Magnolia Oil & Gas Corporation · NYSE:MGY
Magnolia Oil & Gas — Q4 2023 Earnings Presentation
26 slides from Magnolia Oil & Gas's earnings presentation, Feb 15, 2024
Slide 1: Fourth Quarter 2023 Earnings Presentation
Fourth Quarter 2023 Earnings Presentation February 15, 2024 Christopher Stavros – President & CEO Brian Corales – Senior Vice President & CFO Tom Fitter – Director, Investor Relations
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: Highlights
Highlights Q4 2023 FY 2023 Production (Mboe/d) 85.4 82.3 Year-over-year Growth 16% 9% Adjusted EBITDAX(1) ($MM) $240 $899 Earnings Per Share ($) $0.53 $2.04 Per Diluted Share D&C Capital Spending ($MM) $91 $422 As a % of Adjusted EBITDAX 38% 47% Free Cash Flow(1) ($MM) $131 $413 Shareholder Returns
Slide 4: Magnolia’s Business Model
Magnolia’s Business Model High Quality Assets Drive Low Capital Deliver Mid-Single Digit Long-Term Reinvestment Rate that Grows the Business Production Growth with Significant Free Cash Flow1 Limit Capital Spending to 55% of 2024 BOE and Oil Growth of High Single-Digits Annual Adjusted EBITDAX1 Retu
Slide 5: 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) 77% 79% 23% 66% 19% 60% 57% 17% 55% 55% 55% 49% 47% 44% 46% 14% 42% 43% 39% 40% 41% 38% 38% 39% 11% 35% 35% 10% 10% 10% 9% 7% 6% 5% 5% 4% 4% 0% -1% -2% -4% -4% -5% -6% Mag
Slide 6: History of Top-Tier Return on Capital Employed
History of Top-Tier Return on Capital Employed 3-Year Average ROCE1 39% 37% 36% ❑ Magnolia delivers top-tier corporate returns (ROCE) 31% 30% 28% 28% ❑ Focus on cost reductions in 2023 and ongoing share 27% 27% 27% repurchases has had a tangible beneficial impact on 23% 22% 21% 21% corporate returns
Slide 7: Low Leverage Drives Financial Flexibility
Low Leverage Drives Financial Flexibility Net Debt / EBITDA (2023E) (1) 2.0 1.8 Magnolia has one of the best 1.6 1.5 1.5 1.5 balance sheets in the industry 1.4 1.4 1.2 1.2 1.1 0.9 0.9 0.8 0.8 0.7 0.5 0.4 0.4 0.4 0.1 -0.1 0.0 (1) Source: FactSet (2023E) as of 2/9/2024. Net debt is calculated as the d
Slide 8: Strong Operating Margins
Strong Operating Margins Operating Margin1 (3-Year Average) 61% 56% ❑ Magnolia has consistently delivered one of 52% 51% the highest operating margins 49% 48% 44% 43% 42% 42% 42% ❑ High-quality asset base and focus on 39% 38% 38% 37% 37% maintaining low costs support top-tier 35% 34% 33% operating m
Slide 9: 2024 Operating Plan
2024 Operating Plan 2024 Production & Capital 2024 Capital Annual BOE and Oil Growth Giddings ~20% High Single-Digit Karnes 2024 Budget ~80% Giddings $450 - $480 Million (DC&F) 2024 Operating Plan ~2 Rigs / ~1 Completion Crew Karnes 9
Slide 10: First Quarter and Full Year 2024 Guidance
First Quarter and Full Year 2024 Guidance Guidance (as of February 14, 2024) Full Year Production (Mboe/d and Mbo/d) High-Single Digit Year-over-year Growth Q1 Production (Mboe/d) 84 - 85 Full Year D&C Capital Spending ($MM) $450 - $480 Q1 D&C Capital Spending ($MM) ~$130 Q1 Oil Differential Per Bar
Slide 11: 2023 Cash Flow Reconciliation
2023 Cash Flow Reconciliation 1,600 $ In Millions 59 102 1,400 205 1,200 872 1,000 355 800 600 425 400 675 200 401 0 (4) Cash Cash Flow (1) Changes in (2) Dividends(3) Common Stock Acquisitions D&C and Cash 12/31/2022 from Working Capital and Repurchases Facilities Capital 12/31/2023 Operations Othe
Slide 12: Significant Share Repurchases Since 2019
Significant Share Repurchases Since 2019 Magnolia’s Consistent Share Repurchases1 5-Year Change in Diluted Shares Outstanding (million shares repurchased by year) (2019 – 2023E) 304% Magnolia has reduced its diluted 180% share count by approximately 20% 97% 80% 38% 43% 44% 29% 19% 9% 0% 0% 2% 6% 6%
Slide 13: Safe, Sustainable and Growing Dividend
Safe, Sustainable and Growing Dividend Annualized Dividend Payout Per Share ❑ Magnolia’s dividend has grown at a $0.52 substantial rate over the past four years $0.46 ❑ Sustainable dividend growth supported even at low commodity prices $0.40 ❑ Higher than peer average dividend growth supported by mo
Slide 14: Summary Balance Sheet
Summary Balance Sheet (in thousands) December 31, 2023 December 31, 2022 Cash $401,121 $675,441 Current assets 190,152 175,306 Property, plant and equipment, net 2,052,021 1,533,029 Other assets 112,922 188,809 Total assets $2,756,216 $2,572,585 Current liabilities $314,887 $340,273 Long-term debt,
Slide 15: Margin and Cost Structure
Margin and Cost Structure For the Quarters Ended For the Years Ended $ / Boe, unless otherwise noted December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Revenue $41.06 $51.42 $40.83 $61.60 Total Cash Operating Costs: Lease Operating Expenses (1) (5.09) (5.17) (5.11) (4.74) Gather
Slide 16: Reserves Detail
Reserves Detail For the Years Ended For the Three Years (In thousands) December 31, 2023 December 31, 2022 December 31, 2021 (2021 – 2023) Costs incurred: Proved property acquisition costs $326,150 $53,781 $12,354 $392,285 Unproved properties acquistions costs 68,177 37,994 10,483 116,654 Total acqu
Slide 17: Summary Investment Highlights
Summary Investment Highlights High Quality Assets Positioned for Success ❑ Leading position in the Giddings area with low breakevens and substantial running room Giddings ❑ Coveted position in the Karnes area in the core of the Eagle Ford Positive Free Cash Flow and Industry Leading Margins ❑ Genera
Slide 18: Appendix
Appendix * a3; xa a VY MAGNOLIA Git sGas
Slide 19: Key Financial Metrics
Key Financial Metrics Quarterly and Full Year Highlights ❑ Q4 D&C capital of $91 million represented just 38% of adjusted EBITDAX(1) ❑ Returned $78 million(2) to shareholders during Q4, inclusive of $54 million(2) of share repurchases (2.5 million shares) and $24 million of dividends Metric 2023 YoY
Slide 20: Fourth Quarter 2023 Capital Structure and Liquidity Overview
Fourth Quarter 2023 Capital Structure and Liquidity Overview Capital Structure Overview Capitalization & Liquidity ($MM) ▪ Maintaining low financial leverage profile Capitalization Summary As of 12/31/2023 ‒ Currently have a net cash(1) position of $1 MM Cash and Cash Equivalents $401 ‒ Net Debt(1)
Slide 21: Free Cash Flow Reconciliations
Free Cash Flow Reconciliations For the Quarters Ended For the Years Ended (in thousands) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Net cash provided by operating activities $246,882 $268,002 $855,789 $1,296,687 Add back: net change in operating assets and liabilities (1
Slide 22: Adjusted EBITDAX Reconciliations
Adjusted EBITDAX Reconciliations For the Quarters Ended For the Years Ended (in thousands) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Net income $113,856 $254,762 $442,604 $1,050,249 Interest expense, net 405 1,805 33 23,442 Income tax expense (benefit) 31,544 (58,695) 1
Slide 23: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation For the Quarters Ended For the Years Ended (in thousands) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Net income $113,856 $254,762 $442,604 $1,050,249 Adjustments: Impairment of oil and natural gas properties - - 15,735 - Deferred income
Slide 24: Committed to Sustainability
Committed to Sustainability 2023 Sustainability Report Highlights Include: Flaring Intensity(1) Total Recordable Incident Rate(2) (TRIR) ❑ Magnolia record for lowest annual flaring rate1 at 0.11%, a 0.99% reduction of almost 90% since 2019 0.57 0.69% ❑ Addition of scope 2 emissions reporting; provid
Slide 25: Operating Highlights
Operating Highlights For the Quarters Ended For the Year Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Production: Oil (MBbls) 3,263 2,972 12,608 12,189 Natural gas (MMcf) 14,246 12,455 55,085 50,660 Natural gas liquids (MBbls) 2,221 1,740 8,266 6,874 Total (Mboe) 7,8
Slide 26: Production Results
Production Results Combined Karnes Giddings & Other Combined Karnes Giddings & Other For the Quarter Ended December 31, 2023 For the Quarter Ended December 31, 2022 Production: Oil (MBbls) 3,263 1,213 2,050 2,972 1,585 1,387 Natural gas (MMcf) 14,246 2,650 11,596 12,455 3,824 8,631 Natural gas liqui