Magnolia Oil talks $400 million eight-year notes at 6% area yield; pricing Tuesday

By Paul A. Harris

Portland, Ore., July 16 – Magnolia Oil & Gas talked its $400 million offering of eight-year senior notes (B3/BB-/BB-) to yield in the 6% area, according to a syndicate source.

Books were scheduled to close on Monday, and the deal is expected to price early Tuesday afternoon.

Citigroup Global Markets Inc. is the left bookrunner for the Rule 144A and Regulation S for life offering. Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC are the joint bookrunners.

The notes feature a make-whole call at Treasuries plus 50 basis points for the first three years, then become callable at a premium. The notes also feature a three-year 40% equity clawback and a 101% poison put.

The issuing entities will be Magnolia Oil & Gas Operating LLC and Magnolia Oil & Gas Finance Corp., each a consolidated subsidiary of TPG Pace Energy Holdings.

Magnolia Oil & Gas Corp. was formed earlier in 2018 when TPG Pace entered into definitive agreements with certain funds managed by EnerVest, Ltd. to acquire the oil and gas assets within EnerVest’s south Texas division.

The Houston-based independent oil & gas company plans to use the proceeds to fund that business combination, as well as to fund any redemptions of common stock in connection with the combination, and for general corporate purposes.

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