Magnolia Oil & Gas Corporation · NYSE:MGY
Magnolia Oil & Gas — Investor Presentation (January 2019)
25 slides from Magnolia Oil & Gas's investor presentation, January 2019
Slide 1: Magnolia Oil & Gas Corporation Investor Presentation – January 2019
Magnolia Oil & Gas Corporation Investor Presentation – January 2019
Slide 2: Disclaimer
Disclaimer FORWARD LOOKING STATEMENTS The information in this presentation and the oral statements made in connection therewith include “forward‐looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities E
Slide 3: Magnolia Oil & Gas – Overview
Magnolia Oil & Gas – Overview • High‐quality, low‐risk pure‐play South Texas operator with a core ~475,000 Net Acre Position Targeting Two of the Top Eagle Ford and Austin Chalk position acquired at an attractive entry Oil Plays in the U.S. multiple • Significant scale and PDP base generates materia
Slide 4: Corporate Execution of Business Model and Strategy
Corporate Execution of Business Model and Strategy Magnolia Value Creation Strategy YTD and Q3 Achievements (1) Organic production growth of 7% Q/Q and 1 Consistent organic production growth 59% YoY (excludes Harvest acquisition) 2 High full‐cycle operating margins Continue to target full cycle marg
Slide 5: Magnolia Oil & Gas – Free Cash Flow Model
Magnolia Oil & Gas – Free Cash Flow Model • Our objective is to manage the business to generate meaningful free cash flow while providing moderate production growth • D&C capex spend is planned within 60% of EBITDAX, irrespective of commodity price ‒ Year to date, we have invested ~50% of our EBITDA
Slide 6: Q3 Financials Adjusted for Current Price Environment
Q3 Financials Adjusted for Current Price Environment Q3 2018 Pro Forma Actuals Q3 2018 @ Current Pricing Adjusting only the commodity prices Net Production from the Q3 2018 Pro Forma Actuals to Oil (Mbopd) 32.8 32.8 reflect the current price environment Gas (MMcfpd) 76.5 76.5 still results in positi
Slide 7: Asset Overview
Asset Overview 3 MAGNOLIA L & GAS
Slide 8: Karnes County – Core Eagle Ford and Austin Chalk
Karnes County – Core Eagle Ford and Austin Chalk Key Asset Highlights Premier Position in the Core of the Eagle Ford • World‐class acreage footprint located in the core of the Eagle Ford, substantially de‐risked ‒ 16,454 net acres (31,043 gross acres), 69% operated, 90% HBP, 41.4 Mboe/d Q3 2018 prod
Slide 9: Located in an Attractive Neighborhood
Located in an Attractive Neighborhood BP Core position in Karnes County Oil Window adjacent to EOG and Marathon with $28 to $32/barrel breakevens(1) and less than 1‐year new well paybacks (1) Source: RSEG 9
Slide 10: Karnes County Results Show Superior Economics
Karnes County Results Show Superior Economics • Results in Karnes County are some the best in North America • Karnes Eagle Ford and Austin Chalk type curves produce 216,000 and 332,000 barrels of oil, respectively, in their first 12 months of production supporting paybacks in less than 6 months • Li
Slide 11: Giddings Field – Redeveloping as an Emerging Play
Giddings Field – Redeveloping as an Emerging Play Giddings Asset Overview Lease Map • Emerging, high‐growth asset with extensive inventory potential and significant development flexibility ‒ ~458,989 net acres, 99%+ HBP and ~87% operated, 13.8 Mboe/d Q3 2018 production (30% oil, 57% liquids) • HBP n
Slide 12: Financial Overview
Financial Overview 3 MAGNOLIA L & GAS
Slide 13: Magnolia Oil & Gas – Financial Policy
Magnolia Oil & Gas – Financial Policy Capital Spending Plan Targeted at 50 ‐ Conservative Financial Statements with 60% of annual EBITDAX Low Financial Leverage (Plan expected to deliver 10%+ of annual (<= 1.0x EBITDAX) production growth and consistently generate free cash flow) Acquisitions general
Slide 14: Business Risks Adequately Managed
Business Risks Adequately Managed Level of Risk Generally Acceptable to Magnolia Risk Factor Low Moderate Fully Exposed Geologic/Exploratory Political Cost Risk Reinvestment Commodity Financial 14
Slide 15: Magnolia Oil & Gas – Focus on High Margins
Magnolia Oil & Gas – Focus on High Margins Successor $ / Boe, unless otherwise noted July 31, 2018 through September 30, 2018 Revenue ($MM) $179 Revenue $50.93 Less: Lease Operating Expenses (3.14) Less: Gathering, Transportation & Processing (1.64) Less: Taxes Other Than Income (2.67) Less: Explora
Slide 16: Q3 2018 Capital Structure and Liquidity Overview
Q3 2018 Capital Structure and Liquidity Overview Capital Structure Overview Capitalization & Liquidity ($MM) • Maintaining low financial leverage profile Capitalization Summary As of 9/30/2018 ‒ Net Debt / Total Book Capitalization of 12% Cash and Cash Equivalents $37 ‒ Net Debt / Q3 annualized EBIT
Slide 17: Cash Flow Priorities to Maximize Shareholder Returns
Cash Flow Priorities to Maximize Shareholder Returns Accretive Bolt‐On Acquisitions Debt Share Reduction Repurchases Return‐ focused Value Creation With a targeted goal of always being free cash flow positive, Magnolia intends to be a prudent steward of shareholder’s capital 17
Slide 18: Summary Investment Highlights
Summary Investment Highlights High Quality Assets Positioned for Success • Coveted position in core of Karnes County with industry leading breakevens between $28 - $32 per barrel(1) • Emerging position in the Giddings Field with results that continue to improve and substantial running room Positive
Slide 19: Appendix
Appendix 3 MAGNOLIA L & GAS
Slide 20: Magnolia Oil & Gas – Q3 2018 Key Metrics
Magnolia Oil & Gas – Q3 2018 Key Metrics Q3 2018 Earnings Q3 2018 Pro Forma Total Production Q4 2018 Estimated Production $6.7 Million (GAAP) 55.2 Mboe/d 59 Mboe/d $58 Million (Pro Forma) Adjusted Operating Margin ($/Boe, %) (1) Q3 2018 Pro Forma EBITDAX (1) Q3 2018 Pro Forma D&C Capex $21.12 / 41%
Slide 21: Revised Production Guidance
Revised Production Guidance Original 2018 Production Guidance Revised 2018 Production Guidance 45.6 Mboe/d 50.0 Mboe/d Transaction Announcement – 3/20/2018 Q2 Earnings Release – 8/14/2018 10% Increase over Original Further Revised 2018 Production Guidance Q4 2018 Production Guidance 53.0 Mboe/d 59.0
Slide 22: Harvest Acquisition Overview
Harvest Acquisition Overview • On August 31st, closed acquisition of substantially all of the South Texas Assets of Harvest Oil & Gas Corporation for ~$193 million in cash and stock ‒ Transaction consideration of $133 million cash and 4.2MM newly issues shares of Magnolia ‒ Cash consideration funded
Slide 23: Q3 2018 Operating Highlights
Q3 2018 Operating Highlights Successor Predecessor Pro Forma July 31, 2018 through July 1, 2018 through Three Months Ended September 30, 2018 July 30, 2018 September 30, 2018 Production: Oil (MBbls) 2,023 897 3,018 Natural Gas (MMcf) 5,047 1,153 7,036 NGLs (MBbls) 642 160 885 Total (Mboe) 3,506 1,24
Slide 24: Magnolia Oil & Gas – Summary Balance Sheet
Magnolia Oil & Gas – Summary Balance Sheet (in thousands) Successor Predecessor September 30, 2018 December 31, 2017 Cash $36,715 $‐ Other current assets 174,998 114,536 Property, plant and equipment, net 3,016,671 1,565,537 Other assets 71,713 8,901 Total assets $3,300,097 $1,688,974 Current liabil
Slide 25: Reconciliation of Net Income to EBITDAX
Reconciliation of Net Income to EBITDAX (in thousands) Pro Forma Three Months Ended Nine Months Ended EBITDAX reconciliation to net income: September 30, 2018 September 30, 2018 (1) Net income attributable to Class A Common Stock $57,891 $151,316 Net income attributable to noncontrolling interest 43
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