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Magnolia Oil & Gas Shares Pump 13% Higher on Q4/FY Financial Results and 2021 Outlook

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Magnolia Oil & Gas Corp. shares established a new 52-week high after the company reported Q4/20 and FY/20 financial results and advised it expects to increase production and bring additional wells online in FY/21.

Oil and gas exploration and production company Magnolia Oil & Gas Corp. (MGY:NYSE) yesterday announced its financial and operational results for the fourth quarter and full year 2020 ended December 31, 2020.

Magnolia Oil & Gas reported that for Q4/20, it posted net income attributable to Class A common stock in the amount of $27.7 million, or $0.16 per share. The company added that Q4/20 total net income came in at $42.0 million and adjusted net income was $39.3 million, or $0.15 per diluted share.

The firm additionally stated that adjusted EBITDAX totaled $98.1 million during Q4/20 and $338.6 million for FY/20.

The company advised that during Q4/20, as part of its ongoing share repurchase program, it purchased 2.4 million shares of its Class A common stock, or about 1% of the total share count for approximately $15.7 million. The firm noted that FY/20 repurchases totaled 4.5 million shares for $28.7 million and added that its Board of Directors recently increased the repurchase authorization by 10.0 million shares. Magnolia also stated that it expects to begin paying a cash dividend in 2021, but did not provide any specific details as to the amount of the dividend or the anticipated commencement date.

The company's Chairman, President and CEO Steve Chazen commented, "Magnolia ended 2020 with very strong fourth quarter operational and financial performance. Despite last year's challenging environment, our policy of low financial leverage, commitment to capital discipline and high-quality assets allowed us to exit 2020 in better shape than when we entered...We increased our quarterly production by nearly 12% sequentially while spending only 40% of our adjusted EBITDAX and, repurchasing 2.4 million Magnolia shares or roughly 1% of the outstanding shares. We achieved all this while building our year-end cash position to more than $190 million."

"We entered 2021 in a strong financial position and with considerable operational momentum driven by our Giddings asset. Our capital spending plan for the year is expected to be no more than 60% of our Adjusted EBITDAX, and consistent with our business model. We expect that this level of spending and activity to provide full-year 2021 production growth of between 5% to 8% compared to 2020 volumes...We expect to reduce our outstanding shares by roughly 1% per quarter through share repurchases, which should result in annual production per share growth of approximately 10%. In addition to these value enhancing activities, Magnolia intends to begin paying a cash dividend in mid-2021," Chazen added.

The company advised that Q4/20 production averaged 60.6 Mboe/d, representing an increase of 12% over Q3/20. This production included production of 28.3 Mboe/d from Giddings and other areas and production of 32.3 Mboe/d in the Karnes area.

Magnolia said that it brought eight wells online in Q4/20 and that six of them were located in the initial core area, which brings the total to 20 completed wells in this area.

Magnolia provided some forward guidance for FY/21 stating that consistent with its business model it expects to spend around 50-60% of its adjusted EBITDAX for drilling and completing wells.

The activity plan for 2021 calls for deploying a one rig program at Giddings where it anticipates drilling multi-well pads largely in the company's initial core location. At the Karnes property, the firm plans to commence drilling of 10 "DUC" wells and expects to bring these wells online by the end of H1/21.

Magnolia projects that Q1/21 production will be relatively flat compared to Q4/20 levels.

The company indicated that during 2020 it added 30.4 MMboe of proved developed reserves and that as of December 31, 2020, it had total proved developed reserves of 85.8 MMboe.

Magnolia Oil & Gas is an oil and gas exploration and production company based in Houston, Tex. The firm operations are located mostly in the core of the Eagle Ford Shale and Austin Chalk formations in South Texas.

Magnolia has a market capitalization of around $2.6 billion with approximately 251.3 million shares outstanding. MGY shares opened 3% higher today at $10.61 (+$0.32, +3.11%) over yesterday's $10.29 closing price and reached a new 52-week high price this afternoon of $11.69. The stock has traded today between $9.92 and $11.69 per share and closed for trading at $11.67 (+$1.38, +13.41%).


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