Magnolia Oil & Gas Corporation · NYSE:MGY
Magnolia Oil & Gas — Investor Presentation (September 2024)
30 slides from Magnolia Oil & Gas's investor presentation, September 2024
Slide 1: September 2024 Investor Presentation
September 2024 Investor Presentation
Slide 2: Disclaimer
Disclaimer FORWARD LOOKING STATEMENTS The information in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of pr
Slide 3: Magnolia Oil & Gas Overview
Magnolia Oil & Gas Overview ❑ High-quality, low-risk pure-play South Texas operator with core Eagle Ford and Austin Chalk positions acquired at Texas attractive entry costs ❑ Significant scale and PDP base generates material free cash Giddings flow, reduces development risk, and increases optionalit
Slide 4: Magnolia's Business Model & Strategy
Magnolia’s Business Model & Strategy High Quality Assets Drive Low Capital Deliver Mid-Single Digit Long-Term Reinvestment Rate & Providing Growth Production Growth with Significant Free Cash Flow1 Limit Capital Spending to 55% of 2024E BOE and Oil Growth of High Single-Digits Annual Adjusted EBITDA
Slide 5: Asset Overview
Asset Overview
Slide 6: Giddings Area Assets
Giddings Area Assets Asset Overview Texas ❑ ~743,000 gross acres (~554,000 net acres) with high working interest (~98% operated) ❑ >200,000 net acres in development ❑ Appraisal program outside of development area ❑ 2023 production averaged 58.3 Mboe/d (36% oil, 66% liquids), or ~71% of total Company
Slide 7: Giddings Bolt-On Acquisition
Giddings Bolt-On Acquisition April Acquisition Highlights ❑ Acquired >27,000 net acres in Giddings (>80,000 gross) from a private operator for ~$125 million; closed on April 30th ❑ Includes ~1,000 BOEPD (~35% oil, ~68% liquids) ❑ Primarily in Fayette, Washington and Lee counties ❑ Low PDP assets are
Slide 8: Core Karnes Assets
Core Karnes Assets Texas Asset Overview ❑ Mature asset offers significant free cash flow and a low base production decline ❑ Acreage located in the core of the Eagle Ford offering strong economics and high returns in Karnes, Gonzales and Dewitt counties ❑~22,000 net acres producing 20.6 Mboe/d (58%
Slide 9: Financial, Capital Allocation & Risk Management Overview
Financial, Capital Allocation & Risk Management Overview
Slide 10: Cash Flow Allocation Matches Magnolia's Business Model
Cash Flow Allocation Matches Magnolia’s Business Model Allocation of Operating Cash Flow – Since Inception Dividends & Cash Build (7/31/2018 – 6/30/2024) 8% Share Repurchases Magnolia’s “recipe” is a disciplined, low 25% Drilling & Completions reinvestment rate, a balanced return of 47% capital to s
Slide 11: Low Leverage Provides Financial Flexibility
Low Leverage Provides Financial Flexibility Net Debt / EBITDA (2024E) (1) 2.1 Magnolia has one of the best 1.5 1.4 balance sheets in the industry 1.3 1.3 1.3 1.3 1.1 1.2 1.0 1.0 1.0 0.8 0.7 0.7 0.5 0.4 0.5 0.4 0.4 0.1 -0.1 (1) Source: FactSet (2024E) as of 8/29/2024. Net debt is calculated as the di
Slide 12: Low Reinvestment Rate with Strong Production Growth
Low Reinvestment Rate with Strong Production Growth 3-Year Average Reinvestment Rate1 Production Growth Per Share1 (3-Year CAGR) 78% 79% 23% 64% 19% 58% 17% 56% 54% 54% 51% 51% 45% 45% 46% 46% 47% 14% 41% 42% 43% 38% 38% 40% 11% 34% 35% 10% 10% 10% 9% 7% 6% 5% 5% 4% 4% 0% -1% -2% -4% -4% -5% -6% Mag
Slide 13: Strong Operating Margins
Strong Operating Margins Operating Margin1 (3-Year Average) 61% 56% 52% 51% 48% ❑ Magnolia has consistently delivered one of the 46% 44% 43% highest operating margins 41% 41% 41% 39% 38% 38% 37% 37% 36% 34% 34% 33% ❑ High-quality asset base and focus on maintaining 29% low costs support top-tier ope
Slide 14: History of Top-Tier Return on Capital Employed
History of Top-Tier Return on Capital Employed Historical ROCE 25% 23% ❑ High-quality assets, ongoing business model execution – including low debt, 18% disciplined capital spending & low operating costs are critical to sustaining high returns, well-above our cost of capital ❑ Cost reduction & conta
Slide 15: Consistent & Sizable Return to Shareholders
Consistent & Sizable Return to Shareholders Cumulative Return of Capital ($MM) >$1.4 Billion Returned to Shareholders $1,447 $1,213 ❑ Magnolia has a strong track record $908 of returning capital to shareholders ❑ Returned >30% of current market cap over prior five years Inception $467 ❑ Continue inc
Slide 16: History of Significant & Consistent Share Repurchases
History of Significant & Consistent Share Repurchases Magnolia’s Consistent Share Repurchases1 (million shares repurchased) Magnolia has reduced its diluted share count by approximately 22% (1) Class A share reduction includes 3.6 million non-compete shares that were paid in lieu of stock in 2021. I
Slide 17: Safe, Sustainable and Growing Dividend
Safe, Sustainable and Growing Dividend Annualized Dividend Payout Per Share ❑ Magnolia’s dividend has grown at a double-digit rate over the past 4 years $0.52 ❑ Sustainable dividend growth supported $0.46 even at lower product prices $0.40 ❑ Dividend per share payout capacity is enhanced by moderate
Slide 18: Business Risks Adequately Managed
Business Risks Adequately Managed Level of Risk Acceptable to Magnolia Low Risk Moderate Risk Fully Exposed Risk Factor Geologic/Exploratory Political Cost Risk Reinvestment Commodity Financial 18
Slide 19: Why Own Magnolia? – Investment Highlights
Why Own Magnolia? – Investment Highlights Unique and Durable Business Model & Strategy Texas High Quality Assets Positioned for Success ❑ Leading position in the Giddings area with low breakevens and substantial Giddings running room ❑ Coveted position in the Karnes area in the core of the Eagle For
Slide 20: 2024 Operating Plan
2024 Operating Plan 2024 Production & Capital 2024 Capital Third Quarter 2024 Guidance Annual BOE and Oil Growth ~20% Production Karnes High Single-Digit ~91 Mboe/d ~80% 2024 Budget Giddings D&C Capital Spending $450 - $480 Million (DC&F) ~$120 Million 2024 Operating Plan Oil Differential (To Magell
Slide 21: Magnolia's Commitment to Sustainability
Magnolia’s Commitment to Sustainability Safeguarding the 86% REDUCTION 12% REDUCTION 35% REDUCTION Environment Flaring Intensity Rate GHG Intensity Rate Hydrocarbon Spill Volume 2019 to 2023 2019 to 2023 2019 to 2023 Supporting Employees 30% DIVERSITY 1,000 SHARES 2023 TOP WORKPLACES and Communities
Slide 22: Appendix
Appendix
Slide 23: 2Q 2024 Cash Flow Reconciliation
2Q 2024 Cash Flow Reconciliation 700 $ In Millions 27 27 600 106 500 233 124 400 126 300 200 399 276 100 0 (1) (2) (3) Cash Cash Flow Changes in Dividends and Share Acquisitions D&C and Cash 3/31/2024 from Working Capital Distributions Repurchases Facilities Capital 6/30/2024 Operations and Other (1
Slide 24: Summary Balance Sheet
Summary Balance Sheet (in thousands) June 30, 2024 December 31, 2023 Cash $275,683 $401,121 Current assets 178,183 190,152 Property, plant and equipment, net 2,260,755 2,052,021 Other assets 128,243 112,922 Total assets $2,842,864 $2,756,216 Current liabilities $354,959 $314,887 Long-term debt, net
Slide 25: Q2 2024 Capital Structure & Liquidity Overview
Q2 2024 Capital Structure & Liquidity Overview Capital Structure Overview Capitalization & Liquidity ($ million) ▪ Maintain low financial leverage profile Capitalization Summary As of 6/30/2024 ‒ Currently have a net debt(1) position of $124 million Cash and Cash Equivalents $276 ‒ Net Debt(1) / Q2
Slide 26: Margin and Cost Structure
Margin and Cost Structure For the Quarters Ended $ / Boe, unless otherwise noted June 30, 2024 June 30, 2023 Revenue $41.02 $37.62 Total Cash Operating Costs: Lease Operating Expenses (1) (5.33) (4.87) Gathering, Transportation & Processing (1.03) (1.39) Taxes Other Than Income (2.42) (2.04) Explora
Slide 27: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation For the Quarters Ended (in thousands) June 30, 2024 June 30, 2023 Net cash provided by operating activities $269,398 $201,775 Add back: net change in operating assets and liabilities (36,665) 2,721 Cash flows from operations before net change in operating assets and lia
Slide 28: Adjusted EBITDAX Reconciliation
Adjusted EBITDAX Reconciliation For the Quarters Ended (in thousands) June 30, 2024 June 30, 2023 Net income $105,113 $104,596 Interest expense, net 3,516 1,149 Income tax expense 26,769 24,847 EBIT $135,398 $130,592 Depreciation, depletion and amortization 104,743 77,008 Asset retirement obligation
Slide 29: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation For the Quarters Ended (in thousands) June 30, 2024 June 30, 2023 Net income $105,113 $104,596 Adjustments: Other income adjustment(1) (1,005) (9,193) Change in estimated income tax(2) 205 1,782 Adjusted Net Income $104,313 $97,185 (in thousands) For the Quarters E
Slide 30: Return on Capital Employed
Return on Capital Employed Six Months Ended 5-Year Average For the Years Ended (in thousands) June 30, 2024 2019 - 2023 December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 Operating income (loss) $258,909 $82,540 $534,485 $1,073,785 $602,594 ($1,925,666) $127,50
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