Magnolia Oil & Gas (MGY) Q2 Results - Aug 14

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dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Magnolia Oil & Gas (MGY) Q2 Results - Aug 14

Post by dan_s »

Magnolia Oil & Gas Corporation (MGY) is a company that just went public about a year ago. It has moved rapidly up to the top of my Watch List because (a) it already has more than 65,000 Boepd of production, (b) it committed to reason growth that is funded entirely by cash flow from operations and (c) it is a Eagle Ford company. Eagle Ford companies sell their oil at a much higher price than Permian Basin companies because they have plenty of pipeline access and they get Gulf Coast (LLS) prices.

Second Quarter 2019 Summary Financial Results:

Total reported net income: $31.3 million
Earnings per share - diluted: $0.12
Adjusted net income: $31.4 million
Weighted average total shares outstanding: 250.8 million
Adjusted EBITDAX: $181.7 million
Capital expenditures - drilling and completions: $116.0 million
Cash acquisition expenditures: $38.6 million
Cash balance as of June 30, 2019: $96.7 million

MGY's realized oil price was $64.13 per barrel for the second quarter of 2019, or 107 percent of the average NYMEX WTI benchmark price during the period.

Cash on the balance sheet increased to $96.7 million at the end of the second quarter.
In addition, MGY had an undrawn revolving credit facility with $550.0 million of capacity and $400.0 million of principal debt outstanding.

“As we cross the one-year mark as a public company, Magnolia continues to execute on the strategy we laid out over a year ago,” said Magnolia Chairman, President and CEO, Steve Chazen. “The latest quarter’s results continue to demonstrate our ability to deliver on our original founding principles - generating steady and moderate production growth while spending within 60 percent of our cash flow for drilling and completing wells. The latest quarter saw our business benefit from heavier levels of both operated and non-op development spending early in the year, as well as the completion of several small acquisitions. Capital spending declined significantly during the second quarter and we expect that trend to continue through the back half of the year, averaging 60 percent (of cash flow from operations) for all of 2019. Our differentiated business model allows us to continually generate free cash flow providing us with a variety of options to create stock market value over time. The three options available for the use of our free cash include acquisitions, dividends, and share repurchases. We continue to seek small accretive bolt-on acquisition opportunities and have now added share repurchases to our active use of free cash."
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Magnolia Oil & Gas (MGY) Q2 Results - Aug 14

Post by dan_s »

More good news:

Free Cash Flow

Our cash flow from operating activities was $192.8 million during the second quarter and we ended the period with $96.7 million of cash on hand compared to $76.3 million at the end of the prior quarter. Total cash outlays related to our capital program including drilling, completions and leasehold acquisitions were $132.9 million, and we spent $38.6 million of cash acquiring oil and gas properties.

During the eleven-month period from our inception, Magnolia has generated approximately $614.9 million cash flow from operating activities. Over the same timeframe, our production increased nearly 30 percent and we have grown our Karnes area acreage position by approximately 50 percent. Our growth was entirely self-funded as we have not added any additional debt to the balance sheet.

Updated Guidance

We expect our total production to be approximately 70 Mboe/d for the third quarter and in line with our prior guidance. Our oil production mix is now expected to be at the high end of our 52 to 54 percent guidance range. The higher percentage of oil production is a result of a combination of new operated and non-operated wells turned in line in the Karnes area during the quarter.

The Company's Board of Directors authorized an initial share-repurchase program of up to 10 million shares, to be executed as deemed appropriate by Company management and based on market conditions. Share purchases would be funded with cash on hand and the program does not require purchases to be made within a particular timeframe.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Magnolia Oil & Gas (MGY) Q2 Results - Aug 14

Post by dan_s »

I have posted my updated forecast/valuation model for MGY to the EPG website. I will be adding MGY to our Small-Cap Growth Portfolio.
Dan Steffens
Energy Prospectus Group
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