8-K - MGY - Equibles

UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): February 19, 2020


Magnolia Oil & Gas Corporation
(Exact name of registrant as specified in its charter)

Delaware	001-38083	81-5365682
(State or other jurisdiction <br>of incorporation)	(Commission <br>File Number)	(I.R.S. Employer <br>Identification Number)

	Nine Greenway Plaza, Suite 1300<br><br>Houston , Texas ** 77046**
(Address of principal executive offices, including zip code)

	( 713 ) 842-9050
Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 Per Share	MGY	New York Stock Exchange

Item 2.02Results of Operations and Financial Condition.

****On February 19, 2020, Magnolia Oil & Gas Corporation (the ‘Company”) issued a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated by reference herein, announcing its financial and operational results for the fourth quarter and full-year ended December 31, 2019.

The Information furnished pursuant to this Item 2.02 (including Exhibit 99.1) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.

Item 7.01	Regulation FD Disclosure.

On February 19, 2020, the Company provided information in an earnings presentation on its website, www.magnoliaoilgas.com, regarding its financial and operational results for the fourth quarter and full-year ended December 31, 2019.

The earnings presentation, which is attached hereto as Exhibit 99.2, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

Item 9.01	Financial Statements and Exhibits.

(d)Exhibits.


Exhibit
Number	Description
99.1	Press Release dated February 19, 2020

99.2	Earnings Presentation dated February 19, 2020

104	Cover Page Interactive Data File (formatted as inline XBRL)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

<br><br><br><br>
	MAGNOLIA OIL & GAS CORPORATION


Date: February 19, 2020	By: /s/ Timothy D. Yang
	Name: Timothy D. Yang
	Title: Executive Vice President,<br> General Counsel and Corporate Secretary

		EX99.1Earnings Release

Exhibit 99.1

Magnolia Oil & Gas Corporation Announces Fourth Quarter and 2019 Year-End Results

HOUSTON, TX, February 19, 2020 - Magnolia Oil & Gas Corporation (“Magnolia,” “we,” “our,” or the “Company”) (NYSE: MGY) today announced its financial and operational results for the fourth quarter and full year 2019.

2019 Accomplishments:

| · | Total drilling and completions \("D&C"\) capital for 2019 was 60 percent of our adjusted EBITDAX, and in line with our business model which prioritizes free cash flow. |

| --- | --- | | · | Generated $647.6 million net cash provided by operating activities and $222.9 million of free cash flow(1) during 2019. | | --- | --- | | · | Exited 2019 with total production growth of 10 percent compared to prior year levels. | | --- | --- | | · | Completed bolt-on oil and gas property acquisitions of $135.7 million including 5,200 net acres further supplementing our existing core position in the Karnes County area. | | --- | --- | | · | Repurchased 7 million Magnolia shares for $79.4 million. | | --- | --- | | · | Increased our cash position at year end 2019 to $183 million from $136 million in the prior year, without incurring any additional debt. | | --- | --- | | · | Completed the exchange of all our outstanding public warrants which simplified our capital structure. | | --- | --- | | · | Further de-risked the Giddings Field asset through our appraisal and exploration program, improving our confidence and positioning us to increase activity later this year. | | --- | --- | | · | We replaced 142 percent of our production by adding 34.7 MMboe of total proved developed reserves, the vast majority of which were organic. | | --- | --- |

Fourth Quarter and Full Year 2019 Summary Financial Results:

| \(In millions, except per share data\) | For the<br>Quarter Ended<br>December 31, 2019 |  | For the<br>Year Ended<br>December 31, 2019 |  |

| --- | --- | --- | --- | --- | | Reported net income | $ | 13.6 | $ | 85.0 | | Earnings per share - diluted | | 0.05 | | 0.28 | | Adjusted net income(1) | | 12.5 | | 78.1 | | Adjusted earnings per share(1) | | 0.05 | | 0.30 | | Adjusted EBITDAX(1) | | 170.8 | | 696.0 | | Capital expenditures - D&C | | 72.2 | | 416.4 | | Cash acquisition expenditures | | — | | 93.2 | | Cash balance as of December 31, 2019 | $ | 182.6 | $ | 182.6 | | Weighted average total shares outstanding(2) | | 262.6 | | 259.0 | | Total shares outstanding as of December 31, 2019(3) | | 253.1 | | 253.1 |

Fourth Quarter and Full Year 2019 Highlights:

| · | Magnolia reported fourth quarter net income attributable to Class A Common Stock of $8.1 million, or $0.05 per diluted share. Total adjusted net income including noncontrolling interest was $12.5 million, or $0.05 per adjusted diluted share. |

| --- | --- |

| · | Fourth quarter 2019 production averaged 68.3 thousand barrels of oil equivalent per day \("Mboe/d"\), and 66.8 Mboe/d for full year 2019. Fourth quarter production increased by 10 percent compared to prior year levels. Oil production averaged 52 percent of total volumes for the fourth quarter and 53 percent for all of 2019. |

| --- | --- |

| · | Adjusted EBITDAX for full year 2019 was $696.0 million with D&C capital representing 60 percent of adjusted EBITDAX, in line with our business model. Adjusted EBITDAX was $170.8 million during the fourth quarter of 2019.  D&C capital during the fourth quarter of $72.2 million represented just 42 percent of our adjusted EBITDAX and better than our earlier guidance. |

| --- | --- |

| · | Total cash operating costs including G&A were $9.80 per boe in the fourth quarter of 2019 representing a 10 percent decline compared to $10.92 per boe in the prior year period. |

| --- | --- |

| · | We repurchased 6 million shares of Class B Common Stock for $69.1 million in the fourth quarter. During 2019 we repurchased a total of 7 million shares for $79.4 million. |

| --- | --- |

| · | Cash on the balance sheet increased by $18.1 million during the quarter, ending 2019 with $182.6 million. In addition, we have an undrawn revolving credit facility with $550.0 million of capacity and liquidity of $732.6 million. |

| --- | --- |

(1) Adjusted EBITDAX, free cash flow, adjusted net income, adjusted earnings per share, and total cash operating costs are non-GAAP financial measures. For reconciliations to the most comparable GAAP measures, please see "Non-GAAP Financial Measures" at the end of this press release.

(2) Weighted average total shares outstanding include diluted weighted average shares of Class A Common Stock outstanding during the period and shares of Class B Common Stock, which are anti-dilutive in the calculation of weighted average number of common shares outstanding.

(3) Total shares outstanding as of December 31, 2018 were 249.7 million.

“Magnolia had numerous accomplishments during our first full calendar year as a public company, and we are well positioned both financially and operationally as we enter 2020,” said Magnolia Chairman, President and CEO, Steve Chazen. “Despite the current challenging product price environment, our founding principles remain unchanged as we continue to prioritize significant free cash flow generation combined with moderate growth in our business. During 2019, we spent approximately 60 percent of our cash flow on drilling and completing wells, while growing our production 10 percent from the end of last year. Our business model continues to focus on generating free cash flow which provides us with options to allocate capital toward opportunities that are most accretive to the value of our stock. The majority of last year’s free cash flow was used for small, bolt-on oil and gas property acquisitions that both strengthened our business and increased our core Karnes area acreage position by about 30 percent. We also repurchased 7 million shares of Magnolia stock and ended 2019 with $47 million more cash than at the end of the prior year.”

“A significant achievement during the past year was our improved understanding and predictability of results at our Giddings field asset. The two Giddings wells that we referenced last quarter are still performing quite well. These two wells have averaged more than 1,500 barrels per day of oil production during their first 120 days on line. During the fourth quarter we added another two new wells that have a combined rate of more than 1,100 barrels per day of oil production during their first 60 days of production. As a result of our growing confidence in Giddings, we plan to increase our drilling activity in the field later this year.”

Operational Update

During the second half of 2019, our D&C capital averaged just 45 percent of our adjusted EBITDAX. Total company production averaged 68.3 Mboe/d during the fourth quarter of 2019, a 10 percent increase compared to fourth quarter 2018 levels. Production in the Karnes area averaged 44.9 Mboe/d during the fourth quarter 2019, a 9 percent increase from prior year levels of 41.3 Mboe/d. Production from Giddings and Other increased 13 percent to 23.4 Mboe/d in the most recent quarter compared to year-ago quarterly levels of 20.6 Mboe/d. Oil production in the Giddings area increased 24 percent sequentially as a result of new wells brought online in the latter part of the year.

We continue to operate one rig in each of our Karnes and Giddings assets, as well as continue using one completion crew between our assets. The results of our ongoing appraisal program in Giddings continue to be encouraging, and our confidence and predictability utilizing our existing model continues to improve. Based on these results, our current plan is to shift our rig operating in Karnes to Giddings later this year as we embark on an early stage development drilling plan in the field.

Cash Flow

Our cash flow from operations was $159.0 million and our cash flow from operations before changes in operating assets and liabilities was $162.9 million during the fourth quarter 2019. Total cash outlays related to our capital program including drilling, completions and leasehold acquisitions were $70.2 million and we spent $69.6 million repurchasing our stock. We ended the period with $182.6 million of cash on the balance sheet compared to $164.5 million at the end of the third quarter.

For full year 2019, our cash flows from operations before changes in operating assets and liabilities was $658.0 million. Cash outlays during the year included $435.0 million for drilling, completions and leasehold, cash costs related to oil and gas property acquisitions of $93.2 million and $79.4 million for Magnolia share repurchases. Our cash position at year-end 2019 increased by $46.9 million compared to the end of the prior year.

Updated Guidance

For 2020, we expect to spend approximately 60 percent of our adjusted EBITDAX for drilling and completing wells, which is consistent with our business model. While we anticipate drilling and completing a similar number of wells this year as compared to 2019, improved efficiencies of our drilling program combined with lower oil field service costs should reduce our overall capital outlays by 5 to 10 percent compared to last year. We estimate that this year’s capital and activity program should result in year-over-year total production growth of approximately 5 percent, including growth in Giddings oil production of more than 20 percent.

Based on the pace of our capital spending and estimated non-operated activity, we expect a similar pattern for our quarterly production profile as compared to 2019 - with higher spending and activity levels in the early part of the year, followed by higher production during the second and third quarters. We currently plan to shift our Karnes area rig to Giddings in the latter part of the year to start an early stage development program while continuing with our appraisal efforts.

Capital spending levels are expected to peak in the first quarter and then gradually decline through the remainder of the year. We expect our first quarter 2019 production to average around 65 Mboe/d, as most of the wells turned in line are expected to occur in the latter part of the quarter.

Reserves

Magnolia’s total proved developed reserves at year-end 2019 were 86.8 MMboe, 13 percent higher than the prior year-end period, replacing 142 percent of our total production last year. Our total D&C capital and proved property acquisition costs were $522.8 million during 2019.

Annual Report on Form 10-K

Magnolia's financial statements and related footnotes will be available in its Annual Report on Form 10-K for the year ended December 31, 2019, which is expected to be filed with the U.S. Securities and Exchange Commission ("SEC") on February 26, 2020.

Conference Call and Webcast

Magnolia will host an investor conference call on Thursday, February 20, 2020 at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss these operating and financial results. Interested parties may join the webcast by visiting Magnolia's website at www.magnoliaoilgas.com/investors/events-and-presentations and clicking on the webcast link or by dialing 1-844-701-1059. A replay of the webcast will be posted on Magnolia's website following completion of the call.

About Magnolia Oil & Gas Corporation

Magnolia (MGY) is a publicly traded oil and gas exploration and production company with operations primarily in South Texas in the core of the Eagle Ford Shale and Austin Chalk formations. Magnolia focuses on generating value for shareholders through steady production growth, strong pre-tax margins, and free cash flow. For more information, visit www.magnoliaoilgas.com.

Cautionary Note Regarding 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 present or historical fact included in this press release, regarding Magnolia’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward looking statements. When used in this press release, the words could, should, will, may, believe, anticipate, intend, estimate, expect, project, the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, Magnolia disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release. Magnolia cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Magnolia, incident to the development, production, gathering and sale of oil, natural gas and natural gas liquids. In addition, Magnolia cautions you that the forward looking statements contained in this press release are subject to the following factors: (i) the outcome of any legal proceedings that may be instituted against Magnolia; (ii) Magnolia’s ability to realize the anticipated benefits of its business combination, which may be affected by, among other things, competition and the ability of Magnolia to grow and manage growth profitably; (iii) changes in applicable laws or regulations; and (iv) the possibility that Magnolia may be adversely affected by other economic, business, and/or competitive factors. Should one or more of the risks or uncertainties described in this press release occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact the operations and projections discussed herein can be found in Magnolia’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Magnolia’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

Contacts for Magnolia Oil & Gas Corporation

Investors

Brian Corales

(713) 842-9036

bcorales@mgyoil.com

Media

Art Pike

(713) 842-9057

apike@mgyoil.com

Magnolia Oil & Gas Corporation

Operating Highlights

|  | For the<br>Quarter Ended<br>December 31, 2019 |  |  | For the<br>Quarter Ended<br>December 31, 2018 |  |  | For the<br>Year Ended<br>December 31, 2019 |  |  |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Production: | | | | | | | | | | | Oil (MBbls) | | 3,251 | | | 3,054 | | | 12,867 | | | Natural gas (MMcf) | | 10,689 | | | 8,795 | | | 41,272 | | | NGLs (MBbls) | | 1,254 | | | 1,179 | | | 4,643 | | | Total (Mboe) | | 6,287 | | | 5,699 | | | 24,389 | | | Average daily production: | | | | | | | | | | | Oil (Bbls/d) | | 35,337 | | | 33,196 | | | 35,252 | | | Natural gas (Mcf/d) | | 116,185 | | | 95,598 | | | 113,074 | | | NGLs (Bbls/d) | | 13,630 | | | 12,815 | | | 12,721 | | | Total (boe/d) | | 68,331 | | | 61,944 | | | 66,819 | | | Revenues (in thousands): | | | | | | | | | | | Oil sales | $ | 187,972 | | $ | 198,891 | | $ | 771,981 | | | Natural gas sales | | 22,537 | | | 29,565 | | | 93,745 | | | NGL sales | | 19,200 | | | 26,599 | | | 70,416 | | | Total Revenues | $ | 229,709 | | $ | 255,055 | | $ | 936,142 | | | Average sales price: | | | | | | | | | | | Oil (per Bbl) | $ | 57.82 | | $ | 65.12 | | $ | 60.00 | | | Natural gas (per Mcf) | | 2.11 | | | 3.36 | | | 2.27 | | | NGL (per Bbl) | | 15.31 | | | 22.56 | | | 15.17 | | | Total (per boe) | $ | 36.54 | | $ | 44.75 | | $ | 38.38 | | | NYMEX WTI ($/Bbl) | $ | 56.96 | | $ | 59.08 | | $ | 57.04 | | | NYMEX Henry Hub ($/Mcf) | $ | 2.50 | | $ | 3.64 | | $ | 2.63 | | | Realization to benchmark: | | | | | | | | | | | Oil (per Bbl) | | 102 | % | | 110 | % | | 105 | % | | Natural Gas (per Mcf) | | 84 | % | | 92 | % | | 86 | % | | Operating Expenses (in thousands): | | | | | | | | | | | Lease operating expenses | $ | 23,034 | | $ | 19,737 | | $ | 93,788 | | | Gathering, transportation and processing | | 8,908 | | | 9,092 | | | 34,924 | | | Taxes other than income | | 12,904 | | | 13,819 | | | 53,728 | | | Depreciation, depletion and amortization | | 137,629 | | | 111,989 | | | 523,572 | | | Operating costs per boe: | | | | | | | | | | | Lease operating expenses | $ | 3.66 | | $ | 3.46 | | $ | 3.85 | | | Gathering, transportation and processing | | 1.42 | | | 1.60 | | | 1.43 | | | Taxes other than income | | 2.05 | | | 2.42 | | | 2.20 | | | Depreciation, depletion and amortization | | 21.89 | | | 19.65 | | | 21.47 | |

Magnolia Oil & Gas Corporation

Consolidated Statements of Operations

(In thousands, except per share data)

|  | For the<br>Quarter Ended<br>December 31, 2019 |  | For the<br>Quarter Ended  <br>December 31, 2018 |  | For the<br>Year Ended<br>December 31, 2019 |  |

| --- | --- | --- | --- | --- | --- | --- | | REVENUES | | | | | | | | Oil revenues | $ | 187,972 | $ | 198,891 | | 771,981 | | Natural gas revenues | | 22,537 | | 29,565 | | 93,745 | | Natural gas liquids revenues | | 19,200 | | 26,599 | | 70,416 | | Total revenues | | 229,709 | | 255,055 | | 936,142 | | OPERATING EXPENSES | | | | | | | | Lease operating expenses | | 23,034 | | 19,737 | | 93,788 | | Gathering, transportation and processing | | 8,908 | | 9,092 | | 34,924 | | Taxes other than income | | 12,904 | | 13,819 | | 53,728 | | Exploration expense | | 2,724 | | 661 | | 12,741 | | Asset retirement obligation accretion | | 1,416 | | 1,276 | | 5,512 | | Depreciation, depletion and amortization | | 137,629 | | 111,989 | | 523,572 | | Amortization of intangible assets | | 3,626 | | 3,626 | | 14,505 | | General & administrative expenses | | 16,784 | | 18,504 | | 69,432 | | Transaction related costs | | — | | 2,241 | | 438 | | Total operating costs and expenses | | 207,025 | | 180,945 | | 808,640 | | OPERATING INCOME | | 22,684 | | 74,110 | | 127,502 | | OTHER INCOME (EXPENSE) | | | | | | | | Income from equity method investee | | 249 | | 465 | | 857 | | Interest expense, net | | (6,745) | | (7,494) | | (28,356) | | Other expense, net | | (246) | | (1,355) | | (238) | | Total other income (expense) | | (6,742) | | (8,384) | | (27,737) | | INCOME BEFORE INCOME TAXES | | 15,942 | | 65,726 | | 99,765 | | Income tax expense | | 2,311 | | 7,918 | | 14,760 | | NET INCOME | | 13,631 | | 57,808 | | 85,005 | | LESS: Net income attributable to noncontrolling interest | | 5,516 | | 24,887 | | 34,809 | | NET INCOME ATTRIBUTABLE TO MAGNOLIA | | 8,115 | | 32,921 | | 50,196 | | LESS: Non-cash deemed dividend related to warrant exchange | | — | | — | | (2,763) | | NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCK | $ | 8,115 | $ | 32,921 | $ | 47,433 | | NET INCOME PER COMMON SHARE | | | | | | | | Basic | $ | 0.05 | $ | 0.21 | $ | 0.29 | | Diluted | $ | 0.05 | $ | 0.21 | $ | 0.28 | | WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | | | | | | | Basic | | 167,331 | | 156,273 | | 161,886 | | Diluted | | 171,647 | | 158,998 | | 167,047 | | WEIGHTED AVERAGE NUMBER OF CLASS B SHARES OUTSTANDING(1) | | 90,942 | | 93,189 | | 91,951 |

(1) Shares of Class B Common Stock, and corresponding Magnolia LLC Units, are anti-dilutive in the calculation of weighted average number of common shares outstanding.

Magnolia Oil & Gas Corporation

Summary Cash Flow Data

(In thousands)

|  | For the<br>Quarter Ended<br>December 31, 2019 |  | For the<br>Quarter Ended<br>December 31, 2018 |  | For the<br>Year Ended<br>December 31, 2019 |  |

| --- | --- | --- | --- | --- | --- | --- | | CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | Net Income | $ | 13,631 | $ | 57,808 | $ | 85,005 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | Depreciation, depletion and amortization | | 137,629 | | 111,988 | | 523,572 | | Amortization of intangible assets | | 3,626 | | 3,626 | | 14,505 | | Exploration expense, non-cash | | 618 | | 567 | | 1,154 | | Asset retirement obligations accretion expense | | 1,416 | | 1,276 | | 5,512 | | Amortization of deferred financing costs | | 897 | | 891 | | 3,541 | | Deferred taxes | | 2,496 | | 8,635 | | 14,261 | | Stock based compensation | | 2,713 | | 1,851 | | 11,089 | | Other | | (149) | | (555) | | (677) | | Changes in operating assets and liabilities | | (3,870) | | 32,081 | | (10,343) | | Net cash provided by operating activities | | 159,007 | | 218,168 | | 647,619 | | CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | Acquisition of EnerVest properties, final settlement | | — | | — | | 4,250 | | Acquisitions, other | | — | | (10,880) | | (93,221) | | Additions to oil and natural gas properties | | (70,176) | | (107,895) | | (435,035) | | Other investing | | 6 | | (350) | | (242) | | Net cash used in investing activities | | (70,170) | | (119,125) | | (524,248) | | CASH FLOW FROM FINANCING ACTIVITIES | | | | | | | | Contributions from noncontrolling interest owners | | — | | — | | 7,301 | | Distributions to noncontrolling interest owners | | (708) | | — | | (1,424) | | Repurchase of common stock | | (555) | | — | | (10,277) | | Class B Common Stock repurchase | | (69,093) | | — | | (69,093) | | Other financing activities | | (337) | | — | | (3,003) | | Net cash used in financing activities | | (70,693) | | — | | (76,496) | | NET CHANGE IN CASH AND CASH EQUIVALENTS | | 18,144 | | 99,043 | | 46,875 | | Cash and cash equivalents – Beginning of period | | 164,489 | | 36,715 | | 135,758 | | Cash and cash equivalents – End of period | $ | 182,633 | $ | 135,758 | $ | 182,633 |

Magnolia Oil & Gas Corporation

Summary Balance Sheet Data

(In thousands)

|  | December 31, 2019 |  | December 31, 2018 |  |

| --- | --- | --- | --- | --- | | Cash and cash equivalents | $ | 182,633 | $ | 135,758 | | Other current assets | | 110,585 | | 156,601 | | Property, plant and equipment, net | | 3,116,757 | | 3,073,204 | | Other assets | | 56,431 | | 67,960 | | Total assets | $ | 3,466,406 | $ | 3,433,523 | | Current liabilities | $ | 175,208 | $ | 197,361 | | Long-term debt, net | | 389,835 | | 388,635 | | Other long-term liabilities | | 172,834 | | 139,572 | | Common stock | | 26 | | 25 | | Additional paid in capital | | 1,703,362 | | 1,641,237 | | Treasury stock | | (10,277) | | — | | Retained earnings | | 82,940 | | 35,507 | | Noncontrolling interests | | 952,478 | | 1,031,186 | | Total liabilities and equity | $ | 3,466,406 | $ | 3,433,523 |

Magnolia Oil & Gas Corporation

Costs Incurred, Capital Expenditures, and Proved Reserves

The following table summarizes the Company's costs incurred in oil and gas property acquisition, exploration, and development activities and capital expenditures in oil and gas development activities for the year ended December 31, 2019.

| \(In thousands\) | For the<br>Year Ended<br>December 31, 2019 |  |

| --- | --- | --- | | Costs incurred: | | | | Proved property acquisition costs | $ | 106,489 | | Unproved properties acquisition costs | | 29,208 | | Total acquisition costs | | 135,697 | | Exploration and development costs | | 441,482 | | Total costs incurred | $ | 577,179 | | Capital expenditures: | | | | Capital expenditures - D&C | $ | 416,353 | | Leasehold acquisition costs | | 10,003 | | Total capital spending (accrual basis) | $ | 426,356 | | Proved property acquisition costs and D&C capital | $ | 522,842 |

The following table summarizes the Company's proved developed reserves and production.

| Proved developed reserves: | Total<br>\(MMboe\) |

| --- | --- | | December 31, 2018 | 76.5 | | December 31, 2019 | 86.8 | | Increase in proved developed reserves | 10.3 | | Production | 24.4 | | Increase in proved developed reserves plus production | 34.7 |

Magnolia Oil & Gas Corporation

Non-GAAP Financial Measures

Reconciliation of net income to adjusted EBITDAX

In this press release, we refer to adjusted EBITDAX, a supplemental non-GAAP financial measure that is used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. We define adjusted EBITDAX as net income before interest expense, income taxes, depreciation, depletion and amortization, amortization of intangible assets, accretion of asset retirement obligations, non-cash stock based compensation expense, exploration costs, and certain transaction costs. Adjusted EBITDAX is not a measure of net income in accordance with GAAP.

Our management believes that adjusted EBITDAX is useful because it allows them to more effectively evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We also believe that securities analysts, investors and other interested parties may use adjusted EBITDAX in the evaluation of our Company. We exclude the items listed above from net income in arriving at adjusted EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of adjusted EBITDAX. Our presentation of adjusted EBITDAX should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of adjusted EBITDAX may not be comparable to other similarly titled measures of other companies.

The following table presents a reconciliation of net income to adjusted EBITDAX, our most directly comparable financial measure calculated and presented in accordance with GAAP:

(In thousands)	For the<br>Quarter Ended<br>December 31, 2019		For the<br>Quarter Ended<br>December 31, 2018		For the<br>Year Ended<br>December 31, 2019
Net income(1)	$	13,631	$	57,808	$	85,005
Exploration expense		2,724		661		12,741
Asset retirement obligations accretion		1,416		1,276		5,512
Depreciation, depletion and amortization		137,629		111,989		523,572
Amortization of intangible assets		3,626		3,626		14,505
Interest expense, net		6,745		7,494		28,356
Income tax expense		2,311		7,918		14,760
EBITDAX		168,082		190,772		684,451
Non-cash stock based compensation expense		2,713		1,851		11,089
Transaction related costs(2)		—		2,241		438
Adjusted EBITDAX	$	170,795	$	194,864	$	695,978

(1) Includes net income attributable to noncontrolling interest.

(2) Transaction costs incurred related to the execution of our business combination with EnerVest, Ltd. and its affiliates and the Harvest acquisition, including legal fees, advisory fees, consulting fees, accounting fees, employee placement fees, and other transaction and facilitation costs.

Magnolia Oil & Gas Corporation

Non-GAAP Financial Measures

Reconciliation of net income attributable to Class A Common Stock to adjusted earnings

Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Class A Common Stock. Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Company’s on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, and capital structure, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.

| \(In thousands, except per share data\) | For the<br>Quarter Ended<br>December 31, 2019 |  | Per Share<br>Diluted<br>EPS |  | For the<br>Quarter Ended<br>December 31, 2018 |  | Per Share<br>Diluted<br>EPS |  | For the<br>Year Ended<br>December 31, 2019 |  | Per Share<br>Diluted<br>EPS |  |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Net income attributable to Class A Common Stock | $ | 8,115 | $ | 0.05 | $ | 32,921 | $ | 0.21 | $ | 47,433 | $ | 0.28 | | Adjustments for certain items affecting comparability: | | | | | | | | | | | | | | Non-cash deemed dividend | | — | | — | | — | | — | | 2,763 | | 0.02 | | Transaction costs | | — | | — | | 2,241 | | 0.01 | | 438 | | — | | Change in estimated income tax | | — | | — | | (471) | | — | | (92) | | — | | Adjusted earnings | $ | 8,115 | $ | 0.05 | $ | 34,691 | $ | 0.22 | $ | 50,542 | $ | 0.30 |

Magnolia Oil & Gas Corporation

Non-GAAP Financial Measures

Reconciliation of net income to adjusted net income

Our presentation of adjusted net income is a non-GAAP measures because it excludes the effect of certain items included in Net Income and adjusts for income taxes assuming the exchange of all outstanding Magnolia LLC Units and corresponding Class B Common Stock for shares of Class A Common Stock. Management uses adjusted net income to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Company’s on-going business operations. As a performance measure, adjusted net income may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, and capital structure, among other factors. Management believes adjusting these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted net income may not be comparable to similar measures of other companies in our industry.

| \(In thousands\) | For the<br>Quarter Ended<br>December 31, 2019 |  | For the<br>Quarter Ended<br>December 31, 2018 |  | For the<br>Year Ended<br>December 31, 2019 |  |

| --- | --- | --- | --- | --- | --- | --- | | Net income(1) | $ | 13,631 | $ | 57,808 | $ | 85,005 | | Add: transaction costs | | — | | 2,241 | | 438 | | Add: income tax expense | | 2,311 | | 7,918 | | 14,760 | | Adjusted income before taxes | | 15,942 | | 67,967 | | 100,203 | | Less: adjusted income tax expense(2) | | (3,475) | | (12,890) | | (22,116) | | Adjusted net income | $ | 12,467 | $ | 55,077 | $ | 78,087 | | Diluted weighted average shares of Class A Common Stock outstanding during the period | | 171,647 | | 158,998 | | 167,047 | | Weighted average shares of Class B Common Stock outstanding during the period(3) | | 90,942 | | 93,189 | | 91,951 | | Total weighted average shares of Class A and B Common Stock, including dilutive impact of other securities(3) | | 262,589 | | 252,187 | | 258,998 |

(1) Includes net income attributable to noncontrolling interest.

(2) Represents corporate income taxes at an assumed effective tax rate of 22% for the quarter ended December 31, 2019, 19% for the quarter ended December 31, 2018, and 22% for the year ended December 31, 2019, applied to adjusted income before income taxes.

(3) Shares of Class B Common Stock, and corresponding Magnolia LLC Units, are anti-dilutive in the calculation of weighted average number of common shares outstanding.

Magnolia Oil & Gas Corporation

Non-GAAP Financial Measures

Reconciliation of operating margin to adjusted operating margin

Our presentation of adjusted operating margin and total cash operating costs are supplemental non-GAAP financial measures that are used by management. Total cash operating costs exclude stock based compensation expense because it is non-cash in nature. We define adjusted operating margin per boe as total revenues per boe less operating expenses per boe adjusted for certain unusual or non-recurring items per boe that management does not consider to be representative of the Company's on-going business operations. Management believes that total cash operating costs per boe and adjusted operating margin per boe provide relevant and useful information, which is used by our management in assessing the Company’s profitability and comparability of results to our peers.

As a performance measure, total cash operating costs and adjusted operating margin may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, and capital structure, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted operating margin and adjusted operating margin per boe may not be comparable to similar measures of other companies in our industry.

| \(in $/boe\) | For the<br>Quarter Ended<br>December 31, 2019 |  |  | For the<br>Quarter Ended<br>December 31, 2018 |  |  | For the<br>Year Ended<br>December 31, 2019 |  |  |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Revenue | $ | 36.54 | | $ | 44.75 | | $ | 38.38 | | | Direct operating expenses | | | | | | | | | | | Less: Lease operating expenses | | (3.66) | | | (3.46) | | | (3.85) | | | Less: Gathering, transportation and processing | | (1.42) | | | (1.60) | | | (1.43) | | | Less: Taxes other than income | | (2.05) | | | (2.42) | | | (2.20) | | | Less: Exploration expense | | (0.43) | | | (0.12) | | | (0.52) | | | Less: General & administrative expense(1) | | (2.24) | | | (2.93) | | | (2.40) | | | Less: Transaction related expense | | — | | | (0.39) | | | (0.02) | | | Total cash operating costs | | (9.80) | | | (10.92) | | | (10.42) | | | Cash operating margin | $ | 26.74 | | $ | 33.83 | | $ | 27.96 | | | Margin (%) | | 73 | % | | 76 | % | | 73 | % | | Non-cash expenses | | | | | | | | | | | Less: Asset retirement obligations accretion | $ | (0.23) | | $ | (0.22) | | $ | (0.23) | | | Less: Depreciation, depletion, and amortization | | (21.89) | | | (19.65) | | | (21.47) | | | Less: Amortization on intangible assets | | (0.58) | | | (0.64) | | | (0.59) | | | Less: Non-cash stock based compensation | | (0.43) | | | (0.32) | | | (0.45) | | | Total non-cash expenses | | (23.13) | | | (20.83) | | | (22.74) | | | Operating margin | $ | 3.61 | | $ | 13.00 | | $ | 5.22 | | | Margin (%) | | 10 | % | | 29 | % | | 14 | % | | Adjustments | | | | | | | | | | | Add: Transaction related expense | $ | — | | $ | 0.39 | | $ | 0.02 | | | Adjusted operating margin | $ | 3.61 | | $ | 13.39 | | $ | 5.24 | | | Margin (%) | | 10 | % | | 30 | % | | 14 | % |

(1) General & administrative expense excludes non-cash stock based compensation of $2.7 million, $1.9 million, and $11.1 million, or $0.43 per boe, $0.32 per boe, and $0.45 per boe, for the quarter ended December 31, 2019, the quarter ended December 31, 2018, and for the year ended December 31, 2019, respectively.

Magnolia Oil & Gas Corporation

Non-GAAP Financial Measures

Reconciliation of net cash provided by operating activities to cash flows from operations before changes in operating assets and liabilities and free cash flow

Free cash flow and cash flows from operations before changes in operating assets and liabilities are non-GAAP financial measures. Free cash flow is defined as cash flows from operations before changes in operating assets and liabilities less additions to oil and natural gas properties. Management believes free cash flow and cash flows from operations before changes in operating assets and liabilities are useful for investors and widely accepted by those following the oil and gas industry as financial indicators of a company’s ability to generate cash to internally fund drilling and completion activities, fund acquisitions, and service debt. They are also used by research analysts to value and compare oil and gas exploration and production companies and are frequently included in published research when providing investment recommendations. Free cash flow and cash flows from operations before changes in operating assets and liabilities, therefore, are additional measures of liquidity but are not measures of financial performance under GAAP and should not be considered alternatives to cash flows from operating, investing, or financing activities.

| \(In thousands\) | For the<br>Quarter Ended<br>December 31, 2019 |  | For the<br>				<br>Quarter Ended<br>				<br>December 31, 2018 |  | For the<br>Year Ended<br>December 31, 2019 |  |

| --- | --- | --- | --- | --- | --- | --- | | Net cash provided by operating activities | $ | 159,007 | $ | 218,168 | $ | 647,619 | | Add: Changes in operating assets and liabilities | | 3,870 | | (32,081) | | 10,343 | | Cash flows from operations before changes in operating assets and liabilities | | 162,877 | | 186,087 | | 657,962 | | Less: Additions to oil and natural gas properties | | (70,176) | | (107,895) | | (435,035) | | Free cash flow | $ | 92,701 | $ | 78,192 | $ | 222,927 |

Exhibit 99.2

Fourth Quarter 2019<br>Earnings Presentation<br>February 19, 2020<br>Stephen I. Chazen – Chairman, President & CEO<br>Christopher Stavros – Executive Vice President & CFO<br>Brian Corales – Vice President, Investor Relations
Disclaimer<br>2<br>FORWARD LOOKING STATEMENTS<br>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<br>(the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included in this presentation, regarding Magnolia<br>Oil & Gas Corporation’s (“Magnolia,” “we,” “us,” “our” or the “Company”) financial and production guidance, strategy, future operations, financial position, estimated revenues, and losses, projected costs,<br>prospects, plans and objectives of management are forward-looking statements. When used in this presentation, including any oral statements made in connection therewith, the words “could,” “should,”<br>“will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all<br>forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events. Except as otherwise<br>required by applicable law, Magnolia disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after<br>the date of this presentation. Magnolia cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond<br>the control of Magnolia, incident to the development, production, gathering and sale of oil, natural gas and natural gas liquids. These risks include, but are not limited to, commodity price volatility, low prices<br>for oil and/or natural gas, global economic conditions, inflation, increased operating costs, lack of availability of drilling and production equipment, supplies, services and qualified personnel, processing<br>volumes and pipeline throughput, and certificates related to new technologies, geographical concentration of operations, environmental risks, weather risks, security risks, drilling and other operating risks,<br>regulatory changes, the uncertainty inherent in estimating oil and natural gas reserves and in projecting future rates of production, reductions in cash flow, lack of access to capital, Magnolia’s ability to satisfy<br>future cash obligations, restrictions in existing or future debt agreements, the timing of development expenditures, managing growth and integration of acquisitions, failure to realize expected value creation<br>from property acquisitions, and the defects and limited control over non-operated properties. Should one or more of the risks or uncertainties described in this presentation and the oral statements made in<br>connection therewith occur, or should underlying assumptions prove incorrect, actual results and plans could different materially from those expressed in any forward-looking statements. Additional<br>information concerning these and other factors that may impact Magnolia's operations and projections can be found in its filings with the Securities and Exchange Commission (the "SEC"), its Annual Report on<br>Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on February 27, 2019. Magnolia’s SEC filings are available publicly on the SEC’s website at www.sec.gov.<br>NON-GAAP FINANCIAL MEASURES<br>This presentation includes non-GAAP financial measures, including free cash flow, EBITDAX, adjusted EBITDAX, adjusted operating margin, adjusted net income and adjusted earnings. Magnolia believes these<br>metrics are useful because they allow Magnolia to more effectively evaluate its operating performance and compare the results of its operations from period to period and against its peers without regard to<br>financing methods or capital structure. Magnolia does not consider these non-GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with GAAP. The<br>computations of these non-GAAP measures may not be comparable to other similarly titled measures of other companies.<br>Magnolia excludes certain items from net income in arriving at adjusted operating margin, adjusted net income and adjusted earnings because these amounts can vary substantially from company to company<br>within its industry depending upon accounting methods, book values of assets and the method by which the assets were acquired. Adjusted EBITDAX, adjusted operating margin, adjusted net income and<br>adjusted earnings should not be considered as alternatives to, or more meaningful than, net income as determined in accordance with GAAP. Certain items excluded from adjusted EBITDAX, adjusted operating<br>margin, adjusted net income and adjusted earnings are significant components in understanding and assessing a company’s financial performance, and should not be construed as an inference that its results<br>will be unaffected by unusual or non-recurring terms.<br>As performance measures, adjusted operating margin, adjusted EBITDAX and adjusted net income may be useful to investors in facilitating comparisons to others in the Company’s industry because certain<br>items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, and capital structure, among other factors. Management believes<br>excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused<br>by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. As liquidity measures, management believes free cash flow and cash flows from<br>operations before changes in operating assets and liabilities are useful for investors and widely accepted by those following the oil and gas industry as financial indicators of a company’s ability to generate<br>cash to internally fund drilling and completion activities, fund acquisitions, and service debt. Our presentation of free cash flow, adjusted operating margin per boe, adjusted net income, and adjusted EBITDAX<br>may not be comparable to similar measures of other companies in our industry. A free cash flow reconciliation is shown on page 14, an adjusted operating margin per boe reconciliation is shown on page 8 of<br>the presentation, an adjusted EBITDAX reconciliation is shown on page 15 of the presentation, adjusted net Income reconciliation is shown on page 16 and adjusted earnings reconciliation is shown on page 17.<br>INDUSTRY AND MARKET DATA<br>This presentation has been prepared by Magnolia and includes market data and other statistical information from sources believed by Magnolia to be reliable, including independent industry publications,<br>governmental publications or other published independent sources. Some data is also based on the good faith estimates of Magnolia, which are derived from its review of internal sources as well as the<br>independent sources described above. Although Magnolia believes these sources are reliable, it has not independently verified the information and cannot guarantee its accuracy and completeness.
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Magnolia Oil & Gas – 2019 Highlights<br>3<br>• Total D&C capital for 2019 was 60% of our EBITDAX and in line with our business model prioritizing<br>free cash flow generation<br>• Generated $647.6 million net cash flow from operating activities and $223 million of free cash flow<br>during 2019<br>• Exited 2019 with total production growth of 10% compared to prior year levels<br>• Completed $136 million of bolt-on oil and gas property acquisitions, including 5,200 net acres<br>(~30% increase) supplementing our existing core position in the Karnes County area<br>• Repurchased 7 million MGY shares for $79.4 million<br>• Increased our cash position to $183 million from $136 million in the prior year, without incurring<br>additional debt<br>• Completed the exchange of all our outstanding public warrants, which simplified our capital structure<br>• Further de-risked the Giddings Field asset through our appraisal and exploration program, improving<br>our confidence and positioning us to increase activity later this year<br>• Replaced 142% of our production by adding 34.7 MMboe of total proved developed reserves, the vast<br>majority of which were organic
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Magnolia Oil & Gas – Q4 2019 Key Metrics<br>4<br>Net Income, Earnings and EPS (GAAP) (1) Total Production<br>68.3 Mboe/d (52% oil)<br>~10% YOY Growth<br>Adj. Net Income, Adj. EPS and TSO (2)(3)<br>$12.5 Million<br>Adjusted EPS $0.05<br>253.1 Million Shares<br>Adjusted EBITDAX (2)<br>$170.8 Million<br>D&C Capex<br>$72.2 Million<br>(42% of Adjusted EBITDAX)<br>$13.6 Million<br>$8.1 Million<br>$0.05 Per Share<br>CFO and Free Cash Flow (2)<br>$159.0 Million<br>$92.7 Million<br>(1) Earnings is attributed to Class A Common Stock only.<br>(2) Free cash flow, Adjusted EBITDAX, Adjusted net income, Adjusted EPS and are non-GAAP measures. For a reconciliation to the most directly comparable GAAP measure see pages 14,<br>15, 16 and 17.<br>(3) Total shares outstanding as of December 31, 2019.
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Q4 2019 Cash Flow Summary<br>164<br>163<br>4<br>70<br>70<br>183<br>$0<br>$50<br>$100<br>$150<br>$200<br>$250<br>$300<br>$350<br>Cash<br>9/30/19<br>Cash Flow<br>from Operations<br>Changes in<br>Working Capital<br>Common Stock<br>Repurchases<br>D&C and Facilities<br>Capital<br>Cash<br>12/31/19 (1) (2)<br>5<br>($ In Millions)<br>(1) Cash flow from operations before changes in working capital.<br>(2) Comprised of $69 million Class B Common Stock repurchases outside of share repurchase program and approximately $0.6 million of Class A Common Stock<br>repurchases as part of the share repurchase program.
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155.8 171.3<br>91.8 85.8<br>7.3 9.2<br>(7.0)<br>247.6 257.1<br>0.0<br>50.0<br>100.0<br>150.0<br>200.0<br>250.0<br>300.0<br>Beginning Share Count Acquisitions Warrant Conversion Shares Repurchased 12/31/2019 Share Count<br>Class A Shares Class B Shares<br>(1) (1)<br>(2)<br>Total Share Count Since Inception (MM Shares)<br>• A summary of Magnolia’s overall share count is shown in the graph below:<br>‒ Since the company’s inception, we have repurchased 7 million shares,<br>including 6 million Class B and 1 million Class A shares<br>‒ Shares repurchased to date have roughly offset the shares issued for<br>acquisitions<br>• The Class A Share breakdown is shown in the pie chart to the right:<br>‒ 71% of the Class A shares are in the public float (~123 million shares) (1)<br>• The Class B shares (which are not publicly traded) are essentially the same to<br>Class A shares in terms of voting rights and economic value<br>Magnolia Oil & Gas Share Count Summary<br>Class A Share Breakdown (171.3 MM Shares) (1)<br>6<br>(1) Included in the Class A share count are 4 million contingent shares which are expected to be issued to EnerVest (2 million shares in 2021 and 2 million shares in 2022).<br>(2) Share count after close and final settlement of EnerVest Business Combination and issuance of earnout shares.
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Magnolia Oil & Gas – Summary Balance Sheet<br>7<br>(in thousands)<br>December 31, 2019 December 31, 2018<br>Cash $182,633 $135,758<br>Current assets 110,585 156,601<br>Property, plant and equipment, net 3,116,757 3,073,204<br>Other assets 56,431 67,960<br>Total assets $3,466,406 $3,433,523<br>Current liabilities $175,208 $197,361<br>Long-term debt, net 389,835 388,635<br>Other long-term liabilities 172,834 139,572<br>Total stockholders' equity 2,728,529 2,707,955<br>Total liabilities and equity $3,466,406 $3,433,523
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Magnolia Oil & Gas – Margins<br>8<br>(1) General & administrative expense excludes non-cash stock based compensation of $2.7 million, $1.9 million, and $11.1 million, or $0.43 per Boe, $0.32 per Boe, and<br>$0.45 per Boe, for the quarter ended December 31, 2019, the quarter ended December 31, 2018, and the year ended December 31, 2019, respectively.<br>(2) Adjusted Operating Margin and Total Cash Operating Costs are non-GAAP measures. For reasons management believes this is useful to investors, refer to slide 2<br>“Non-GAAP Financial Measures.”<br>$ / Boe, unless otherwise noted For the Quarter Ended<br>December 31, 2019<br>For the Quarter Ended<br>December 31, 2018<br>For the Year Ended<br>December 31, 2019<br>Revenue $36.54 $44.75 $38.38<br>Less: Lease Operating Expenses (3.66) (3.46) (3.85)<br>Less: Gathering, Transportation & Processing (1.42) (1.60) (1.43)<br>Less: Taxes Other Than Income (2.05) (2.42) (2.20)<br>Less: Exploration Expense (0.43) (0.12) (0.52)<br>Less: General & Administrative Expense (1) (2.24) (2.93) (2.40)<br>Less: Transaction Related Expense -(0.39) (0.02)<br>Total Cash Operating Costs (2) (9.80) (10.92) (10.42)<br>Cash Operating Margin $26.74 $33.83 $27.96<br>Margin % 73% 76% 73%<br>Less: Asset Retirement Obligations Accretion (0.23) (0.22) (0.23)<br>Less: Depreciation, Depletion, and Amortization (21.89) (19.65) (21.47)<br>Less: Amortization on Intangible Assets (0.58) (0.64) (0.59)<br>Less: Non-cash stock based compensation (0.43) (0.32) (0.45)<br>Total non-cash expenses (23.13) (20.83) (22.74)<br>Operating Margin $3.61 $13.00 $5.22<br>Margin % 10% 29% 14%<br>Add: Transaction Related Expense - 0.39 0.02<br>Adjusted Operating Margin (2) $3.61 $13.39 $5.24<br>Margin % 10% 30% 14%
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2019 Proved Reserves & Costs Incurred<br>9<br>($ in thousands) For the Year Ended<br>December 31, 2019<br>Costs incurred:<br>Proved property acquisition costs $106,489<br>Unproved properties acquistions costs 29,208<br>Total acquisition costs $135,697<br>Exploration and development costs 441,482<br>Total costs incurred $577,179<br>Capital expenditures:<br>Drilling and completion costs $416,353<br>Leasehold acquisition costs 10,003<br>Total capital spending (accrual basis) $426,356<br>Proved property acquisition costs and D&C capital $522,842<br>Proved developed reserves: (MMboe)<br>December 31, 2018 76.5<br>December 31, 2019 86.8<br>Increase in proved developed reserves 10.3<br>Production 24.4<br>Increase in proved developed reserves plus production 34.7
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2019 Cash Flow Summary<br>136<br>658<br>11<br>79<br>86<br>435<br>183<br>$0<br>$100<br>$200<br>$300<br>$400<br>$500<br>$600<br>$700<br>$800<br>$900<br>Cash<br>1/1/2019<br>Cash Flow<br>From Operations<br>Changes in<br>Working Capital<br>Common Stock<br>Repurchases<br>Acquisitions D&C and<br>Facilities<br>Capital<br>Cash<br>12/31/19<br>10<br>(1) (2)<br>(3)<br>(1) Cash flow from operations before changes in working capital.<br>(2) Comprised of $69 million Class B Common Stock repurchases outside of share repurchase program and $10.3 million of Class A Common Stock repurchases as part of the<br>share repurchase program.<br>(3) Acquisitions include leasehold acquisitions and are net of partner contributions<br>($ In Millions)
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11<br>Karnes Net Acreage Additions Since Inception<br>Magnolia has added ~7,600 net<br>acres to its Karnes position since<br>inception and 5,200 net acres<br>during 2019.<br>Achieving Key Objectives Through Steady Growth<br>Production Growth<br>(1) Inception production is based on Q3 2018 Successor Period which is July 31, 2018 through September 30, 2018.<br>(1)
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Appendix
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Magnolia Oil & Gas – Overview<br>• High-quality, low-risk pure-play South Texas operator with a core<br>Eagle Ford and Austin Chalk position acquired at an attractive entry<br>multiple<br>• Significant scale and PDP base generates material free cash flow,<br>reduces development risk and increases optionality<br>• Asset Overview:<br>– ~22,100 net acres in a well-delineated, low-risk position in the<br>core of Karnes County, representing some of the most prolific<br>acreage in the United States with industry leading breakevens<br>– ~430,000 net acres in the Giddings Field, a re-emerging oil play<br>with significant upside and what we believe to be substantial<br>inventory<br>– Both assets expected to remain self funding and within cash flow<br>13<br>Karnes County<br>Giddings Field<br>~450,000 Net Acre Position Targeting Two of the Top<br>Oil Plays in the U.S.<br>Market Statistics<br>Trading Symbol (NYSE) MGY<br>Share Price as of 2/18/2019 $9.18<br>Common Shares Outstanding (1) 253.1 million<br>Market Capitalization $2.3 billion<br>Long-term Debt - Principal $400 million<br>Total Enterprise Value $2.5 billion<br>Operating Statistics Karnes Giddings Total<br>Net Acreage 22,088 428,766 450,854<br>2019 Net Production (Mboe/d) 44.6 22.2 66.8<br>Industry Leading Breakevens ($/Bbl WTI)<br>Source: IHS Performance Evaluator.<br>$28 $32 $34 $35 $38 $39 $39<br>$45<br>Karnes Austin<br>Chalk<br>Karnes Lower<br>Eagle Ford<br>Midland Delaware DJ Basin Eagle Ford STACK Bakken<br>Source: RSEG.<br>Wilson<br>Dewitt<br>Gonzales<br>(1) Common Stock outstanding includes Class A and Class B Stock.<br>(2) Giddings Includes “other” production not located in the Giddings Field.<br>(2)
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Reconciliation of Free Cash Flow<br>14<br>(1) Free cash flow is a non-GAAP measure. For reasons management believes these are useful to Investors, refer to slide 2 “Non-GAAP Financial Measures.”<br>(in thousands)<br>Free Cash Flow Reconciliation For the Quarter Ended<br>December 31, 2019<br>For the Quarter Ended<br>December 31, 2018<br>For the Year Ended<br>December 31, 2019<br>Net Cash provided by operating activities $159,007 $218,168 $647,619<br>Changes in operating assets and liabilities 3,870 (32,081) 10,343<br>Cash flows from operations before changes in<br>operatings assets and liabilities $162,877 $186,087 $657,962<br>Additions to oil and natural gas properties (70,176) (107,895) (435,035)<br>Free Cash Flow (1) $92,701 $78,192 $222,927
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Reconciliation of Net Income to Adjusted EBITDAX<br>15<br>(1) Includes net income attributable to noncontrolling interest.<br>(2) Transaction costs incurred related to the execution of our business combination with EnerVest, Ltd. and its affiliates and the Harvest acquisition, including legal fees,<br>advisory fees, consulting fees, accounting fees, employee placement fees, and other transaction and facilitation costs.<br>(3) EBITDAX and Adjusted EBITDAX are non-GAAP measures. For reasons management believes these are useful to Investors, refer to slide 2 “Non-GAAP Financial Measures.”<br>(in thousands)<br>Adjusted EBITDAX reconciliation to net income: For the Quarter Ended<br>December 31, 2019<br>For the Quarter Ended<br>December 31, 2018<br>For the Year Ended<br>December 31, 2019<br>Net income (1) $13,631 $57,808 $85,005<br>Exploration expense 2,724 661 12,741<br>Asset retirement obligation accretion 1,416 1,276 5,512<br>Depreciation, depletion and amortization 137,629 111,989 523,572<br>Amortization of intangible assets 3,626 3,626 14,505<br>Interest expense 6,745 7,494 28,356<br>Income tax expense 2,311 7,918 14,760<br>EBITDAX (3) $168,082 $190,772 $684,451<br>Non-cash stock based compensation expense $2,713 $1,851 $11,089<br>Transaction related costs (2) - 2,241 438<br>Adjusted EBITDAX (3) $170,795 $194,864 $695,978
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Adjusted Net Income Reconciliation<br>16<br>(1) Includes net income attributable to noncontrolling interest.<br>(2) Represents corporate income taxes at an assumed effective tax rate of 22% for the quarter ended December 31, 2019, 19% for the quarter ended for the quarter ended December<br>31, 2018, and 22% for the year ended December 31, 2019, applied to adjusted income before income taxes.<br>(3) Adjusted Net Income is a non-GAAP measure. For reasons management believes this is useful to investors, refer to slide 2 “Non-GAAP Financial Measure.”<br>(4) Shares of Class B Common Stock, and corresponding Magnolia LLC Units, are anti-dilutive in the calculation of weighted average number of common shares outstanding.<br>(in thousands)<br>Adjusted Net Income For the Quarter Ended<br>December 31, 2019<br>For the Quarter Ended<br>December 31, 2018<br>For the Year Ended<br>December 31, 2019<br>Net income(1) $13,631 $57,808 $85,005<br>Transaction costs - $2,241 $438<br>Income tax expense $2,311 $7,918 $14,760<br>Adjusted income before taxes 15,942 67,967 100,203<br>Adjusted income tax expense (2) (3,475) (12,890) (22,116)<br>Adjusted net income (3) $12,467 $55,077 $78,087<br>(in thousands)<br>Total Share Count For the Quarter Ended<br>December 31, 2019<br>For the Quarter Ended<br>December 31, 2018<br>For the Year Ended<br>December 31, 2019<br>Diluted weighted average of Class A Common Stock outstanding during<br>the period 171,647 158,998 167,047<br>Weighted average shares of Class B Common Stock outstanding during<br>the period (4) 90,942 93,189 91,951<br>Total weighted average shares of Class A and B Common Stock,<br>including dilutive impact of other securities (4) 262,589 252,187 258,998
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Adjusted Earnings Reconciliation<br>17<br>(1) Adjusted earnings is a non-GAAP measure. For reasons management believes this is useful to investors, refer to slide 2 “Non-GAAP Financial Measures.”<br>(in thousands)<br>For the Quarter Ended<br>December 31, 2019<br>Per Share<br>Diluted EPS<br>For the Quarter Ended<br>December 31, 2018<br>Per Share<br>Diluted EPS<br>For the Year Ended<br>December 31, 2019<br>Per Share<br>Diluted EPS<br>Net income attributable to Class A Common Stock $8,115 $0.05 $32,921 $0.21 $47,433 $0.28<br>Adjustments for certain items affecting comparability (1)<br>Non-cash deemed dividend ---- 2,763 0.02<br>Transaction costs -- 2,241 0.01 438 -<br>Change in estimated income tax --(471) -(92) -<br>Adjusted earnings $8,115 $0.05 $34,691 $0.22 $50,542 $0.30
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Magnolia Oil & Gas – Operating Highlights<br>18<br>(1) Benchmarks are the NYMEX WTI and NYMEX HH average prices for oil and natural gas, respectively.<br>For the Quarter Ended<br>December 31, 2019<br>For the Quarter Ended<br>December 31, 2018<br>For the Year Ended<br>December 31, 2019<br>Production:<br>Oil (MBbls) 3,251 3,054 12,867<br>Natural Gas (MMcf) 10,689 8,795 41,272<br>NGLs (MBbls) 1,254 1,179 4,643<br>Total (Mboe) 6,287 5,699 24,389<br>Average Daily Production:<br>Oil (Bbls/d) 35,337 33,196 35,252<br>Natural Gas (Mcf/d) 116,185 95,598 113,074<br>NGLs (Bbls/d) 13,630 12,815 12,721<br>Total (Mboe) 68,331 61,944 66,819<br>Revenues (in thousands):<br>Oil Sales $187,972 $198,891 $771,981<br>Natural Gas Sales 22,537 29,565 93,745<br>NGL Sales 19,200 26,599 70,416<br>Total Revenues $229,709 $255,055 $936,142<br>Average Sales Price:<br>Oil (per Bbl) $57.82 $65.12 $60.00<br>Natural Gas (per Mcf) 2.11 3.36 2.27<br>NGL (per Bbl) 15.31 22.56 15.17<br>Total (per Boe) $36.54 $44.75 $38.38<br>NYMEX WTI ($/Bbl) $56.96 $59.08 $57.04<br>NYMEX Henry Hub($/Mcf) 2.50 3.64 2.63<br>Realization to benchmark (1):<br>Oil (per Bbl) 102% 110% 105%<br>Natural Gas (per Mcf) 84% 92% 86%
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Magnolia Oil & Gas – Production Results<br>19<br>Combined Karnes Giddings & Other Combined Karnes Giddings & Other<br>Three Months Ended December 31, 2019 Three Months Ended December 31, 2018<br>Production:<br>Oil (MBbls) 3,251 2,740 511 3,054 2,564 490<br>Natural Gas (MMcf) 10,690 4,207 6,483 8,795 3,788 5,007<br>NGLs (MBbls) 1,254 692 562 1,179 606 573<br>Total (Mboe) 6,287 4,133 2,154 5,699 3,801 1,898<br>Average Daily Production Volume:<br>Oil (MBbls/d) 35.3 29.8 5.5 33.2 27.9 5.3<br>Natural Gas (MMcf/d) 116.2 45.7 70.5 95.6 41.2 54.4<br>NGLs (MBbls/d) 13.6 7.5 6.1 12.8 6.6 6.2<br>Total (MBoe/d) 68.3 44.9 23.4 61.9 41.3 20.6
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Cash Flow Summary from Inception<br>116<br>979<br>5 28<br>79<br>233<br>577<br>183<br>$0<br>$200<br>$400<br>$600<br>$800<br>$1,000<br>$1,200<br>Opening cash<br>after<br>transaction<br>Cash flow from<br>operations after<br>transaction costs<br>incurred during<br>close<br>Changes in<br>Working Capital<br>Other Common Stock<br>Repurchases<br>Acquisitions D&C and Facilities<br>Capital<br>Cash<br>12/31/19<br>(1)<br>(2) (3) (4)<br>59% of<br>OCF<br>58%<br>Increase<br>20<br>(1) Represents cash remaining after cash held in Trust ($656 MM) and proceeds from debt ($400 MM) and equity ($355 MM) issuances were used to pay for the EnerVest acquisition ($1.2 Bn),<br>deferred underwriting comp ($23 MM), debt issuance costs ($23 MM), repayment of the Sponsor Loan ($1 MM), and transaction costs ($31 MM) on 7/31.<br>(2) Includes payment to settle Giddings earnout ($26MM) and other financing activities, offset by cash received in final settlement of EnerVest Acquisition.<br>(3) Comprised of $69 million Class B Common Stock repurchases outside of the share repurchase program and ~$0.6 million of Class A Common Stock repurchases as part of the repurchase program.<br>(4) Acquisitions include leasehold acquisitions and are net of partner contributions.<br>($ In Millions)
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