TPGE closes $2.66bn business combination with EnerVest

US-based acquisition company TPG Pace Energy Holdings (TPGE) has closed the $2.66bn business combination deal with oil and gas firm EnerVest’s South Texas division.

In March, TPGE signed agreements to acquire oil and gas assets within EnerVest’s South Texas division, including acreage in the Eagle Ford and Austin Chalk in Karnes County and an extended position in the Giddings Field.

The transaction has resulted in the creation of Magnolia Oil & Gas, a new company that is based in Houston and led by president, CEO and chairman Steve Chazen, who is a former CEO of Occidental Petroleum.

The new company will be a pure-play South Texas operator with assets having more than 40,000boed of current net production.

Chazen said: “We look forward to delivering on our objective of maximising shareholder returns by generating steady production growth, strong pre-tax margins and significant free cash flow.”

Former Occidental Petroleum chief financial officer (CFO) Christopher Stavros has been appointed as CFO of Magnolia.

The acquisition comprises around 360,000 total net acres in South Texas, including around 14,000 net acres in prolific sections of Karnes County and 345,000 net acres in the Giddings Field.

As well as receiving $1.2bn in cash, EnerVest will retain 120 million shares of Magnolia common stock.

The company can also earn up to an additional 17 million shares depending on the achievement of certain operating and/or stock price targets.

EnerVest’s South Texas team will continue to operate the assets under a long-term services agreement.