Magnolia Oil & Gas Corporation · NYSE:MGY
Magnolia Oil & Gas — Investor Presentation (August 2019)
26 slides from Magnolia Oil & Gas's investor presentation, August 2019
Slide 1: Magnolia Oil & Gas Corporation Investor Presentation – August 2019
Magnolia Oil & Gas Corporation Investor Presentation – August 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 ~450,000 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 Production growth of ~10% 4Q/4Q 2 High full-cycle operating margins Targeting full cycle margins of ~50% $97 million of cash and $400 million of 3 Conservative leverage pro
Slide 5: Magnolia Oil & Gas – 2nd Quarter 2019 Highlights
Magnolia Oil & Gas – 2nd Quarter 2019 Highlights • Grew total Company production 4% sequentially to 65.1 Mboe/d (54% oil) ‒ Karnes production grew 8% sequentially largely due to new operated & non-op wells turned in-line • Oil realizations averaged 107% of WTI for the quarter • Generated $182 mm of
Slide 6: Magnolia Oil & Gas – Q2 2019 Key Metrics
Magnolia Oil & Gas – Q2 2019 Key Metrics Earnings and EPS (GAAP) (1) Total Production Oil Realizations (2) $18.5 Million 65.1 Mboe/d $64.13/bbl $0.12/sh (54% oil) (107% of WTI) Adjusted Net Income & Total Shares (3)(4) Adjusted EBITDAX (3) D&C Capex $31.4 Million $181.7 Million $116.0 Million 250.8
Slide 7: Q2 2019 Cash Flow Reconciliation
Q2 2019 Cash Flow Reconciliation ($ in millions) 300 15 250 39 200 178 133 150 100 50 97 76 0 (2) Cash Cash Flow Changes in Acquisitions D&C and Facilities Cash (1) 3/31/19 from Operations Working Capital Capital 6/30/19 (1) Cash flow from operations before changes in working capital. (2) Acquisitio
Slide 8: Cash Flow Since Magnolia’s Inception – Reconciliation
Cash Flow Since Magnolia’s Inception – Reconciliation ($ in millions) 900 800 24 17 700 232 600 500 663 400 300 409 200 100 116 97 0 Opening cash Cash flow from Other (2) Changes in Acquisitions (3) D&C and Facilities Cash after operations after Working Capital Capital 6/30/19 transaction(1) transac
Slide 9: Achieving Key Objectives Through Steady Growth
Achieving Key Objectives Through Steady Growth Production Growth Karnes Net Acreage Additions Since Inception ~70 Mboe/d 65.1 62.4 61.9 58.9 Magnolia has added over 7,000 net acres to its Karnes position, representing approximately a 50% increase over original amount Q3 2018 Q4 2018A Q1 2019A Q2 201
Slide 10: Asset Overview
Asset Overview
Slide 11: 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 ‒ 21,516 net acres, 65% operated, 95% HBP, 43.8 Mboe/d Q2 2019 production (70% oil, 84%
Slide 12: 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 $32/barrel breakevens(1) and typically less than 1-year new well paybacks (1) Source: RSE
Slide 13: Karnes County Results Show Superior Economics
Karnes County Results Show Superior Economics • Results in Karnes County are some the best in North America • Karnes Eagle Ford and Austin Chalk type curves produce 216,000 and 332,000 barrels of oil, respectively, in their first 12 months of production supporting paybacks in less than 6 months • Li
Slide 14: Giddings Field – Redeveloping as an Emerging Play
Giddings Field – Redeveloping as an Emerging Play Giddings Asset Overview Lease Map • Emerging, high-growth asset with extensive inventory potential and significant development flexibility ‒ ~430,000 net acres, ~98% HBP and ~87% operated, ~21 Mboe/d Q2 2019 production (20% oil, 46% liquids) • HBP na
Slide 15: Financial Overview
Financial Overview
Slide 16: Magnolia Oil & Gas – Financial Policy
Magnolia Oil & Gas – Financial Policy Capital Spending Plan Targeted Conservative Financial Statements with at 50 - 60% of annual EBITDAX Low Financial Leverage (Plan expected to deliver 10%+ of annual (<= 1.0x EBITDAX) production growth and consistently generate free cash flow) Acquisitions general
Slide 17: Level of Risk Generally Acceptable to Magnolia
Business Risks Adequately Managed Level of Risk Generally Acceptable to Magnolia Risk Factor Low Moderate Fully Exposed Geologic/Exploratory Political Cost Risk Reinvestment Commodity Financial 17
Slide 18: Q2 2019 Capital Structure and Liquidity Overview
Q2 2019 Capital Structure and Liquidity Overview Capital Structure Overview Capitalization & Liquidity ($MM) • Maintaining low financial leverage profile Capitalization Summary As of 6/30/2019 ‒ Net Debt / Total Book Capitalization of 10% Cash and Cash Equivalents $97 ‒ Net Debt / Q2 annualized Adju
Slide 19: Magnolia Oil & Gas – Summary Balance Sheet
Magnolia Oil & Gas – Summary Balance Sheet (in thousands) June 30, 2019 December 31, 2018 Cash $96,709 $135,758 Current assets 133,788 156,601 Property, plant and equipment, net 3,235,266 3,073,204 Other assets 65,369 67,960 Total assets $3,531,132 $3,433,523 Current liabilities $201,131 $197,361 Lo
Slide 20: 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 20
Slide 21: 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 22: Appendix
Appendix
Slide 23: Magnolia Oil & Gas – Operating Highlights
Magnolia Oil & Gas – Operating Highlights For the Quarter Ended For the Quarter Ended June 30, 2019 March 31, 2019 Production: Oil (MBbls) 3,189 2,906 Natural Gas (MMcf) 10,057 9,763 NGLs (MBbls) 1,060 1,084 Total (Mboe) 5,925 5,617 Average Daily Production: Oil (Bbls/d) 35,044 32,289 Natural Gas (M
Slide 24: Reconciliation of Net Income to Adjusted EBITDAX
Reconciliation of Net Income to Adjusted EBITDAX (in thousands) For the Quarter Ended For the Quarter Ended Adjusted EBITDAX reconciliation to net income: June 30, 2019 March 31, 2019 Net income (1) $31,303 $22,713 Exploration expense 3,617 2,476 Asset retirement obligation accretion 1,373 1,328 Dep
Slide 25: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation (in thousands) For the Quarter Ended For the Quarter Ended Adjusted Net Income June 30, 2019 March 31, 2019 Net income (1) $31,303 $22,713 Adjustments for certain items affecting comparability: Transaction costs 85 353 Tax impact of adjustments (18) (74) Adjusted n
Slide 26: Magnolia Oil & Gas – Margins
Magnolia Oil & Gas – Margins For the Quarter Ended For the Quarter Ended $ / Boe, unless otherwise noted June 30, 2019 March 31, 2019 Revenue $41.01 $38.93 Less: Lease Operating Expenses (4.20) (3.83) Less: Gathering, Transportation & Processing (1.25) (1.66) Less: Taxes Other Than Income (2.21) (2.
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