Magnolia Oil & Gas Corporation · NYSE:MGY
Magnolia Oil & Gas — Investor Presentation (November 2023)
23 slides from Magnolia Oil & Gas's investor presentation, November 2023
Slide 1: Magnolia Oil & Gas Corporation Investor Presentation – November 2023
Magnolia Oil & Gas Corporation Investor Presentation – November 2023
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, and Section 21E of the Securities Exchange Act of 1934, as
Slide 3: Magnolia Oil & Gas – Overview
Magnolia Oil & Gas – Overview • High-quality, low-risk pure-play South Texas operator with a core ~498,000 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: Magnolia Oil & Gas – Business Model & Strategy
Magnolia Oil & Gas – Business Model & Strategy Magnolia Value Creation Principles Objectives & Execution Generate moderate annual organic production • 2022 production growth was 14% 1 growth Limit D&C capital to 55% of annual Adjusted • Actual D&C capital spending since company 2 EBITDAX, providing
Slide 5: Magnolia Oil & Gas – Prudent Financial Policy
Magnolia Oil & Gas – Prudent Financial Policy Conservative Financial Statements with Capital Spending Plan Limited Low Financial Leverage to 55% of Annual Adj. EBITDAX (Expected to deliver modest production (<= 1.0x EBITDAX) growth and consistent free cash flow) Acquisitions generally expected to be
Slide 6: Accretive Bolt-On Acquisitions – Prudent Deployment of Free Cash Flow
Magnolia Oil & Gas – Prudent Deployment of Free Cash Flow Accretive Share Bolt-On Repurchases Acquisitions Return- focused Value Creation Debt Dividend Reduction Consistent free cash flow generation allows for prudent and effective reinvestment to maximize Magnolia’s total shareholder return proposi
Slide 7: Realized Significant Cost Reductions
Realized Significant Cost Reductions Cost reduction initiatives implemented in early 2023 delivering strong results • Reduced 2023 Capex 15% compared Annual D&C Capital Spending ($MM)1 to original guidance • Cost per foot (D,C&F) at Giddings has $505 declined by ~15% since beginning of 15% 2023 Redu
Slide 8: Annual Free Cash Flow Allocation ($MM)
Significant and Flexible Return of Free Cash Flow Magnolia’s business model delivers consistent free cash flow, strong return of capital through share repurchases and dividends and excess cash flow that provides options and flexibility to improve the per share value Share Repurchases Dividends Exces
Slide 9: Cash Flow Allocation Matches Magnolia’s Business Model
Cash Flow Allocation Matches Magnolia’s Business Model Percentage of Operating Cash Flow (1) – Since Inception - 7/31/18 thru 9/30/23 Cash Build and Dividends 20% Drilling & Completions 45% Share Repurchases 23% Acquisitions 12% (1) Operating Cash Flow is cash flow from operations before changes in
Slide 10: Share Repurchase Summary Through 3Q 2023
Share Repurchase Summary Through 3Q 2023 • Since the initial repurchase authorization in 3Q19, Magnolia has reduced its dilutive share count by 32.5(1) million shares of Class A common stock as well as 26.9 million shares of Class B common stock, for a total reduction of 59.4 million shares, or appr
Slide 11: Differentiated Dividend Framework
Magnolia Oil & Gas – Differentiated Dividend Framework Dividend Principles 15% Increase Secure & Sustainable – Dividend is safe, and supported by our strong balance sheet, prudent spending and 43% Increase consistent free cash flow Paid out of Earnings – Dividend is paid out of earnings generate
Slide 12: 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 12
Slide 13: Asset Overview
Asset Overview
Slide 14: Giddings – Development & Appraisal Opportunities
Giddings – Development & Appraisal Opportunities Giddings Asset Overview Lease Map • Emerging, high-growth asset with extensive inventory potential and significant development flexibility • ~663,000 gross acres (~476,000 net acres) that is 99% HBP and 98% operated. 3Q 2023 production averaged 61.2 M
Slide 15: Giddings – Development
Giddings – Development • Magnolia has greater than 150,000 acres in development ‒ Operating one full-time rig drilling development wells in this area ‒ Greater than 100 horizontal wells online • 3Q23 production at Giddings has increased 28% YOY • Magnolia entered full field development during 2021 ‒
Slide 16: Karnes – Core Eagle Ford and Austin Chalk
Karnes – 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 Eagle Ford – Karnes Trough the Eagle Ford, substantially de-risked Magnolia Fluid Windows BP Oil ‒ ~22,800 net acres, 60% operated, 98%
Slide 17: Commitment to Sustainability
Commitment to Sustainability 2023 Sustainability Report Highlights Include: • Magnolia record for lowest annual flaring rate1 at 0.11%, a reduction of almost 90% since 2019 • Addition of scope 2 emissions reporting; providing further disclosure of the Company’s operations • Continued production of l
Slide 18: Summary Investment Highlights
Magnolia Oil & Gas – Summary Investment Highlights High Quality Assets Positioned for Success • Coveted position in core of Karnes County with industry leading breakevens • Emerging position in Giddings with greater than 150,000 acres now in development Positive Free Cash Flow and Leading Margins •
Slide 19: Appendix
Appendix
Slide 20: 3Q 2023 Capital Structure and Liquidity Overview
3Q 2023 Capital Structure and Liquidity Overview Capital Structure Overview Capitalization & Liquidity ($MM) • Maintaining low financial leverage profile Capitalization Summary As of 9/30/2023 ‒ Currently have a net cash position of $218 MM Cash and Cash Equivalents $618 ‒ Net Debt / Q3 annualized a
Slide 21: Free Cash Flow Reconciliations
Free Cash Flow Reconciliations For the Quarter Ended For the Quarter Ended (in thousands) September 30, 2023 September 30, 2022 Net cash provided by operating activities $187,310 $410,681 Add back: Changes in operating assets and liabilities 29,419 (49,438) Cash flows from operations before changes
Slide 22: Margin and Cost Structure
Magnolia Oil & Gas – Margin and Cost Structure For the Quarter Ended For the Quarter Ended $ / Boe, unless otherwise noted September 30, 2023 September 30, 2022 Revenue $41.52 ∆ $22.88/boe $64.40 Total Cash Operating Costs: Lease Operating Expenses (1) (4.65) (4.59) Gathering, Transportation & Proce
Slide 23: Adjusted EBITDAX Reconciliations
Adjusted EBITDAX Reconciliations For the Quarter Ended For the Quarter Ended (in thousands) September 30, 2023 September 30, 2022 Net income $117,477 $286,963 Exploration expenses 5,128 1,173 Asset retirement obligations accretion 875 814 Depreciation, depletion and amortization 81,158 68,972 Intere
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