About Magnolia Oil & Gas

Magnolia Oil & Gas Corporation (Magnolia) operates as an independent oil and natural gas company. The company engages in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquid (‘NGL’) reserves. Magnolia’s operations are conducted predominantly in one geographic area of the United States. The company’s oil and natural gas properties are located primarily in the Karnes and Giddings areas in South Texas, where the company targets the Eagle Ford Shale and Austin Chalk formations. Magnolia’s principal asset is a controlling equity interest in Magnolia LLC. As the managing member of Magnolia LLC, the company operates and controls all of the business and affairs of Magnolia LLC and, through Magnolia LLC and its subsidiaries, conducts business. As of December 31, 2023, Magnolia owned an 89.4% interest in Magnolia LLC and the noncontrolling interest was 10.6%. Properties As of December 31, 2023, Magnolia’s assets consisted of a total leasehold position of 789,719 gross (576,504 net) acres, including 72,503 gross (50,681 net) acres in the Karnes area and 717,216 gross (525,823 net) acres in the Giddings area. During 2023, Magnolia operated two rigs. Approximately 42%, 31%, and 27% of production from Magnolia’s assets was attributable to oil, natural gas, and NGLs, respectively, for the year ended December 31, 2023. The Karnes area is consisted of oil and natural gas assets primarily located in Karnes, Dimmit, Gonzales, and Zavala counties, Texas, in the core of the Eagle Ford Shale. The acreage comprising the Karnes area also includes the Austin Chalk formation overlying the Eagle Ford Shale. The Austin Chalk formation has shown itself to be an independent reservoir from the Eagle Ford Shale and represents a very attractive development target. The Karnes area includes a well-known, low-risk acreage position that has been developed with a focus on maximizing returns and improving operational efficiencies. The Giddings area is consisted of oil and natural gas assets primarily located in Brazos, Burleson, Fayette, Grimes, Lee, Milam, Robertson, and Washington counties, Texas. The Austin Chalk formation produces along a northeast-to-southwest trend that is approximately parallel to the Texas Gulf Coast. There are several notable producing areas along the Austin Chalk trend, the largest of which is the Giddings area. The Giddings area has seen two major drilling cycles. As of December 31, 2023, Magnolia’s total undeveloped acres across its assets that will expire in 2024, 2025, and 2026 are 24,032 gross (22,764 net), 2,664 gross (2,167 net), and 3,034 gross (2,561 net) acres, respectively, unless production is established within the spacing units covering the acreage prior to the expiration dates, drilling commitments are fulfilled, or unless such leasehold rights are extended or renewed. Magnolia anticipates that its drilling plans along with the lease extensions should address most the company’s leases subject to potential expiration in 2024 and beyond. There are no significant expirations after 2026. Delivery Commitments Oil and natural gas properties in the Giddings area are subject to contracts with third-party midstream companies that provide for firm pipeline transportation and gathering and processing services for a portion of the natural gas produced from the Giddings area. The delivery commitments require the company to deliver 5.3 million MMBtu in 2024. Operations Facilities Production facilities related to Magnolia’s assets, including central tank batteries, consist of storage tanks, two-phase and/or three-phase separation equipment, flowlines, metering equipment, emissions control equipment, leased compressors, and safety systems. Predominant artificial lift methods include gas lift, rod pump lift, and plunger lift. The Karnes area includes access to a crude oil gathering system and access to natural gas gathering systems. Magnolia is subject to the terms of a crude oil gathering agreement with Ironwood Eagle Ford Midstream, LLC that expires in July 2027, which allows oil production to be delivered and sold to various crude oil refining markets on a competitive pricing basis. The majority of natural gas production related to the Karnes area is processed to collect NGLs. Produced natural gas and NGLs are sold to third-party natural gas processors. The Giddings area includes access to natural gas gathering systems, which allows production to be delivered to third-party natural gas processors. The majority of natural gas production related to the Giddings area is processed to collect NGLs. Produced natural gas and NGLs are sold to third-party natural gas processors, as well as various intrastate and interstate markets on a competitive pricing basis. The Giddings area also includes several saltwater disposal wells that handle a portion of water production from the area. Marketing and Customers For the year ended December 31, 2023, three customers, including their subsidiaries, accounted for 25%, 22%, and 11% of the company’s combined oil, natural gas, and NGL revenue. The natural gas production from the Giddings area is gathered and processed under acreage dedications with three third-party midstream companies. The NGL production extracted from the Giddings area is sold to gathering and processing counterparties. Magnolia sells the majority of the oil production from the Giddings area to three third parties at market prices, with such purchasers transporting the oil from the lease via trucks under contracts of 12 months or less. The remainder of the oil production from the Giddings area is sold to various third-party purchasers at market prices under contracts with terms of 12 months or less. In addition, Magnolia sells the natural gas production from the Karnes area to various third parties pursuant to the terms of multiple natural gas processing and purchase contracts of varying terms. Magnolia transports the majority of its crude oil production from the Karnes area on a gathering agreement with Ironwood Eagle Ford Midstream, LLC that expires in July 2027, which provides an outlet for Magnolia to sell oil production via pipeline from the Karnes area to third-party purchasers at market prices. The majority of the remaining oil production is transported from the lease via trucks at market prices with terms of 12 months or less. The NGL production from the Karnes area is sold to midstream natural gas processors in the Eagle Ford area. Regulation Magnolia is subject to the requirements of the Occupational Health and Safety Act (‘OSHA’) and comparable state statutes whose purpose is to protect the health and safety of workers. In addition, the OSHA hazard communication standard, the Emergency Planning and Community Right-to-Know Act, comparable state statutes, and any implementing regulations require that Magnolia maintain and/or disclose information about hazardous materials used or produced in its operations and that this information be provided to employees, state and local governmental authorities, and citizens. History The company was incorporated in 2017. It was formerly known as TPG Pace Energy Holdings Corp. and changed its name to Magnolia Oil & Gas Corporation in 2018.