Magnolia Oil & Gas Corporation · NYSE:MGY
Magnolia Oil & Gas — TPG Pace Energy Holdings — SPAC Merger (July 2018)
26 slides from Magnolia Oil & Gas's SPAC merger presentation, Jul 9, 2018
Slide 1: Magnolia Oil & Gas Corporation Investor Presentation
Exhibit 99.1 MAGNOLIA OIL & GAS CORPORATION Investor Presentation July 2018
Slide 2: Disclaimer: Forward Looking Statements
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: Introduction to Magnolia Oil & Gas Corporation
Introduction to Magnolia Oil & Gas Corporation IPO at $10/unit; NYSE ticker of TPGE Steve Chazen and TPG partnered to form a publicly traded consolidation platform with a disciplined corporate return philosophy On March 20, 2018, TPGE entered into definitive agreements to acquire EnerVest’s South Te
Slide 4: Focused on Traditional Value Creation Metrics
Focused on Traditional Value Creation Metrics A differentiated Independent E&P Company with the objective to generate stock market value over the long term, through: Consistent organic production growth High EBIT operating margins à focused on oil Efficient capital program with short economic paybac
Slide 5: Developments Since Announcement
Developments Since Announcement TPGE will become MGY on July 31st following upcoming shareholder vote Magnolia is completing its transition from a SPAC to a standalone, independent oil & gas company Cumulative trading volume since deal announcement is more than 115% of the shares sold in the IPO Sto
Slide 6: Top Tier Eagle Ford & Austin Chalk Asset Position
Top Tier Eagle Ford & Austin Chalk Asset Position High-quality, low-risk pure-play South Texas operator with a core Eagle Ford and Austin Chalk position Significant scale and PDP base generates material free cash flow, reduces development risk and increases optionality Core Karnes County Position So
Slide 7: Located in an Attractive Neighborhood
Located in an Attractive Neighborhood 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.
Slide 8: Great Fit with Management's Value Creation Strategy
Great Fit with Management’s Value Creation Strategy Value Creation Strategy Magnolia Oil & Gas Core Karnes County acreage with some of the best economics in the U.S(1) Highly economic wells with short payback periods creates self-funding drilling program, averaging less than 1-year paybacks Targetin
Slide 9: Focus on Maintaining High Full-Cycle Operating & EBIT Margins
Focus on Maintaining High Full-Cycle Operating & EBIT Margins Note: Boxed $58 / bbl WTI case was originally disclosed in the investor presentation posted to TPGE's website on March 20, 2018 and corresponds to base case financial projections included in definitive merger proxy filed July 2, 2018. Ill
Slide 10: Cash Flow Priorities to Maximize Shareholder Returns
Cash Flow Priorities to Maximize Shareholder Returns With a targeted goal of always being free cash flow positive, Magnolia intends to be a prudent steward of shareholder’s capital Return-focused Value Creation Debt Reduction Accretive Bolt-On Acquisitions Share Repurchases
Slide 11: Attractive Entry Valuation
U.S. Independents <1.5x 2018E Leverage >8% Production CAGR (2017E-2019E) 2018E and 2019E FCF Positive Attractive Entry Valuation Source: Company filings, FactSet consensus peer projections as of 7/5/2018. Note: U.S. Independents include: APA, APC, AR, BBG, CDEV, CHK, CLR, CNX, COG, COP, CPE, CRZO, C
Slide 12: Summary Investment Highlights – Why Own Magnolia Oil & Gas?
Source: RSEG. The Company expects to issue approximately $300 million aggregate principal amount of Senior Notes on or prior to the Closing, but may increase the size of the offering if market conditions warrant. Net proceeds from any increase in offering size are expected to be used for working cap
Slide 13: Appendix – Financial Information
Appendix – Financial Information
Slide 14: Sources, Uses and Pro Forma Valuation
Sources, Uses and Pro Forma Valuation Note: Base case projections based on flat $58 WTI and $2.75 Henry Hub pricing and include recent acquisition. Please see definitive merger proxy filed July 2, 2018 for details on base case projections. Other outstanding instruments from TPGE.U IPO: 21.7 million
Slide 15: Attractive Compared to In-Basin and Business Model Comps
Attractive Compared to In-Basin and Business Model Comps Source: Company filings, FactSet consensus projections as of 7/5/2018. Note: See slide 9 (Focus on Maintaining High Full-Cycle Operating & EBIT Margins) and slide 16 (Better Than Expected 1Q18 Results) for additional details on Magnolia and 20
Slide 16: Better Than Expected 1Q18 Results
Better Than Expected 1Q18 Results Magnolia Q1 2018 Results(1) The information presented is based on the unaudited lease operating statements for the Magnolia Assets and will not reconcile to the EnerVest financial statements presented in accordance with U.S. generally accepted accounting principles.
Slide 17: Appendix – Operational Information
Appendix – Operational Information
Slide 18: Karnes County – Core Eagle Ford and World Class Austin Chalk
World-class acreage footprint located in the core of the Eagle Ford, substantially de-risked 14,070 net acres (28,886 gross acres), 65% operated, 90% HBP, 35.5 Mboe/d Q1 2018 production (71% oil, 85% liquids)(1) EOG represents ~50% of non-operated interest Steady production growth while generating s
Slide 19: Karnes County has some of the Top Economics in North America
Karnes County has some of the Top Economics in North America Karnes has some of the highest U.S. IPs… Note: Magnolia type curves normalized to 5,000’ laterals. Projections based on flat $58 WTI and $2.75 Henry Hub pricing. Commodity percentage splits represent first 24 months of production. Source:
Slide 20: Giddings Field – Austin Chalk Redeveloping as an Emerging Play
Giddings Field – Austin Chalk Redeveloping as an Emerging Play Giddings Asset Overview Emerging, high-growth asset with extensive inventory potential and significant development flexibility ~345,027 net acres, 99%+ HBP and ~87% operated, 10.2 Mboe/d Q1 2018 production(1) (29% oil, 55% liquids) HBP n
Slide 21: Giddings – Early Results Indicate Large Development Potential
Giddings – Early Results Indicate Large Development Potential Application of modern high intensity slickwater completions have unlocked significant reserves previously thought inaccessible Recent Giddings Results Magnolia Giddings Footprint Note: Giddings Results shown on a Gross Pre-Royalty Basis.
Slide 22: Magnolia Asset Summary – Free Cash Flow Positive Assets
High quality assets allow for two self sustaining operating areas Karnes County World class asset that generates substantial free cash flow Engine to fund inorganic growth via acquisitions or to accelerate drilling Giddings Emerging, high growth assets with substantial upside Impressive results to d
Slide 23: Magnolia to Partner with EnerVest to Operate Assets
Magnolia to Partner with EnerVest to Operate Assets Note: EnerVest Organization and South Texas Division statistics are as of YE 2017. (1) 30-Day IP represents max month volumes. Includes data from active producing wells since January 2015. Excludes operators with less than 10 wells. (2) Defined as
Slide 24: Production with Free Cash Flow Generation in 2018+
Production with Free Cash Flow Generation in 2018+ Note: Projections based on flat $58 WTI and $2.75 Henry Hub pricing and include recent acquisition. See definitive merger proxy filed July 2, 2018 and the investor presentation posted to TPGE’s website on March 20, 2018 for base case financial detai
Slide 25: Karnes County – Core Eagle Ford and Austin Chalk
Karnes County – Core Eagle Ford and Austin Chalk Eagle Ford Play Heat Map Karnes Overview Karnes Well Spacing Lower Eagle Ford Well Performance(1) Austin Chalk A Austin Chalk B Austin Chalk C Upper EF Lower EF 600’ Spacing 250’ Spacing (“wine racked”) Cum Oil per well per 1,000’ (bbls) Months 300’-
Slide 26: Illustrative Fully Diluted Share Count
Illustrative Fully Diluted Share Count (1) Assumes treasury share method for warrants. (2) 21.7 million public warrants issued as part of IPO with strike price of $11.50 and redemption price of $18.00. (3) 10 million sponsor warrants issued as part of IPO with strike price of $11.50. (4) Seller shar