Magnolia Oil & Gas has agreed to acquire WildFire Energy for approximately $4.06 billion, including WildFire’s debt and subject to customary purchase price adjustments. Magnolia’s board unanimously approved the transaction, which is expected to close late in the third quarter of 2026.
The acquisition will add approximately 810,000 net acres in the Giddings field and more than double Magnolia’s acreage in the region. The combined company will control more than 1.25 million net acres, or over 1.55 million gross acres, across South Texas.
Magnolia said the combination will create a large, contiguous position spanning the Austin Chalk, Eagle Ford and Woodbine formations. The overlapping acreage is also expected to support longer well laterals, shared infrastructure and more efficient field operations.
WildFire’s assets currently produce approximately 53,000 barrels of oil equivalent per day. Production is roughly 70% oil, with the acquired oil base carrying an estimated decline rate of approximately 29%.
The relatively low decline profile is expected to help Magnolia maintain production with a lower capital reinvestment requirement. Access to Gulf Coast markets could also support stronger pricing and operating margins for the acquired production.
WildFire’s historical development has primarily focused on the Eagle Ford. Magnolia believes the acreage also offers substantial future potential in the Austin Chalk, with additional opportunities in the Woodbine and other formations.
Magnolia expects the acquisition to be immediately and significantly accretive to cash flow, free cash flow and earnings per share. The company also expects the transaction to improve its operating margins and drilling and completion capital reinvestment rate.
The company estimates that the combination will generate more than $100 million in annual cost savings and synergies. Magnolia assigned an estimated net present value of approximately $700 million to those anticipated benefits.
Potential savings include reduced corporate expenses, shared facilities, improved logistics and supply-chain pricing, and the elimination of overlapping field activities. Magnolia also plans to apply its existing geological knowledge and drilling experience across the larger acreage position.
The acquisition includes a sand mine that supplies approximately 80% of Magnolia’s annual sand needs, including all of WildFire’s requirements. More than 500 miles of gas-gathering pipelines in the Giddings area are also included in the transaction.
Owning this infrastructure could give Magnolia greater control over important drilling inputs and the transportation of natural gas. The company expects these assets to further reduce costs and improve operating margins.
WildFire’s owners will receive 32.2 million shares of Magnolia Class A common stock. Magnolia will also assume $600 million of WildFire notes due in 2029 and fund the remaining purchase price through cash, debt and newly issued common equity.
JPMorgan Chase, Citigroup and Wells Fargo have provided committed financing for the transaction. Magnolia also increased its secured credit facility to a $2 billion borrowing base, with $1.75 billion of elected commitments contingent on the acquisition closing.
The company expects the additional debt used to complete the purchase to be temporary. Magnolia plans to use free cash flow remaining after shareholder distributions to reduce leverage in line with its conservative financial policy.
Following the acquisition, Magnolia plans to limit capital spending to approximately 55% of annual adjusted EBITDAX. The company believes this level of reinvestment can support moderate production growth while preserving high operating margins and meaningful free cash flow.
The expected increase in free cash flow has prompted Magnolia to raise its quarterly dividend by 9%, from $0.165 to $0.18 per share. The higher dividend is scheduled to begin with the payment made during the third quarter of 2026.
Magnolia also plans to continue repurchasing at least 1% of its outstanding shares each quarter. The company views the dividend and repurchase program as core elements of its shareholder-return strategy.
Separately, Magnolia reported that second-quarter production averaged 106,100 barrels of oil equivalent per day, including 41,900 barrels of oil per day. The company spent $125 million on drilling and completion activities and ended the quarter with $296 million in cash.
Based on its second-quarter results, Magnolia raised its standalone 2026 production growth guidance from 5% to 6%. Updated guidance incorporating the WildFire assets will be provided after the transaction closes.
J.P. Morgan Securities and Moelis are serving as Magnolia’s lead financial advisers, with Citigroup also providing financial advice. Jefferies is WildFire’s lead financial adviser, while BofA Securities is also advising the company.
KEY QUOTES:
“The acquisition of the WildFire oil and gas properties and acreage is a natural and strategic fit and most notably, it makes our business better by extending our runway of advantaged profitability and significant free cash flow generation. This transaction is the culmination of our extensive subsurface understanding, experience, and the demonstration of our proven resource capture in the Giddings field.”
“With more than 1.25 million net acres and upside development opportunities across multiple benches including the Austin Chalk, Eagle Ford and Woodbine, this transaction creates a premier position in South Texas by combining two high-quality and complementary assets near Gulf Coast markets which offer premium pricing for our products.”
“Together with the acquired WildFire assets, Magnolia’s adjacent and overlapping acreage creates a larger, contiguous position with additional infrastructure benefits, estimated to provide at least $100 million in cost savings and annual synergies that enhance our free cash flow. We expect the transaction to be immediately and highly accretive to our key per share financial metrics including cash flow, free cash flow and earnings, in addition to enhancing our D&C capital reinvestment rate.”
Chris Stavros, Chairman, President and CEO of Magnolia Oil & Gas
