Magnolia Oil & Gas Corporation · NYSE:MGY
Magnolia Oil & Gas — Barclays Energy Conference 2018
23 slides from Magnolia Oil & Gas's conference presentation, Sep 5, 2018
Slide 1: Barclays Energy Conference
Barclays Energy Conference September 5, 2018
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: Focused on Traditional Value Creation Metrics
Magnolia Oil & Gas – 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: 1 Consistent organic production growth 2 High full-cycle operating margins 3 Efficient capital program with short
Slide 4: Corporate Overview
Magnolia Oil & Gas – Corporate Overview ▪ High-quality, low-risk pure-play South Texas operator with a ~474,000 Net Acres Position Targeting Two of the Top core Eagle Ford and Austin Chalk position acquired at an Oil Plays in the U.S.(1) attractive entry multiple ▪ Significant scale and PDP base gen
Slide 5: Value Creation Strategy
Magnolia Oil & Gas – Value Creation Strategy Value Creation Strategy Magnolia Oil & Gas Build a large scale • Core Karnes County acreage with some of the best economics focused business in the U.S(1) Oily production base with superior well • Highly economic wells with short payback periods creates s
Slide 6: Recent Developments & Q2 2018 Highlights
Magnolia Oil & Gas – Recent Developments & Q2 2018 Highlights • Closed business combination with EnerVest’s South Texas Division on July 31 st ‒ Commenced trading as Magnolia Oil & Gas Corporation on the NYSE as “MGY” on August 1st • Announced strong Q2 asset level operating and financial results of
Slide 7: Asset Overview
Magnolia Oil & Gas – Asset Overview
Slide 8: Karnes County – Core Eagle Ford and World Class Austin Chalk
Karnes County – Core Eagle Ford and World Class 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 ̶ 14,574 net acres(1) (28,886 gross acres), 65% operated, 90% HBP, 39.6 Mboe
Slide 9: Located in an Attractive Neighborhood
Magnolia Oil & Gas – 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. 9
Slide 10: Karnes County has some of the Best Economics in North America
Karnes County has some of the Best Economics in North America • 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 th
Slide 11: Giddings Field – Austin Chalk Redeveloping as an Emerging Play
Giddings Field – Austin Chalk Redeveloping as an Emerging Play Giddings Asset Overview Lease Map • Emerging, high-growth asset with extensive inventory potential and significant development flexibility ‒ ~458,989 net acres(1), 99%+ HBP and ~87% operated, 10.0 Mboe/d Q2 2018 production (26% oil, 53%
Slide 12: Financial Overview
Magnolia Oil & Gas – Financial Overview
Slide 13: Financial Policy
Magnolia Oil & Gas Corporation – Financial Policy Capital Spending Plan Targeted at Conservative Financial Statements 50 - 60% of annual EBITDA with Low Financial Leverage (Plan expected to deliver 10%+ of annual (<= 1.0x EBITDA) production growth and consistently generate free cash flow) Acquisitio
Slide 14: Business Risks Adequately Managed
Magnolia Oil & Gas – 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 14
Slide 15: Focus on High Margins
Magnolia Oil & Gas – Focus on High Margins 1H 2018 Actuals 1H 2018 @ Illustrative $50 WTI / $2.75 HH Benchmark Prices WTI ($/bbl) $65.44 $50.00 Henry Hub ($/mcf) $2.82 $2.75 Differentials Oil ($/bbl) $2.40 $2.40 Natural Gas ($/mcf) ($0.04) ($0.04) NGL (% of WTI) 39% 39% Realized Price Oil ($/bbl) $6
Slide 16: 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 16
Slide 17: Harvest Acquisition Overview
Magnolia Oil & Gas – Harvest Acquisition Overview • On August 31st, closed acquisition of substantially all of the South Texas Assets of Harvest Oil & Gas Corporation for ~$193 million in cash and stock ‒ Transaction consideration of $135 million cash and 4.2MM newly issues shares of Magnolia ‒ Cash
Slide 18: Relative Valuation Metrics
Relative Valuation Metrics 12.0x 11.0x 10.0x COG FANG 9.0x EOG 2018E EV / EBITDA 8.0x OXY 7.0x 6.0x 5.0x Magnolia: 5.2x 4.0x 3.0x U.S. <1.5x 2018E Leverage >10% Production Growth 2018E and 2019E FCF Independents (2018E-2019E) Positive Number of companies: 50 17 15 4 Median 2018E EV / EBITDA: 6.5x 7.
Slide 19: Summary Investment Highlights – Why Own Magnolia Oil & Gas?
Summary Investment Highlights – Why Own Magnolia Oil & Gas? High Quality Assets Positioned for Success • Coveted position in core of Karnes County with industry leading breakevens between $28 - $32 per barrel(1) • Emerging position in the Giddings Field with results that continue to improve and subs
Slide 20: Appendix
Appendix
Slide 21: Attractive Compared to In-Basin and Business Model Comps
Attractive Compared to In-Basin and Business Model Comps Magnolia will be in a class of its own from a cash flow generation perspective... Legend 2018E Free Cash Flow Yield(1) 9.7% 3.3% Magnolia 0.9% 0.0% NM (0.1%) (7.6%) (8.0%) (15.8%) In-Basin Comps 2018E Free Cash Flow ($MM) (37.8%) $325 $800 $19
Slide 22: Q2 & 1H 2018 Summary Results
Q2 & 1H 2018 Summary Results Production Volumes Karnes Q2 Giddings Q2 Total Q2 2018 Total Q1 2018 Total 1H 2018 Oil (Bbls/d) 27,428 2,593 30,022 29,166 29,597 Natural Gas (Mcf/d) 39,055 28,473 67,527 59,833 63,702 NGL (Bbls/d) 5,681 2,659 8,341 7,311 7,829 Total Oil Equivalent (Boe/d) 39,615 10,000
Slide 23: Illustrative Fully Diluted Share Count & Current Ownership
Illustrative Fully Diluted Share Count & Current Ownership Illustrative Share Price Shares Share Counts in Millions $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $16.00 $17.00 $18.00 Ow ner % Ow ned (m illions) IPO Investors 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 EnerVest 120.2 50% PIPE Investors