x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
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81-5365682
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Nine Greenway Plaza, Suite 1300
Houston, TX
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77046
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(Address of principal executive offices)
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(Zip Code)
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Securities registered pursuant to section 12(b) of the Act:
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||
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
|
Class A Common Stock, par value $0.0001
|
MGY
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New York Stock Exchange
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Warrants to purchase Class A Common Stock
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MGY.WS
|
New York Stock Exchange
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Large accelerated filer
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|
x
|
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Small reporting company
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¨
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Emerging growth company
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¨
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Page
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PART I.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Successor
|
|
Predecessor
|
||||
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Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||
REVENUES:
|
|
|
|
|
||||
Oil revenues
|
|
$
|
171,654
|
|
|
$
|
154,156
|
|
Natural gas revenues
|
|
27,375
|
|
|
8,374
|
|
||
Natural gas liquids revenues
|
|
19,645
|
|
|
9,782
|
|
||
Total revenues
|
|
218,674
|
|
|
172,312
|
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||
|
|
|
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|
||||
OPERATING EXPENSES
|
|
|
|
|
||||
Lease operating expenses
|
|
21,518
|
|
|
9,286
|
|
||
Gathering, transportation and processing
|
|
9,315
|
|
|
4,478
|
|
||
Taxes other than income
|
|
14,401
|
|
|
8,769
|
|
||
Exploration expense
|
|
2,476
|
|
|
102
|
|
||
Asset retirement obligation accretion
|
|
1,328
|
|
|
96
|
|
||
Depreciation, depletion and amortization
|
|
115,946
|
|
|
51,361
|
|
||
Amortization of intangible assets
|
|
3,626
|
|
|
—
|
|
||
General and administrative expenses
|
|
16,196
|
|
|
5,708
|
|
||
Transaction related costs
|
|
353
|
|
|
—
|
|
||
Total operating costs and expenses
|
|
185,159
|
|
|
79,800
|
|
||
|
|
|
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|
||||
OPERATING INCOME
|
|
33,515
|
|
|
92,512
|
|
||
|
|
|
|
|
||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
||||
Income from equity method investee
|
|
388
|
|
|
368
|
|
||
Interest expense
|
|
(7,416
|
)
|
|
—
|
|
||
Loss on derivatives, net
|
|
—
|
|
|
(7,192
|
)
|
||
Other income (expense), net
|
|
1
|
|
|
124
|
|
||
Total other income (expense)
|
|
(7,027
|
)
|
|
(6,700
|
)
|
||
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|
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|
||||
INCOME BEFORE INCOME TAXES
|
|
26,488
|
|
|
85,812
|
|
||
Income tax expense
|
|
3,775
|
|
|
446
|
|
||
NET INCOME
|
|
22,713
|
|
|
85,366
|
|
||
LESS: Net income attributable to noncontrolling interest
|
|
9,687
|
|
|
—
|
|
||
NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCK
|
|
$
|
13,026
|
|
|
$
|
85,366
|
|
|
|
|
|
|
||||
NET INCOME PER COMMON SHARE
|
|
|
|
|
||||
Basic
|
|
$
|
0.08
|
|
|
|
|
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Diluted
|
|
$
|
0.08
|
|
|
|
||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
|
|
||||
Basic
|
|
156,322
|
|
|
|
|
||
Diluted
|
|
158,140
|
|
|
|
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Predecessor
|
||
BALANCE, DECEMBER 31, 2017
|
$
|
1,597,838
|
|
Parents’ contribution, net
|
133,117
|
|
|
Net income
|
85,366
|
|
|
Balance – March 31, 2018
|
$
|
1,816,321
|
|
|
Class A Common Stock
|
Class B Common Stock
|
Additional Paid In Capital
|
Retained Earnings
|
Total Stockholders’ Equity
|
Noncontrolling Interest
|
Total Equity
|
||||||||||||||||||
|
Shares
|
Value
|
Shares
|
Value
|
|
|
|
|
|
||||||||||||||||
Balance, December 31, 2018
|
156,333
|
|
$
|
16
|
|
93,346
|
|
$
|
9
|
|
$
|
1,641,237
|
|
$
|
35,507
|
|
$
|
1,676,769
|
|
$
|
1,031,186
|
|
$
|
2,707,955
|
|
Stock based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
2,432
|
|
—
|
|
2,432
|
|
—
|
|
2,432
|
|
|||||||
Changes in ownership interest adjustment
|
—
|
|
—
|
|
—
|
|
—
|
|
(919
|
)
|
—
|
|
(919
|
)
|
832
|
|
(87
|
)
|
|||||||
Final settlement adjustment related to Business Combination
|
(496
|
)
|
—
|
|
(1,556
|
)
|
—
|
|
(6,095
|
)
|
—
|
|
(6,095
|
)
|
(19,150
|
)
|
(25,245
|
)
|
|||||||
Contributions from noncontrolling interest owner
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8,809
|
|
8,809
|
|
|||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
13,026
|
|
13,026
|
|
9,687
|
|
22,713
|
|
|||||||
Balance, March 31, 2019
|
155,837
|
|
$
|
16
|
|
91,790
|
|
$
|
9
|
|
$
|
1,636,655
|
|
$
|
48,533
|
|
$
|
1,685,213
|
|
$
|
1,031,364
|
|
$
|
2,716,577
|
|
|
Successor
|
|
Predecessor
|
||||
|
For the three months ended March 31, 2019
|
|
For the three months ended March 31, 2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net Income
|
$
|
22,713
|
|
|
$
|
85,366
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
115,946
|
|
|
51,361
|
|
||
Amortization of intangible assets
|
3,626
|
|
|
—
|
|
||
Exploration expense, non-cash
|
483
|
|
|
—
|
|
||
Asset retirement obligations accretion expense
|
1,328
|
|
|
96
|
|
||
Amortization of deferred financing costs
|
871
|
|
|
—
|
|
||
Non-cash interest expense
|
4,011
|
|
|
—
|
|
||
Loss on derivatives, net
|
—
|
|
|
7,192
|
|
||
Cash settlements of matured derivative contracts
|
—
|
|
|
(2,196
|
)
|
||
Deferred taxes
|
3,415
|
|
|
(118
|
)
|
||
Stock based compensation
|
2,432
|
|
|
—
|
|
||
Other
|
(393
|
)
|
|
(368
|
)
|
||
Changes in assets and liabilities, net of amounts acquired:
|
|
|
|
||||
Accounts receivable
|
5,012
|
|
|
(35,484
|
)
|
||
Prepaid expenses and other assets
|
(618
|
)
|
|
—
|
|
||
Accounts payable and accrued liabilities
|
(41,054
|
)
|
|
(1,271
|
)
|
||
Drilling advances
|
(599
|
)
|
|
—
|
|
||
Other assets and liabilities, net
|
(611
|
)
|
|
35
|
|
||
Net cash provided by operating activities
|
116,562
|
|
|
104,613
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Acquisition of EnerVest properties, final settlement
|
4,250
|
|
|
—
|
|
||
Acquisitions, other
|
(53,326
|
)
|
|
(150,139
|
)
|
||
Additions to oil and natural gas properties
|
(134,435
|
)
|
|
(87,591
|
)
|
||
Other investing
|
197
|
|
|
—
|
|
||
Net cash used in investing activities
|
(183,314
|
)
|
|
(237,730
|
)
|
||
|
|
|
|
||||
CASH FLOW FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Parents’ contribution, net
|
—
|
|
|
133,117
|
|
||
Partner contribution
|
7,301
|
|
|
—
|
|
||
Net cash provided by financing activities
|
7,301
|
|
|
133,117
|
|
||
|
|
|
|
||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(59,451
|
)
|
|
—
|
|
||
CASH AND CASH EQUIVALENTS – Beginning of period
|
135,758
|
|
|
—
|
|
||
CASH AND CASH EQUIVALENTS – End of period
|
$
|
76,307
|
|
|
$
|
—
|
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Supplemental non-cash investing and financing activity
|
|
|
|
||||
Accruals or liabilities for capital expenditures
|
11,144
|
|
|
39,532
|
|
||
Supplemental non-cash lease operating activities
|
|
|
|
||||
Right-of-use assets obtained in exchange for operating lease obligations
|
2,516
|
|
|
—
|
|
•
|
certain right, title and interest in certain oil and natural gas assets located primarily in the Karnes County portion of the Eagle Ford Shale in South Texas (the “Karnes County Assets” and, such business the “Karnes County Business”) pursuant to that certain Contribution and Merger Agreement (as subsequently amended, the “Karnes County Contribution Agreement”), by and among the Company, Magnolia LLC and certain affiliates (the “Karnes County Contributors”) of EnerVest Ltd. (“EnerVest”);
|
•
|
certain right, title and interest in certain oil and natural gas assets located primarily in the Giddings Field of the Austin Chalk (the “Giddings Assets”) pursuant to that certain Purchase and Sale Agreement (the “Giddings Purchase Agreement”) by and among Magnolia LLC and certain affiliates of EnerVest (the “Giddings Sellers”); and
|
•
|
a
35%
membership interest (the “Ironwood Interests”) in Ironwood Eagle Ford Midstream, LLC (“Ironwood”), a Texas limited liability company, which owns an Eagle Ford gathering system, pursuant to that certain Membership Interest Purchase Agreement (together with the transactions contemplated by the Karnes County Contribution Agreement and the Giddings Purchase Agreement, the “Business Combination Agreements” and the transactions contemplated thereby, the “Business Combination”), by and among Magnolia LLC and certain affiliates of EnerVest (the “Ironwood Sellers”).
|
(1)
|
At closing of the Business Combination, the Karnes County Contributors received
83.9 million
shares of Class B Common Stock and
31.8 million
shares of Class A Common Stock (and a corresponding number of Magnolia LLC Units). On March 29, 2019, Magnolia and EnerVest consummated the final settlement pursuant to the Contribution and Merger Agreement as agreed to by the parties, with the Karnes County Contributors forfeiting
2.1 million
shares of Class A and Class B Common Stock to Magnolia (and a corresponding number of Magnolia LLC Units).
|
(2)
|
Pursuant to ASC 805, ASC 480, “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives and Hedging,” the Karnes County earnout consideration was valued at fair value as of the Closing Date and was classified in stockholders’ equity. The Giddings earnout was valued at fair value as of the Closing Date and was classified as a liability. The fair value of the earnouts was determined using the Monte Carlo simulation valuation method based on Level 3 inputs in the fair value hierarchy.
|
(1)
|
The total purchase consideration allocation above is preliminary. Any changes within the measurement period, including working capital adjustments, may change the allocation of the purchase consideration. The allocation of the purchase consideration and related tax impact assessments are to be completed within twelve months of the Closing Date and could impact on the components of the purchase consideration allocation.
|
(2)
|
The fair value measurements of oil and natural gas properties and asset retirement obligations are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair values of oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of oil and natural gas properties included estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighted average cost of capital rate.
|
(1)
|
The fair value measurements of oil and natural gas properties and asset retirement obligations are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair values of oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of oil and natural gas properties included estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighted average cost of capital rate. These inputs required significant judgments and estimates by management at the time of the valuation.
|
|
|
March 31, 2019
|
||||||
(In thousands)
|
|
Carrying Value
|
|
Fair Value
|
||||
Long-term debt
|
|
$
|
388,928
|
|
|
$
|
404,000
|
|
(In thousands)
|
March 31, 2019
|
||
Non-compete intangible assets
|
$
|
44,400
|
|
Accumulated amortization
|
(9,670
|
)
|
|
Intangible assets, net
|
$
|
34,730
|
|
Weighted average amortization (years)
|
3.25
|
|
(in thousands)
|
|
For the Quarter Ended March 31, 2019
|
||
Asset retirement obligations, beginning of period
|
|
$
|
85,983
|
|
Liabilities incurred and assumed
|
|
3,873
|
|
|
Liabilities settled
|
|
(837
|
)
|
|
Accretion expense
|
|
1,328
|
|
|
Asset retirement obligations, end of period
|
|
90,347
|
|
|
Less: Current portion
|
|
1,129
|
|
|
Asset retirement obligation, long-term
|
|
$
|
89,218
|
|
|
|
Successor
|
|
Predecessor
|
||||
(In thousands)
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||
Current:
|
|
|
|
|
||||
Federal
|
|
$
|
177
|
|
|
$
|
—
|
|
State
|
|
183
|
|
|
564
|
|
||
|
|
360
|
|
|
564
|
|
||
Deferred:
|
|
|
|
|
||||
Federal
|
|
3,361
|
|
|
—
|
|
||
State
|
|
54
|
|
|
(118
|
)
|
||
|
|
3,415
|
|
|
(118
|
)
|
||
Total provision
|
|
$
|
3,775
|
|
|
$
|
446
|
|
(In thousands)
|
|
March 31, 2019
|
||
Revolving credit facility
|
|
$
|
—
|
|
6.0% Senior Notes due 2026
|
|
400,000
|
|
|
Total long-term debt
|
|
400,000
|
|
|
|
|
|
||
Less: unamortized deferred financing cost
|
|
(11,072
|
)
|
|
Total debt, net
|
|
$
|
388,928
|
|
(In thousands)
|
March 31, 2019
|
||
Operating Leases
|
|
||
Operating lease assets
|
$
|
2,039
|
|
|
|
||
Operating lease liabilities - current
|
$
|
1,340
|
|
Operating lease liabilities - long-term
|
694
|
|
|
Total operating lease liabilities
|
$
|
2,034
|
|
|
|
||
Weighted Average Remaining Lease Term (in years)
|
1.88
|
|
|
Weighted Average Discount Rate
|
4.4
|
%
|
(1)
|
As of December 31, 2018, minimum future contractual payments for long-term operating leases under the scope of ASC 840 were
$881 thousand
in 2019,
$646 thousand
in 2020,
$198 thousand
in 2021,
$14 thousand
in 2022,
$15 thousand
in 2023 and
$63 thousand
thereafter.
|
|
Restricted Stock Units
|
Weighted Average Grant Date Fair Value
|
|||
Unvested restricted stock units, beginning of period
|
807,431
|
|
$
|
13.97
|
|
Granted
|
438,261
|
|
$
|
12.52
|
|
Vested
|
—
|
|
—
|
|
|
Forfeited
|
—
|
|
—
|
|
|
Unvested restricted stock units, end of period
|
1,245,692
|
|
$
|
13.46
|
|
|
Performance Stock Units
|
Weighted Average Grant Date Fair Value
|
|||
Unvested performance stock units, beginning of period
|
475,313
|
|
$
|
14.58
|
|
Granted
|
260,720
|
|
$
|
13.84
|
|
Vested
|
—
|
|
—
|
|
|
Forfeited
|
—
|
|
—
|
|
|
Unvested performance stock units, end of period
|
736,033
|
|
$
|
14.32
|
|
|
As of February 25, 2019
Grant Date Fair Value Assumptions
|
|
Expected term (in years)
|
2.85
|
|
Expected volatility
|
33.61
|
%
|
Risk-free interest rate
|
2.48
|
%
|
(in thousands)
|
|
For the three months ended
March 31, 2019
|
||
Basic:
|
|
|
||
Net Income attributable to Class A Common Stock
|
|
$
|
13,026
|
|
Weighted average number of common shares outstanding during the period
|
|
156,322
|
|
|
Net income per common share - basic
|
|
$
|
0.08
|
|
|
|
|
||
Diluted:
|
|
|
||
Net Income attributable to Class A Common Stock
|
|
$
|
13,026
|
|
Basic weighted average number of common shares outstanding during the period
|
|
156,322
|
|
|
Add: Dilutive effect of warrants and stock based compensation
|
|
1,818
|
|
|
Diluted weighted average number of common shares outstanding during the period
|
|
158,140
|
|
|
Net income per common share - diluted
|
|
$
|
0.08
|
|
•
|
the market prices of oil, natural gas, natural gas liquids (“NGLs”), and other products or services;
|
•
|
the supply and demand for oil, natural gas, NGLs, and other products or services;
|
•
|
production and reserve levels;
|
•
|
drilling risks;
|
•
|
economic and competitive conditions;
|
•
|
the availability of capital resources;
|
•
|
capital expenditure and other contractual obligations;
|
•
|
currency exchange rates;
|
•
|
weather conditions;
|
•
|
inflation rates;
|
•
|
the availability of goods and services;
|
•
|
legislative, regulatory, or policy changes;
|
•
|
cyber attacks;
|
•
|
occurrence of property acquisitions or divestitures;
|
•
|
the integration of acquisitions;
|
•
|
the securities or capital markets and related risks such as general credit, liquidity, market, and interest-rate risks.
|
•
|
For the quarter ended March 31, 2018, the results of operations reflect the results of solely the Predecessor, which, as described above, consists of only the results of the Karnes County Business, including, as applicable, its ownership of the Ironwood Interest, when the Predecessor was not owned by the Company, and do not include the results of the Giddings Assets;
|
•
|
The results of operations of the Predecessor were not previously accounted for as the results of operations of a stand-alone legal entity, and accordingly have been carved out, as appropriate, for the periods presented. The results of operations of the Predecessor therefore include a portion of indirect costs for salaries and benefits, depreciation, rent, accounting, legal services, and other expenses. In addition to the allocation of indirect costs, the results of operations reflect certain agreements executed by the Karnes County Contributors for the benefit of the Predecessor, including price risk management instruments. For more information, please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. These allocations may not be indicative of the cost of future operations or the amount of future allocations;
|
•
|
The Predecessor completed the acquisition of the Subsequent GulfTex Assets from GulfTex Energy III, L.P. and GulfTex Energy IV, L.P. on March 1, 2018 during the Predecessor Period, and accordingly the results of operations of the Predecessor reflect the impact of the assets acquired in that acquisition only from their respective acquisition date;
|
•
|
As a corporation, the Company is subject to U.S. federal income taxes at a statutory rate of
21%
of pretax earnings whereas the Karnes County Contributors were treated as partnerships for income tax purposes. As a result, items of income, expense, gains and losses flowed through to the owners of the Karnes County Contributors and were taxed at the owner level. Accordingly, no U.S. tax provision for federal income taxes is included in the financial statements of the Predecessor;
|
•
|
On August 31, 2018, the Company acquired substantially all of the South Texas assets of Harvest Oil & Gas Corporation (the “Harvest Acquisition”) for approximately
$133.3
million in cash and
4.2 million
newly issued shares of the Company’s Class A Common Stock. On March 14, 2019, Magnolia consummated the final settlement with Harvest receiving a cash payment of
$1.4 million
. The Harvest Acquisition added an undivided working interest across a portion of the Karnes County Assets and all of the Giddings Assets;
|
•
|
In the first quarter of 2019, Highlander Oil & Gas Holdings LLC (“Highlander”), which the Company indirectly holds an
85%
membership interest in, completed the acquisition of a
72%
working interest in the Eocene-Tuscaloosa Zone, Ultra Deep Structure gas well located in St. Martin Parish, Louisiana (“Highlander Well”) and
31.1 million
royalty trust units in the Gulf Coast Ultra Deep Royalty Trust from McMoRan Oil & Gas, LLC. Highlander paid cash consideration of approximately
$51.9 million
, net of customary closing adjustments, for such interests.
|
|
|
Successor
|
|
Predecessor
|
||||
(In thousands, except per unit data)
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||
PRODUCTION VOLUMES:
|
|
|
|
|
||||
Oil (MBbls)
|
|
2,906
|
|
|
2,362
|
|
||
Natural gas (MMcf)
|
|
9,763
|
|
|
2,888
|
|
||
NGLs (MBbls)
|
|
1,084
|
|
|
420
|
|
||
Total (Mboe)
|
|
5,617
|
|
|
3,263
|
|
||
|
|
|
|
|
||||
Average daily production volume:
|
|
|
|
|
||||
Oil (Bbls/d)
|
|
32,289
|
|
|
26,244
|
|
||
Natural gas (Mcf/d)
|
|
108,478
|
|
|
32,089
|
|
||
NGLs (Bbls/d)
|
|
12,044
|
|
|
4,667
|
|
||
Total (boe/d)
|
|
62,413
|
|
|
36,256
|
|
||
|
|
|
|
|
||||
REVENUES:
|
|
|
|
|
||||
Oil revenues
|
|
$
|
171,654
|
|
|
$
|
154,156
|
|
Natural gas revenues
|
|
27,375
|
|
|
8,374
|
|
||
Natural gas liquids revenues
|
|
19,645
|
|
|
9,782
|
|
||
Total revenues
|
|
$
|
218,674
|
|
|
$
|
172,312
|
|
|
|
|
|
|
||||
AVERAGE PRICE:
|
|
|
|
|
||||
Oil (per barrel)
|
|
$
|
59.07
|
|
|
$
|
65.27
|
|
Natural gas (per Mcf)
|
|
2.80
|
|
|
2.90
|
|
||
NGLs (per barrel)
|
|
18.12
|
|
|
23.29
|
|
|
|
Successor
|
|
Predecessor
|
||||
(In thousands, except per unit data)
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||
OPERATING EXPENSES:
|
|
|
|
|
||||
Lease operating expenses
|
|
$
|
21,518
|
|
|
$
|
9,286
|
|
Gathering, transportation and processing
|
|
9,315
|
|
|
4,478
|
|
||
Taxes other than income
|
|
14,401
|
|
|
8,769
|
|
||
Exploration expenses
|
|
2,476
|
|
|
102
|
|
||
Asset retirement obligations accretion
|
|
1,328
|
|
|
96
|
|
||
Depreciation, depletion and amortization
|
|
115,946
|
|
|
51,361
|
|
||
Amortization of intangible assets
|
|
3,626
|
|
|
—
|
|
||
General & administrative expenses
|
|
16,196
|
|
|
5,708
|
|
||
Transaction related costs
|
|
353
|
|
|
—
|
|
||
Total operating costs and expenses
|
|
$
|
185,159
|
|
|
$
|
79,800
|
|
|
|
|
|
|
||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
||||
Income from equity method investee
|
|
$
|
388
|
|
|
$
|
368
|
|
Interest expense
|
|
(7,416
|
)
|
|
—
|
|
||
Loss on derivatives, net
|
|
—
|
|
|
(7,192
|
)
|
||
Other income, net
|
|
1
|
|
|
124
|
|
||
Total other expense
|
|
$
|
(7,027
|
)
|
|
$
|
(6,700
|
)
|
|
|
|
|
|
||||
AVERAGE OPERATING COSTS PER BOE:
|
|
|
|
|
||||
Lease operating expenses
|
|
$
|
3.83
|
|
|
$
|
2.85
|
|
Gathering, transportation and processing
|
|
1.66
|
|
|
1.37
|
|
||
Taxes other than income
|
|
2.56
|
|
|
2.69
|
|
||
Exploration costs
|
|
0.44
|
|
|
0.03
|
|
||
Asset retirement obligation accretion
|
|
0.24
|
|
|
0.03
|
|
||
Depreciation, depletion and amortization
|
|
20.64
|
|
|
15.74
|
|
||
Amortization of intangible assets
|
|
0.65
|
|
|
—
|
|
||
General and administrative expenses
|
|
2.88
|
|
|
1.75
|
|
||
Transaction related costs
|
|
0.06
|
|
|
—
|
|
|
|
Successor
|
|
Predecessor
|
||||
(In thousands)
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||
Net cash provided by operating activities
|
|
$
|
116,562
|
|
|
$
|
104,613
|
|
Net cash used in investing activities
|
|
(183,314
|
)
|
|
(237,730
|
)
|
||
Net cash provided by financing activities
|
|
7,301
|
|
|
133,117
|
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2*
|
|
|
|
|
|
4.3*
|
|
|
|
|
|
4.4*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
101.INS**
|
|
XBRL Instance Document
|
|
|
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF**
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
|
|
MAGNOLIA OIL & GAS CORPORATION
|
|
|
|
|
|
Date: May 7, 2019
|
|
By:
|
/s/ Stephen Chazen
|
|
|
|
Stephen Chazen
|
|
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
|
|
|
Date: May 7, 2019
|
|
By:
|
/s/ Christopher G. Stavros
|
|
|
|
Christopher G. Stavros
|
|
|
|
Chief Financial Officer (Principal Financial Officer)
|
|
|
|
|
Participant:
|
[_____________________]
|
Date of Grant:
|
[_________]
|
|
|
Total Number of Restricted Stock Units:
|
[_________] (“
Grant Date Number of RSUs
”)
|
|
|
Vesting Commencement Date:
|
[_________] (“
Vesting Commencement Date
”)
|
Vesting Schedule:
|
Subject to the terms and conditions of the Agreement, the Plan and the other terms and conditions set forth herein, the RSUs shall vest according to the following schedule:
1/3
rd
of the Grant Date Number of RSUs on the first anniversary of the Vesting Commencement Date
1/3
rd
of the Grant Date Number of RSUs on the second anniversary of the Vesting Commencement Date
1/3
rd
of the Grant Date Number of RSUs on the third anniversary of the Vesting Commencement Date
except as provided below, so long as you remain continuously employed or engaged by the Company or an Affiliate, as applicable, from the Date of Grant through each such vesting date.
In the event of the termination of your employment or service by the Company without Cause or your resignation for Good Reason, in each case, within 12 months following a Change in Control, the RSUs will vest in full. In the event of a Change in Control pursuant to which the successor company or a parent or subsidiary thereof does not assume the RSUs, then so long as you have remained continuously employed by or have continued to provide services to the Company or an Affiliate, as applicable, from the Date of Grant through the date of such Change in Control, the RSUs will vest in full upon such Change in Control.
|
|
|
|
|
Participant:
|
[_____________________]
|
Date of Grant:
|
[_________]
|
|
|
Total Number of Restricted Stock Units:
|
[_________] (“
Grant Date Number of RSUs
”)
|
|
|
Vesting Commencement Date:
|
[_________] (“
Vesting Commencement Date
”)
|
Vesting Schedule:
|
Subject to the terms and conditions of the Agreement, the Plan and the other terms and conditions set forth herein, the RSUs shall vest according to the following schedule:
100% of the Grant Date Number of RSUs on the first anniversary of the Vesting Commencement Date
except as provided below, so long as you remain continuously employed or engaged by the Company or an Affiliate, as applicable, from the Date of Grant through such vesting date.
In the event of the termination of your employment or service by the Company without Cause or your resignation for Good Reason, in each case, prior to the date on which the RSUs are settled in accordance with Section 4 of the Agreement, the RSUs will vest in full. In the event of a Change in Control pursuant to which the successor company or a parent or subsidiary thereof does not assume the RSUs, then so long as you have remained continuously employed by or have continued to provide services to the Company or an Affiliate, as applicable, from the Date of Grant through the date of such Change in Control, the RSUs will vest in full upon such Change in Control.
|
Participant:
|
[_____________________]
|
Date of Grant:
|
[_________]
|
Grant Date Number of Performance Share Units:
|
[_________] (“
Target Number of PSUs
”)
|
Vesting Commencement Date:
|
[_________] (“
Vesting Commencement Date”
)
|
Vesting Schedule:
|
Subject to the terms and conditions of the Agreement, the Plan and the other terms and conditions set forth herein, a portion of the Target Number of PSUs are eligible to vest and become earned, and Stock may become issuable with respect to the PSUs based on achievement of the performance criteria set forth in
Exhibit B
. PSUs actually earned upon satisfaction of the foregoing requirements are referred to herein as the “
Earned PSUs
.”
The period over which the Company’s performance will be measured for purposes of applying the methodology set forth in
Exhibit B
shall be from [January 1, 2019] to [December 31, 2021] (the “
Performance Period
”).
Except as described below, in order to be eligible to receive any Earned PSUs, the performance goals as set forth in
Exhibit B
must be satisfied, and you must remain employed by or continue to provide services to the Company or an Affiliate, as applicable, from the Date of Grant through the date on which the PSUs are settled in accordance with Section 4 of the Agreement following the conclusion of the Performance Period.
In the event of the termination of your employment or service by the Company or an Affiliate other than as described below, at any time prior to the date on which the PSUs are settled in accordance with Section 4 of the Agreement following the conclusion of the Performance Period, all PSUs (and all rights arising from such PSUs and from being a holder thereof) will terminate automatically without any further action by the Company and will be forfeited without consideration or notice;
provided
that, in the event of the termination of your employment or service by the Company or an Affiliate without Cause (as defined below) or upon your resignation for Good Reason (as defined below), in each case, following the conclusion of the Performance Period, but prior to the date on which the PSUs are settled in accordance with Section 4 of the Agreement, you shall not forfeit your PSUs and the Earned PSUs, if any, shall be settled in accordance with Section 4 of the Agreement.
|
Treatment upon a Change in Control
|
Upon a Change in Control, the PSUs will cease to be subject to the performance goals set forth in
Exhibit B
and a number of PSUs equal to the greater of (i) the Target Number of PSUs or (ii) the percentage of the Target Number of PSUs that are deemed to have been earned upon such Change in Control based on actual performance assuming the Performance Period ended on the date of such Change in Control, as determined by the Committee (the “
Frozen PSUs
”) will remaining outstanding and, except as provided below in the “Vesting upon Certain Terminations following a Change in Control” section of this Grant Notice, the Frozen PSUs shall vest subject to your continued employment or service through the conclusion of the original Performance Period.
Notwithstanding the foregoing, in the event of a Change in Control pursuant to which the successor company or a parent or subsidiary thereof does not assume the PSUs (a “
Change in Control Vesting Event
”), then so long as you have remained continuously employed by or have continued to provide services to the Company or an Affiliate, as applicable, from the Date of Grant through the date of such Change in Control, the Frozen PSUs will become Earned PSUs upon such Change in Control and will be settled in accordance with Section 4 of the Agreement within 60 days thereafter.
|
Vesting upon Certain Terminations following a Change in Control
|
In the event of the termination of your employment or service by the Company or an Affiliate without Cause or upon your resignation for Good Reason, in each case, within 12 months following a Change in Control and prior to settlement of the PSUs (a “
Change in Control Termination
”), the Frozen PSUs will become Earned PSUs as of the date of such Change in Control Termination and will be settled in accordance with Section 4 of the Agreement within 60 days thereafter. The date of a Change in Control Vesting Event or Change in Control Termination is referred to herein as an “
Early Vesting Event
.”
|
1.
|
If a company in the Peer Group is acquired or becomes a private company, in each case, prior to the first anniversary of the commencement of the Performance Period, such company shall be removed from the Peer Group.
|
2.
|
If a company in the Peer Group is acquired or becomes a private company, in each case, on or after the first anniversary of the commencement of the Performance Period, the TSR of such company shall be measured on the effective date of the consummation of such acquisition.
|
3.
|
In the event of a merger or other business combination of two Peer Group members (including, without limitation, the acquisition of one Peer Group member, or all or
|
4.
|
If a company in the Peer Group files for bankruptcy or liquidates due to an insolvency or is delisted, the TSR of such company shall be deemed to be negative 100% (and if multiple members of the Peer Group file for bankruptcy or liquidate due to an insolvency or are delisted, such members shall be ranked in order of when such bankruptcy or liquidation occurs, with earlier bankruptcies, liquidations and delistings ranking lower than later bankruptcies, liquidations and delistings).
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Magnolia Oil & Gas Corporation (the "registrant");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: May 7, 2019
|
|
By:
|
|
/s/ Stephen Chazen
|
|
|
|
|
Stephen Chazen
|
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Magnolia Oil & Gas Corporation (the "registrant");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: May 7, 2019
|
|
By:
|
|
/s/ Christopher G. Stavros
|
|
|
|
|
Christopher G. Stavros
|
|
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 7, 2019
|
|
By:
|
|
/s/ Stephen Chazen
|
|
|
|
|
Stephen Chazen
|
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Date: May 7, 2019
|
|
By:
|
|
/s/ Christopher G. Stavros
|
|
|
|
|
Christopher G. Stavros
|
|
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|