquisition in the Giddings area for approximately $40 million,” he said. “This asset purchase, which is outside of our core development area in Giddings, was a direct result of the extensive knowledge we have gained through operating in Giddings as well as some of our appraisal efforts.”
Stavros also said Magnolia’s board recently increased the company’s share repurchase authorization by 10 million shares, allowing “us to opportunistically repurchase our shares into next year.”
“We will continue to allocate our free cash flow toward enhancing our per share metrics and improving our overall business,” he said. “These activities, which include small, accretive bolt-on oil and gas property acquisitions and share repurchases, reinforce our investment proposition of providing 10% annual dividend growth over time.”
Read Next: Early Texas Oil Fields
Magnolia Oil & Gas: Where We Operate
Magnolia’s South Texas asset platform includes a well-delineated, low-risk position in the core of Karnes County and a position in the Giddings Field, a re-emerging oil play with significant upside. Together, these positions comprise approximately 460,000 net acres targeting two of the top oil plays in the United States.
Karnes County: Core Eagle Ford and Austin Chalk
- World-class acreage footprint located in the core of the Eagle Ford, substantially de-risked
- Full field development allows for operational efficiencies and improved performance
- Well known, repeatable acreage position targeting multiple benches and representing some of the best economics in North America
Giddings Field: Redeveloping as an Emerging Play
- Emerging, high-growth asset with extensive inventory potential and significant development flexibility
- Held-by-production nature of asset allows for systematic delineation and optimization of play while staying within asset cash flow
- Modern high-intensity completions have resulted in a step-change improvement in well performance
- At least 1,000 locations based on conservative spacing assumptions