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2021
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TPG PACE ENERGY HOLDINGS CORP.
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| Delaware | 81-5365682 | ||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
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Houston, | Texas | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(713) 842-9050
| Securities registered pursuant to section 12(b) of the Act: | ||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Class A Common Stock, par value $0.0001 | MGY | New York Stock Exchange | ||||||
| Large accelerated filer |
| Accelerated filer | ☐ | |||||||||||||||||
Non-accelerated filer |
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Emerging growth company |
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At November 1, 2017,
Item 2. Item 3. Item 4. PART II. Item 1A. Item 2. Item 3. Item 4. Item 5. Item 6. September 30, 2017 Assets Current assets: Cash $ 955,993 Prepaid expenses 182,026 Total current assets 1,138,019 Investments held in Trust Account 651,609,907 Total assets $ 652,747,926 Liabilities and stockholders' equity Current liabilities: Accrued offering costs $ 846,092 Accrued professional fees and other expenses 383,378 Total current liabilities 1,229,470 Deferred underwriting compensation 22,750,000 Total liabilities 23,979,470 Commitments and contingencies Class A common stock subject to possible redemption; 62,376,845 shares at September 30, 2017, at a redemption value of $10.00 per share 623,768,450 Stockholders' equity: Preferred stock, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding — Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 2,623,155 shares issued and outstanding (excluding 62,376,845 shares subject to possible redemption) at September 30, 2017 262 Class F common stock, $0.0001 par value; 20,000,000 shares authorized, 16,250,000 shares issued and outstanding 1,625 Additional paid-in capital 4,080,102 Retained earnings 918,017 Total stockholders' equity 5,000,006 Total liabilities and stockholders' equity $ 652,747,926 For the Period For the Three from February 14, 2017 Months Ended (inception) to September 30, 2017 September 30, 2017 Revenue $ — $ — Professional fees and other expenses 250,286 421,627 Travel expenses 77,363 175,988 Loss from operations (327,649 ) (597,615 ) Interest income 1,357,208 2,009,949 Income from continuing operations 1,029,559 1,412,334 Income tax expense (360,346 ) (494,317 ) Net income attributable to common stock $ 669,213 $ 918,017 Net income per share of common stock: Basic and diluted $ 0.01 $ 0.02 Weighted average shares of common stock outstanding: Basic and diluted 81,250,000 55,556,769 Preferred Stock Class A Common Stock Class F Common Stock Additional Retained Stockholders' Shares Amount Shares Amount Shares Amount Paid-In Capital Earnings Equity Balance at February 14, 2017 (inception) — $ — — $ — — $ — $ — $ — $ — Sale of shares of Class F common stock to Sponsor on February 22, 2017 at $0.002 per share — — — — 11,500,000 1,150 23,850 — 25,000 Class F common stock dividend effected on April 24, 2017 — — — — 5,750,000 575 (575 ) — — Proceeds from initial public offering of Units on May 10, 2017 at $10.00 per Unit — — 65,000,000 6,500 — — 649,993,500 — 650,000,000 Sale of 10,000,000 Private Placement Warrants to Sponsor on May 10, 2017 at $1.50 per Private Placement Warrant — — — — — — 15,000,000 — 15,000,000 Underwriters discount — — — — — — (13,000,000 ) — (13,000,000 ) Deferred offering costs charged to additional paid-in capital — — — — — — (1,424,561 ) — (1,424,561 ) Deferred underwriting compensation — — — — — — (22,750,000 ) — (22,750,000 ) Class F common stock forfeited by Sponsor on June 24, 2017 — — — — (1,000,000 ) (100 ) 100 — — Class A common stock subject to possible redemption; 62,376,845 shares at a redemption value of $10.00 per share — — (62,376,845 ) (6,238 ) — — (623,762,212 ) — (623,768,450 ) Net income attributable to common stock — — — — — — — 918,017 918,017 Balance at September 30, 2017 — $ — 2,623,155 $ 262 16,250,000 $ 1,625 $ 4,080,102 $ 918,017 $ 5,000,006 For the Period from February 14, 2017 (inception) to September 30, 2017 Cash flows from operating activities: Net income attributable to common stock $ 918,017 Changes in operating assets and liabilities: Prepaid expenses (182,026 ) Accrued professional fees and other expenses 383,378 Interest on Investments held in Trust Account (2,009,907 ) Withdrawal of interest from Trust Account to pay federal income taxes 400,000 Net cash used in operating activities (490,538 ) Cash flows from investing activities: Proceeds deposited into Trust Account (650,000,000 ) Net cash used in investing activities (650,000,000 ) Cash flows from financing activities: Proceeds from sale of shares of Class F common stock to Sponsor 25,000 Proceeds from sale of Units in initial public offering 650,000,000 Proceeds from sale of Private Placement Warrants to Sponsor 15,000,000 Proceeds of notes payable from Sponsor 300,000 Payment of underwriters discounts (13,000,000 ) Payment of accrued offering costs (578,469 ) Repayment of notes payable from Sponsor (300,000 ) Net cash provided by financing activities 651,446,531 Net change in cash 955,993 Cash at beginning of period — Cash at end of period $ 955,993 Supplemental disclosure of cash flow information: Cash paid for federal income taxes $ 400,000 Supplemental disclosure of non-cash financing activities: Accrued offering costs $ 846,092 Notes to an orderly transaction, using the valuation hierarchy prescribed by GAAP under Accounting Standards Codification (“ASC”) 820. plaintiffs claim to be entitled to a minority working interest in certain Karnes County Assets. The the permit, and after judicial review of the Commission’s order by the 53rd Judicial District Court Travis County, Texas (the “District Court”), the District Court reversed and remanded the Commission’s order. The Commission and Magnolia have appealed the District Court’s judgment to the Third Court of Appeals in Austin, Texas, and the appeal is in the preliminary stage. Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical result of lower oil and natural gas property balances associated with proved property impairments recorded in the first quarter of 2020. Procedures Factors Securities Disclosures Exhibits 101.INS** XBRL Instance XBRL Taxonomy Extension Schema XBRL Taxonomy Extension Calculation Linkbase XBRL Taxonomy Extension Definition Linkbase XBRL Taxonomy Extension Label Linkbase XBRL Taxonomy Extension Presentation Linkbase By: /s/ Stephen Chazen Stephen Chazen Chief Executive Officer (Principal Executive Officer) Date: By: /s/ Chief Financial Officer (Principal Financial PagePART I.1Item 1.FINANCIAL INFORMATION 1Item 1. Financial Statements 145141717PART II.OTHER INFORMATION Item 1. 1818181919191921iSheet(unaudited)June 30, 2021 December 31, 2020 ASSETS (Unaudited) (Audited) CURRENT ASSETS Cash and cash equivalents $ 190,282 $ 192,561 Accounts receivable 119,241 81,559 Drilling advances 1,244 3,805 Other current assets 2,094 3,601 Total current assets 312,861 281,526 PROPERTY, PLANT AND EQUIPMENT Oil and natural gas properties 2,237,851 2,130,125 Other 5,120 4,412 Accumulated depreciation, depletion and amortization (1,071,338) (985,010) Total property, plant and equipment, net 1,171,633 1,149,527 OTHER ASSETS Deferred financing costs, net 4,881 6,042 Intangible assets, net 0 9,346 Other long-term assets 8,970 6,979 Total other assets 13,851 22,367 TOTAL ASSETS $ 1,498,345 $ 1,453,420 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 92,134 $ 62,626 75,815 66,323 Total current liabilities 167,949 128,949 LONG-TERM LIABILITIES Long-term debt, net 386,996 391,115 Asset retirement obligations, net of current 94,154 88,232 Other long-term liabilities 6,590 5,702 Total long-term liabilities 487,740 485,049 0 0 STOCKHOLDERS’ EQUITY Class A Common Stock, $0.0001 par value, 1,300,000 shares authorized, 184,800 shares issued and 175,327 shares outstanding in 2021 and 168,755 shares issued and 163,280 shares outstanding in 2020 18 17 Class B Common Stock, $0.0001 par value, 225,000 shares authorized, 60,524 shares issued and outstanding in 2021 and 85,790 shares issued and outstanding in 2020 6 9 Additional paid-in capital 1,684,579 1,712,544 Treasury Stock, at cost, 9,473 shares and 5,475 shares in 2021 and 2020, respectively (83,286) (38,958) Accumulated deficit (977,761) (1,125,450) Noncontrolling interest 219,100 291,260 Total equity 842,656 839,422 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,498,345 $ 1,453,420 Three Months Ended Six Months Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 REVENUES Oil revenues $ 188,096 $ 60,790 $ 334,509 $ 215,476 Natural gas revenues 32,595 13,168 67,359 29,343 Natural gas liquids revenues 30,035 8,881 56,521 19,385 Total revenues 250,726 82,839 458,389 264,204 OPERATING EXPENSES Lease operating expenses 21,971 18,310 41,363 42,473 Gathering, transportation and processing 8,963 6,788 17,762 14,807 Taxes other than income 13,812 5,525 24,574 15,543 Exploration expense 62 6,462 2,124 562,888 Impairment of oil and natural gas properties 0 0 0 1,381,258 Asset retirement obligations accretion 1,405 1,464 2,736 2,902 Depreciation, depletion and amortization 43,332 50,870 86,275 193,542 Amortization of intangible assets 7,233 3,626 9,346 7,253 General and administrative expenses 24,757 15,729 45,122 33,809 Total operating expenses 121,535 108,774 229,302 2,254,475 OPERATING INCOME (LOSS) 129,191 (25,935) 229,087 (1,990,271) OTHER INCOME (EXPENSE) Income from equity method investee 0 611 0 1,052 Interest expense, net (8,752) (7,256) (16,046) (14,012) Loss on derivatives, net (2,004) 0 (2,486) 0 Other income (expense), net 135 13 (94) (460) Total other expense, net (10,621) (6,632) (18,626) (13,420) INCOME (LOSS) BEFORE INCOME TAXES 118,570 (32,567) 210,461 (2,003,691) Income tax expense (benefit) 2,398 (3,176) 2,797 (79,001) NET INCOME (LOSS) 116,172 (29,391) 207,664 (1,924,690) LESS: Net income (loss) attributable to noncontrolling interest 31,727 (11,119) 59,975 (679,408) NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON STOCK $ 84,445 $ (18,272) $ 147,689 $ (1,245,282) NET INCOME (LOSS) PER SHARE OF CLASS A COMMON STOCK Basic $ 0.48 $ (0.11) $ 0.86 $ (7.46) Diluted $ 0.48 $ (0.11) $ 0.85 $ (7.46) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 175,169 166,572 171,083 166,860 Diluted 176,129 166,572 172,085 166,860 condensedconsolidated financial statements.Operations(unaudited)Class A
Common StockClass B
Common StockAdditional Paid In Capital Treasury Stock Retained Earnings/ Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interest Total
EquityShares Value Shares Value Shares Value Balance, December 31, 2019 168,319 $ 17 85,790 $ 9 $ 1,703,362 1,000 $ (10,277) $ 82,940 $ 1,776,051 $ 952,478 $ 2,728,529 Stock based compensation expense — — — — 1,902 — — — 1,902 977 2,879 Changes in ownership interest adjustment — — — — (970) — — — (970) 970 0 Common stock issued related to stock based compensation, net 154 — — — (298) — — — (298) (154) (452) Class A Common Stock repurchase — — — — — 1,000 (6,483) — (6,483) — (6,483) Distributions to noncontrolling interest owners — — — — — — — — — (284) (284) Net loss — — — — — — — (1,227,010) (1,227,010) (668,289) (1,895,299) Balance, March 31, 2020 168,473 $ 17 85,790 $ 9 $ 1,703,996 2,000 $ (16,760) $ (1,144,070) $ 543,192 $ 285,698 $ 828,890 Stock based compensation expense — — — — 2,023 — — — 2,023 1,042 3,065 Changes in ownership interest adjustment — — — — 124 — — — 124 (124) 0 Common stock issued related to stock based compensation and other, net 114 — — — (22) — — — (22) (11) (33) Distributions to noncontrolling interest owners — — — — — — — — — (207) (207) Net loss — — — — — — — (18,272) (18,272) (11,119) (29,391) Balance, June 30, 2020 168,587 $ 17 85,790 $ 9 $ 1,706,121 2,000 $ (16,760) $ (1,162,342) $ 527,045 $ 275,279 $ 802,324 Class A
Common StockClass B
Common StockAdditional Paid In Capital Treasury Stock Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interest Total
EquityShares Value Shares Value Shares Value Balance, December 31, 2020 168,755 $ 17 85,790 $ 9 $ 1,712,544 5,475 $ (38,958) $ (1,125,450) $ 548,162 $ 291,260 $ 839,422 Stock based compensation expense — — — — 1,835 — — — 1,835 870 2,705 Changes in ownership interest adjustment — — — — 28,924 — — — 28,924 (28,924) 0 Common stock issued related to stock based compensation and other, net 244 — — — (839) — — — (839) (399) (1,238) Class A Common Stock repurchases — — — — — 1,973 (20,281) — (20,281) — (20,281) Class B Common Stock purchase and cancellation — — (5,000) (1) 1 — — — — (50,781) (50,781) Non-compete settlement 375 — — — (11,231) — — — (11,231) (5,921) (17,152) Conversion of Class B Common Stock to Class A Common Stock 14,166 1 (14,166) (1) — — — — — — 0 Distributions to noncontrolling interest owners — — — — — — — — — (155) (155) Net Income — — — — — — — 63,244 63,244 28,248 91,492 Balance, March 31, 2021 183,540 $ 18 66,624 $ 7 $ 1,731,234 7,448 $ (59,239) $ (1,062,206) $ 609,814 $ 234,198 $ 844,012 Stock based compensation expense — — — — 2,577 — — — 2,577 951 3,528 Changes in ownership interest adjustment — — — — (30,662) — — — (30,662) 30,662 0 Common stock issued related to stock based compensation and other, net 160 — — — (44) — — — (44) (17) (61) Class A Common Stock repurchases — — — — — 2,025 (24,047) — (24,047) — (24,047) Class B Common Stock purchase and cancellation — — (5,000) (1) 1 — — — — (71,750) (71,750) Non-compete settlement — — — — (18,527) — — — (18,527) (6,395) (24,922) Conversion of Class B Common Stock to Class A Common Stock 1,100 — (1,100) — — — — — — — — Distributions to noncontrolling interest owners — — — — — — — — — (276) (276) Net Income — — — — — — — 84,445 84,445 31,727 116,172 Balance, June 30, 2021 184,800 $ 18 60,524 $ 6 $ 1,684,579 9,473 $ (83,286) $ (977,761) $ 623,556 $ 219,100 $ 842,656 Six Months Ended June 30, 2021 June 30, 2020 CASH FLOWS FROM OPERATING ACTIVITIES NET INCOME (LOSS) $ 207,664 $ (1,924,690) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion and amortization 86,275 193,542 Amortization of intangible assets 9,346 7,253 Exploration expense, non-cash 0 561,629 Impairment of oil and natural gas properties 0 1,381,258 Asset retirement obligations accretion 2,736 2,902 Amortization of deferred financing costs 2,018 1,797 Unrealized loss on derivatives, net 2,320 0 Deferred taxes 0 (77,834) Stock based compensation 6,233 5,944 Other (85) (1,052) Changes in operating assets and liabilities: Accounts receivable (37,682) 45,249 Accounts payable 29,509 (14,894) Accrued liabilities (6,322) (13,958) Drilling advances 2,561 (343) Other assets and liabilities, net 1,458 (961) Net cash provided by operating activities 306,031 165,842 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions (9,409) (69,782) Additions to oil and natural gas properties (94,356) (129,651) Changes in working capital associated with additions to oil and natural gas properties 11,814 (24,381) Other investing (655) (345) Net cash used in investing activities (92,606) (224,159) CASH FLOW FROM FINANCING ACTIVITIES Class A Common Stock repurchases (44,328) (6,483) Class B Common Stock purchase and cancellation (122,531) 0 Non-compete settlement (42,074) 0 Cash paid for debt modification (4,976) 0 Distributions to noncontrolling interest owners (431) (490) Other financing activities (1,364) (493) Net cash used in financing activities (215,704) (7,466) NET CHANGE IN CASH AND CASH EQUIVALENTS (2,279) (65,783) Cash and cash equivalents – Beginning of period 192,561 182,633 Cash and cash equivalents – End of period $ 190,282 $ 116,850 SUPPLEMENTAL CASH FLOW INFORMATION: Supplemental non-cash operating activity: Cash paid for income taxes $ 15 $ 0 Cash paid for interest 14,033 12,540 Supplemental non-cash investing and financing activity: Accruals or liabilities for capital expenditures $ 28,182 $ 16,341 Supplemental non-cash lease operating activity: Right-of-use assets obtained in exchange for operating lease obligations $ 3,687 $ 1,508 condensedconsolidated financial statements.The accompanying notes are an integral part of these condensed financial statements.The accompanying notes are an integral part of these condensed financial statements.TPG Pace Energy Holdings Corp.CondensedConsolidated Financial Statements(unaudited)BusinessNature of OperationsOrganization and GeneralTPG Pace Energy Holdings Corp.was incorporatedis an independent oil and natural gas company engaged in the stateacquisition, development, exploration, and production of Delaware on February 14, 2017oil, natural gas, and natural gas liquid (“Inception”NGL”). The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company intends to focus its search for a target business in the energy or energy related industries, but may seek to complete a Business Combination with an operating company in any industry or location in the United States. The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). reserves. The Company’s sponsor is TPG Pace Energy Sponsor, LLC, a Delaware limited liability company (the “Sponsor”), which is an affiliate of TPG Global, LLC.All activity for the period from Inception to September 30, 2017 relates to the Company’s formationoil and natural gas properties are located primarily in Karnes County and the initial public offering of units, each consisting of one of the Company’s shares of Class A common stock and one-third of one warrant to purchase one share of Class A common stock (the “Public Offering”), and the identification and evaluation of prospective acquisition targets for a Business Combination. The Company will not generate operating revenues prior to the completion of the Business Combination and will generate non-operating incomeGiddings area in the form of interest income on Permitted Investments (as defined below) from the proceeds derived from the Public Offering. The Company has selected December 31st as its fiscal year end.FinancingThe registration statement for the Company’s Public Offering was declared effective by the United States Securities and Exchange Commission (the “SEC”) on May 4, 2017. The Public Offering closed on May 10, 2017 (the “Close Date”). The Sponsor purchased an aggregate of 10,000,000 warrants at a purchase price of $1.50 per warrant, or $15,000,000 in the aggregate, in a private placement on the Close Date (the “Private Placement”). The warrants are included in additional paid-in capital at the balance sheet.The Company intends to finance a Business Combination with proceeds from its $650,000,000 Public Offering (see Note 3) and $15,000,000 Private Placement (see Note 4). At the Close Date, proceeds of $650,000,000, net of underwriting discounts of $13,000,000 and funds designated for operational use of $2,000,000, were deposited in a trust account with Continental Stock Transfer and Trust Company acting as trustee (the “Trust Account”) as described below.The Trust AccountOn the Close Date, all funds held in the Trust Account were invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations (collectively, “Permitted Investments”).Funds will remain in the Trust Account except for the withdrawal of interest to fund working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes. The proceeds from the Public Offering will not be released from the Trust Account until the earliest of (i) the completion of the Business Combination, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the amended and restated certificate of incorporation to modify the substance and timing of the Company’s obligation to redeem 100% of the public shares ifSouth Texas where the Company does not completetargets the Business Combination within 24 months from the closing of the Public Offering, or (iii) the redemption of all of the Company’s public shares if itEagle Ford Shale and Austin Chalk formations. Magnolia’s objective is unable to complete the Business Combination within 24 months from the Close Date, subject to applicable law. In addition, if the Company is unable to complete the Business Combination within 24 months from the closing of the Public Offering for any reason, compliance with Delaware law may require that the Company submit a plan of dissolution to the then-existing stockholders for approval prior to the distribution of the proceeds held in the Trust Account.Of the remaining proceeds of $2,000,000 held outside the Trust Account, $300,000 was used to repay the loan from the Sponsor, with the remainder available to pay offering costs, business, legal and accounting due diligence on prospective acquisitions, listing fees and continuing general and administrative expenses.The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a Business Combination with (or acquisition of) a target business. As used herein, the target business must be with one or more target businesses that together have a fairgenerate stock market value equal to at least 80%over the long-term through consistent organic production growth, high full cycle operating margins, an efficient capital program with short economic paybacks, significant free cash flow after capital expenditures, and effective reinvestment of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the timefree cash flow.the Company signing a definitive agreement.After signing a definitive agreement for a Business Combination, the Company will provide the public stockholders with the opportunity to redeem all or a portion of their public shares either (i) in connection with a stockholder meeting to approve the Business Combination or (ii) by means of a tender offer. Each public stockholder may elect to redeem their shares irrespective of whether they vote for or against the Business Combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the Trust Account is initially anticipated to be approximately $10.00 per public share. The per share amount the Company will distribute to investors who properly redeem their shares will not be reduced by any deferred underwriting commissions payable to underwriters. The decision as to whether the Company will seek stockholder approval of the Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval under the law or stock exchange listing requirements. If the Company seeks stockholder approval, it will complete its Business Combination only if a majority of the outstanding shares voted are voted in favor of the Business Combination. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001 after payment of the deferred underwriting commission. In such an instance, the Company would not proceed with the redemption of its public shares and the related Business Combination, and instead may search for an alternate Business Combination.The Company has 24 months from the Close Date to complete its Business Combination. If the Company does not complete a Business Combination within this period, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds in the Trust Account and not previously released to the Company to fund its working capital requirements, subject to an annual limit of $750,000, and/or to pay its taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The Company’s Sponsor and four independent directors (collectively, “Initial Stockholders”) and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to their Founder Shares (as defined in Note 4) if the Company fails to complete the Business Combination within 24 months from the Close Date. However, if the initial stockholders acquire public shares after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if the Company fails to complete the Business Combination within the allotted 24-month time period.The underwriters have agreed to waive their rights to any deferred underwriting commission (“Deferred Discount”) held in the Trust Account in the event the Company does not complete the Business Combination and those amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Company’s public shares.If the Company fails to complete the Business Combination, the redemption of the Company’s public shares will reduce the book value of the shares held by the Initial Stockholders, who will be the only remaining stockholders after such redemptions.If the Company holds a stockholder vote or there is a tender offer for shares in connection with a Business Combination, a public stockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes. As a result, such shares are recorded at their redemption amount and classified as temporary equity on the balance sheet, in accordance with ASC 480, “Distinguishing Liabilities from Equity.”Going ConcernAt September 30, 2017, the Company had current liabilities of $1,229,470 and negative working capital of $91,451 largely due to amounts owed for professional services associated with the Public Offering and operating of the Company. As discussed above, the Company has the ability to use annually up to $750,000 of interest earned from the Trust Account to fund working capital. The Company's ability to continue as a going concern is dependent upon its ability to consummate a Business Combination or have access to sufficient interest income from the Trust Account to fund expenses and negative working capital balances. If there is insufficient interest income available to pay such amounts in full or if a Business Combination does not occur, the Company will need to obtain additional funds to meet its liabilities. Management's options for obtaining additional working capital, to the extent needed, include potentially requesting loans from the Sponsor or affiliates of the Sponsor, or certain of the Company’s executive officers or directors. Additional funds could also be raised through a private offering of debt or equity. There can be no assurance that the Company will be able to raise such funds if they are needed. The uncertainty regarding the need for and ability to obtain such funding raises substantial doubt about the Company’s ability to continue as a going concern.interim condensed financial statements have been prepared on a going concern basis and do not include any adjustments that might arise as a result of uncertainties about the Company’s ability to continue as a going concern.2. Summary of Significant Accounting PoliciesBasis of PresentationThe accompanying unaudited interim condensedconsolidated financial statements have been prepared in accordance with generally accepted accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC,Securities and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessaryExchange Commission (“SEC”) for a fair presentation of the Company’sinterim financial position at September 30, 2017 and the results of operations and cash flows for the periods presented. Certain information andreporting. Accordingly, certain disclosures normally included in an Annual Report on Form 10-K have been omitted. The consolidated financial statements preparedand related notes included in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. Interim results are not necessarily indicative of results for the full year or any future periods. The accompanying unaudited interim condensed financial statementsthis Quarterly Report should be read in conjunction with the auditedCompany’s consolidated and combined financial statements and related notes thereto included in the final Prospectus dated May 4, 2017 filed byCompany’s Annual Report on Form 10-K for the Company withperiod ended December 31, 2020 (the “2020 Form 10-K”). Except as disclosed herein, there have been no material changes to the SECinformation disclosed in the notes to the consolidated and the audited balance sheet and notes theretocombined financial statements included in the Current Report onCompany’s 2020 Form 8-K dated May 10, 2017 filed10-K.SEC.Emerging Growthassociated gathering, transportation and processing expenses if the processor is a service provider and there is redelivery of one or several commodities to the CompanySection 102(b)(1) at the tailgate of the JOBS Act exempts emerging growth companiesplant. The facts and circumstances of an arrangement are considered and judgment is often required in making this determination. For processing contracts that require noncash consideration in exchange for processing services, the Company recognizes revenue and an equal gathering, transportation and processing expense for commodities transferred to the service provider.beingcontracts with customers. Additionally, the Company’s product sales contracts do not give rise to material contract assets or contract liabilities.comply with new or revised financial accounting standards until private companies (thatmake a payment to the Company and when the settlement price is those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered underabove the Securities Exchange Act of 1934, as amended) areceiling price, the Company is required to comply withmake a payment to the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out ofcounterparty. When the extended transition periodsettlement price is between the floor and comply with the requirements that apply to non-emerging growth companies but any such an election to opt outceiling, there is irrevocable. no payment required.opt outdesignate any of such extended transition period which means that when a standard is issued or revisedits derivative instruments as hedging instruments. Accordingly, changes in the fair value of the Company’s derivative instruments are recorded immediately to earnings as “Loss on derivatives, net” on the Company’s consolidated statements of operations.it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.CashCash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. six months ended June 30, 2021: (In thousands) Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Derivative settlements, realized loss $ 166 $ 166 Unrealized loss on derivatives 1,838 2,320 Loss on derivatives, net $ 2,004 $ 2,486 cash equivalents at Septemberany derivative instruments during the three or six months ended June 30, 2017.2020.Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. has not experienced losses on these accounts and management believeshad the Company is not exposed to significant risks on such accounts.Financial InstrumentsThefollowing outstanding derivative contracts in place as of June 30, 2021:2021 Natural gas costless collars: Notional volume (MMBtu) 3,100,000 Weighted average floor price ($/MMBtu) $ 2.31 Weighted average ceiling price ($/MMBtu) $ 3.00 which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet due to their short-term nature.Fair Value MeasurementASC 820 establishes aare carried at fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure investments at fair value.measured either on a recurring or nonrecurring basis. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements).Investments with readily available quoted prices or for whichCompany’s fair value can be measured from quoted pricesmeasurements are based either on actual market data or assumptions that other market participants would use in active markets will typically have a higher degree of input observability and a lesser degree of judgment appliedpricing an asset or liability in determining fair value.I—I - Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used.II—II - Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.III—III - Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation.In some cases,June 30, 2021 December 31, 2020 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Long-term debt $ 386,996 $ 412,608 $ 391,115 $ 407,500 measurematurity, which are considered Level 2 inputs. The Company’s derivative instruments are recorded at fair value might fall within different levels“Other current liabilities” on the Company’s consolidated balance sheet as of June 30, 2021. The Company’s derivative instruments were recorded at fair value within “Other current assets” on the Company’s consolidated balance sheet as of December 31, 2020. These fair values are recorded by netting asset and liability positions with the same counterparty and are subject to contractual terms, which provide for net settlement.Fair Value Measurements Using (In thousands) Level 1 Level 2 Level 3 Total Fair Value Netting Carrying Amount June 30, 2021 Current assets: Natural gas derivative instruments $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Current liabilities: Natural gas derivative instruments $ 0 $ 2,043 $ 0 $ 2,043 $ 0 $ 2,043 Fair Value Measurements Using (In thousands) Level 1 Level 2 Level 3 Total Fair Value Netting Carrying Amount December 31, 2020 Current assets: Natural gas derivative instruments $ 0 $ 1,375 $ 0 $ 1,375 $ (1,098) $ 277 Current liabilities: Natural gas derivative instruments $ 0 $ 1,098 $ 0 $ 1,098 $ (1,098) $ 0 hierarchy. In such cases,measurement standard on a nonrecurring basis to its non-financial assets and liabilities, including oil and natural gas properties. These assets and liabilities are not measured at fair value on a recurring basis but are subject to fair value adjustments when facts and circumstances arise that indicate a need for remeasurement. levelfirst quarter of 2020, Magnolia recorded impairments of $1.9 billion related to proved and unproved properties as a result of a sharp decline in commodity prices. Proved property impairment of $1.4 billion is included in “Impairment of oil and natural gas properties” and unproved property impairment of $0.6 billion is included in “Exploration expense” on the Company’s consolidated statement of operations for the three and six months ended June 30, 2020. Proved and unproved properties that were impaired had aggregate fair values of $0.8 billion and $0.3 billion, respectively. The fair values of these oil and natural gas properties were measured using the income approach based on inputs that are not observable in the market, and therefore, represent Level 3 inputs. The Company calculated the estimated fair value hierarchy within whichvalues of its oil and natural gas properties using a discounted future cash flow model. Significant inputs associated with the investment is categorized in its entirety is determinedcalculation of discounted future net cash flows include estimates of future commodity prices based on NYMEX strip pricing adjusted for price differentials, estimates of proved oil and natural gas reserves and risk adjusted probable and possible reserves, estimates of future expected operating and capital costs, and a market participant based weighted average cost of capital of 10% for proved property impairments and 12% for unproved property impairments. NaN impairments were recorded for the lowest level inputthree and six months ended June 30, 2021.is significant to the investment. Assessing the significancerather than delivering an aggregate of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the perceived risk of that investment.The Permitted Investments are Level I at September 30, 2017.Redeemable Common StockAll 65,000,0004.0 million shares of Class A common stock sold as partCommon Stock upon the two and one-half year and the four year anniversaries of the Units in the Public Offering contain a redemption feature as discussed above. In accordance with ASC 480, redemption provisions not solely within the control ofClosing Date, the Company requirewould deliver (i) the security to be classified outsidecash value of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Although the Company did not specify a maximum redemption threshold, its charter provides that in no event will it redeem its Class A common stock in an amount that would cause its net tangible assets, or total stockholders’ equity, to fall below $5,000,001. Accordingly, at September 30, 2017, 62,376,845 of the Company’s 65,000,000approximately 2.0 million shares of Class A common stock were classified outsideCommon Stock and approximately 0.4 million shares of permanent equity at their redemption value.UseClass A Common Stock on the two and one-half year anniversary of EstimatesThe preparationthe Closing Date and (ii) an aggregate of financial statements1.6 million shares of Class A Common Stock on the four year anniversary of the Closing Date, in conformityeach case subject to the terms and conditions of the Non-Compete. On February 1, 2021, as consideration for compliance with U.S. GAAP requiresthe Non-Compete, the Company paid $17.2 million in cash and issued 0.4 million shares of Class A Common Stock.managementconsolidated balance sheet. These intangible assets had a definite life and were subject to amortization utilizing the straight-line method over their economic life, previously estimated to be two and one-half to four years. The Second Non-Compete Amendment resulted in the Company accelerating the amortization of the remaining intangible assets. The Company includes the amortization in “Amortization of intangible assets” on the Company’s consolidated statements of operations.(In thousands) June 30, 2021 December 31, 2020 Non-compete intangible assets $ 44,400 $ 44,400 Accumulated amortization (44,400) (35,054) Intangible assets, net $ 0 $ 9,346 Weighted average amortization period (in years) 2.70 3.25 (In thousands) June 30, 2021 December 31, 2020 Accrued capital expenditures $ 28,182 $ 16,368 Accrued interest 10,000 10,000 Other 37,633 39,955 Total Other current liabilities $ 75,815 $ 66,323 (In thousands) June 30, 2021 December 31, 2020 Revolving credit facility $ 0 $ 0 Senior Notes due 2026 400,000 400,000 Total long-term debt 400,000 400,000 Less: Unamortized deferred financing cost (13,004) (8,885) Long-term debt, net $ 386,996 $ 391,115 estimatesRestricted Payments (as defined in the Indenture). The amendment to the Indenture was accounted for as a debt modification. Costs incurred with third parties directly related to the modification were expensed as incurred. The Company incurred approximately $1.1 million of transaction fees related to the modification which were expensed and assumptions that affectare reflected in “Interest expense, net” on the reported amountsCompany’s consolidated statements of assetsoperations for the three and liabilitiessix months ended June 30, 2021. The Company also paid $5.0 million in fees to holders of the 2026 Senior Notes, which are reflected as deferred financing costs reducing “Long-term debt, net” on the Company’s consolidated balance sheets. These costs are amortized using the new effective interest rate applied prospectively over the remaining term of the 2026 Senior Notes and disclosureare also included in “Interest expense, net” in the Company’s consolidated statements of contingent assetsoperations.liabilitiesan additional $5.0 million related to the amendment to the Indenture governing the 2026 Senior Notes, which were capitalized. These costs are amortized using the effective interest method over the term of the 2026 Senior Notes and are included in “Interest expense, net” in the Company’s consolidated statements of operations. The unamortized portion of the deferred financing costs is included as a reduction to the carrying value of the 2026 Senior Notes, which has been recorded as “Long-term debt, net” on the Company’s consolidated balance sheet as of June 30, 2021. The Company recognized interest expense related to the 2026 Senior Notes of $7.7 million and $6.3 million for the three months ended June 30, 2021 and 2020, respectively, and $14.0 million and $12.6 million for the six months ended June 30, 2021 and 2020, respectively.financial statementsIssuers may redeem all or areported amounts of revenues and expenses duringCompany have been named as defendants in a lawsuit where the reporting period. Actual results could differ from those estimates.Company complies withlitigation is in the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A “Expenses of Offering”.pre-trial stage. The Company incurred offering costs of $1,424,561exposure related to this litigation is currently not reasonably estimable. The Magnolia LLC Unit Holders retained all such liability in connection with the Public Offering. These costs, togetherBusiness Combination.underwriter discount and Deferred Discount, totaling $35,750,000, were charged to additional paid-in capital upon completionTexas Railroad Commission (the “Commission”) challenging the validity of the Public Offering.Net Income Per Sharepermit to drill such well by questioning the long-standing process by which the Commission granted the permit. After the Commission affirmed the granting of Common Stockcomplies with accountingas an owner or lessee and disclosure requirementsoperator of FASB ASC Topic 260, Earnings Per Share. Net income per shareoil and natural gas properties, is subject to various federal, state, and local laws and regulations relating to discharge of common stock is computed by dividing net income bymaterials into, and the weighted average numberprotection of, common shares outstanding during the period as calculated usingenvironment. These laws and regulations may, among other things, impose liability on a lessee under an oil and natural gas lease for the treasury stock method. At September 30, 2017,cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company had outstanding warrantsmay be directed to purchase of upsuspend or cease operations in an affected area. The Company maintains insurance coverage, which it believes is customary in the industry, although the Company is not fully insured against all environmental risks.31,666,666 shares of Class A common stock. significant fluctuations in the future. weighted average of these shares was excluded fromcoronavirus disease 2019 (“COVID-19”) pandemic and related economic repercussions have created significant volatility, uncertainty, and turmoil in the calculation of diluted net income per share of common stock since the exerciseoil and natural gas industry. Oil demand significantly deteriorated and has remained volatile as a result of the warrantsvirus outbreak and corresponding preventative measures taken around the world to mitigate the spread of the virus. The implications of the decrease in global demand for, coupled with the general oversupply of, oil may have further negative effects on the Company’s business. Demand and pricing may again decline if there is contingent upona resurgence of the occurrenceoutbreak across the U.S. and other locations across the world or as a result of future events. At Septemberany related social distancing guidelines, travel restrictions, and stay-at-home orders. The extent of any further impact of the pandemic on the Company’s industry and business cannot be reasonably predicted at this time.Three Months Ended Six Months Ended (In thousands) June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Current: Federal $ 1,645 $ 5 $ 1,645 $ (1,167) State 753 0 1,152 0 2,398 5 2,797 (1,167) Deferred: Federal 0 (2,916) 0 (71,792) State 0 (265) 0 (6,042) 0 (3,181) 0 (77,834) Income tax expense (benefit) $ 2,398 $ (3,176) $ 2,797 $ (79,001) 2017,2021 and 2020 was 2.0% and 9.8%, respectively. The Company’s effective tax rate for the six months ended June 30, 2021 and 2020 was 1.3% and 3.9%, respectively. As a result of impairments in the first quarter of 2020, the Company established full valuation allowances on the federal and state deferred tax assets, which resulted in additional differences between the effective tax rate and the statutory rate as of June 30, 2021 and June 30, 2020. The primary differences between the annual effective tax rate and the statutory rate of 21.0% are income attributable to noncontrolling interest, state taxes, and valuation allowances.haveanticipate recognition of any dilutive securitiessignificant liabilities for uncertain tax positions during the next 12 months. For the quarter ended June 30, 2021, 0 amounts were incurred for income tax uncertainties or other contracts that could, potentially, be exercised or converted into shares of common stockinterest and then share in the earnings ofpenalties. Currently, the Company under the treasury stock method. As a result, diluted net income per share of common stock is the same as basic net income per share of common stock for the period.Income TaxesUnder ASC 740, “Income Taxes,” deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized.ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at September 30, 2017. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or a material deviation from its position. The Company isCompany’s tax years since its formation remain subject to possible income tax examinations by its major taxing authorities since inception.The Company incurred United States federal income tax expense of approximately $360,346 and $494,317 for all periods.threesix months ended SeptemberJune 30, 2017 and the period from Inception to September 30, 2017, respectively.On September 15, 2017, the Company made an estimated quarterly tax payment2021, EnerVest redeemed 15.3 million Magnolia LLC Units (and a corresponding number of $400,000 to the Internal Revenue Service (“IRS”) for federal income taxes estimated for 2017 on interest earned in the Trust Account. The funds were paid from the Trust Account. At September 30, 2017, the Company had accrued federal income taxes of $94,317 included in accrued professional fees and other expenses on the balance sheet.State Franchise TaxAs the Company is incorporated in the state of Delaware, it is subject to Delaware state franchise tax which is computed based on an analysis of both authorized shares and total gross assets. At September 30, 2017, the Company had accrued Delaware state franchise taxes of $78,900 included in accrued professional fees and other expenses on the balance sheet.Recent Accounting PronouncementsManagement does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.3. Public OfferingIn its Public Offering, the Company sold 65,000,000 units at a price of $10.00 per unit. Each unit consists of one share of Class A common stock of the Company at $0.0001 par value and one-third of one warrant (a “Unit”). Each whole warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share (a “Warrant”). Only whole Warrants may be exercised and no fractional Warrants will be issued upon separation of the Units and only whole Warrants may be traded. The Warrants willbecome exercisable on the later of 30 days after the completion of the Business Combination or 12 months from the Close Date, and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. Alternatively, if the Company does not complete a Business Combination within 24 months after the Close Date, the Warrants will expire at the end of such period. If the Company is unable to deliver registered shares of Class A common stock to the holder upon exercise of Warrants issued in connection with the 65,000,000 Units during the exercise period, the Warrants will expire worthless, except to the extent that they may be exercised on a cashless basis in the circumstances described in the agreement governing the Warrants.Once the Warrants become exercisable, the Company may redeem the outstanding Warrants in whole, but not in part, at a price of $0.01 per Warrant upon a minimum of 30 days’ prior written notice of redemption, and only in the event that the last sale price of the Company’s public shares equals or exceeds $18.00 per share for any 20 trading days within the 30-trading day period ending on the third trading day before the Company sends the notice of redemption to the Warrant holders. The Company has agreed to use its best efforts to file a registration statement for the shares of Class A common stock issuable upon exercise of the Warrants under the Securities Act as soon as practicable, but in no event later than 15 business days following the completion of a Business Combination.The Company paid an underwriting discount of 2.00% of the gross proceeds of the Public Offering, or $13,000,000, to the underwriters at the Close Date, with an additional fee (the “Deferred Discount”) of 3.50% of the gross proceeds of the Public Offering, or $22,750,000, payable upon the Company’s completion of a Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes a Business Combination. The underwriters are not entitled to receive any of the interest earned on Trust Account funds that would be used to pay the Deferred Discount. The Deferred Discount has been recorded as a deferred liability on the balance sheet at September 30, 2017 as management deemed the consummation of a Business Combination to be probable.4. Related Party TransactionsFounder SharesOn February 22, 2017, the Sponsor purchased an aggregate of 11,500,000 shares of the Company’s Class F common stock (the “Founder Shares”)B Common Stock) for an aggregate purchase price of $25,000, or approximately $0.002 per share. Prior to the Sponsor’s initial investment in the Company of $25,000, the Company had no assets. The purchase price of the Founder Shares was determined by dividing the amount of cash contributed to the Company by theequivalent number of Founder Shares issued by the Company.On April 24, 2017, the Company agreed to effect a stock dividend prior to the closing of the Public Offering of approximately 0.5 shares of Class F common stock for each share of Class F common stock, which resulted in a total of 17,250,000 issued and outstanding Founder Shares. The stock dividend also adjusted the Founder Shares subject to forfeiture from 1,500,000 to 2,250,000 such that the Founder Shares would represent 20.0% of the Company’s issued and outstanding common shares after the Public Offering. The stock dividend was accounted for with a transfer from additional paid in capital to Class F common stock as there is a legal requirement to maintain par value per share. On April 24, 2017, the Sponsor transferred 40,000 Founder Shares to each of the Company’s four independent directors at their original purchase price. On June 24, 2017, the Sponsor forfeited 1,000,000 Founder Shares on the expiration of the underwriters’ over-allotment option. At September 30, 2017, the Sponsor and the Company’s four independent directors (the “Initial Stockholders”) held, collectively, 16,250,000 Founder Shares.The Founder Shares are identical to the Class A common stock included in the Units sold in the Public Offering except that:only holders of the Founder Shares have the right to vote on the election of directors prior to the Business Combination;the Founder Shares are subject to certain transfer restrictions, as described in more detail below;the Initial Stockholders and the Company’s officers and directors entered into a letter agreement with the Company, pursuant to which they have agreed (i) to waive their redemption rights with respect to their Founder Shares and public shares in connection with the completion of the Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete the Business Combination within 24 months from the Public Offering. If the Company submits the Business Combination to the public stockholders for a vote, the initial stockholders have agreed, pursuant to such letter agreement, to vote their Founder Shares and any public shares purchased during or after the Public Offering in favor of the Business Combination; andthe Founder Shares are automatically convertible into Class A common stock at the time of the Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights.Additionally, the Initial Stockholders will agree not to transfer, assign or sell any of their respective Founder Shares until the earlier of (i) one year after the completion of the Business Combination or (ii) subsequent to the Business Combination, if the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination and (iii) the date following the completion of the Business Combination on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property (the “Lock Up Period”).Private Placement WarrantsOn the Close Date, the Sponsor purchased from the Company an aggregate of 10,000,000 private placement warrants at a price of $1.50 per warrant, or approximately $15,000,000, in a private placement that occurred in conjunction with the completion of the Public Offering (the “Private Placement Warrants”). Each Private Placement Warrant entitles the holder to purchase one share of Class A common stock at $11.50 per share, subject to adjustment. A portion of the purchase price of the Private Placement Warrants was placed in the Trust Account. The Private Placement Warrants will not be redeemable by the Company so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the Units sold in the Public Offering. The Sponsor, or its permitted transferees, will have the option to exercise the Private Placement Warrants on a cashless basis. The Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of the Business Combination.If the Company does not complete the Business Combination within 24 months from the Close Date, the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Company’s public shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.UnitsThe Company’s Chief Executive Officer purchased 100,000 Units in the Public Offering at the offering price of $10.00 per share. Rights and obligations under these Units are identical to those offered in the Public Offering.During the period from August 18, 2017 to August 23, 2017, the Company’s Chief Executive Officer purchased a total of 27,900 Units in a series of open market transactions at a weighted average price of $10.24 per Unit. The actual price paid for each Unit ranged from a low of $10.23 to a high of $10.30.Class A Common StockDuring the period from August 18, 2017 to August 24, 2017, the Company’s Chief Executive Officer purchased a total of 32,000 shares of Class A Common Stock in a series of open market transactions at a price of $9.80 per share.Registration RightsHolders of the Founder Shares and Private Placement Warrants are entitled to registration rights pursuant to a registration rights agreement signed on the effective date of the Public Offering. The holders ofsubsequently sold these securities are entitled to make up to three demands that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to other registration statements filed by the Company subsequent to its completion of the Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that that Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable Lock Up Period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.IndemnityThe Sponsor has agreed that it will be liableshares to the Company if and to the extentpublic. Magnolia did not receive any claims by a vendor (other than the Company’s independent auditors) for services rendered or products sold to the Company, or a prospective target business with which the Company discussed entering into a transaction agreement, reduces the amount of funds in the Trust Account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to fund the Company’s working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not beresponsible to the extent of any liability for such third party claims. The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of the Company and, therefore, the Sponsor may not be able to satisfy those obligations. The Company has not asked the Sponsor to reserve for such eventuality as the Company believes the likelihood of the Sponsor having to indemnify the Trust Account is limited because the Company will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.Related Party Note PayableBetween Inception and the Close Date, the Company’s Sponsor loaned the Company $300,000 in unsecured promissory notes. The funds were used to pay up front expenses associated with the Public Offering. These notes were non-interest bearing and were repaid in full to the Sponsor at the Close Date. Administrative Services AgreementOn May 10, 2017, the Company entered into an agreement to pay $20,000 a month for office space, administrative and support services to an affiliate of the Sponsor, and will terminate the agreement upon the earlier of a Business Combination or the liquidation of the Company. For the three months ended September 30, 2017 and the period from Inception to September 30, 2017, the Company incurred expenses of $60,000 and $93,333, respectively, under this agreement.Private Aircraft TravelThe Company reimburses affiliates for reasonable travel related expenses incurred while conducting business on behalf of the Company, including the use of private aircraft. For the three months ended September 30, 2017 and the period from Inception to September 30, 2017, travel related reimbursements for private aircraft use were $34,200 and $125,681, respectively. Private aircraft services are provided by independent third parties, coordinated by an affiliate of the Company and billed to the Company at cost.5. Investments Held in Trust AccountGross proceeds of $650,000,000 and $15,000,000 from the Public Offering and the sale of the Private Placement Warrants, respectively, less underwriting discounts of $13,000,000; and funds of $2,000,000 designated to pay the Company’s accrued formation and offering costs, ongoing administrative and acquisition search costs, plus repay notes payable of $300,000 to the Sponsor at the Close Date were placed in the Trust Account at the Close Date.On the Close Date, all funds held in the Trust Account were invested in Permitted Investments, which are considered Level 1 investments under ASC 820. For the three months ended September 30, 2017 and the period from Inception to September 30, 2017, the investments held in the Trust Account generated interest income of $1,357,208 and $2,009,907, respectively, all of which was reinvested in Permitted Investments.On September 15, 2017, the Company made a payment of $400,000, with funds from the Trust Account, to the IRS for estimated federal income taxes on interest earned in the Trust Account. At September 30, 2017, the balance of funds held in the Trust Account was $651,609,907.6. Deferred Underwriting CompensationThe Company is committed to pay the Deferred Discount of 3.50% of the gross proceeds of the Public Offering, or $22,750,000, to the underwriters upon the Company’s completion of a Business Combination. The underwriters are not entitled to receive any of the interest earned on Trust Account funds that would be used to pay the Deferred Discount, and no Deferred Discount is payable to the underwriters if a Business Combination is not completed within 24 months after the Close Date.Class A Common StockThe Company is currently authorized to issue 200,000,000 shares of Class A common stock. Depending on the terms of a potential Business Combination, the Company may be required to increase the number of authorized shares of Class A common stock at the same time as its stockholders vote on the Business Combination to the extent the Company seeks stockholder approval in connection with its Business Combination. Holders of shares of Class A common stockCommon Stock by EnerVest. The redemption and exchange of these Magnolia LLC Units created additional tax basis in Magnolia LLC. There was no net tax impact as the Company recorded a full valuation allowance.to one1 vote for each share held. There is no cumulative voting with respect to the exception that onlyelection of directors, which results in the holders of more than 50% of the Company’s outstanding common shares being able to elect all of the directors, subject toF common stock haveA Common Stock or, at Magnolia LLC’s option, an equivalent amount of cash. Upon the right to vote on the electionfuture redemption or exchange of directors prior to the completionMagnolia LLC Units held by any holder of Class B Common Stock, a Business Combination, subject to adjustment as provided in the Company’s amended and restated memorandum and articlescorresponding number of association. At September 30, 2017, there were 65,000,000 shares of Class A common stock issued and outstanding, of which 62,376,845 shares were subject to possible redemption and are classified outside of stockholders’ equity at the balance sheet.Class FB Common StockThe Company is currently authorized to issue 20,000,000 shares held by such holder of Class FB Common Stock will be canceled. In the event of a liquidation, dissolution, or winding up of Magnolia LLC, the holders of the Class B Common Stock, through their ownership of Magnolia LLC Units, are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of units of Magnolia LLC, if any, having preference over the common stock. At September 30, 2017,units. The holders of the Class B Common Stock have no preemptive or other subscription rights, and there were 16,250,000 shares of Class F common stock (Founder Shares) issued and outstanding.Preferred StockThe Company is authorizedare no sinking fund provisions applicable to issue 1,000,000 preferredsuch shares.willhas authorized a share repurchase program of up to 20.0 million shares of Class A Common Stock. The program does not require purchases to be authorizedmade within a particular time frame. As of June 30, 2021, the Company had repurchased 9.5 million shares under the plan at a cost of $83.3 million.fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicableMagnolia LLC Units that were issued to the shares of each series. The board of directors will be able to, without stockholder approval, issue preferred stockMagnolia LLC Unit Holders in connection with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. At September 30, 2017, there were no shares of preferred stock issued or outstanding.Dividend PolicyThe Company has not paid and does not intend to pay any cash dividends on its common stock prior to the completion of the Business Combination. Additionally,The noncontrolling interest percentage is affected by various equity transactions such as issuances and repurchases of Class A Common Stock, the exchange of Class B Common Stock (and corresponding Magnolia LLC Units) for Class A Common Stock, or the cancellation of Class B Common Stock (and corresponding Magnolia LLC Units).does not contemplate or anticipate declaring anyadopted the “Magnolia Oil & Gas Corporation Long Term Incentive Plan” (the “Plan”), effective as of July 17, 2018. A total of 16.8 million shares of Class A Common Stock have been authorized for issuance under the Plan as of June 30, 2021. The Company grants stock dividendsbased compensation awards in the foreseeable future.8. Subsequent EventsManagementform of restricted stock units (“RSU”), performance stock units (“PSU”), and performance restricted stock units (“PRSU”) to eligible employees and directors to enhance the Company and its affiliates’ ability to attract, retain, and motivate persons who make important contributions to the Company and its affiliates by providing these individuals with equity ownership opportunities. Shares issued as a result of awards granted under the Plan are generally new shares of Class A Common Stock.performedelected to account for forfeitures of awards granted under the Plan as they occur in determining compensation expense.Restricted Stock Units Performance Stock Units Performance Restricted Stock Units Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Unvested at March 31, 2021 1,587,243 $ 8.46 757,944 $ 11.10 1,001,079 $ 9.33 Granted 148,996 11.82 0 0 9,412 12.19 Vested (183,523) 6.65 (8,333) 14.58 0 0 Forfeited 0 0 0 0 0 0 Unvested at June 30, 2021 1,552,716 $ 9.00 749,611 $ 11.06 1,010,491 $ 9.36 Restricted Stock Units Performance Stock Units Performance Restricted Stock Units Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Unvested at December 31, 2020 1,686,637 $ 8.51 841,425 $ 10.95 0 $ 0 Granted 455,128 10.39 0 0 1,012,330 9.36 Vested (524,040) 8.50 (16,666) 14.58 0 0 Forfeited (65,009) 9.96 (75,148) 9.13 (1,839) 9.33 Unvested at June 30, 2021 1,552,716 $ 9.00 749,611 $ 11.06 1,010,491 $ 9.36 evaluationemployee or director of subsequent eventsthe Company prior to vesting of the award. Compensation expense for the service-based RSU awards is based upon the grant date market value of the award and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards. Unrecognized compensation expense related to unvested RSUs as of June 30, 2021 was $9.6 million, which the Company expects to recognize over a weighted average period of 2.0 years.November 8, 2017,each applicable vesting date. Each PRSU is earned based on whether Magnolia’s stock price achieves a target average stock price for any 20 consecutive trading days during the five-year performance period. If PRSUs are not earned by the end of the five-year performance period (“Performance Condition”), the PRSUs will be forfeited and no shares of Class A Common Stock will be issued, even if the vesting conditions have been met. Compensation expense for the PRSU awards is based upon grant date fair market value of the award, calculated using a Monte Carlo simulation, as presented below, and such costs are recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in-substance, multiple awards, as applicable. Unrecognized compensation expense related to unvested PRSUs as of June 30, 2021 was $8.3 million, which the Company expects to recognize over a weighted average period of 2.8 years.unauditedPSUs, which will occur within 60 days following the end of the performance period. Unrecognized compensation expense related to unvested PSUs as of June 30, 2021 was $1.6 million, which the Company expects to recognize over a weighted average period of 1.1 years.Six Months Ended PRSU and PSU Grant Date Fair Value Assumptions June 30, 2021 June 30, 2020 Expected term (in years) 3.64 2.85 Expected volatility 55.18% 33.50% Risk-free interest rate 0.56% 1.16% Three Months Ended Six Months Ended (In thousands, except per share data) June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Basic: Net income (loss) attributable to Class A Common Stock $ 84,445 $ (18,272) $ 147,689 $ (1,245,282) Less: Undistributed earnings allocated to participating securities 642 0 819 0 Net income (loss), net of participating securities $ 83,803 $ (18,272) $ 146,870 $ (1,245,282) Weighted average number of common shares outstanding during the period - basic 175,169 166,572 171,083 166,860 Net income (loss) per share of Class A Common Stock - basic $ 0.48 $ (0.11) $ 0.86 $ (7.46) Diluted: Net income (loss) attributable to Class A Common Stock $ 84,445 $ (18,272) $ 147,689 $ (1,245,282) Less: Undistributed earnings reallocated to participating securities 638 0 814 0 Net income (loss), net of participating securities $ 83,807 $ (18,272) $ 146,875 $ (1,245,282) Weighted average number of common shares outstanding during the period - basic 175,169 166,572 171,083 166,860 Add: Dilutive effect of stock based compensation and other 960 0 1,002 0 Weighted average number of common shares outstanding during the period - diluted 176,129 166,572 172,085 166,860 Net income (loss) per share of Class A Common Stock - diluted $ 0.48 $ (0.11) $ 0.85 $ (7.46) condensed financial statements were issued, noting no subsequent events which require adjustmentcash dividend of $0.08 per share of Class A Common Stock, and Magnolia LLC declared a cash distribution of $0.08 per Magnolia LLC Unit to each holder of Magnolia LLC Units, each payable on September 1, 2021 to shareholders or disclosure.members of record, as applicable, as of August 12, 2021.Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations.References toOperations“Company,” “our,” “us” or “we” refer to TPG Pace Energy Holdings Corp. The following discussion and analysismeaning of Section 27A of the Company’s financial conditionSecurities Act of 1933, as amended, and resultsSection 21E of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.Special Note Regarding Forward-Looking Statementsfactfacts included or incorporated by reference in this Quarterly Report on Form 10-Qreport, including, without limitation, statements under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” regarding the Company’s future financial position, business strategy, budgets, projected revenues, projected costs, and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. ActualIn addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” or “continue” or similar terminology. Although Magnolia believes that the expectations reflected in such forward-looking statements are reasonable, the Company can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results couldto differ materially from the Company’s expectations include, but are not limited to, Magnolia’s assumptions about:contemplatedfollowing the change in presidential administrations;forward-looking statementsglobal economy and the demand for oil and natural gas. The implications of the decrease in global demand for, coupled with the general oversupply of, oil may have further negative effects on the Company’s business. Demand and pricing may again decline if there is a resurgence of the outbreak across the U.S. and other locations across the world or as a result of certain factors detailedthe related social distancing guidelines, travel restrictions, and stay-at-home orders. The extent of any further impact of the pandemic on Magnolia’s industry and business cannot be reasonably predicted at this time.our filingsthe Giddings area. The Company added a second rig at the end of the second quarter which is currently drilling wells in the Giddings area. The Company is well positioned to reduce or increase operations given the significant flexibility within its capital program, as its operated drilling rig is on a short-term contract and the Company has no long-term service obligations. Moreover, Magnolia does not have any contractual drilling obligations and nearly all of the Company’s acreage is held by production.United States Securitiesthree and Exchange Commission (“SEC”). All subsequent written or oral forward-looking statementssix months ended June 30, 2021, respectively. The Company primarily operated one rig in the Giddings area for the first six months of 2021 and added a second rig at the end of the second quarter.usClass A Common Stock of $84.4 million and $147.7 million, or persons acting$0.48 and $0.85 per diluted common share, for the three and six months ended June 30, 2021, respectively. Magnolia recognized net income of $116.2 million and $207.7 million, which includes a noncontrolling interest of $31.7 million and $60.0 million related to the Magnolia LLC Units (and corresponding Class B Common Stock) held by certain affiliates of EnerVest for the three and six months ended June 30, 2021, respectively.behalf are qualifiedconsolidated statements of operations.their entiretythe Company accelerating the amortization of the intangible assets by this paragraph.OverviewWe areapproximately $5.9 million.blank check company incorporated as a Delaware corporationresult of the factors listed above, the historical results of operations and formedperiod-to-period comparisons of these results and certain financial data may not be comparable or indicative of future results.purposeperiods indicated, as well as each period’s respective average prices and production volumes. This table shows production on a boe basis in which natural gas is converted to an equivalent barrel of effectingoil based on a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination withratio of six Mcf to one or more businesses (“Business Combination”). We have reviewed, and continue to review, a number of opportunities to enter into a Business Combination with an operating business, but we arebarrel. This ratio may not able to determine at this time whether we will complete a Business Combination with anybe reflective of the target businesses that we have reviewed or with any other target business.We intend to consummate a Business Combination using cash fromcurrent price ratio between the proceedstwo products.Three Months Ended (In thousands, except per unit data) June 30, 2021 June 30, 2020 Production: Oil (MBbls) 2,903 3,089 Natural gas (MMcf) 9,947 9,763 NGLs (MBbls) 1,349 1,122 Total (Mboe) 5,910 5,838 Average daily production: Oil (Bbls/d) 31,897 33,940 Natural gas (Mcf/d) 109,313 107,289 NGLs (Bbls/d) 14,830 12,324 Total (boe/d) 64,946 64,146 Revenues: Oil revenues $ 188,096 $ 60,790 Natural gas revenues 32,595 13,168 Natural gas liquids revenues 30,035 8,881 Total revenues $ 250,726 $ 82,839 Average Price: Oil (per barrel) $ 64.80 $ 19.68 Natural gas (per Mcf) 3.28 1.35 NGLs (per barrel) 22.26 7.92 our initial public offering (the “Public Offering”) that closed on May 10, 2017 (the “Close Date”) and the private placement of warrants to purchase shares of our Class A common stock (“Private Placement Warrants”) that occurred at the Close Date, and from additional issuances of, if any, our capital stock and our debt, or a combination of cash, stock and debt.At September 30, 2017, we held cash of $955,993, current liabilities of $1,229,470 and deferred underwriting compensation of $22,750,000. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.Results of OperationsForCompany’s total revenues for the three months ended SeptemberJune 30, 20172021 and 2020, respectively. Oil production was 49% and 53% of total production volume for the three months ended June 30, 2021 and 2020, respectively. Oil revenues for the three months ended June 30, 2021 were $127.3 million higher than the three months ended June 30, 2020. A 229% increase in average prices increased second quarter 2021 revenues by $139.4 million, while a 6% decrease in oil production reduced revenues by $12.1 million compared to the same period in the prior year.Three Months Ended (In thousands, except per unit data) June 30, 2021 June 30, 2020 Operating Expenses: Lease operating expenses $ 21,971 $ 18,310 Gathering, transportation and processing 8,963 6,788 Taxes other than income 13,812 5,525 Exploration expenses 62 6,462 Asset retirement obligations accretion 1,405 1,464 Depreciation, depletion and amortization 43,332 50,870 Amortization of intangible assets 7,233 3,626 General and administrative expenses 24,757 15,729 Total operating expenses $ 121,535 $ 108,774 Other Income (Expense): Income from equity method investee $ — $ 611 Interest expense, net (8,752) (7,256) Loss on derivatives, net (2,004) — Other income, net 135 13 Total other expense, net $ (10,621) $ (6,632) Average Operating Costs per boe: Lease operating expenses $ 3.72 $ 3.14 Gathering, transportation and processing 1.52 1.16 Taxes other than income 2.34 0.95 Exploration expense 0.01 1.11 Asset retirement obligations accretion 0.24 0.25 Depreciation, depletion and amortization 7.33 8.71 Amortization of intangible assets 1.22 0.62 General and administrative expenses 4.19 2.69 February 14, 2017the Karnes area to the Giddings area, which has a lower DD&A rate.Inception”G&A”) expenses during the three months ended June 30, 2021 were $9.0 million, or $1.50 per boe, higher than the three months ended June 30, 2020, primarily driven by costs associated with the termination of the Services Agreement and increased corporate payroll expenses related to Septemberincreased employee headcount.2017, we earned2021 was $1.5 million higher than the three months ended June 30, 2020, driven by third-party costs associated with the debt modification pursuant to the amendment of the Indenture in the second quarter of 2021.Six Months Ended (In thousands, except per unit data) June 30, 2021 June 30, 2020 Production: Oil (MBbls) 5,495 6,479 Natural gas (MMcf) 20,188 19,817 NGLs (MBbls) 2,654 2,276 Total (Mboe) 11,514 12,058 Average daily production: Oil (Bbls/d) 30,361 35,600 Natural gas (Mcf/d) 111,536 108,882 NGLs (Bbls/d) 14,661 12,506 Total (boe/d) 63,611 66,253 Revenues: Oil revenues $ 334,509 $ 215,476 Natural gas revenues 67,359 29,343 Natural gas liquids revenues 56,521 19,385 Total revenues $ 458,389 $ 264,204 Average Price: Oil (per barrel) $ 60.87 $ 33.26 Natural gas (per Mcf) 3.34 1.48 NGLs (per barrel) 21.30 8.52 Six Months Ended (In thousands, except per unit data) June 30, 2021 June 30, 2020 Operating Expenses: Lease operating expenses $ 41,363 $ 42,473 Gathering, transportation and processing 17,762 14,807 Taxes other than income 24,574 15,543 Exploration expenses 2,124 562,888 Impairment of oil and natural gas properties — 1,381,258 Asset retirement obligations accretion 2,736 2,902 Depreciation, depletion and amortization 86,275 193,542 Amortization of intangible assets 9,346 7,253 General and administrative expenses 45,122 33,809 Total operating expenses $ 229,302 $ 2,254,475 Other Income (Expense): Income from equity method investee $ — $ 1,052 Interest expense, net (16,046) (14,012) Loss on derivatives, net (2,486) — Other expense, net (94) (460) Total other expense, net $ (18,626) $ (13,420) Average Operating Costs per boe: Lease operating expenses $ 3.59 $ 3.52 Gathering, transportation and processing 1.54 1.23 Taxes other than income 2.13 1.29 Exploration expense 0.18 46.68 Impairment of oil and natural gas properties — 114.55 Asset retirement obligations accretion 0.24 0.24 Depreciation, depletion and amortization 7.49 16.05 Amortization of intangible assets 0.81 0.60 General and administrative expenses 3.92 2.80 $669,213an impairment recorded for the quarter ended March 31, 2020 related to Magnolia’s unproved oil and $918,017, respectively. Our income consists solelynatural gas properties due to the sharp decline in commodity prices. For more information, please see Note 6—Fair Value Measurements in the Company’s Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.interest earned. Our business activities since our Public Offering have consisted solelyimpairment included in “Impairment of identifyingoil and evaluating prospective acquisition targets fornatural gas properties” in the consolidated statements of operations related to its proved oil and natural gas properties. The impairment was driven by the sharp decline in commodity prices. For more information, please see Note 6—Fair Value Measurements in the Company’s Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.Business Combination.On February 22, 2017, TPG Pace Energy Sponsor, LLC (the “Sponsor”) purchased an aggregate11,500,000 sharesliquidity and capital has been its cash flows from operations. The Company’s primary uses of cash have been for acquisitions of oil and natural gas properties and related assets, development of the Company’s Class F common stock (the “Founder Shares”) for an aggregate purchase priceoil and natural gas properties, share repurchases, and general working capital needs.$25,000,equity or approximately $0.002 per share. Priordebt securities through public offerings or private placements, to our Sponsor’s initial investment in usfund Magnolia’s acquisitions and long-term liquidity needs. Magnolia’s ability to complete future offerings of $25,000, weequity or debt securities and the timing of these offerings will depend upon various factors, including prevailing market conditions and the Company’s financial condition. The Company anticipates its current cash balance, cash flows from operations, and its available sources of liquidity to be sufficient to meet the Company’s cash requirements.no assets. On April 24, 2017, we agreed to effect a stock dividend prior$400.0 million of principal debt related to the closing2026 Senior Notes outstanding and no outstanding borrowings related to the RBL Facility. As of June 30, 2021, the Company had $640.3 million of liquidity comprised of the Public Offering$450.0 million of approximately 0.5borrowing base capacity of the RBL Facility, which was reaffirmed on April 12, 2021, and $190.3 million of cash and cash equivalents.Six Months Ended (In thousands) June 30, 2021 June 30, 2020 Sources of cash and cash equivalents Net cash provided by operating activities $ 306,031 $ 165,842 Uses of cash and cash equivalents Acquisitions $ (9,409) $ (69,782) Additions to oil and natural gas properties (94,356) (129,651) Changes in working capital associated with additions to oil and natural gas properties 11,814 (24,381) Class A Common Stock repurchases (44,328) (6,483) Class B Common Stock purchase and cancellation (122,531) — Non-compete settlement (42,074) — Other (7,426) (1,328) (308,310) (231,625) Decrease in cash and cash equivalents $ (2,279) $ (65,783) Three Months Ended Six Months Ended (In thousands) June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Drilling and completion $ 53,808 $ 27,272 $ 92,658 $ 127,883 Leasehold acquisition costs 382 988 1,698 1,768 Total capital expenditures $ 54,190 $ 28,260 $ 94,356 $ 129,651 F common stockA Common Stock. The program does not require purchases to be made within a particular time frame and whether the Company undertakes these additional repurchases is ultimately subject to numerous considerations, market conditions, and other factors. During the six months ended June 30, 2021 and 2020, the Company repurchased 4.0 million and 1.0 million shares for each share of Class F common stock, which resulted in a total cost of 17,250,000 issuedapproximately $44.3 million and outstanding Founder Shares. The stock dividend also adjusted the Founder Shares subject to forfeiture from 1,500,000 to 2,250,000 such that the Founder Shares would represent 20.0% of our issued and outstanding common shares after the Public Offering. On April 24, 2017, our Sponsor transferred 40,000 Founder Shares to each of our four independent directors at their original purchase price. On June 24, 2017, our Sponsor forfeited 1,000,000 Founder Shares on the expiration of the underwriters’ over-allotment option. At September 30, 2017, our Sponsor and our four independent directors held, collectively, 16,250,000 Founder Shares.$6.5 million, respectively.On May 10, 2017, we consummated the Public Offering of 65,000,000 Units (which included the purchase of 5,000,000 Units subject to the underwriters’ 9,000,000 Unit over-allotment option) at a price of $10.00 per Unit generating gross proceeds of $650,000,000 before underwriting discounts and expenses. Each unit consists of one share of Class A common stock of the Company at $0.0001 par value and one-third of one warrant (a “Unit”). Each whole warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share (a “Warrant”). Only whole Warrants may be exercised and no fractional Warrants will be issued upon separation of the Units and only whole Warrants may be traded. On the Close Date, we completed the private sale of an aggregate of 10,000,000 private placement warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share, subject to adjustment (the “Private Placement Warrants”), to our Sponsor, at a price of $1.50 per Private Placement Warrant.We received gross proceeds from the Public Offering and the sale of the Private Placement Warrants of $650,000,000 and $15,000,000, respectively, for an aggregate of $665,000,000. $650,000,000 of the gross proceeds were deposited in a trust account with Continental Stock Transfer and Trust Company (the “Trust Account”). At the Close Date, the remaining $15,000,000 was held outside of the Trust Account, of which $13,000,000 was used to pay underwriting discounts and $300,000 was used to repay notes payable to our Sponsor, with the balance reserved to pay accrued offering and formation costs, business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Interest income on the funds held in the Trust Account of up to $750,000 per year plus sufficient funds to pay tax obligations may be released to us.On May 10, 2017, we invested the funds held in the Trust Account in a money market account invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act (“Permitted Investments”).period from Inception to Septembersix months ended June 30, 2017, we earned interest income of $2,009,907 on investments held in the Trust Account. On September 15, 2017, we made a payment of $400,000,2021, Magnolia LLC repurchased and subsequently canceled 10.0 million Magnolia LLC Units with funds from the Trust Account, to the Internal Revenue Service for estimated federal income taxes on interest earned in the Trust Account.At September 30, 2017, we had cash held outside of the Trust Account of $955,993, which is available to fund our working capital requirements.At September 30, 2017, we had current liabilities of $1,229,470 and negative working capital of $91,451, largely due to costs associated with our formation and Public Offering. The identification and evaluation of potential Business Combinations is continuing after September 30, 2017 and we therefore expect to incur additional expenses, which may be significant. We expect some portion of these expenses to be paid upon consummation of a Business Combination. We may, however, need to raise additional funds in order to meet the expenditures required for operating our business prior to a Business Combination. We may request loans from our Sponsor, affiliates of our Sponsor or certain of our executive officers and directors to fund our working capital requirements prior to completing a Business Combination. We may use working capital to repay such loans. Additional funds could also be raised through a private offering of debt or equity. There can be no assurance that we will be able to raise such funds. The uncertainty regarding the need for and ability to obtain such funding raises substantial doubt about our ability to continue as a going concern.We may also need to obtain additional financing either to complete a Business Combination or because we become obligated to redeem a significantan equal number of shares of ourcorresponding Class A common stock upon completionB Common Stock for $122.5 million of a Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.We have 24 months from the Close Date to complete our Business Combination. If we do not complete a Business Combination within this period, we shall (i) cease all operations except for the purposescash consideration (the “Class B Common Stock Repurchases”). As of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds in the Trust Account and not previously released to us to fund its working capital requirements, subject to an annual limit of $750,000, and/or to pay our taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approvalJune 30, 2021, Magnolia owned approximately 74.3% of the remaining stockholdersinterest in Magnolia LLC and the boardnoncontrolling interest was 25.7%.directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The initial stockholders and our officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete the Business Combination within 24 months from the Close Date. However, if the initial stockholders acquire public shares after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if we fail to complete the Business Combination within the allotted 24-month time period.We intend to use substantially all of the funds held in the Trust Account, including earned interest (which interest shall be net of taxes payable) to consummate a Business Combination. To the extent that our capital stock or debt is used, in whole or in part, asconsideration to consummate a Business Combination, the remaining proceeds held in the Trust Account after completion of the Business Combination and redemptions of shares of our Class A common stock, if any, will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategy.Off-Balance Sheet Financing ArrangementsWe have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.Contractual ObligationsWe do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than an administrative agreement to pay monthly recurring expenses of $20,000 for office space, administrative and support services to an affiliate of our Sponsor. The agreement terminates upon the earlier of the completion of a Business Combination or the liquidation of the Company.Critical Accounting PoliciesThe preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:Offering CostsWe comply with the requirements of Accounting Standards Codification (“ASC”) 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering.” We incurred offering costs in connection with our Public Offering of $1,424,561, primarily consisting of accounting and legal services, securities registration expenses and exchange listing fees. These costs, along with paid and deferred underwriter discounts totaling $35,750,000, were charged to additional paid-in capital at the Close Date.Redeemable Common StockAll 65,000,0004.0 million shares of Class A common stock sold as partCommon Stock upon the two and one-half year and the four year anniversaries of the Units in the Public Offering contain a redemption feature as discussed above. In accordance with ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”July 31, 2018 (the “Closing Date”), redemption provisions not solely within our control require the security to be classified outsideCompany would deliver (i) the cash value of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of an entity’s equity instruments, are excluded from the provisions of ASC 480. Although we did not specify a maximum redemption threshold, our charter provides that in no event will we redeem our Class A common stock in an amount that would cause our net tangible assets, or total stockholders’ equity, to fall below $5,000,001. Accordingly, at September 30, 2017, 62,376,845 of our 65,000,000approximately 2.0 million shares of Class A common stock were classified outside of permanent equity at their redemption value.Net Income Per Share of Common StockWe comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income per share of common stock is computed by dividing net income by the weighted average number of common shares outstanding during the period as calculated using the treasury stock method. At September 30, 2017, we had outstanding warrants to purchase up to 31,666,666approximately 0.4 million shares of Class A common stock. The weighted average of these shares was excluded fromCommon Stock on the calculation of diluted net income per share of common stock since the exercisetwo and one-half year anniversary of the warrants is contingent upon the occurrenceClosing Date and (ii) an aggregate of future events. At September 30, 2017, we did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into1.6 million shares of common stock and then share in our earnings under the treasury stock method. As a result, diluted net income per share of common stock is the same as basic net income per share of common stock for the period.Recent Accounting PronouncementsManagement does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effectClass A Common Stock on the our financial statements.Risk.To date, our efforts have been limitedRiskorganizational activities and activities relatingmarket risk exposure related to changes in interest rates on borrowings under the RBL Facility. Interest on borrowings under the RBL Facility is based on the LIBOR rate or alternative base rate plus an applicable margin as stated in the agreement governing the RBL Facility. At June 30, 2021, the Company had no borrowings outstanding under the RBL Facility.Public Offeringprices it receives for its oil, natural gas, and NGL production. The prices the identificationCompany ultimately realizes for its oil, natural gas, and evaluationNGLs are based on a number of prospective acquisition targetsvariables, including prevailing index prices attributable to the Company’s production and certain differentials to those index prices. Pricing for a Business Combination. We have neither engaged in any operations nor generated any revenues. As the net proceeds from our Public Offeringoil, natural gas, and the sale of the Private Placement Warrants heldNGLs has historically been volatile and unpredictable, and this volatility is expected to continue in the Trust Account have been investedfuture. The prices the Company receives for production depend on factors outside of its control, including physical markets, supply and demand, financial markets, and national and international policies. A $1.00 per barrel increase (decrease) in Permitted Investments, we do not believe there will be any material exposure to interest rate risk. For both the threeweighted average oil price for the six months ended SeptemberJune 30, 20172021 would have increased (decreased) the Company’s revenues by approximately $11.0 million on an annualized basis and the period from Inception to September 30, 2017, the effective annualized interest rate earned on our Permitted Investments was 0.8%.At September 30, 2017, $651,609,907 was heldTrust Accountweighted average natural gas price for the purposes of consummating a Business Combination. If we complete a Business Combination within 24six months afterended June 30, 2021 would have increased (decreased) the Close Date, funds in the Trust Account will be used to pay for the Business Combination, redemptions of shares of Class A common stock, if any, the deferred underwriting compensation of $22,750,000 and accrued expenses related to the Business Combination. Any funds remaining will be made available to us to provide working capital to finance our operations.We have not engaged in any hedging activities since our Inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.Procedures.controls and other procedures that are designed to ensureprovide reasonable assurance that the information required to be disclosed by it in our reports filed or submittedthat it files under the Securities Exchange Act of 1934,is accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as amended (the “Exchange Act”)appropriate, to allow for timely decisions regarding required disclosure and is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluationforms of the effectivenessSEC. the design and operation of our disclosure controls and procedures as of September 30, 2017. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2021 that hashave materially affected, or isare reasonably likely to materially affect, ourthe Company’s internal control over financial reporting.Proceedings.None.Factors. that could cause our actual resultsdiffer materially from those in this report are anyPart I, Item 1A - Risk Factors of the risks disclosed in our final Prospectus, dated May 4, 2017, which was filed withCompany’s Annual Report on Form 10-K for the SECfiscal year ended December 31, 2020, and Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on May 5, 2017.Form 10-Q. Any of these factors could result in a significant or material adverse effect on ourMagnolia’s business, results of operations, or financial condition. There have been no material changes to the Company’s risk factors since its 2020 Form 10-K. Additional risk factors not presently known to usthe Company or that wethe Company currently deemdeems immaterial may also impair ourits business, or results of operations.As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our final Prospectus, dated May 4, 2017, which was filed with the SEC on May 5, 2017. However, we may disclose changes to such factorsoperations, or disclose additional factors from time to time in our future filings with the SEC.Proceeds.Unregistered SalesOn February 22, 2017, our Sponsor purchased an aggregateProceedsPeriod Number of Shares of Class A Common Stock Purchased Average Price Paid per Share Maximum Number of Shares of Class A Common Stock that May Yet Be Purchased Under the Program January 1, 2021 - March 31, 2021 1,972,520 $ 10.28 1,972,520 12,552,480 April 1, 2021 - April 30, 2021 627,480 11.41 627,480 11,925,000 May 1, 2021 - May 31, 2021 1,275,000 12.01 1,275,000 10,650,000 June 1, 2021 - June 30, 2021 122,520 12.84 122,520 10,527,480 Total 3,997,520 $ 11.09 3,997,520 10,527,480 11,500,000 Founder Shares for an aggregate purchase pricedirectors has authorized a share repurchase program of $25,000, or approximately $0.002 per share. Priorup to our Sponsor’s initial investment in us of $25,000, we had no assets. On April 24, 2017, we agreed to effect a stock dividend prior to the closing of the Public Offering of approximately 0.520.0 million shares of Class F common stock for eachA Common Stock. The program does not require purchases to be made within a particular time frame.of Class F common stock, which resulted inrepurchase program, Magnolia LLC repurchased and subsequently canceled a total of 17,250,000 issued and outstanding Founder Shares. The stock dividend also adjusted the Founder Shares subject to forfeiture from 1,500,000 to 2,250,000 such that the Founder Shares would represent 20.0%10.0 million units representing limited liability company interests in Magnolia LLC with an equal number of our issued and outstanding common shares after the Public Offering. On April 24, 2017, our Sponsor transferred 40,000 Founder Shares to each of our four independent directorscorresponding Class B Common Stock for a cash consideration of $122.5 million at their original purchase price. On June 24, 2017, our Sponsor forfeited 1,000,000 Founder Shares on the expiration of the underwriters’ over-allotment option. At September 30, 2017, our Sponsor and our four independent directors held, collectively, 16,250,000 Founder Shares.On the Close Date, we completed the private sale of an aggregate of 10,000,000 Private Placement Warrants, to our Sponsor, at aaverage price of $1.50$12.25 per Private Placement Warrant. The Private Placement Warrants are substantially similarshare. There is no public market for the Class B Common Stock. For further detail, see Warrants underlying the Units issuedConsolidated Financial Statements in the Public Offering, except that if held by our Sponsor or its permitted transferees, they (i) may be exercised for cash or on a cashless basis and (ii) are not subject to being called for redemption. If the Private Placement Warrants are held by holders other than our Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by us and exercisable by the holders on the same basis as the Warrants.The sales of the above securities by the Company were deemed to be exempt from registration under the Securities Act, in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.Use of ProceedsOn May 4, 2017, our registration statementthis Quarterly Report on Form S-1 (File No. 333-217338) was declared effective by the SEC for the Public Offering pursuant to which we sold an aggregate of 65,000,000 Units at an offering price to the public of $10.00 per Unit for an aggregate offering price of $650,000,000, with each Unit consisting of one share of Class A common stock of the Company at $0.0001 par value and one-third of one warrant. Each whole warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share. Only whole warrants may be exercised and no fractional warrants will be issued upon separation of the Units and only whole warrants may be traded. Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Tudor, Pickering, Holt & Co. Securities, Inc. acted as underwriters. Our Public Offering did not terminate before all of the securities registered in our registration statement were sold. The Public Offering was consummated on May 10, 2017.Net proceeds of $650,000,000 from the Public Offering and the sale of the Private Placement Warrants, including deferred underwriting discounts of $22,750,000, are held in the Trust Account at September 30, 2017. We paid $13,000,000 in underwriting discounts and incurred offering costs of $1,424,561 related to the Public Offering. In addition, the Underwriters agreed to defer $22,750,000 in underwriting discounts, which amount will be payable when and if a Business Combination is consummated. We also repaid $300,000 in non-interest bearing loans made to us by our Sponsor to cover expenses related to the Public Offering. No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates. There has been no material change in the planned use of proceeds from the Public Offering as described in our final Prospectus, dated May 4, 2017, which was filed with the SEC on May 5, 2017.DefaultsDefaults Upon Senior Securities.Disclosures.Information.None.Exhibits.10-Q.10-Q:ExhibitNumberDescription31.1** 10.11*10.12*10.13*10.14*31.1**31.2** 32.1*** 32.2**Document101.SCH** Document101.CAL** Document101.DEF** Document101.LAB** Document101.PRE** Document*Incorporated herein by reference as indicated.104** Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101). **Filed herewith.
* Incorporated herein by reference as indicated.TPG PACE ENERGY HOLDINGS CORP.MAGNOLIA OIL & GAS CORPORATION Date: November 8, 2017August 3, 2021November 8, 2017Martin DavidsonMartin Davidsonand Accounting Officer)21