Magnolia Oil & Gas Corporation · NYSE:MGY
Magnolia Oil & Gas — Investor Presentation (June 2019)
25 slides from Magnolia Oil & Gas's investor presentation, June 2019
Slide 1: Magnolia Oil & Gas Corporation Investor Presentation – June 2019
Magnolia Oil & Gas Corporation Investor Presentation – June 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 ~461,000 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 Business Model and Strategy
Corporate Business Model and Strategy Magnolia Value Creation Strategy 2019 Expectations 1 Consistent organic production growth Organic production growth of 10% 4Q/4Q 2 High full‐cycle operating margins Targeting full cycle margins of ~50% $400 million of principal debt outstanding, 3 Conservative l
Slide 5: Magnolia Oil & Gas – Q1 2019 Key Metrics
Magnolia Oil & Gas – Q1 2019 Key Metrics Earnings and EPS (GAAP) (1) Total Production Oil Realizations (2) $13.0 Million 62.4 Mboe/d $59.07/bbl (108% of WTI) $0.08/sh Adjusted Net Income & Total Shares (3)(4) Adjusted EBITDAX (3) D&C Capex $23.0 Million $160.1 Million $139.8 Million 251.5 Million sh
Slide 6: Q1 2019 Cash Flow Reconciliation
Q1 2019 Cash Flow Reconciliation ($ in millions) $350 $4 $300 $38 $250 $52 $154 $200 $150 $128 $100 $136 $50 $76 $0 (2) (3) Cash Cash Flow Other Changes in Acquisitions D&C and Cash (1) 12/31/18 from Operations Working Capital Facilities Capital 3/31/19 (1) Represents cash flow from operations befor
Slide 7: Cash Flow Reconciliation Since Magnolia’s Inception
Cash Flow Reconciliation Since Magnolia’s Inception ($ in millions) $700 $600 $23 $34 $500 $198 $400 $485 $300 $200 $270 $100 $116 $76 $0 Opening Cash Cash Flow from Other (2) Changes in Acquisitions (3) D&C and Cash at Inception Operations After Working Capital Facilities Capital 3/31/19 Transactio
Slide 8: Achieving Key Objectives Through Steady Growth
Achieving Key Objectives Through Steady Growth Production Growth (1) Karnes Net Acreage Additions Since Inception (1) >70 Mboe/d 3‐5% Q/Q Growth 62.4 61.9 58.9 After completing the acquisitions expected to close in Q2 2019, Magnolia expects to have added Production from our 2019 acquisitions is expe
Slide 9: Asset Overview
Asset Overview 3 MAGNOLIA L & GAS
Slide 10: 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 ‒ 21,460 net acres, 64% operated, 97% HBP, 40.5 Mboe/d Q1 2019 production (67% oil, 82%
Slide 11: Located in an Attractive Neighborhood
Located in an Attractive Neighborhood Eagle Ford – Karnes Trough Area Magnolia Fluid Windows BP Oil EOG Wet Gas MRO Dry Gas COP Core position in Karnes County Oil Window adjacent to EOG and Marathon with $28 to $32/barrel breakevens(1) and typically less than 1‐year new well paybacks (1) Source: RSE
Slide 12: Karnes County Results Show Superior Economics
Karnes County Results Show Superior Economics • Results in Karnes County are some the best in North America • Karnes Eagle Ford and Austin Chalk type curves produce 216,000 and 332,000 barrels of oil, respectively, in their first 12 months of production supporting paybacks in less than 6 months • Li
Slide 13: Giddings Field – Redeveloping as an Emerging Play
Giddings Field – Redeveloping as an Emerging Play Giddings Asset Overview Lease Map • Emerging, high‐growth asset with extensive inventory potential and significant development flexibility ‒ ~439,342 net acres, ~98% HBP and ~87% operated, ~20 Mboe/d Q1 2019 production (26% oil, 56% liquids) • HBP na
Slide 14: Financial Overview
Financial Overview 3 MAGNOLIA L & GAS
Slide 15: Magnolia Oil & Gas – Financial Policy
Magnolia Oil & Gas – Financial Policy Capital Spending Plan Targeted Conservative Financial Statements with at 50 ‐ 60% of annual EBITDAX Low Financial Leverage (Plan expected to deliver 10%+ of annual (<= 1.0x EBITDAX) production growth and consistently generate free cash flow) Acquisitions general
Slide 16: Business Risks Adequately Managed
Business Risks Adequately Managed Level of Risk Generally Acceptable to Magnolia Risk Factor Low Moderate Fully Exposed Geologic/Exploratory Political Cost Risk Reinvestment Commodity Financial 16
Slide 17: Q1 2019 Capital Structure and Liquidity Overview
Q1 2019 Capital Structure and Liquidity Overview Capital Structure Overview Capitalization & Liquidity ($MM) • Maintaining low financial leverage profile Capitalization Summary As of 3/31/2019 ‒ Net Debt / Total Book Capitalization of 12% Cash and Cash Equivalents $76 ‒ Net Debt / Q1 annualized Adju
Slide 18: Magnolia Oil & Gas – Summary Balance Sheet
Magnolia Oil & Gas – Summary Balance Sheet (in thousands) March 31, 2019 December 31, 2018 Cash $76,307 $135,758 Current assets 126,938 156,601 Property, plant and equipment, net 3,168,544 3,073,204 Other assets 66,184 67,960 Total assets $3,437,973 $3,433,523 Current liabilities $184,460 $197,361 L
Slide 19: 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 19
Slide 20: 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 provides potential upside Positive
Slide 21: Appendix
Appendix 3 MAGNOLIA L & GAS
Slide 22: Magnolia Oil & Gas – Operating Highlights
Magnolia Oil & Gas – Operating Highlights For the Quarter Ended For the Quarter Ended March 31, 2019 December 31, 2018 Production: Oil (MBbls) 2,906 3,054 Natural Gas (MMcf) 9,763 8,795 NGLs (MBbls) 1,084 1,179 Total (Mboe) 5,617 5,699 Revenues (in thousands): Oil Sales $171,654 $198,891 Natural Gas
Slide 23: Reconciliation of Net Income to EBITDAX & Adjusted EBITDAX
Reconciliation of Net Income to EBITDAX & Adjusted EBITDAX (in thousands) For the Quarter Ended For the Quarter Ended Adjusted EBITDAX reconciliation to net income: March 31, 2019 December 31, 2018 Net income (1) $22,713 $57,808 Exploration expense 2,476 661 Asset retirement obligation accretion 1,3
Slide 24: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation (in thousands) For the Quarter Ended For the Quarter Ended Adjusted Net Income March 31, 2019 December 31, 2018 Net income (1) $22,713 $57,808 Adjustments for certain items affecting comparability: Transaction costs 353 2,241 Tax impact of adjustments (74) (471) Ad
Slide 25: Magnolia Oil & Gas – Margins
Magnolia Oil & Gas – Margins For the Quarter Ended For the Quarter Ended $ / Boe, unless otherwise noted March 31, 2019 December 31, 2018 Revenue $38.93 $44.75 Less: Lease Operating Expenses (3.83) (3.46) Less: Gathering, Transportation & Processing (1.66) (1.60) Less: Taxes Other Than Income (2.56)
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