Magnolia Oil & Gas Corporation (“Magnolia,” “we,” “our,” or
the “Company”) (NYSE: MGY) today announced its financial and
operational results for the second quarter of 2020.
Second Quarter 2020 Highlights:
- Magnolia reported a second quarter 2020 net loss of $29.4
million and net loss attributable to Class A Common Stock of $18.3
million, or $0.11 per share. Second quarter 2020 total adjusted
loss was $14.0 million, or $0.08 per share.
- Second quarter 2020 production averaged 64.1 thousand barrels
of oil equivalent per day ("Mboe/d") and toward the higher end of
our guidance range. Oil production averaged 33.9 thousand barrels
per day ("Mbbl/d") or 53 percent of total volumes. Magnolia did not
complete any operated wells during the second quarter and
production shut-ins were in line with earlier guidance of less than
5 percent of our May 2020 operated volumes.
- Production from Giddings(1) averaged 23.3 Mboe/d in the second
quarter 2020, with oil production representing 6.4 Mbbl/d. Oil
production at Giddings during the quarter was flat compared to
first quarter levels despite having not brought any new wells on
line since February, demonstrating the lower production decline
rate from this asset.
- Magnolia currently has 14 wells producing in our initial core
development area. The 30, 90, and 180-day production rates have
averaged 1,534, 1,557, and 1,374 barrels of oil equivalent per day
("boe/d"), respectively (~50% oil on a two-stream basis).
- Adjusted EBITDAX during the second quarter of 2020 was $40.2
million. Drilling and Completion costs ("D&C") for the quarter
were $27.3 million. Magnolia continues to target D&C spending
during 2020 of approximately 60 percent of adjusted EBITDAX.
- Total adjusted cash costs(2) declined 18 percent sequentially
to $8.50 per boe in the second quarter 2020 compared to $10.37 per
boe in the first quarter 2020. We remain on track to achieve
approximately $55 million of savings in our 2020 total cash costs
as guided earlier this year.
- Magnolia ended the quarter with approximately $116.9 million of
cash on its balance sheet and remains undrawn on its $450 million
revolving credit facility. The Company has no debt maturities until
2026 and has no plans to increase its debt levels.
“Despite one of the most challenging macro environments ever
experienced by the industry, Magnolia successfully managed through
the recent period of severe weakness in product prices,” said
Magnolia Chairman, President, and CEO, Steve Chazen. “This was due
to our low levels of debt and our high quality, capital efficient
assets. Our business model continues to prioritize low financial
leverage and disciplined capital spending, providing consistent
free cash flow generation. Our focused business has allowed us to
reduce our overhead and operating expenses to the current
environment and we expect to make further progress.
“All of our assets have outperformed our expectations. We
continue to advance our understanding and operating capabilities at
Giddings, as evidenced by the per well 6-month production results
averaging approximately 120,000 barrels of oil and 750,000 Mcf of
natural gas. Positive drilling results at Giddings combined with
the recent improvement and stability in product prices, should
allow for further drilling in our core area. We plan to begin
completing the Giddings DUCs in the latter part of the third
quarter. Our pace of activity continues to be guided by commodity
prices and free cash flow generation.
“Our objectives remain the same, with the level of spending for
the year to be around 60 percent of our adjusted EBITDAX. At
current product prices, we would expect to return to profitability
and our cash levels to build through the remainder of the
year.”
(1)
Giddings includes other production not
located in the Giddings Field.
(2)
Total adjusted cash costs include lease
operating expense, gathering transportation and processing, taxes
other than income, exploration expense, excluding non-cash
impairments, general and administrative expenses, excluding
non-cash stock based compensation, and interest expense, excluding
amortization of deferred financing costs.
Operational Update
Second quarter total company production averaged 64.1 Mboe/d,
with oil production representing 53 percent of our volumes.
Production from the Karnes area and from Giddings and Other
averaged 40.8 Mboe/d and 23.3 Mboe/d, respectively, during the
second quarter 2020. Despite not bringing any new wells on line
during the second quarter, Giddings and Other production volumes
were approximately flat with the 23.9 Mboe/d produced in the first
quarter of 2020. Giddings oil production was 6.4 Mbbl/d and similar
with first quarter levels of 6.5 Mbbl/d.
Magnolia did not bring any operated wells on line throughout our
assets during the second quarter. We are currently operating one
rig at Giddings which is drilling a three-well pad. Once drilling
on this pad is finished, we will have 8 uncompleted wells from 3
pads at Giddings and a total of 10 uncompleted wells in the Karnes
area. We expect to begin completing the drilled but uncompleted
wells ("DUCs") at Giddings before the end of this quarter. The
drilling of additional wells in Giddings is dependent on product
prices. Magnolia does not currently plan to complete any operated
wells in the Karnes area during the remainder of 2020.
Magnolia has brought on line a total of 28 horizontal wells in
Giddings over the last three years. Until this year, we focused on
evaluating and appraising a sizable portion of approximately
630,000 gross acres in the Giddings Field. Beginning with this
year, we applied some of our learnings and shifted some of our
appraisal activity to an early stage development program
concentrated on an area encompassing approximately 70,000 acres. In
this early stage development area, Magnolia currently has 14
producing wells with at least 180 days of production history. These
wells have average 30, 90, and 180-day production rates of 1,534,
1,557, and 1,374 boe/d, respectively, with oil consisting of
approximately half of the total production.
30-Day
90-Day
180-Day
Well Count
14
14
14
Oil Bbls/d
781
783
677
boe/d (two-stream)
1,534
1,557
1,374
The production results demonstrate the shallower production
declines from the Giddings wells. The shift from appraisal to
development activity has also helped to drive down our overall well
costs. Despite the average lateral length increasing from 5,000
feet to between 6,000 to 7,000 feet, recent development well costs
have fallen to less than $7 million. We believe we can drive
overall well costs toward $6 million per well through additional
experience and efficiencies. The shallower decline rates and lower
well costs speaks to the improved capital efficiency we are seeing
from our early stage development at Giddings.
Guidance
Magnolia continues to target capital spending of within
approximately 60 percent of adjusted 2020 EBITDAX. We expect our
third quarter production to average between 55-58 Mboe/d with oil
expected to be 50-52 percent of the total volumes. These estimates
assume no new operated wells come on line during the quarter. As we
bring wells on line in Giddings later this year, we expect our
production levels for both the fourth quarter and the 2020 exit
rate to exceed our production in the third quarter. Oil
differentials are expected to be at an approximately $3 per barrel
discount to MEH, which is similar to our historical levels.
Quarterly Report on Form 10-Q
Magnolia's financial statements and related footnotes will be
available in its Quarterly Report on Form 10-Q for the three and
six months ended June 30, 2020, which is expected to be filed with
the U.S. Securities and Exchange Commission ("SEC") on August 6,
2020.
Conference Call and Webcast
Magnolia will host an investor conference call on Thursday,
August 6, 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 length, scope and
severity of the recent coronavirus disease 2019 (“COVID-19”)
pandemic, including the effects of related public health concerns
and the impact of actions taken by governmental authorities and
other third parties in response to the pandemic and its impact on
commodity prices, supply and demand considerations, and storage
capacity; (ii) the outcome of any legal proceedings that may be
instituted against Magnolia; (iii) 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; (iv) changes in
applicable laws or regulations; and (v) 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.
Magnolia Oil & Gas
Corporation
Operating Highlights
For the Three Months
Ended
For the Six Months
Ended
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Production:
Oil (MBbls)
3,089
3,189
6,479
6,095
Natural gas (MMcf)
9,763
10,057
19,817
19,820
NGLs (MBbls)
1,122
1,060
2,276
2,144
Total (Mboe)
5,838
5,925
12,058
11,542
Average daily production:
Oil (Bbls/d)
33,940
35,044
35,600
33,674
Natural gas (Mcf/d)
107,289
110,516
108,882
109,503
NGLs (Bbls/d)
12,324
11,648
12,506
11,845
Total (boe/d)
64,146
65,111
66,253
63,770
Revenues (in thousands):
Oil sales
$
60,790
$
204,513
$
215,476
$
376,167
Natural gas sales
13,168
22,590
29,343
49,965
NGL sales
8,881
15,855
19,385
35,499
Total Revenues
$
82,839
$
242,958
$
264,204
$
461,631
Average sales price:
Oil (per Bbl)
$
19.68
$
64.13
$
33.26
$
61.72
Natural gas (per Mcf)
1.35
2.25
1.48
2.52
NGL (per Bbl)
7.92
14.96
8.52
16.56
Total (per boe)
$
14.19
$
41.01
$
21.91
$
40.00
NYMEX WTI ($/Bbl)
$
27.85
$
59.83
$
36.97
$
57.38
NYMEX Henry Hub ($/Mcf)
$
1.71
$
2.64
$
1.83
$
2.89
Realization to benchmark:
Oil (per Bbl)
71
%
107
%
90
%
108
%
Natural Gas (per Mcf)
79
%
85
%
81
%
87
%
Operating Expenses (in
thousands):
Lease operating expenses
$
18,310
$
24,895
$
42,473
$
46,413
Gathering, transportation and
processing
6,788
7,431
14,807
16,746
Taxes other than income
5,525
13,091
15,543
27,492
Depreciation, depletion and
amortization
50,870
126,102
193,542
242,048
Operating costs per boe:
Lease operating expenses
$
3.14
$
4.20
$
3.52
$
4.02
Gathering, transportation and
processing
1.16
1.25
1.23
1.45
Taxes other than income
0.95
2.21
1.29
2.38
Depreciation, depletion and
amortization
8.71
21.28
16.05
20.97
Magnolia Oil & Gas
Corporation
Consolidated Statements of
Operations
(In thousands, except per
share data)
For the Three Months
Ended
For the Six Months
Ended
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
REVENUES
Oil revenues
$
60,790
$
204,513
$
215,476
$
376,167
Natural gas revenues
13,168
22,590
29,343
49,965
Natural gas liquids revenues
8,881
15,855
19,385
35,499
Total revenues
82,839
242,958
264,204
461,631
OPERATING EXPENSES
Lease operating expenses
18,310
24,895
42,473
46,413
Gathering, transportation and
processing
6,788
7,431
14,807
16,746
Taxes other than income
5,525
13,091
15,543
27,492
Exploration expense
6,462
3,617
562,888
6,093
Impairment of oil and natural gas
properties
—
—
1,381,258
—
Asset retirement obligation accretion
1,464
1,373
2,902
2,701
Depreciation, depletion and
amortization
50,870
126,102
193,542
242,048
Amortization of intangible assets
3,626
3,626
7,253
7,253
General & administrative expenses
15,729
19,106
33,809
35,302
Transaction related costs
—
85
—
438
Total operating costs and expenses
108,774
199,326
2,254,475
384,486
OPERATING INCOME (LOSS)
(25,935
)
43,632
(1,990,271
)
77,145
OTHER INCOME (EXPENSE)
Income from equity method investee
611
128
1,052
516
Interest expense, net
(7,256
)
(7,299
)
(14,012
)
(14,715
)
Other expense, net
13
(13
)
(460
)
(11
)
Total other income (expense)
(6,632
)
(7,184
)
(13,420
)
(14,210
)
INCOME (LOSS) BEFORE INCOME TAXES
(32,567
)
36,448
(2,003,691
)
62,935
Income tax expense (benefit)
(3,176
)
5,145
(79,001
)
8,920
NET INCOME (LOSS)
(29,391
)
31,303
(1,924,690
)
54,015
LESS: Net income (loss) attributable to
noncontrolling interest
(11,119
)
12,797
(679,408
)
22,484
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A
COMMON STOCK
$
(18,272
)
$
18,506
$
(1,245,282
)
$
31,531
NET INCOME (LOSS) PER COMMON SHARE
Basic
$
(0.11
)
$
0.12
$
(7.46
)
$
0.20
Diluted
$
(0.11
)
$
0.12
$
(7.46
)
$
0.20
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic
166,572
156,844
166,860
156,584
Diluted
166,572
159,057
166,860
158,587
WEIGHTED AVERAGE NUMBER OF CLASS B SHARES
OUTSTANDING(1)
85,790
91,790
85,790
92,547
(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 Three Months
Ended
For the Six Months
Ended
June 30, 2020
June 30, 2019
June 30, 2020
June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS)
$
(29,391)
$
31,303
$
(1,924,690)
$
54,015
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, depletion and
amortization
50,870
126,102
193,542
242,048
Amortization of intangible assets
3,626
3,626
7,253
7,253
Exploration expense, non-cash
6,440
—
561,629
483
Impairment of oil and natural gas
properties
—
—
1,381,258
—
Asset retirement obligations accretion
expense
1,464
1,373
2,902
2,701
Amortization of deferred financing
costs
901
881
1,797
1,752
Deferred tax expense (benefit)
(3,181)
4,935
(77,834)
8,351
Stock based compensation
3,065
3,115
5,944
5,547
Other
(611)
(35)
(1,052)
(424)
Net change in operating assets and
liabilities
(2,219)
21,529
15,093
(12,335)
Net cash provided by operating
activities
30,964
192,829
165,842
309,391
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of EnerVest properties, final
settlement
—
—
—
4,250
Acquisitions, other
(392)
(38,577)
(69,782)
(91,903)
Additions to oil and natural gas
properties
(28,260)
(117,372)
(129,651)
(263,064)
Changes in working capital associated with
additions to oil and natural gas properties
(31,562)
(15,502)
(24,381)
(4,245)
Other investing
(145)
(445)
(345)
(248)
Net cash used in investing activities
(60,359)
(171,896)
(224,159)
(355,210)
CASH FLOW FROM FINANCING ACTIVITIES
Contributions from noncontrolling interest
owners
—
—
—
7,301
Distributions to noncontrolling interest
owners
(206)
(226)
(490)
(226)
Repurchase of common stock
—
—
(6,483)
—
Other financing activities
(41)
(305)
(493)
(305)
Net cash used in financing activities
(247)
(531)
(7,466)
6,770
NET CHANGE IN CASH AND CASH
EQUIVALENTS
(29,642)
20,402
(65,783)
(39,049)
Cash and cash equivalents – Beginning of
period
146,492
76,307
182,633
135,758
Cash and cash equivalents – End of
period
$
116,850
$
96,709
$
116,850
$
96,709
Magnolia Oil & Gas
Corporation
Summary Balance Sheet
Data
(In thousands)
June 30, 2020
December 31, 2019
Cash and cash equivalents
$
116,850
$
182,633
Other current assets
65,654
110,585
Property, plant and equipment, net
1,181,420
3,116,757
Other assets
49,155
56,431
Total assets
$
1,413,079
$
3,466,406
Current liabilities
$
120,313
$
175,208
Long-term debt, net
390,464
389,835
Other long-term liabilities
99,978
172,834
Common stock
26
26
Additional paid in capital
1,706,121
1,703,362
Treasury stock
(16,760)
(10,277)
Retained earnings (accumulated
deficit)
(1,162,342)
82,940
Noncontrolling interests
275,279
952,478
Total liabilities and equity
$
1,413,079
$
3,466,406
Magnolia Oil & Gas Corporation
Non-GAAP Financial Measures
Reconciliation of net income (loss) 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 (loss) 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 (loss) 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 (loss) 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 (loss) 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
(loss) to adjusted EBITDAX, our most directly comparable financial
measure calculated and presented in accordance with GAAP:
For the Three Months
Ended
(In thousands)
June 30, 2020
June 30, 2019
NET INCOME (LOSS)
$
(29,391)
$
31,303
Exploration expense
6,462
3,617
Asset retirement obligations accretion
1,464
1,373
Depreciation, depletion and
amortization
50,870
126,102
Amortization of intangible assets
3,626
3,626
Interest expense, net
7,256
7,299
Income tax expense (benefit)
(3,176)
5,145
EBITDAX
37,111
178,465
Non-cash stock based compensation
expense
3,065
3,115
Transaction related costs(1)
—
85
Adjusted EBITDAX
$
40,176
$
181,665
(1)
Transaction costs incurred related to the
execution of our business combination with EnerVest, Ltd. and its
affiliates, 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 (loss) attributable to Class A
Common Stock to adjusted earnings (loss)
Our presentation of adjusted earnings (loss) and adjusted
earnings (loss) 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 (loss)
and adjusted earnings (loss) 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 (loss) 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 (loss) and adjusted earnings (loss) per share may not be
comparable to similar measures of other companies in our
industry.
For the Three Months Ended
June 30, 2020
Per Share Diluted EPS
For the Three Months Ended
June 30, 2019
Per Share Diluted EPS
(In thousands, except per share
data)
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A
COMMON STOCK
$
(18,272
)
$
(0.11
)
$
18,506
$
0.12
Adjustments:
Impairment of unproved properties(1)
6,440
0.04
—
—
Transaction related costs
—
—
85
—
Noncontrolling interest impact of
adjustments
(2,183
)
(0.01
)
—
—
Tax adjustments
—
—
(18
)
—
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO
CLASS A COMMON STOCK
$
(14,015
)
$
(0.08
)
$
18,573
$
0.12
(1)
Impairment of unproved properties is
included within Exploration expense on the Consolidated Statement
of Operations.
Magnolia Oil & Gas Corporation
Non-GAAP Financial Measures
Reconciliation of net income (loss) to adjusted net income
(loss)
Our presentation of adjusted net income (loss) is a non-GAAP
measures because it excludes the effect of certain items included
in Net income (loss) 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 (loss) 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 (loss) 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 (loss) may not be comparable to similar measures of other
companies in our industry.
For the Three Months
Ended
(In thousands)
June 30, 2020
June 30, 2019
NET INCOME (LOSS)
$
(29,391)
$
31,303
Income tax expense (benefit)
(3,176)
5,145
INCOME (LOSS) BEFORE INCOME TAXES
(32,567)
36,448
Adjustments:
Impairment of unproved properties(1)
6,440
—
Transaction costs
—
85
ADJUSTED INCOME (LOSS) BEFORE INCOME
TAXES
(26,127)
36,533
Adjusted income tax expense
(benefit)(2)
(5,629)
7,672
ADJUSTED NET INCOME (LOSS)
$
(20,498)
$
28,861
Diluted weighted average shares of Class A
Common Stock outstanding during the period
166,572
159,057
Weighted average shares of Class B Common
Stock outstanding during the period(3)
85,790
91,790
Total weighted average shares of Class A
and B Common Stock, including dilutive impact of other
securities(3)
252,362
250,847
(1)
Impairment of unproved properties is
included within Exploration expense on the Consolidated Statement
of Operations.
(2)
Represents corporate income taxes at an
assumed effective tax rate of 21.5% and 21.0% for the three months
ended June 30, 2020 and 2019, respectively.
(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 cash costs to adjusted cash costs
Our presentation of adjusted cash costs is a supplemental
non-GAAP financial measure that is used by management. Adjusted
cash costs exclude stock based compensation expense and unproved
property impairment because they are non-cash in nature. We define
adjusted cash costs as lease operating expenses, gathering,
transportation and processing, taxes other than income, exploration
expense, general & administrative expense, and interest
expense, adjusted for certain non-cash components of exploration
expense and general & administrative expense. Management
believes that adjusted cash costs provides 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, adjusted cash costs 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
cash costs may not be comparable to similar measures of other
companies in our industry.
For the Three Months
Ended
(In $/boe)
June 30, 2020
March 31, 2020
June 30, 2019
Lease operating expenses
$
3.14
$
3.88
$
4.20
Gathering, transportation and
processing
1.16
1.29
1.25
Taxes other than income
0.95
1.61
2.21
Exploration expense
1.11
89.43
0.61
General & administrative expenses
2.69
2.91
3.22
Interest expense, net
1.24
1.09
1.23
Total cash costs
10.29
100.21
12.72
Less: Exploration expense, non-cash(1)
(1.11)
(89.23)
—
Less: General & administrative
expenses, non-cash(2)
(0.53)
(0.47)
(0.53)
Less: Amortization of deferred financing
costs(3)
(0.15)
(0.14)
(0.15)
Total adjusted cash costs
$
8.50
$
10.37
$
12.04
(1)
Exploration expense, non-cash includes
unproved property impairment of $6.4 million and $555.2 million for
the three months ended June 30, 2020 and March 31, 2020,
respectively.
(2)
General & administrative expenses,
non-cash includes stock based compensation of $3.1 million for each
of the three months ended June 30, 2020 and 2019, respectively, and
$2.9 million for the three months ended March 31, 2020.
(3)
Amortization of deferred financing costs
included in Interest expense, net, on the Consolidated Statement of
Operations was $0.9 million for each of the three months ended June
30, 2020, March 31, 2020, and June 30, 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805006016/en/
Investors Brian Corales (713) 842-9036
bcorales@mgyoil.com
Media Art Pike (713) 842-9057 apike@mgyoil.com
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